“Data Center revenue included $287 million for orders originally scheduled for delivery primarily in the third quarter that were converted to second-quarter delivery…” In a commentary accompanying second quarter results, Nvidia’s Chief Financial Officer (CFO) Colette Kress revealed some eye-opening details concerning the company’s potentially worse revenue decline during the second quarter. It appears like Nvidia’s management potentially propped up an otherwise negative-growth quarter through revenue smoothening – a strategy that artificially distributes revenue and earnings between quarters to dampen out acute declines so that stock investors do not freak out. However, the company “desperately” accelerated more than a quarter of a billion dollars of sales from a later financial period into the quarter. The 3% annual growth rate still paints NVDA as a growth stock, and justifiably so. Nvidia reported second-quarter revenue of $6.7 billion, down 19% sequentially but showing a respectable 3% year-over-year growth. Nvidia’s Q2 Earnings Report: Manipulated?
Potential management shenanigans during the last quarter might have helped avoid a jittery market reaction to a potentially worse earnings outcome, but the company may not be out of the woods yet. The computing graphics chip manufacturing giant was in worse trouble than depicted in recent earnings results. Nvidia’s ( NVDA) second-quarter earnings results for the three-month period ended July 31, 2022, show concerning revenue declines, inventory write-offs, poor cash flow generation, and a glaring incidence of potential earnings management – a controversial and unsustainable corporate practice that may artificially prop up NVDA stock price in the short term.
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