In context: Nvidia yesterday revealed that even the mighty team green isn't safe from the current economic climate—unlike rival AMD, which bucked the industry trend by having an excellent quarter. Disappointing financial reports often result in companies starting a streamlining process (i.e., laying off staff), but CEO Jensen Huang has assured employees that won't happen, at least not in the near term. In fact, staff at the tech giant have been given raises to help deal with rising inflation.
In its preliminary financial results, Nvidia revealed that the quarter ending July 31 missed expectations by a wide margin. Previous guidance put Q2 FY23 revenue at $8.10 billion, but this has been revised down 21% to $6.70 billion, marking a 19% quarter-over-quarter fall. Gaming revenue was hit particularly hard, dropping 33.33% YoY from $3.06 billion to a projected $2.04 billion.
The preliminary earnings warning isn't good news for Nvidia or its workers. Staff are likely concerned about their employer doing a Robin Hood or Facebook and cutting numbers. However, according to a report from Insider, CEO Huang assuaged those fears in an email addressing the Q2 results.
"So what does this mean for us? Do we have a layoff? No. Instead, we have given raises to take care of your families as all of you are facing sky-high inflation," he wrote.
It's unclear if Huang is talking about a new increase in pay for all staff or if he's referring to a previous raise. It's possibly the latter, given his use of the past tense.
Huang did add the caveat that future layoffs were something that couldn't be ruled out. The CEO also talked about making Nvidia even "faster, leaner, and agile."
"We will exercise extreme collaboration, a hallmark of our culture, finding every opportunity to leverage and reuse. We will find and eliminate all wasted time, process, and material," he wrote.
This isn't the first time Huang has said there would be raises instead of layoffs at a time when people expected to lose their jobs. He did the same thing during the height of the Covid-19 crisis in 2020.
Nvidia blamed falling demand and an excess of inventory for its poor quarter. Ironically, it comes after a long period of massive demand and little to no availability. The good news for gamers, of course, is that card prices keep falling as Nvidia looks to clear stock before the RTX 4000 series arrives.
Nvidia's fortunes were a contrast to AMD's. Its red rival saw revenue hit $6.6 billion in the last quarter, up 70% year-over-year.