NVIDIA Warns Financial Statements May be Impacted by ERP System Upgrade

The company’s systems infrastructure upgrade is complicated by a massive data breach.

March 18, 2022

NVIDIA’s (NVDA) graphics processing units (GPUs) and software power some of the most complex data centers, gaming platforms, and artificial intelligence (AI)-powered high performance computing (HPC) applications in the world. But the tech firm is warning investors its own technical backbone may be too difficult to upgrade seamlessly.

In the current fiscal quarter, which began January 31, 2022, NVIDIA revealed that as part of its enterprise resource planning (ERP) upgrade, it will implement its new financial and accounting modules. Recently, DuDil has documented disastrous ERP system implementations that ground operations to a halt (Mission Produce: AVO) and resulted in millions of dollars of cost overruns (McCormick: MKC).

In its latest 10-K, NVIDIA offers boilerplate language warning of potential programming errors and quality issues disrupting operations. It also included new language— specific to this stage of the project— warning of potential control deficiencies that may:

“...cause us to fail to meet our reporting obligations.”

The infrastructure upgrade began in FY22 but this portion of the ERP system is designed to accurately maintain NVIDIA’s financial records used to report operating results.

To complicate matters, one month into the implementation, on February 23, 2022, NVIDIA was hacked by a group that stole the company’s source code, some of which was then leaked online after NVIDIA presumably refused to pay a ransom.

ERP system implementations are difficult in hospitable environments. The hostile environment in which NVIDIA finds itself only serves to complicate matters. If anyone can pull off a significant systems upgrade while the system is under attack, it’s NVIDIA. Still, investors should not be surprised if the current quarter’s operations— including financial records— are disrupted.

Related: AMD, INTC, AMZN, GOOGL, MSFT, AAPL, TSM, JBL

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