NVIDIA FY 2015 Q2 Financial Results
by Brett Howse on August 10, 2014 11:10 PM EST
On Thursday August 7th, NVIDIA released their results for the second quarter of their fiscal year 2015. Year-over-year, they had an excellent quarter based on strong growth in the PC GPU market, Datacenter and Cloud (GRID), and mobile with the Tegra line.
GAAP Revenue for the quarter came in at $1.103 billion which is flat from Q1 2015, but up 13% from $977 million at the same time last year. Gross margin for Q2 was up both sequentially and year-over-year at 56.1%. Net income for the quarter came in at $128 million, down 6% from Q1 and up 33% from Q2 2014. These numbers resulted in diluted earnings per share of $0.22, down 8% from Q1 and up 38% from Q2 last year but beating analysts expectations.
| NVIDIA Q2 2015 Financial Results (GAAP) | |||||
| In millions except EPS | Q2'2015 | Q1'2015 | Q2'2014 | Q/Q | Y/Y |
| Revenue | $1103 | $1103 | $977 | 0% | +13% |
| Gross Margin | 56.1% | 54.8% | 55.8% | +1.3% | +0.3% |
| Operating Expenses | $456 | $453 | $440 | +1% | +4% |
| Net Income | $128 | $137 | $96 | -6% | +33% |
| EPS | $0.22 | $0.24 | $0.16 | -8% | +38% |
| NVIDIA Q2 2015 Financial Results (Non-GAAP) | |||||
| In millions except EPS | Q2'2015 | Q1'2015 | Q2'2014 | Q/Q | Y/Y |
| Revenue | $1103 | $1103 | $977 | 0% | +13% |
| Gross Margin | 56.4% | 55.1% | 56.3% | +1.3% | +0.1% |
| Operating Expenses | $411 | $411 | $401 | 0% | +2% |
| Net Income | $173 | $166 | $133 | +4% | +30% |
| EPS | $0.30 | $0.29 | $0.23 | +3% | +30% |
The GPU business is the primary source of revenue for NVIDIA, and includes GeForce for desktops and notebook PCs, Quadro for workstations, Tesla for high performance computing, and GRID for cloud-enabled graphic solutions. This quarter, the GPU revenue rose 2% over Q2 2014 with $878 million in revenue. This is down 2% from the previous quarter due to the seasonal decline of consumer PCs. Revenue from the PC GPU line rose 10% over last year and was helped by the introduction of the GeForce GTX 750 and 750 Ti Maxwell based boards. They are also seeing growth in the Tesla datacenter business. Quadro revenue also increased, citing strong growth in mobile workstations.
The mobile side of NVIDIA hasn’t seen as many product wins compared to Qualcomm, but the Tegra business is still growing strongly for NVIDIA. Tegra revenue was up 14% from Q1 2015, and 200% from Q2 2014 with a total revenue of $159 million for the quarter. Tegra continues to have strong demand in the automotive infotainment sector, with a 74% growth in that market year-over-year. This could be a lucrative market, with automotive systems generally locking in for at least several years compared to the mobile sector which might see a product replaced in less than a single year. The Tegra K1 has just come to market though, and it has shown itself to be a capable performer and may win some more designs soon.
The last avenue of income for NVIDIA is $66 million per quarter in a licensing deal with Intel.
| NVIDIA Quarterly Revenue Comparison (GAAP) | |||||
| In millions | Q2'2015 | Q1'2015 | Q2'2014 | Q/Q | Y/Y |
| GPU | $878 | $898 | $858 | -2% | +2% |
| Tegra Processor | $159 | $139 | $53 | +14% | +200% |
| Other | $66 | $66 | $66 | flat | flat |
The company projected this quarter to be flat on revenue as compared to Q1, and they were exactly right. Projections for Q3 2015 are for revenue of $1.2 billion plus or minus 2%.
During the quarter, $47 million was paid in dividends and NVIDIA purchased 6.8 million shares back from investors. This brings them to $594 million of the $1 billion promised to shareholders for FY 2015. The next dividend of $0.085 per share will be paid on September 12th to all stockholders of record as of August 21st.
It was an excellent quarter for NVIDIA, and their stock prices jumped after the numbers were released. All segments of the company are growing at the moment, and with the recent release of the Tegra K1 they can only be hoping to have another strong quarter of mobile grown in Q3 after a great 200% jump in Tegra revenue since last year. The stronger than expected PC sales have helped their biggest business as well, with the GPU division up 2%. CEO Jen-Hsun Huang has worked to bring the company a more diversified portfolio, and with the recent gains in mobile and datacenter computing, the company has certainly had some recent success.
Source: NVIDIA Investor Relations
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TheJian - Monday, August 11, 2014 - link
Don't forget tegra has been losing money since inception. T1-4 were just test runs and delay tactics until K1. All they get from the first 4 is experience and name recognition (which is good, pretty much had to be done) and a gaming platform for android. From K1 on though, desktop gpus change the game and in house cpu for xmas devices puts them on a level field with Qcom from here on out. Everything that goes with desktop gpus comes to mobile (drivers, game devs already using it in the same year, feature support same as desktops, cuda, physx, full OpenGL 4.4 etc etc) and the rest will have trouble matching all of this. Qcom has zero experience in gaming and drivers, and devs have pretty much zero experience with their gpus. NV/AMD have 20yrs of that stuff (which is why I hope AMD gets in this arm stuff soon! I'm not talking servers, they should have went mobile first), so both have a gpu advantage for quite some time. Now that K1 will be in nexus 9 and likely other gaming oriented devices, I think they'll quit losing money and start finally adding to the bottom line with tegra over the next few quarters after it ramps.So their gpus are making more than you think, it's just that tegra is stealing income. It's worth it though, because now GPU is taking over the modem as gaming becomes something we all want to do on mobile (90% of revenue on googleplay is games, apple's in the 80's, amazon mid 60's etc). With google now pushing games with AndroidL+AEP and trying to close the gap between desktop and mobile, we'll start to see the NV/Google partnership bloom. We saw the start of this at Google's IO event, as everything there was on K1. Others will have to adopt K1's gpu IP or lag as S805 shows already. S810 is off the shelf so that won't help either (that will hurt batter/cpu and their gpu won't catch NV either). NV will rule the tablets for gaming for at least a year or more now until we see Qcom's answer after S810 (likely well over a year away and will miss the next Nov nexus also IMHO).
Denver will be in HTC Nexus9 and qcom has no Nov answer. Next year you'll have a 20nm maxwell (for Nov nexus I mean) to contend with and as I said whatever is after S810 will be too late to make it into a Nov launch. The IN HOUSE 64bit from Qcom will probably start to ship about a year from now or a tad later, making it a few months shy of 4.5-5mo for putting it into a product, that would end up a late Dec/Jan product in retail and google won't accept that :) They want xmas sales, wisely IMHO, so launch in Nov. I'd expect a shield rev2 handheld soon or for xmas (denver if they wait to rev2 for then) as it's a no brainer and should basically just drop in to the T4 shield housing with little change. Also matches the 1440x810+4GB specs we've heard, which clearly are not the shield tablet's specs. This would be a slight bump from the old shield and massive gpu upgrade of course. Qcom said S810 is 6 months after S805, and in house 64bit 6 months or more after S810. Anandtech thinks 2nd half 2015 for devices with Qcom in house cpu, but I'll believe that when I see it. Even the change in their roadmap landed them around least 6-8 months behind NV's 64bit denver arriving in nexus in Nov. Considering it really does look like they got caught with their pants down on 64bit, I'd be pretty surprised if they can get into a Nov Nexus next year with the IN HOUSE chip.
Sushisamurai - Monday, August 11, 2014 - link
Is it me, or did I just lose a year by reading this article?If we're talking about 2015, it should be forward guidance, fiscal results should be 2014
Sushisamurai - Monday, August 11, 2014 - link
But seriously, please fix your dates in this article, as you reference YoY gains from 2015 and 2014, pitting "this fiscal quarter" from 2016 and 2015...Time for an editor anand...
Black Obsidian - Monday, August 11, 2014 - link
I'm not sure what your complaint is, but it sounds like you're unaware that many companies operate in a fiscal year that's ahead (sometimes by as much as a full year) of the calendar year. These results being for nVidia's Q2 2015 fiscal year is not a typo.Sushisamurai - Monday, August 11, 2014 - link
Oopsies. That was my honest mistake there. My bad and no offence there. I'm actually invested in Nvidia, but the news/websites I read in terms of financials and reporting "simplify" the dating terminology, so they reference the current fiscal year (Q2 2014) vs last year (Q2 2013). I had to actually look up Nvidia's investor's site to see that they report it as Q2 2015. Wtf...Brett Howse - Monday, August 11, 2014 - link
NVIDIA's fiscal year seems to always cause this kind of confusion, but the dates are correct. FY 2015 for NVIDIA began on January 27th 2014. That's why I specifically said it was for fiscal year 2015, but even so, it's easy to think it's a mistake.