NVIDIA Announces Q1 FY 2017 Results: Strong Growth In All Segments
by Brett Howse on May 12, 2016 10:20 PM EST- Posted in
- GPUs
- NVIDIA
- Financial Results
Much of the PC industry has been reporting less than strong results, with declines in PC unit sales leading to lower earnings for many of the big players such as Intel, AMD, and even Apple. NVIDIA has bucked this trend though with a strong quarter to start their fiscal year 2017. Revenue for the quarter was $1.305 billion, up 13% from Q1 FY 2016, with growth in NVIDIA’s GPU business, datacenter, automotive, and professional visualization all showing strong sales. Gross margin for the quarter was 57.5%, up 0.8% from a year ago. Operating income was up 39% to $245 million, and net income came in up 46% to $196 million. This resulted in earnings per share of $0.33.
| NVIDIA Q1 2017 Financial Results (GAAP) | |||||
| Q1'2017 | Q4'2016 | Q1'2016 | Q/Q | Y/Y | |
| Revenue (in millions USD) | $1305 | $1401 | $1151 | -7% | +13% |
| Gross Margin | 57.5% | 56.5% | 56.7% | +1.0% | +0.8% |
| Operating Income (in millions USD) | $245 | $252 | $176 | -3% | +39% |
| Net Income | $196 | $207 | $134 | -5% | +46% |
| EPS | $0.33 | $0.35 | $0.24 | -6% | +38% |
NVIDIA also reports Non-GAAP results, which exclude stock based compensation, warranty charges, restructuring fees, and other fees. The Non-GAAP results had revenue of $1.305 billion, which is up 13%. Gross margin was 58.6%, which is up 1.7%. Operating income was up 39% to $322 million, and net income was up 41% to $263 million. Non-GAAP earnings per share were $0.46.
| NVIDIA Q1 2017 Financial Results (Non-GAAP) | |||||
| Q1'2017 | Q4'2016 | Q1'2016 | Q/Q | Y/Y | |
| Revenue (in millions USD) | $1305 | $1401 | $1151 | -7% | +13% |
| Gross Margin | 58.6% | 57.2% | 56.9% | +1.4% | +1.7% |
| Operating Income (in millions USD) | $322 | $356 | $231 | -10% | +39% |
| Net Income | $263 | $297 | $187 | -11% | +41% |
| EPS | $0.46 | $0.52 | $0.33 | -12% | +39% |
GPUs accounted for most of the revenue, with GPU revenue coming in at $1.08 billion for the quarter. This is a gain of 15% year-over-year, driven by strong growth in the GeForce lineup. NVIDIA has recently announced their latest Pascal architecture with the GTX 1080 and GTX 1070, with cards coming soon, so I would expect strong sales to continue. Tegra processor revenue for the quarter was $160 million, up 10% compared to Q1 2016, thanks to continued growth in Tegra automotive.
Gaming platform revenue was up 17% to $687 million, consistent with the strong growth in PC gaming compared to the rest of the PC market. Quadro revenue, filed under Professional Visualization, was up 4% to $189 million.
Datacenter revenue which includes Tesla and GRID results were a record $143 million for the quarter, up 63% from a year ago, driven by demand for GPU acceleration for deep learning.
Automotive revenue was $113 million of the $160 million for Tegra, up 47% year-over-year. It appears that NVIDIA made the right call with Tegra by mostly abandoning the mobile market where competition is pretty fierce, and they’ve really gained a good diversified foothold in the automotive sector where higher TDPs can let them drive larger GPUs.
Finally, the licensing deal with Intel, which is going to end soon, accounted for $66 million in revenue.
| NVIDIA Quarterly Revenue Comparison (GAAP) | |||||
| In millions | Q1'2017 | Q4'2016 | Q1'2016 | Q/Q | Y/Y |
| GPU | $1079 | $1178 | $940 | -8% | +15% |
| Tegra Processor | $160 | $157 | $145 | +2% | +10% |
| Other | $66 | $66 | $66 | flat | flat |
NVIDIA has had a pretty successful run since the introduction of their Maxwell products, and these results are all prior to Pascal even coming on the market in a consumer card. NVIDIA’s outlook for Q2 is revenue of $1.35 billion plus or minus 2%, and GAAP gross margin of 57.7%, plus or minus 0.5%.
Source: NVIDIA Investor Relations
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Yojimbo - Friday, May 13, 2016 - link
They can triple sales. Multiple companies (10?) obtain over $1.5 billion in revenue from automobile infotainment. It's a $40+ Billion market that's growing. In addition, Tegra is integral to NVIDIA's plan to capture some of the deep learning inference compute market. Whether that's successful or not remains to be seen, but many of these trained networks will run on low power devices and if NVIDIA can prove their GPUs are the most advantageous way to run them it will open up many doors for Tegra products. If GPUs turn out to be good processors for inference, there's a good chance NVIDIA might have a software/middleware advantage that would carry them over companies like ARM and PowerVR just like it's carrying them over AMD in the data center and in HPC.lefty2 - Friday, May 13, 2016 - link
My, you are an optimist. It's always the next thing will make Tegra profitable, but Tegra has lost money every single year since it started in 2008. It's only that Nvidia makes so much money for GPU's that keeps this turkey afloat. If that GPU profit ever stops growing Tegra will be the first thing on the chopping block. That's what happaned to Intel's smartphone platform.Yojimbo - Friday, May 13, 2016 - link
I'm not certain but I think Tegra may have turned a profit for NVIDIA in FY12 or FY13. There were definitely quarters in there where it was profitable. But, in any case, AMD has lost money every quarter for a while but they're still making stuff. Tesla has lost money for the last several years, ever since it came into existence.And there's absolutely nothing clever about saying that if a company gets into financial trouble that it is going to have less resources to invest towards speculative areas. But in this case you are wrong. The GPU profit could stop growing and that would likely only cause NVIDIA to invest more heavily in automotive. Why? Because automotive is a growth segment and your supposition was that the GPU segment wasn't so attractive as before. They would still have plenty of money to make the investment too, since NVIDIA not only does NVIDIA have plenty of cash and low debt at the moment, your supposition was just that the GPU profits "stopped growing", so they are still bringing new cash in.
But as far as the struggles with the Tegra unit, a lot of it had to due with Qualcomm. Qualcomm was already fined for their practices by China and will probably be facing more punishment in the future by the EU and the US. NVIDIA was not the only company forced out by their practices. Texas Instruments was, too. Icera was trying to get regulatory attention against Qualcomm even before NVIDIA bought Icera. Now that China stepped in, MediaTek and a new Chinese SOC maker which I forget the name of have been able to compete. It takes time to shift focus from mobile to automotive. Yes, I am very optimistic that Tegra will be profitable in perhaps 2 years. it is also a strategically important part of the company even if its margins are lower. It gives them a jumping off point to future possible opportunities. It's a smart endeavor as long as they can make it profitable or at least break even, which I think they can.
lefty2 - Saturday, May 14, 2016 - link
Tegra lost $157M in 2013 and $60M 2012, since then it's gone downhill.Yojimbo - Saturday, May 14, 2016 - link
Until now, now it's going uphill.michael2k - Friday, May 13, 2016 - link
I think it is a good call. I'm not sure they left so much as refused to compete with Intel's contra revenue scheme. Now that Intel has dropped out of the market that leaves an opening for Pascal and Tegra for VR enabled mobile devices, and anyone willing to license a GPU, or build around Pascal.