NVIDIA announced its earnings this afternoon for the second quarter of their 2018 fiscal year (not a typo). As we’ve seen over the past several quarters, NVIDIA has been growing their business at a very brisk pace, and that growth was reflected in their earnings statement once again. For the second quarter, ending July 30, NVIDIA reported revenues of $2.23 billion, up 56% from a year ago. Gross margin was up half a percent as well to 58.4%. When revenue is up, and margins are up, it should perhaps not be a shock that operating income also jumped, in this case to $688 million, which is up 117% compared to Q2 2017. Net income was $583 million, up 123% year-over-year, and that resulted in earnings per share of $0.92, up 124% from the $0.41 a year ago. Sometimes these large jumps can be attributed to write-downs or other charges in the compared quarter, but in fact Q2 2017 was also a record for the company, after they took a write down charge for the Icera modem division two years ago.

NVIDIA Q2 2018 Financial Results (GAAP)
  Q2'2018 Q1'2018 Q2'2017 Q/Q Y/Y
Revenue (in millions USD) $2230 $1937 $1428 +15.1% +56.2%
Gross Margin 58.4% 59.4% 57.8% -1.7% +1.0%
Operating Income (in millions USD) $688 $554 $317 +24.2% +117.0%
Net Income $583 $507 $261 +15.0 +123.4%
EPS $0.92 $0.79 $0.41 +16.4% +124.4%

NVIDIA’s gaming segment continues to be their largest source of revenue, even as they have diversified the company, and despite the contraction of the PC market, PC gaming still appears to be a strong business, and NVIDIA has taken advantage of that. For the quarter, NVIDIA had gaming revenue of $1.186 billion, compared to $781 million a year ago. They’ve not launched anything that’s completely new this quarter, but are still seeing success with their Pascal based GPUs. This growth can also likely be attributed to mining, but to NVIDIA, a GeForce sale goes in the gaming column.

Professional visualization is likely still one of the higher margin divisions of NVIDIA, even as they’ve seen this group surpassed by several other divisions in the company. The Professional Visualization revenue grew 13.5%, which is actually pretty solid growth, but it can seem a bit diminutive compared to some of the other growth in the company.

Datacenter has quickly become one of NVIDIA’s biggest sources of revenue. A year ago, it accounted for just under 11% of the company’s revenue, but for Q2 2018, revenue is up 175% to $416 million. This once small segment of NVIDIA now accounts for almost 19% of their revenue, and with the acceleration of AI and compute tasks in the datacenter, the company appears to be in a prime position to continue to capitalize on that trend.

Automotive is the segment that emerged out of NVIDIA’s unsuccessful attempt to move into mobile. It continues to grow as well, with NVIDIA signing agreements with many of the largest automotive companies to include their technology in new vehicles. In May of this year, NVIDIA announced that Toyota will utilize their DRIVE PX platform, to join the party with other companies such as Volvo. Revenues for this segment grew 19.3% to $142 million this quarter, compared to Q2 2017.

Finally, NVIDIA’s OEM and IP segment had a big jump in revenue as well, from $163 million a year ago to $251 million today. That’s a 54% increase.

NVIDIA Quarterly Revenue Comparison (GAAP)
In millions Q2'2018 Q1'2018 Q2'2017 Q/Q Y/Y
Gaming $1186 $1027 $781 +15.5% +51.9%
Professional Visualization $235 $205 $214 +14.6% +9.8%
Datacenter $416 $409 $151 +1.7% +175.5%
Automotive $142 $140 $119 +1.4% +19.3%
OEM & IP $251 $156 $163 +60.9 +54.0%

Looking ahead to Q3 2018, NVIDIA sees their record year continuing, with expected revenues of $2.35 billion, plus or minus 2%, and margins between 58.1% and 59.1%.

Source: NVIDIA Investor Relations

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  • JKflipflop98 - Friday, August 11, 2017 - link

    Please just stop. You obviously need to do more reading and less talking.
  • smilingcrow - Friday, August 11, 2017 - link

    If they'd given the consumer gaming cards more compute they'd have sold better to miners but worse to gamers.
    Mining is a lot less of a stable source of income than gaming as the whole thing could fall apart if the price falls through the floor for a long period.
    So I think Nvidia called it right and focused on a stable market and their results show that.
    If mining continues to make large profits Nvidia could design a chip just for that as they have the capital to do that.
  • dgingeri - Friday, August 11, 2017 - link

    I would rather have the option to do some minor cryptocurrency mining when my system is not being used for gaming. That's all. AMD users do have that option.
  • CiccioB - Friday, August 11, 2017 - link

    Nvidia user have too.
    A GTX1070 computes exactly as a 580 as they have both the same memory bandwidth and latency.
    The GP106 on GTX1060 that you think is crippled is actually a smaller, less energy hungry with slower and narrower memory controller which develops less TFLOPS than AMD Polaris 10.
  • smilingcrow - Saturday, August 12, 2017 - link

    Of course that is the choice, go for a better gaming card or a mining card.
    Do you prefer gaming or gambling?
    Pick your favourite sin then burn in hell, in glorious 3D! :(
  • TheJian - Sunday, August 13, 2017 - link

    ROFL. Stock up from $20-160 in very short time. To steal trumps words, you're fired :) As a business, they are doing EXACTLY what they should do. AMD should pay attention to how both Intel and NV PRICE their stuff and avoid price wars any time they can (unlike AMD, who seems to invite them).

    If they took your route, market segmentation destroyed, margins destroyed, net income destroyed. Oh and stock price canned. No, no point in that crap.

    Why would I care about compute in a gaming card? Oh you want both so you get a better deal? Not their job to be your friend. Sure I'd love that card too, but if I was them, I'd act exactly the same way because that is their job (to make as much as possible). Maximize profits from R&D.

    Cutting off crap most don't use at home is smart and produces more profit. Why sell 100% of the market die space that only 10% use? The numbers here are not exact but you should get the point. You want a PRO card? BUY one. You want mainstream pricing to go up and nvidia profit down? Ask them to act like AMD. You will see NV stock plunge and profit, R&D, etc all down with it. Why do you think AMD makes NOTHING (well, is MAKING a loss, making something?) even when launching a whole new product line? Even the new cpus look like they only got SOME pricing right. They came in with new GREAT tech, and then price war...ROFL. STUPID. They should have just barely undercut the enemy, which would have not gotten such a large response from Intel (chipset insta-death, kaby insta-death, massive price drops etc). Intel would have waited to see how much you could steal before responding if pricing was at least where they could still make good money. AMD would have maximized profits then, but instead they chose to force a price war...LOL. I'll say it again, management should be fired.

    As a customer, great pricing AMD...LOL. As a business...YOU'RE ALL FIRED MANAGEMENT! A full quarter into new cpu sales, still no INCOME...LOL. It should have been a few hundred million this Q and a billion next as server crap rolls out and 2B next year. Stupid. Hopefully they get the server stuff priced right. If intel's server chips' equivalent is $5000, yours should be $4500, not $2000 or whatever...ROFL. Heck if you chip is BEATING his in more than half the stuff you should be MORE than Intel's price! People PAY for perf, just ask Intel and NV how their high end stuff is doing...If you're better than the competition ALWAYS charge like it.

    One more point, only buy companies that get this crap. Then you don't care about pricing. My chips/upgrades are completely free this year (next year too...etc LOL). NVDA/MU (still have much MU) bought me many things this year and micron will likely be $60 in the next 2yrs and maybe even $100 as they move into stealing enterprise drives and at some point home drives massively too. WD just took their first hit, but those will keep coming to some extent for a while.
  • tuxRoller - Friday, August 11, 2017 - link

    58% gross margin! That's insane
  • BedfordTim - Friday, August 11, 2017 - link

    That is about right for a healthy business. That margin needs to cover investment in future products as well as profits.
    Other successful companies such as Intel operate on similar margins.
  • JKflipflop98 - Friday, August 11, 2017 - link

    What? Most businesses on Earth would KILL to have a 15% profit margin. KILL. Anything over a 50% profit margin is INSANE!
  • iwod - Sunday, August 13, 2017 - link

    Do some research yourself. Most business properly have more the 15% Gross Profit Margin, What you are thinking is likely Net Profit Margin.

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