This week NVIDIA announced their earnings for the first quarter of their 2020 fiscal year, and although the crash in crypto-currency has been a boom for gamers wanting to buy GPUs, it has not been as welcome to the company’s Form 10-Q. Revenue for Q1 2020 fell 31% to $2.22 billion, with gross margin falling 6.1% from 64.5% to 58.4%. Operating expenses at the company were up 21% despite the downturn in revenue, with NVIDIA spending $132 million more this quarter on R&D than the same period a year ago. Operating income was down 72% to $358 million, although thanks to $44 million in interest income and $5 million in income tax benefit, net income came in at $394 million. Even though net was higher than operating, net was still down 68% compared to Q1 2019. This resulted in earnings-per-share of $0.64, down 68% from the $1.98 a year ago.

NVIDIA Q1 2020 Financial Results (GAAP)
  Q1'2020 Q4'2019 Q1'2019 Q/Q Y/Y
Revenue $2220M $2205M $3207M +1% -31%
Gross Margin 58.4% 54.7% 64.5% +3.7% -6.1%
Operating Income $358M $294M $1295M +22% -72%
Net Income $394M $567M $1244M -31% -68%
EPS $0.64 $0.92 $1.98 -30% -68%

Although seeing such a drop is never good, some perspective is required. NVIDIA’s 2019 fiscal year was a standout. Revenue in Q1 2019 was $3.2 billion, with a net income of $1.2 billion. But if you go back to Q1 2018, revenue was $1.9 billion, and net income was $507 million, which is much closer to Q1 2020. Comparing Q1 2018 to Q1 2020 has 2020 up 14.6% on revenue, and net income down 28.6%. Clearly the inflated results thanks to a perfect storm for NVIDIA’s 2019 financials has ended though, and the company has been thrust back to reality. Luckily reality for the company is that a Q1 of $2.2 billion makes it easily their second best Q1 ever, so I think they’ll be OK.

Jumping into individual segments within the company, there are basically two products NVIDIA sells: GPU and Tegra. NVIDIA further breaks these down into subcategories, but NVIDIA at its heart is still a GPU company and its results prove that out. GPU revenue accounted for 91% of the company’s revenue, at $2.022 billion USD, and this segment had an operating income of $669 million. A year ago when crypto was king, GPU was $2.765 billion in revenue with an operating income of $1.394 billion. Revenue for GPU was down due to drops in gaming and data center revenue, as well as not having $289 million in revenue for cryptocurrency mining processors (CMP).

 Tegra on the other hand was only $198 million in revenue for Q1 2020, with an operating loss of $44 million. A year ago, Tegra was $442 million in revenue and the segment was in the black, with an operating income of $97 million. The big drop for Tegra is a decline in SoC modules for gaming, which you can read as Nintendo Switch sales for the most part.

NVIDIA then shuffles all of these results into several other categories. Gaming is their largest, and Gaming had revenue of $1.05 billion, which is down 39% from a year ago. NVIDIA attributes this drop due to a decline in GPU shipments as well as a decline in SoC modules for gaming consoles.

Professional Visualization, which features the Quadro brand, had revenue of $266 million, up 6% from a year ago. NVIDIA has seen growth in both desktop and laptop workstation products compared to 2019.

Data Center had revenue for Q1 of $634 million, which is down 10% from a year ago. NVIDIA has seen some slowdown in the hyperscale and enterprise purchases of GPUs, but some growth in inference which has offset the drop somewhat.

Automotive had revenue of $166 million, up 14% from a year ago, attributed to growth in AI cockpit modules.

Finally, OEM and Other revenue was $99 million, down 74% from a year ago, which is not surprising since this is where NVIDIA stuck it’s CMP sales, meaning this entire drop can be attributed directly to cryptocurrency.

NVIDIA Quarterly Revenue Comparison (GAAP)
($ in millions)
In millions Q1'2020 Q4'2019 Q1'2019 Q/Q Y/Y
Gaming $1055 $954 $1723 +11% -39%
Professional Visualization $266 $293 $251 -9% +6%
Datacenter $634 $679 $701 -7% +10%
Automotive $166 $163 $145 +2% +14%
OEM & IP $99 $116 $387 -15% -74%

After a stellar FY 2019, the company has had to hit reset a bit. Q1 is well down compared to 2019, but luckily for the company, not so far off the year previous. Looking ahead to Q2 2020, NVIDIA is expecting revenue of $2.55 billion, plus or minus 2%, and gross margins 59.2% plus or minus 0.5%.

Source: NVIDIA Investor Relations

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  • Dribble - Monday, May 20, 2019 - link

    Well I could say how if AMD made consistently competitive cards, learned how to do a good release so everything worked in week 1 and didn't take a year to fix the issues, and got more of their features from power point to being actually useful then over time people would switch to AMD. Right now they are simply much worse at that then Nvidia.

    ...but every AMD fan would just respond about how AMD is always brilliant, and look at how badly Nvidia has messed up and so on ....

    ...then they'd all go back to complaining no one buys AMD cards and saying there is no reason why except some grand conspiracy to keep AMD down.
    Reply
  • RSAUser - Sunday, May 19, 2019 - link

    Very few buy the top end cards, what you need of the top end cards is brand reputation.

    Nvidia has just made entry level cards so expensive that the second hand market is too attractive, and it will stay like that unless they do something interesting.

    If you look at the shift, we went from 970 most buy, to 1060, to probably 1660 or whatever lower one will come within the same price bracket. Most gamers are at 1080p, and we'll save that penny.
    Reply
  • Ithaqua - Saturday, May 18, 2019 - link

    Q1 2020? Ummmmm ... Brett can they loan you their time-machine? Reply
  • FSWKU - Saturday, May 18, 2019 - link

    Fiscal Years are identified by the year in which they end. So FY2020 is correct. Reply
  • Guspaz - Saturday, May 18, 2019 - link

    It’s still the company’s choice when those dates fall, and it doesn’t make it any less silly that nvidia chose to start their fiscal year near the start of the previous calendar year. That rule normally just explains why Q1 of a fiscal year might start in the end of the prior calendar year, not why Q1 of fiscal 2020 might start in Q1 of 2019. Reply
  • Lord of the Bored - Saturday, May 18, 2019 - link

    Probably some hare-brained accounting in the past to pad some numbers somewhere. At least they've shifted their fiscal year as far forward as they can now... I HOPE they've shifted it as far as they can, anyways. Reply
  • FSWKU - Saturday, May 18, 2019 - link

    It all depends on when they see it as beneficial for them. They can shift it to any 12-month period they want on a whim. It's their tax year that would need IRS (or relevant national authority) approval to change. But February-January isn't terribly uncommon, nor is April-March (New York State, Japan). I've seen plenty that start in the first calendar quarter of the "previous" year. Coincidentally, Best Buy (*spits on ground*) runs theirs from February to January as well, although it used to be April-March. Oracle runs June-May, but the name also stands for "One Rich Asshole Called Larry Ellison." Reply
  • TristanSDX - Saturday, May 18, 2019 - link

    NV gaming on rise, until Navi is released ? Navi may stir in lower segments (from GF 1660 to GF 2060) Reply
  • RaV[666] - Saturday, May 18, 2019 - link

    Uhm.
    Am i braindead ot r something.This whole article looks like it was written in 2020.
    "After a stellar FY 2019, the company has had to hit reset a bit. Q1 is well down compared to 2019,"
    We ARE in 2019.What am i missing, i see data from Q1 2020 and Q4 2019.What the hell.
    Reply
  • benzosaurus - Saturday, May 18, 2019 - link

    Fiscal years aren’t the same as calendar years. In Nvidia's case the fiscal year designated 2019 ends around the end of calendar Q1 2019, so is mostly in calendar 2018. Reply

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