NVIDIA Announces Q3 FY 2020 Earningsby Brett Howse on November 14, 2019 9:00 PM EST
- Posted in
- Financial Results
Today NVIDIA announced their results for the third quarter of their 2020 fiscal year, and the company’s results took a hit compared to their Q3 2019 results with earnings of $3.014 billion this quarter, down 5% year-over-year. Gross margin was up though to a very healthy 63.6%, up 3.2% from a year ago. Operating income was down 12% to $927 million, with net income down 27% to $899 million. Earnings-per-share fell to $1.45, down 26% from $1.97 a year ago.
|NVIDIA Q3 2020 Financial Results (GAAP)|
NVIDIA breaks its business into two high-level categories, with GPU and Tegra. GPU revenue was down 8% to $2.565 million, while Tegra was up 10% to $449 million.
Breaking these down into markets, NVIDIA’s Gaming revenue was down 6% to $1.659 billion, with NVIDIA attributing this to a decline in desktop GPU sales. A year ago, NVIDIA launched their Turing platform, meaning they are now a year into their latest platform, with sales not quite as high as when it launched. However, the desktop GPU sales drop was partially offset by increased notebook GPUs as well as gaming platform SoCs.
Professional Visualization set a record for revenue, up 6% from a year ago and coming in at $324 million. NVIDIA has stated that they’ve had strong sales in mobile workstation products.
Data Center revenue was down 8% to $726 million. NVIDIA has seen lower enterprise revenue, and sales of products with lower margins than some of their top-tier datacenter products, but this drop was partially offset by increased hyperscale demand.
Automotive revenue was down 6% to $162 million, with lower sales of autonomous vehicle solutions and legacy infotainment modules being singled out, but growth in AI cockpit solutions helped stem the decline.
Finally, OEM and Other revenue was $143 million, down 3% from a year ago.
|NVIDIA Quarterly Revenue Comparison (GAAP)
($ in millions)
|OEM & IP||$143||$111||$148||+29%||-3%|
NVIDIA has been riding a large wave of success over the last several years, and the company has diversified itself significantly, but the last couple of quarters have seen the company fall back to earth somewhat. But with strong margins, they are investing heavily in R&D, with $53 million more spent in this quarter than a year ago, and for first nine months of their 2020 fiscal year, they’ve spent and additional $163 million so far, bringing the total for 2020 to $400 million.
Looking ahead to Q4, NVIDIA is expecting revenue of $2.95 billion, plus or minus 2% with a gross margin of 64.1%, plus or minus 0.5%.
Source: NVIDIA Investor Relations
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michael2k - Friday, November 15, 2019 - linkSEC explains: https://www.sec.gov/reportspubs/investor-publicati...
The raw data from NVIDIA is here: https://nvidianews.nvidia.com/news/nvidia-announce...
Gross Margin is net revenue, unreported here, minus cost of goods, also not reported here, divided by net revenue (NR - COGS)/NR == Gross Margin; that means cost of goods is $1,097m
So Gross Profit is NR - COGS = $1,917m
Operating Expenses is cost associated with research, development, marketing, etc, and is $989; subtract it from Gross Profit and you have Operating Income. There is a rounding error, but $1,917m - $989m = $928m (or as NVIDIA reports it, $927m operating income)
So to get to their Net Income of $899m, you subtract interest and taxes paid, unreported here, but the difference in Operating Income and Net Income is $28m, so that means NVIDIA paid $28m in interest and taxes for the quarter.
Tada! That's how they got a 63% gross margin and $899 of net income
Given we have Operating Income and Operating Expenses, we can add those two to get Net Revenue, or $1,916m
eva02langley - Friday, November 15, 2019 - linkROFL... another genius... no, what I don't understand is how little money they make after all the cost of the company... after such high margins.
What it means is that management is having issues somewhere.
Alistair - Friday, November 15, 2019 - linkBe nice. He explained it to you. Gross margins are not what you seem to think they are. nVidia isn't a grocery store.
michael2k - Friday, November 15, 2019 - linkMan, wait till you see AMD's bottom line then!
Gross Margin: 43%
COG: $1,026m (so roughly the same as NVIDIA)
Gross Profit: $774m (so 40% of NVIDIA)
Operating Expense: $591m (59% of NVIDIA)
Operating Income: $186m (20% of NVIDIA)
Interest + Taxes: $66m (2.35x NVIDIA, indicative of how much AMD borrows)
Net Income: $120m
The report outlines paying $24m in interest, $36m in other expenses, but doesn't explain where the other $20m is spent; in the same report they list liabilities, or money they owe that they haven't paid out yet. They currently own $872m in long term debt, $201m in lease operations, $140m in other long term liabilities, and $7,265 in accumulated deficit (or, debt they have accumulated over several years as operating losses continue to accumulate faster than cash flow can pay them out)
You can also look at NVIDIA's liabilities too:
They actually generated $45m interest income, and owned $13m in interest, for a net positive. Long term debt is $1,990m, lease is $469m, and other is $662, all at least twice AMD, but no accumulated deficit; meaning, they don't owe people money they haven't been able to pay.
If you want to compare their 'cash', necessary when deciding to purchase a company, license IP, or create a new product, NVIDIA has $9,769m to AMD's $1,156m, and both have comparable inventory (an asset if not too large or too old) at $1,040m for AMD and $1,047m for NVIDIA, which would mean current GPU and CPU and not old/discounted/unsold stock.
Or, TLDR; if you think NVIDIA makes 'little money', you'll like how much less money AMD makes.
Phynaz - Saturday, November 16, 2019 - linkRofl, you just owned yourself again you fucking moron.
willis936 - Friday, November 15, 2019 - linkThe same story for the past ten years. We need competition in the GPU space. Will ATI ever step up?
Holliday75 - Friday, November 15, 2019 - linkATI will step up when 3dfx does.
crimsonson - Friday, November 15, 2019 - linklol
Beaver M. - Friday, November 15, 2019 - linkEasily seen how successful Nvidia with Turing really is if you compare the adaption of Turning with the older ones on Steam via the Steam survey for every month after their release.
Even now, over one year later, Turing cards have laughable percentages. Pascal and Maxwell were adapted MUCH MUCH faster and MUCH MUCH more numerously.
Their stock has also only recovered 50% after the huge dip caused by the Turing disaster. And it also doesnt look very stable.
With all those facts I wouldnt invest in Nvidia right now. Maybe their next generation fixes it by having a massive performance gain and much lower prices.
michael2k - Friday, November 15, 2019 - linkHAHA. You mean massive performance gain and much higher prices, right?
Because the only way to see much lower prices is if AMD had an even larger performance gain.