NVIDIA Announces FY 2016 Q1 Financial Results
by Brett Howse on May 7, 2015 11:10 PM EST- Posted in
- GPUs
- NVIDIA
- Financial Results
Today NVIDIA released their earnings for quarter one of their 2016 fiscal year (and no, that’s not a typo, NVIDIA is almost a full calendar year ahead with their fiscal year) and revenue was up for the quarter 4% over the same period last year, coming in at $1.151 billion. NVIDIA had a record quarter for gross margin, with 56.7% this quarter. However net income was down 2% to $134 million. Compared to Q4 2015, revenue was down 8% and net income was down 31% due to the seasonal nature of the GPU market. Earnings per share came in at $0.24, which is flat year-over-year.
| NVIDIA Q1 2016 Financial Results (GAAP) | |||||
| Q1'2016 | Q4'2015 | Q1'2015 | Q/Q | Y/Y | |
| Revenue (in millions USD) | $1151 | $1251 | $1103 | -8% | +4% |
| Gross Margin | 56.7% | 55.9% | 54.8% | +0.8% | +1.9% |
| Operating Expenses (in millions USD) | $477 | $468 | $453 | +2% | +5% |
| Net Income | $134 | $193 | $137 | -31% | -2% |
| EPS | $0.24 | $0.35 | $0.24 | -31% | flat |
One of the things that will be impacting their financials for fiscal year 2016 is the winding down of the Icera modem operations. The company is open to sales, but regardless it is expecting restructuring charges of $100 to $125 million. It will re-invest the money it had been using for modems and put it into deep learning, self-driving cars, and gaming, which are all areas where NVIDIA has seen some success at (I’ve heard they are known for gaming even).
NVIDIA has also announced Non-GAAP results which exclude stock-based compensation, acquisition costs, interest, and taxes on these items. On a Non-GAAP basis, gross margin was 56.9%, and net income was $187 million, which is up 13% year-over-year. Non-GAAP earnings per share came in at $0.33.
| NVIDIA Q1 2016 Financial Results (Non-GAAP) | |||||
| Q1'2016 | Q4'2015 | Q1'2015 | Q/Q | Y/Y | |
| Revenue (in millions USD) | $1151 | $1251 | $1103 | -8% | +4% |
| Gross Margin | 56.9% | 56.2% | 55.1% | +0.7% | +1.8% |
| Operating Expenses (in millions USD) | $425 | $420 | $411 | +1% | +3% |
| Net Income | $187 | $241 | $166 | -22% | +13% |
| EPS | $0.33 | $0.43 | $0.29 | -23% | +14% |
Breaking the results down into the individual segments, the GPU unit accounts for the bulk of the revenue for the company. GPU revenues were up 5% year-over-year, coming in at $940 million for Q1. They attribute this to revenue from GeForce gaming desktops and notebooks growing 14% with strength in their Maxwell GPUs being one of the keys. Notebooks have also been a source of strength, and although they did not release numbers, notebook GPU sales were “well above year-ago levels”. Tesla GPUs also increase due to project wins with cloud service providers, but the Quadro line of professional graphics declined.
| NVIDIA Quarterly Revenue Comparison (GAAP) | |||||
| In millions | Q1'2016 | Q4'2015 | Q1'2015 | Q/Q | Y/Y |
| GPU | $940 | $1073 | $898 | -12% | +5% |
| Tegra Processor | $145 | $112 | $139 | +29% | +4% |
| Other | $66 | $66 | $66 | flat | flat |
Tegra, once the tablet and possible smartphone SoC, has found its niche is the automotive infotainment field, but it is also the SoC inside SHIELD devices sold by NVIDIA. Revenue for Tegra was up 4% year-over-year, and up 29% as compared to Q4 2015, which was attributed to automotive systems and development services.
The final piece of NVIDIA’s pie is their licensing agreement with Intel, which is the standard $66 million per quarter.
For Q2, projections are revenue of $1.01 billion, plus or minus two percent, and gross margins of 55.7% plus or minus 0.5%.
It was another good quarter for NVIDIA, and during the quarter they launched the TITAN X GPU, as well as the NVIDIA SHIELD set top box. Yesterday, AMD announced that they will have a new GPU coming out this quarter, so it will be awesome to see how that plays out in the never ending GPU battle.
Source: NVIDIA Investor Relations
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testbug00 - Friday, May 8, 2015 - link
The licensing fee is more to end Nvidia's lawsuit. I'm guessing it will be renegotiated as a free cross-license both ways. Nvidia's lawsuit about FSB and chipsets isn't going to happen again.And, think of it has 25-50% of it's profit. It hurts a lot more. In some quarters, it has been more than 50% even.
chizow - Friday, May 8, 2015 - link
Asked below, but again, what IP is Nvidia getting back in that free cross-licensing deal?Yojimbo - Friday, May 8, 2015 - link
That licensing agreement gives Intel those patents in perpetuum, I believe. So unless they want access to newer patents they don't have to sign a new deal.chizow - Wednesday, May 13, 2015 - link
Do you have a link for this? Everything I have read including the non-redacted portions of the settlement indicate the cross-licensing agreement ends and will need to be renegotiated. Indeed, the last settlement came just as the previous one expired. No where in the settlement language does it state Nvidia assigns their IP to Intel in perpetuum, in fact it is clearly stated it is a negotiated license fee that lasts for 6 years.tviceman - Friday, May 8, 2015 - link
Intel won't get to keep using Nvidia's patents for free when their licensing deal expires.chizow - Friday, May 8, 2015 - link
Exactly, it'll be interesting to see what happens here though. I've thought for some time Intel and even Apple might be prime candidates to take Nvidia up on their GPU IP licensing offer. Intel especially given they already pay for Nvidia IP, and it is really old IP at that. Apple I've felt is waiting for the litigation to settle with Samsung/Qualcomm, but it is pretty interesting to note Apple was never named in those original law suits.No guarantee Intel re-signs with Nvidia though, I guess their options are to keep close to status quo, bump up their licensing to Nvidia's top-tier IP (Maxwell), or go really risky with someone else like Imagination or even AMD. Imagine Intel IGP with Maxwell-class mobile IP though! Wow that would really close the gap on AMD in the IGP department in a hurry.
testbug00 - Friday, May 8, 2015 - link
The only reason why Nvidia signed it was that it was part of the deal to get Nvidia to drop it's chipset lawsuit. The licensing part will likely become a free cross-license. Like what AMD and Intel/AMD and Nvidia have.For information about why the licensing was done and WHAT the 1.5 billion dollars was for: http://www.anandtech.com/show/4122/intel-settles-w...
The 1.5 billion dollars is for the settlement of the suite, it was tied into the cross licensing. Likely Nvidia hopes to try to make Intel pay for it's patents once it expires, but, the odds of that happening are slim. Intel will crush Nvidia in court on that front.
Another way to look at it is that Intel paid Nvidia 1.5 billion dollars to stop any x86 plays.
testbug00 - Friday, May 8, 2015 - link
Er, what I say "the only reason why Nvidia signed..." I mean 'The only reason why Intel signed..." oops! Sorry! :Schizow - Friday, May 8, 2015 - link
Well, in what is becoming a recurring theme, I disagree with you. :)The cross-licensing portion was Nvidia IP for Intel's chipset/socket. When Intel blocked Nvidia from making a chipset beginning with X58/Nehalem, that agreement was broken. Intel was continuing to benefit from Intel IP and Nvidia sought recourse. The $1.5Bn was simply that, Intel is paying for Nvidia IP now that they no longer benefit from Intel IP.
Now, what Intel IP is Nvidia benefitting from in this cross-licensing agreement that would change the scale and balance to outweigh the IP that Intel uses in every single one of the millions of CPUs with IGPs that they sell each and every year? Answer: none.
So yeah, Intel will need to renegotiate or find another IP vendor, both are certainly on the table.
chizow - Friday, May 8, 2015 - link
First paragraph should read:Intel was continuing to benefit from Nvidia IP and Nvidia sought recourse. The $1.5Bn was simply that, Intel is paying for Nvidia IP now that Nvidia no longer benefits from Intel IP.