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
"To this end, NVIDIA specifically mentions that they are getting access to Intel’s “microprocessor” patents, excluding the x86 (and XScale) technologies we previously mentioned."If Intel just needed to license Nvidia's GPU tech, they wouldn't have cross licensed outside of C2D/AGTL+ bus license/chipset license. Notice how before Intel was licencing Nvidia's GPU IP For their C2D/AGTL+ bus license?
Do you think Intel said "here, have access to microprocessor patents AND have money as part of the licensing" when this was also a settlement of a court case where Nvidia was suing for money? And, unlike AMD, NVidia had the money for a long court case. Which, while drawn our could cast more than 1.5 billion when all was said and done?
If when the agreement expires there is a cross license, expect no money changing hands. If Nvidia has no need of any of Intel's CPU patents (possible) than expect Intel to have to pay something. I'm guessing under 100 million/year.
chizow - Friday, May 8, 2015 - link
Again, you don't seem to understand, there is cross-licensing in place, but the LICENSING FEE is the balance of those cross-licenses. Basically, Intel gets more out of the deal than Nvidia, so they make up the difference in licensing fees. That's why its a 5-year annuity rather than a lump sum. Simply put, there is nothing that Nvidia gets from the arrangement from Intel that is equivalent to what Intel is licensing back to Nvidia, so the difference is made up in cash. I mean I don't see how this is hard to understand, if you start with chipset licensing+microprocessor = graphics IP, but you take chipset licensing out of the equation (which was tangible product from Nvidia), what falls out of that equation, and why wouldn't you think this equation holds true once the existing licensing arrangement expires?The ability to pay for court fees is irrelevant since those would be covered when Intel lost along with the possibility of treble damages, not to mention it is unlikely the fees would have amounted to that much anyways.
Intel was simply doing the smart thing and paying fair value on what they were getting from Nvidia with their graphics IP, knowing full well they were about to make a major IGP push. An injunction would've crippled their desktop CPU business since they were already shipping IGP parts by the time this got settled, but this was most likely the reason Havendale was cancelled and Clarkdale delayed for so long.
testbug00 - Friday, May 8, 2015 - link
I forgot to post this in my original reply, but, remember that this was done before before Tegra really fell on it's face and lost marketshare. Nvidia likely predicted HUGE marketshare wins/etc from Tegra. The access to the majority of Intel's CPU patents has certainly helped them. Sadly, they managed to piss off most vendors, and make chips that drew to much power for phones.If the Nvidia/Intel Cross license was signed after Tegra 3 hit the market in this state, I would say that Nvidia deffo would drop Intel's patents and aim for a real GPU license.
chizow - Friday, May 8, 2015 - link
Uh, you need to check your facts again. The Tegra team actually rose from the ashes of the defunct motherboard/chipset/IGP team. So yeah, Tegra has nothing to do with the expectations of this settlement, if anything Tegra only exists because Intel forced Nvidia out of the chipset business, but as a result of the IP licensing deal, they are still funding that team. So yeah, despite the fact Tegra hasn't been a stellar performer in terms of profit, it is certainly easier to justify the expense when Intel is helping to foot the bill, and certainly better to keep talented folks in house rather than lay them off.testbug00 - Monday, May 11, 2015 - link
Er, Tegra itself doesn't. Custom cores sure do. Intel has a lot of patents for CPU design. And, stopping Nvidia's lawsuit due to all the trouble they could have caused again in the EU/etc is well worth 1.5 billion dollars over 6 years...chizow - Wednesday, May 13, 2015 - link
Custom Tegra cores that Nvidia licenses ARM IP from, so again, non-applicable to what they are getting back from Intel. Also, Nvidia bought Transmeta so they also have their own CPU IP. Let's also not forget Nvidia already designs some of the world's most advanced application processors. But fact remains, Intel is clearly getting more out of the licensing arrangement than Nvidia, so they paid the balance in a licensing fee.And of course it made sense for Intel to make the lawsuit go away, especially given they are so clearly in the wrong.
-Intel and Nvidia agreed to cross-license tech, bulk of which was Nvidia GPU IP for Intel chipset IP. No money changes hands, as value of IP is deemed relatively equal.
-Intel rescinds socket license for IMC chips, cripples Nvidia's IGP/chipset business knowing full well they have their own IGP products on the horizon that fully make use of Nvidia IP.
-Intel settles and pays the balance of the licensing agreement over 6 years knowing full well an injunction on Intel IGP capable parts would be crippling to their business, maybe even enough for AMD to get back in the game.
It is obvious that once this agreement expires, it will need to be renegotiated or Intel will have to find another IP vendor and integrate it into all of their IGPs.
Yojimbo - Friday, May 8, 2015 - link
Actually, I've heard that they will...Yojimbo - Friday, May 8, 2015 - link
It ends in a year. FY 2017 Q1 is the last payment I think, or maybe it's FY 2016 Q4. (The quarter just completed is NVIDIA's FY 2016 Q1.)TheJian - Monday, May 11, 2015 - link
It will be replaced by lawsuit victories from samsung/qcom and either settlements etc from IMG.L, Apple etc. Either way all of these will add up to more than Intel who was NOT willful in infringement the way mobile people are, and it still remains to be seen if Intel can get out of payments in the future. In particular samsung has been infringing willfully for 2yrs, not sure about the rest or what negotiations went on between qcom, apple etc, but samsung was named as having known (and blown off) about this for at least 2yrs (when NV started IP licensing efforts). None of these people have any gpu patents (nowhere near what I suspect Intel even has), and Intel lost 1.5B with FAR fewer units sold. Remember that even MS got $4 a pop just for android being on samsung units. 1B+ owed and MS just sued them recently for failing to pay what was owed on ~250mil units. Depending on vendor MS gets $4-15 I guess from infringing code in android per unit. Nobody really knew much until the non-redacted info came out on samsung. MS collects about 7B a year on this crap, so NV should do fairly well and they have three things to point to: 1. Intel and 1.5B+not willful (just due to Intel breaking chipset agreement). 2. MS fees over some code in android. 3. Qcom's agreements that take a % of the ENTIRE device for having their tech inside; meaning they don't just take a price for the modem, they take a fee of the entire device it is sold in.So NV could argue a reasonable fee will include a % of the entire device too, as your phone really doesn't function without the screen's graphics just like it doesn't function without a modem and a major portion of time spent on a phone is gaming. Don't ask me why people do this on a puny screen, but app store sales being mostly games don't lie. I guess people could also be using hdmi out to tv with a gamepad or something.
http://english.caixin.com/2015-02-12/100783598.htm...
China doesn't like Qcom's royalty crap and just shot it down (over % of the entire unit). Not sure how this will play out in USA in the future, but maybe NV comes away with % of unit in USA and plays according to china rules over their. Who knows, but everyone will get stung here to some degree most likely. But even in the china deal, it's still able to charge on a % of 65% of the device (instead of the whole unit). Still seems odd to me you can even do this, I mean I sell you a chip and that is it here so why do I get to charge you on the whole unit which is comprise of tons of crap not even made by me? Whatever, it bodes well for NV's case. Qcom's patent royalties alone are 7.6B a year in that article (probably higher now, I haven't looked recently, note most of that is modem). Arberl says they'll still charge on the whole unit price in that article, so who knows how this works out in china for them. The article is a bit confusing to say the least with qcom's own comments being [seemingly] opposite of the verdict...LOL. The point here I guess, is it shouldn't hurt NV much as other income comes in, from suits, subscriptions, grid, console, auto etc.
testbug00 - Monday, May 11, 2015 - link
First off, Qualcomm, Samsung, Imagination Tech, ARM and many other companies Nvidai will likely end up suing ALL have GPU patents. Well, they won't sue ARM, but, everyone who uses Mali graphics probably. Qualcomm and Samsung both have GPU patents. Qualcomm likely quite a lot.Depends on how much you value the patents. And, how much Nvidia asked for. And, if Nvidia negotiated in good faith. And if the patents are valid and apply to these cases. If NVidia was confident in their cases Apple and Imagination Tech would be sued currently.
IF NVidai licensed to them we would also know as they would say got 1-2 big licenses/got Apple and Imagination. Haven't seen anything that would make these valid. Hence, I'm a bit dubious. No one at all in the industry accepted the license? Not even a small chinese manufacturer or something? If it was industry standard it would let them get a large GPU advantage for a low cost, although, price is king in their SoCs, so, that could be a problem. Most SoCs that make their way to phones aimed more at the west have huge SoCs.
Anyhow, I don't see anything that confirms Nvidia's patents holding for a license. Or holding up at all. If they do, good for Nvidia. It gets more years to transition into hopefully something beyond GPUs. Tegra doesn't seem to be working out to great.