This afternoon, NVIDIA announced their quarterly earnings for the second quarter of their 2017 fiscal year, which ended July 31. NVIDIA had record revenues for the quarter, coming in at $1.43 billion, which is up 24% from a year ago. Gross margin for the quarter was 57.9%, up 2.9% from a year ago, while operating expenses fell 9% to $509 million. Operating income for the quarter was $317 million, up 317% from Q2 2016 where it was just $76 million due to a write-down of the Icera modem division. This also impacted net income, which was up 873% to $253 million, and earnings per share of $0.40 was up 700% compared to the Q2 2016 results.

NVIDIA Q2 2017 Financial Results (GAAP)
  Q2'2017 Q1'2017 Q2'2016 Q/Q Y/Y
Revenue (in millions USD) $1428 $1305 $1153 +9% +24%
Gross Margin 57.9% 57.5% 55.0% +0.4% +2.9%
Operating Income (in millions USD) $317 $245 $76 +29% +317%
Net Income $253 $196 $26 +29% +873%
EPS $0.40 $0.33 $0.05 +21% +700%

NVIDIA also released Non-GAAP measures, which “exclude stock-based compensation, legal settlement costs, product warranty charge, acquisition-related costs, contributions, restructuring and other charges, gains from non-affiliated investments, interest expense related to amortization of debt discount, and the associated tax impact of these items, where applicable” and therefore don’t factor in the Icera write-down. In Non-GAAP measures, revenue was the same $1.428 billion, and gross margin was 58.1% which was up 1.5% from the Q2 2016 Non-GAAP results. Operating income was up 65% to $328 million, and net income was up the same 65% to $313 million. Earnings per share were up 56% to $0.53 compared to last year’s Non-GAAP results.

NVIDIA Q2 2017 Financial Results (Non-GAAP)
  Q2'2017 Q1'2017 Q2'2016 Q/Q Y/Y
Revenue (in millions USD) $1428 $1305 $1153 +9% +24%
Gross Margin 58.1% 58.6% 56.6% -0.5% +1.5%
Operating Income (in millions USD) $382 $322 $231 +19% +65%
Net Income $313 $263 $190 +19% +65%
EPS $0.53 $0.46 $0.34 +15% +56%

At the heart of this is NVIDIA’s GPU business, which has diversified quite a bit over the last several years. For Q2 2017, NVIDIA’s GPU business brought in $1.196 billion in revenue, up 18% from last year and up 14% over last quarter. NVIDIA’s Tegra platform, which is primarily automotive now, but still powering a couple of consumer devices like the SHIELD Tablet K1 and the SHIELD Android TV, brought in revenues of $166 million, which is up 30% from a year ago. NVIDIA’s “other” category is the $66 million they report per quarter for the payment from Intel for licensing.

Broken down by market, gaming is still the largest market for NVIDIA, with revenues of $781 million attributed to gaming, which is up 18% year-over-year. This has been spurred by the recent releases of their latest Pascal GPUs for the desktop, which hold the current performance crown with the move to a new FinFET node. Professional Visualization brought in $214 million, up 22% from a year ago, and NVIDIA just announced Pascal based Quadro cards as well, so I would expect this growth to continue if Quadro matches GeForce. The Datacenter revenue had the biggest jump, up 110% year-over-year to $151 million, and NVIDIA has put a lot of effort and marketing into deep learning to achieve this kind of growth. Automotive accounted for $119 million in revenue, up 68% from a year ago, and NVIDIA’s OEM and IP market was the only one to see a small loss of 6% revenue compared to last year, down to $163 million.

NVIDIA Quarterly Revenue Comparison (GAAP)
In millions Q2'2017 Q1'2017 Q2'2016 Q/Q Y/Y
GPU $1196 $1079 $959 +11% +25%
Tegra Processor $166 $160 $128 +4% +30%
Other $66 $66 $66 flat flat

For next quarter, NVIDIA is expecting revenues of $1.68 billion, plus or minus 2%, with GAAP margins of 57.8% and non-GAAP margins of 58.0%, plus or minus 0.5%.

With record revenue, a more diversified platform, and the current GPU performance crown, NVIDIA has been easily outperforming the PC market with their strong focus on one of the few bright spots in the PC market – gaming. We’ve seen several companies transition to practically only selling gaming computers, and that is because of the higher margins and strong sales they’ve seen. NVIDIA has been riding this wave with successful launches of it’s Maxwell products, and now Pascal.

Source: NVIDIA Investor Relations

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  • Ian Cutress - Friday, August 12, 2016 - link

    If you believe digitimes from a while back, MSI's profit is 90% notebook, 10% GPU and significantly minor for MB, embedded and other. Makes you wonder why they don't just drop MB, but it helps them keep an ecosystem of the gaming philosophy
  • yannigr2 - Friday, August 12, 2016 - link

    Founders Edition financials.
  • Achaios - Friday, August 12, 2016 - link

    Intel and Nvidia are running a Monopoly on the market of CPU's and GPU's, respectively. This is bad for the lemmings, aka end users who get overcharged.

    After seeing Nvidia's profits, I am led to believe that Intel and Nvidia somehow control AMD ensuring that they release only inferior products that will pose very little challenge to their own, thus making sure that their profits remain exceedingly high.

    AMD is a corpse that NVIDIA and Intel keep alive artificially in an Intensive Care Unit for the sole purpose of evading potential Monopoly charges.
  • Michael Bay - Friday, August 12, 2016 - link

    Ah, so intel is to blame for years of lackluster AMD processors on all fronts, got it.
  • willis936 - Friday, August 12, 2016 - link

    Arguably yes. Read about AMD v. Intel.
  • Gigaplex - Monday, August 15, 2016 - link

    Through anti-competitive behaviour that starved AMD of precious R&D funds during a critical juncture, Intel certainly contributed to that issue. And Intel lost the lawsuit over this matter. AMD had their own missteps too, though.
  • DPUser - Friday, August 12, 2016 - link

    DO i have this right?

    Intel = CPU
    AMD = ICU
  • aryonoco - Friday, August 12, 2016 - link

    Fantastic results overall, but if I am to nitpick, it's amazing how little Tegra revenue is growing.

    Remember Jen-Hsun Huang saying circa 2011 that Tegra should soon be a billion dollar business (i.e, 1 billion dollar a year revenue). Five years later, they are nowhere near that yet. I guess on the positive side the business had a good quarter, and at least Nvidia still seems committed to it and hasn't thrown in the towel (like TI or Intel).

    Will be interesting to see how much Nvidia will grow in the datacentre over the coming couple of years. I think once POWER 9 comes along with its tight integration with NV Link, things should get pretty interesting.

    All in all, if I was in the market, I'd take a serious look at Nvidia's stocks.
  • Guspaz - Friday, August 12, 2016 - link

    The rumours are currently that Nintendo has chosen Tegra (rumours are conflicting on if it's X1 or Parker) for their new NX console. The NX is expected to replace both the 3DS and the Wii U (consolidating Nintendo's product lineup into a single handheld/console device), and putting Tegra in 50 million consoles would go a long way towards boosting Tegra revenue.

    On the other hand, it's been suggested that nVidia, hurting from missing out on both the XB1 and PS4, was desperate to make the Nintendo deal, and is doing it at-cost or even at a loss in order to build momentum for Tegra.

    Confirmations on all this (from the technical side at least) should come sometime between September 2016 (when Nintendo will officially announce the NX) and March 2017 (when Nintendo has said it will be released).
  • poohbear - Friday, August 12, 2016 - link

    that deal would be peanuts compared to the rest of the sectors Nvidia is in.

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