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NVIDIA Achieves Record Revenue - Blows By Expectations

August 11, 2017

NVIDIA reported record revenue for the second quarter ended July 30, 2017, of $2.23 billion, up 56 percent from $1.43 billion a year earlier, and up 15 percent from $1.94 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.92, up 124 percent from $0.41 a year ago and up 16 percent from $0.79 in the previous quarter. Non-GAAP earnings per diluted share were $1.01, up 91 percent from $0.53 a year earlier and up 19 percent from $0.85 in the previous quarter.

Investors expected earnings of 70 cents per share on revenue of $1.96 billion.

"Adoption of NVIDIA GPU computing is accelerating, driving growth across our businesses," said Jensen Huang, founder and chief executive officer of NVIDIA. "Datacenter revenue increased more than two and a half times. A growing number of car and robot-taxi companies are choosing our DRIVE PX self-driving computing platform. And in Gaming, increasingly the world's most popular form of entertainment, we power the fastest growing platforms - GeForce and Nintendo Switch.

"Nearly every industry and company is awakening to the power of AI. Our new Volta GPU, the most complex processor ever built, delivers a 100-fold speedup for deep learning beyond our best GPU of four years ago. This quarter, we shipped Volta in volume to leading AI customers. This is the era of AI, and the NVIDIA GPU has become its brain. We have incredible opportunities ahead of us," he said.

Capital Return

During the first half of fiscal 2018, NVIDIA paid $758 million in share repurchases and $166 million in cash dividends. For fiscal 2018, NVIDIA intends to return $1.25 billion to shareholders through ongoing quarterly cash dividends and share repurchases.

NVIDIA will pay its next quarterly cash dividend of $0.14 per share on September 18, 2017, to all shareholders of record on August 24, 2017.

Q2 FY2018 Summary

 
GAAP
($ in millions except earnings per share)   Q2 FY18   Q1 FY18   Q2 FY17   Q/Q   Y/Y
Revenue   $2,230   $1,937   $1,428   Up 15%   Up 56%
Gross margin   58.4%   59.4%   57.9%   Down 100 bps   Up 50 bps
Operating expenses   $614   $596   $509   Up 3%   Up 21%
Operating income   $688   $554   $317   Up 24%   Up 117%
Net income   $583   $507   $261   Up 15%   Up 123%
Diluted earnings per share   $0.92   $0.79   $0.41   Up 16%   Up 124%
                     
 
Non-GAAP
($ in millions except earnings per share)   Q2 FY18   Q1 FY18   Q2 FY17   Q/Q   Y/Y
Revenue   $2,230   $1,937   $1,428   Up 15%   Up 56%
Gross margin   58.6%   59.6%   58.1%   Down 100 bps   Up 50 bps
Operating expenses   $533   $517   $448   Up 3%   Up 19%
Operating income   $773   $637   $382   Up 21%   Up 102%
Net income   $638   $533   $313   Up 20%   Up 104%
Diluted earnings per share   $1.01   $0.85   $0.53   Up 19%   Up 91%
                     

NVIDIA's outlook for the third quarter of fiscal 2018 is as follows:

  • Revenue is expected to be $2.35 billion, plus or minus two percent.
     
  • GAAP and non-GAAP gross margins are expected to be 58.6 percent and 58.8 percent, respectively, plus or minus 50 basis points.
     
  • GAAP operating expenses are expected to be approximately $672 million. Non-GAAP operating expenses are expected to be approximately $570 million.
     
  • GAAP other income and expense is expected to be an expense of approximately $2 million, inclusive of additional charges from early conversions of convertible notes. Non-GAAP other income and expense is expected to be nominal.
     
  • GAAP and non-GAAP tax rates are both expected to be 17 percent, plus or minus one percent, excluding any discrete items. GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which we expect to generate variability on a quarter by quarter basis.
     
  • Capital expenditures are expected to be approximately $65 million to $75 million.

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