Today NVIDIA announced their earnings for the third quarter of their fiscal year 2016 (yes their fiscal year is almost a full year ahead of calendar) and the company posted record revenues for this quarter at $1.305 billion. This is up 7% from last year, and 13% from last quarter. Gross margin was 56.3%, with an operating income of $245 million and a net income of $246 million for the quarter. This resulted in diluted earnings per share of $0.44, which was up 42% year-over-year.

NVIDIA Q3 2016 Financial Results (GAAP)
  Q3'2016 Q2'2016 Q3'2015 Q/Q Y/Y
Revenue (in millions USD) $1305 $1153 $1225 +13% +7%
Gross Margin 56.3% 55.0% 55.2% +1.3% +1.1%
Operating Income (in millions USD) $245 $76 $213 +222% +15%
Net Income $246 $26 $173 +846% +42%
EPS $0.44 $0.05 $0.31 +780% +42%

NVIDIA also reports Non-GAAP figures, which excludes stock-based compensation and acquisition costs, restructuring, and warranty. Gross margin was slightly higher at 56.5% compared to GAAP results, with operating income at $308 million and net income of $255 million. Earnings per share on a Non-GAAP basis were $0.46. The Non-GAAP numbers are important this quarter because of the large write-down NVIDIA took last quarter on their Icera modem division.

NVIDIA Q3 2016 Financial Results (Non-GAAP)
  Q3'2016 Q2'2016 Q3'2015 Q/Q Y/Y
Revenue (in millions USD) $1305 $1153 $1225 +13% +7%
Gross Margin 56.5% 56.6% 55.5% -0.1% +1.0%
Operating Income (in millions USD) $308 $231 $264 +33% +17%
Net Income $255 $190 $220 +34% +16%
EPS $0.46 $0.34 $0.39 +35% +18%

NVIDIA saw great gains in GPU sales, which are the bulk of the company. GPU based revenue was up 12% year-over-year and up 16% over last quarter, with gaming GPU revenue up 40% over last year, and now sits at record levels. The Quadro side of the house did not fare so well, with revenues of $190 million, which is up 8% over last quarter, but down 8% compared to the same time last year. Tesla and GRID revenue was $80 million, growing since last quarter 13%, but down 8% year-over-year.

Tegra processors are still a mixed bag for NVIDIA. They have tried their hand in the mobile phone and tablet space, but with little success, but they have seen good performance from Tegra in automotive applications, and this continues to be the growth area for Tegra. For the quarter, Tegra revenue was $129 million, which is down 23% year-over-year. This decline is due to the tablet and smartphone space, because their automotive attributed revenue was $79 million, which is up 11% since last quarter and up more than 50% year-over-year. There is still hope for Tegra, but it appears to be less and less likely to be in the tablet space. NVIDIA did win the Google Pixel C tablet but it’s unclear yet how it will fare in the difficult tablet market.

NVIDIA also still receives $66 million per quarter from Intel due to a patent license agreement.

NVIDIA Quarterly Revenue Comparison (GAAP)
In millions Q3'2016 Q2'2016 Q3'2015 Q/Q Y/Y
GPU $1110 $959 $991 +16% +12%
Tegra Processor $129 $128 $168 +1% -23%
Other $66 $66 $66 flat flat

During Q3 2016, NVIDIA paid back $53 million in dividends to shareholders and bought back 4.6 million shares. Their goal for FY 2016 is to repay $800 million, and through three quarters, they are now at $604 million. NVIDIA is planning on paying approximately $1.0 billion to shareholders for their next fiscal year.

Breaking down the numbers a bit more, NVIDIA has seen big growth in the gaming segment, with revenues increasing from $468 million since Q1 FY 2015 to $761 million this quarter. Year-over-year, the gaming market has grown 44%, at a time when the PC industry as a whole has contracted. PC gaming appears to be alive and well. This has covered the drop in NVIDIA’s other segments, with the biggest drop being PC & Tegra OEM, which fell from $350 million in revenue last year to just $192 million this quarter, which is a drop of 45% year-over-year. Automotive is growing, but it is still some ways away from matching the Tablet market for sales.

Overall, any time you can set a record for a quarter it is clearly good news. Not all of NVIDIA’s business is growing as quickly as they would like, but luckily for them, their largest segment is the one that is growing at a much quicker pace than the rest of the industry.

Looking ahead to next quarter, NVIDIA is expecting revenues of $1.30 billion, plus or minus 2%, with GAAP margins of 56.7%.

Source: NVIDIA Investor Relations

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  • xype - Sunday, November 8, 2015 - link

    Economies of scale? You mean that thing that makes Apple earn way less cash than any other smartphone/computer manufacturer because the others are cheaper and have a bigger market share? :)

    Economies of scale only work _after_ you’ve reached a ginormous market share, _and_ you have a product that is not worse than what you competitors offer, _and_ your margins are high enough that the total of sales puts you in the black.

    AMD is losing money. They compete in a market that completely changes the product lines every few years, and one where they might or might not actually have a product that the people want to buy. What if nvidia brings out a product that is simply faster, period? Then AMD would sell _less_ and with _smaller_ margins—going for "economies of scale" is suicide in such a scenario.

    I don’t think webdoctors is the one who needs to take a class.
    Reply
  • tamalero - Thursday, November 12, 2015 - link

    I honestly think AMD needs a way stronger marketing scheme.
    AMD itself as brand wasnt as respected as ATI in the video market.
    then, theres Nvidia mentions and logos EVERYWHERE. You hardly see AMD ads.

    No surprise everyone goes to Nvidia despite the 970 fiasco and AMD card performing very well.
    Reply
  • Jon Irenicus - Friday, November 6, 2015 - link

    AMD generally wins in the midrange and loses on the low end and high end.

    But the range from the nvidia 960-980 has amd beating nvidia in the performance per dollar category. The halo products of the 980 ti vs the fury x is where that is flipped and amd has the same price for a bit less performance.

    But the midrange technical wins vs sales losses cannot be underestimated. Look at the amazon sales rankings.

    http://www.amazon.com/gp/bestsellers/pc/284822/ref...

    The 970 is far and away the most popular single gpu card, that is in the 300-350 dollar price band. That is followed by a 960. Amd has cards that beat both in terms of performance per dollar with a 380 and 390, and it is NOT being translated into sales.

    The problem therefore is perception and people getting distorted information on the internet about terrible drivers damping amd sales. The 970 should not be the most popular card anymore based on merit, but merit is not what drives these sales.
    Reply
  • medi01 - Monday, November 9, 2015 - link

    960 is slower than R9 380.

    R9 380 consumes about 7-30w more power IN GAMES.

    But you outlined the problem right, FUD does count and nVidia fuds well.
    Reply
  • koko4kaka - Saturday, November 14, 2015 - link

    NVIDIA does know how to play the PR game in the GPU space better than anybody else. Esp. the whole FUD/astroturfing business. The amount of "review" sites that basically copy-pasta the NV PR package they're given directly from corporate is fascinating. Reply
  • Ananke - Monday, November 9, 2015 - link

    "Take the R9 380 vs the GTX 960."
    :) Funny, somebody replied before me...what on Earth ?!? R9 380 is a really good card, full 4GB that actually are usable, yet everybody keeps buying the GTX960 or GTX950 for gaming...pathetic.
    GTX980ti and GTX980 are good cards, even money wise are OK purchase, but anything down the stream of NVidia offers is just terrible deal, yet people buy.
    Reply
  • D. Lister - Friday, November 6, 2015 - link

    Ever since the Titan SC, their HPC side is doing quite decently as well. Especially now with the U.S. president's initiative to get his country back at the top of the global supercomputer ranking. Rumor has it that Nvidia has got its finger in that pie.

    http://www.digitaltrends.com/computing/obama-signs...
    Reply
  • squngy - Friday, November 6, 2015 - link

    I would say that their diversification strategy has failed just yet.
    AFAIK they are not planning to drop Tegra and the simple fact is that they started DECADES behind some of the other players. With each iteration they managed to close the gap a little, it isn't far fetched that given continued development it could be successful in the future and with overall financial results like this they can afford to do just that.
    Reply
  • Dirk_Funk - Friday, November 6, 2015 - link

    Not to be a party pooper, but desktop gpu sales are not likely to be the result of these numbers. I'd wager that the fact that pretty much any laptop with a dgpu has an nvidia. After all, Maxwell was a huge push to fit good performance into a smaller tdp. I'm no market expert and haven't done much research except to find desktop gpu sales have been in decline up to at least Q2 2015 where it hit a 10 year low (http://www.kitguru.net/components/graphic-cards/an... If you factor in that 80% of gpu's for pc are nvidia, then that means 80% of the profit from gpus is also going to nvidia. Its not necessarily a sign that gpu sales in general are on the rise, its that they have money coming in now that used to go to amd.

    Or I'm completely wrong and the time where everyone ditches consoles for super powerful pc's is nigh! XD
    Reply
  • Morawka - Saturday, November 7, 2015 - link

    Gaming notebook sales are not gonna push these kinds of numbers. The market just isn't that big. Desktop GPU's are a huge market, production studio's to esports gaming houses, they all are using nvidia desktop. Reply

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