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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  • Dirk_Funk - Sunday, November 8, 2015 - link

    True, gaming notebook sales won't push those numbers up, but notebooks for the general public will, which is exactly my point. Amd gpus can (rarely) be found in gaming notebooks, but try and find just a regular old $600-$800 laptop with an amd gpu (not counting apus, which there's not much of those either.) Sure pc gaming and esports are on the rise, but everyone buys laptops, and most of those either just have an intel cpu with igpu or an intel cpu with an nvidia gpu. Tegra and maxwell shows how badly Nvidia is going after that mobile market (I mean they got the full sized gtx980 into laptops, that doesn't happen by accident). It's not to say they are abandoning desktop gpus, but they want non-gamers' money too. Kids going to college buy laptops, laptops are common birthday presents, laptops are in every home. Laptops can run league of legends, dota 2, hearthstone, heroes of the storm, smite, call of duty and many other games which are free to anyone who just so happens to get said laptops. Therefore most games are run on nvidia because they've penetrated outside their original hardcore market, where amd is losing ground in every place BUT the gaming market (I'm assuming console sales somewhat balance out their less than exciting products as of late in the hardcore pc gaming world.) I'd love to see an actual chart on laptop gpu sales vs desktop gpu sales for both amd and nvidia as I'm only speculating but I think the gap between nvidia's laptop sales and amd's laptop sales is much larger than in the desktop market. Reply
  • Dirk_Funk - Sunday, November 8, 2015 - link

    Idk why I put call of duty there. It's not free but I guess laptops can run it lol. Reply
  • HollyDOL - Friday, November 6, 2015 - link

    Note about the growth of nVidia stock value... this was quite expected given how Fury X wasn't able to beat nVidia flagship and ends up on-par at best. But I wouldn't expect THAT big growth. Reply
  • squngy - Friday, November 6, 2015 - link

    It says in the article that Nv is buying back their stock and paying out $1B to shareholders, both these things directly raise stock value quite aside from any other performance metric. Reply
  • Yojimbo - Friday, November 6, 2015 - link

    I think the recent rise un NVIDIA's stock price mught have to do with investors finally becoming convinced of two things. Firstly and most importantly is that the PC gaming market has insulation from the overall PC market and that the softness in the latter does not necessarily portend softness in the former. Secondly is that NVIDIA seems to have pulled in front of AMD noticably, enough so that the old expectation that as soon as one company gets ahead it won't be long before the other leapfrogs them has diminished. Reply
  • djmcave - Friday, November 6, 2015 - link

    I must have skiped a year ? 2016 Results ? Reply
  • HollyDOL - Friday, November 6, 2015 - link

    Various companies have various weird fiscal years... like starting in July, first Q being Q1, others have "Q"s marked by calendar layout (so the first one can be Q4), some mark fiscal year number by first day of fiscal year, some by last... I have no clue how nVidia counts it though... Reply
  • Essence_of_War - Friday, November 6, 2015 - link

    For some inexplicable reason Nvidia's fiscal year one-year ahead of the calendar year.

    Don't ask. You won't get a sensible explanation :)
  • jimbo2779 - Friday, November 6, 2015 - link

    If this is the 3rd quarter then there is still a quarter of their financial year to go which means their financial year will end in 2016 making this their 2016 financial year.

    It's a very basic accounting practice and is how companies label their financial year.

    Each financial year is labelled when the year ends not when it starts or by calendar year it is being reported in.
  • djmcave - Friday, November 6, 2015 - link

    I have noticed it before , but usually its Q1 starting in Fall/End of summer.
    Having Q3 at this time, let me to believe it was a typo or something.

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