01—Abstract
Summary
Summary of the 10-K filed February 20, 2020. Cited figures are marked; the original filing is the authoritative source.
NVIDIA Corporation's 2020 10-K filing reveals a challenging fiscal year 2020, with revenue declining 7% year-over-year to $10.92 billiona.
This decline was primarily driven by a 12%b drop in Gaming revenue, which was partially offset by modest growth in Professional Visualization and Data Center segments. The company also experienced a 6% decrease in Tegra Processor business revenue, though Automotive saw a 9% increase. Despite the revenue dip, NVIDIA maintained its technological leadership, emphasizing its GPU architecture's role in accelerated computing and Artificial Intelligence (AI).
The company continued to invest heavily in research and development, highlighting advancements in ray tracing, AI platforms like CUDA-X AI, and the EGX Intelligent Edge Computing Platform. NVIDIA is also actively pursuing the acquisition of Mellanox Technologies for approximately $6.9 billionc, anticipating it will close in early 2020, which is expected to enhance its data center and networking capabilities.
02—Key points
Key Highlights
- Fiscal year 2020 revenue decreased by 7% to $10.92 billion.
- Gaming revenue saw a significant decline of 12%, impacting overall performance.
- Data Center revenue grew by 2%, indicating continued demand in this strategic area.
- Professional Visualization revenue increased by 7%, showing strength in workstation markets.
- Automotive revenue grew by 9%, driven by AI cockpit solutions and development services.
- The company is in the process of acquiring Mellanox Technologies for approximately $6.9 billion.
- NVIDIA continued substantial investment in Research and Development, with expenses increasing by 19% year-over-year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, NVIDIA Corp kept $0.26.
- Revenue$10.92B100.0%
- Cost of revenue−$4.15B38.0%
- Gross profit$6.77B62.0%
- Operating costs−$3.92B35.9%
- Operating income$2.85B26.1%
- Interest, other & tax−$50.0M0.5%
- Net income$2.80B25.6%
Where FY2020 revenue went
$10.92B- Cost of revenue: $4.15B, 38% of revenue
- R&D: $2.83B, 26% of revenue
- Net income: $2.80B, 26% of revenue
- SG&A: $1.09B, 10% of revenue
Kept 26% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 20, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $10.92B$11.72B | −6.8% |
| Cost of Revenue | $4.15B$4.54B | −8.7% |
| Gross Profit | $6.77B$7.17B | −5.6% |
| R&D Expenses | $2.83B$2.38B | +19.1% |
| SG&A Expenses | $1.09B$991.00M | +10.3% |
| Operating Expenses | $3.92B$3.37B | +16.5% |
| Operating Income | $2.85B$3.80B | −25.2% |
| Interest Expense | $52.00M$58.00M | −10.3% |
| Net Income | $2.80B$4.14B | −32.5% |
| EPS (Basic) | $0.12$0.17 | −32.5% |
| EPS (Diluted) | $0.11$0.17 | −31.8% |
| Shares Outstanding (Basic) | 24.39B24.32B | +0.3% |
| Shares Outstanding (Diluted) | 24.72B25.00B | −1.1% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue decline in fiscal year 2020?
The primary driver of revenue decline in fiscal year 2020 was a significant decrease in the Gaming segment, down 12%, attributed to lower sales of GeForce desktop GPUs and SoCs for gaming platforms. Additionally, the OEM and Other segment revenue dropped 34%, largely due to the absence of cryptocurrency-specific product sales.
How is NVIDIA positioned for future growth, particularly in AI and Data Center?
NVIDIA is strategically focused on AI and Data Center growth. The company highlights its GPU architecture as foundational for AI and accelerated computing, developing platforms like CUDA-X AI and introducing initiatives like the EGX platform for edge computing. The pending acquisition of Mellanox is expected to further bolster its data center capabilities, particularly in high-performance networking.
What is the status and expected impact of the Mellanox acquisition?
NVIDIA entered into an Agreement and Plan of Merger to acquire Mellanox Technologies for approximately $6.9 billion. As of the filing date (February 20, 2020), regulatory approvals were progressing, with expectations for the deal to close in early calendar year 2020. This acquisition is anticipated to enhance NVIDIA's position in high-performance computing and data centers.
How did NVIDIA manage its inventory and gross margin during fiscal year 2020?
NVIDIA's gross margin improved slightly to 62.0% in fiscal year 2020, up from 61.2% in the prior year. This improvement was driven by reduced inventory provisions and the sale of previously written-off components. The company actively manages its inventories based on demand forecasts, though risks of excess or obsolete inventory remain due to rapid technological change.
06—Continue