01—Abstract
Summary
Summary of the 10-Q filed November 22, 2016. Cited figures are marked; the original filing is the authoritative source.
NVIDIA Corporation's third quarter fiscal year 2017 results (ending October 30, 2016) demonstrate robust growth across key business segments, signaling strong market demand and successful product execution.
The company reported a significant 54% year-over-year increase in revenue to $2.004 billiona, driven by exceptional performance in the GPU business, which saw a 53% increase, and a substantial 87% surge in the Tegra Processor business. Key growth drivers include strong sales of high-end GeForce gaming GPUs based on the new Pascal architecture, a more than doubling of datacenter revenue fueled by demand for AI and high-performance computing, and solid contributions from professional visualization and automotive sectors.
The company also highlighted a favorable gross margin of 59.0%b, an improvement from the prior year, attributed to product mix and strong demand. NVIDIA's strategic focus on visual computing platforms for Gaming, Professional Visualization, Datacenter, and Automotive markets appears to be paying off, with strong financial results supporting its market leadership position.
02—Key points
Key Highlights
- Revenue surged by 54% year-over-year to $2.004 billion, driven by strong demand in the GPU and Tegra Processor segments.
- The GPU business, a primary revenue driver, experienced a 53% year-over-year increase, largely propelled by high-end GeForce gaming GPUs and significant growth in datacenter solutions.
- Datacenter revenue more than doubled (up 193% year-over-year), indicating strong demand for AI and high-performance computing solutions.
- The Tegra Processor business showed remarkable growth with an 87% year-over-year increase in revenue, boosted by automotive systems and gaming development platforms.
- Gross margin improved to 59.0% from 56.3% in the prior year, reflecting favorable product mix and strong demand.
- Net income increased substantially by 120% year-over-year to $542 million, translating to diluted EPS of $0.83, up 89% from the prior year.
- The company continued its capital return program, announcing an additional $2 billion under its repurchase program and increasing its quarterly dividend by 22% to $0.14 per share.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2017, NVIDIA Corp kept $0.27.
- Revenue$2.00B100.0%
- Cost of revenue−$821.0M41.0%
- Gross profit$1.18B59.0%
- Operating costs−$544.0M27.1%
- Operating income$639.0M31.9%
- Interest, other & tax−$97.0M4.8%
- Net income$542.0M27.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2017filed November 22, 2016Financial Statements
Q3 FY2017 against Q3 FY2016
| Line item | Q3 FY2017Q3 FY2016 | Change |
|---|---|---|
| Revenue | $2.00B$1.30B | +53.6% |
| Cost of Revenue | $821.00M$572.00M | +43.5% |
| Gross Profit | $1.18B$733.00M | +61.4% |
| R&D Expenses | $373.00M$329.00M | +13.4% |
| SG&A Expenses | $171.00M$152.00M | +12.5% |
| Operating Expenses | $544.00M$489.00M | +11.2% |
| Operating Income | $639.00M$245.00M | +160.8% |
| Interest Expense | $16.00M$12.00M | +33.3% |
| Net Income | $542.00M$247.00M | +119.4% |
| EPS (Basic) | $0.03$0.01 | +124.4% |
| EPS (Diluted) | $0.02$0.01 | +88.6% |
| Shares Outstanding (Basic) | 21.52B21.68B | −0.7% |
| Shares Outstanding (Diluted) | 26.12B22.60B | +15.6% |
05—Questions
Frequently Asked Questions
What are the main drivers behind NVIDIA's significant revenue growth in this quarter?
NVIDIA's revenue growth was primarily driven by strong performance in its GPU business, particularly high-end GeForce gaming GPUs utilizing the new Pascal architecture, and significant demand in the datacenter for AI and high-performance computing solutions. The Tegra Processor business also contributed substantially with growth in automotive and gaming platforms.
How is NVIDIA's datacenter business performing?
The datacenter business is experiencing exceptional growth, with revenue up 193% year-over-year. This surge is attributed to strong demand for deep learning and high-performance computing, as well as increased adoption of Tesla and GRID solutions for cloud and virtualized computing. Initial sales of the NVIDIA DGX-1 AI supercomputer also contributed.
What is NVIDIA's strategy for returning capital to shareholders?
NVIDIA continues to return capital through share repurchases and cash dividends. The company announced an additional $2.00 billion authorization for its share repurchase program, extending it through December 2020. Furthermore, it declared a 22% increase in its quarterly cash dividend to $0.14 per share, signaling confidence in future cash flows and commitment to shareholder value.
How did the adoption of a new accounting standard impact the financial results?
NVIDIA early adopted a new accounting standard simplifying stock-based compensation accounting in the third quarter of fiscal year 2017. This resulted in adjustments, including recording excess tax benefits within income tax expense and a cumulative-effect adjustment to retained earnings. The adoption provided a tax benefit of $42 million in this quarter and impacted reported figures, such as a slight increase in net income and EPS compared to what would have been reported without the adoption.
06—Continue