01—Abstract
Summary
Summary of the 10-Q filed August 23, 2017. Cited figures are marked; the original filing is the authoritative source.
NVIDIA Corporation reported strong financial performance for the second quarter and first half of fiscal year 2018, reflecting significant year-over-year growth across its key business segments.
Total revenue surged by 56% year-over-year to $2.23 billiona in Q2 FY18, driven by a remarkable 59% increase in the GPU business and a 101% increase in the Tegra Processor business. This growth was fueled by robust demand in gaming, datacenter (especially for AI and deep learning), professional visualization, and automotive markets. Net income saw substantial growth, increasing by 123% year-over-year to $583 million in Q2 FY18, with diluted earnings per share rising to $0.92.
The company demonstrated improved operational efficiency, with income from operations increasing by 117%b year-over-year. NVIDIA continues to return capital to shareholders through dividends and share repurchases, demonstrating a commitment to shareholder value while investing in growth initiatives in AI and autonomous driving.
02—Key points
Key Highlights
- Revenue increased by 56% year-over-year to $2.23 billion in Q2 FY18.
- Net income grew by 123% year-over-year to $583 million in Q2 FY18.
- Diluted EPS increased to $0.92 in Q2 FY18, up 124% year-over-year.
- GPU business revenue increased by 59% year-over-year, driven by strong performance in gaming and datacenter segments.
- Tegra Processor business revenue more than doubled, increasing by 101% year-over-year, with significant contributions from automotive and gaming development platforms.
- Datacenter revenue, a key growth driver, increased by 175% year-over-year.
- The company generated strong operating cash flow, with $987 million for the first half of FY18.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2018, NVIDIA Corp kept $0.26.
- Revenue$2.23B100.0%
- Cost of revenue−$928.0M41.6%
- Gross profit$1.30B58.4%
- Operating costs−$614.0M27.5%
- Operating income$688.0M30.9%
- Interest, other & tax−$105.0M4.7%
- Net income$583.0M26.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2018filed August 23, 2017Financial Statements
Q2 FY2018 against Q2 FY2017
| Line item | Q2 FY2018Q2 FY2017 | Change |
|---|---|---|
| Revenue | $2.23B$1.30B | +70.9% |
| Cost of Revenue | $928.00M$554.00M | +67.5% |
| Gross Profit | $1.30B$751.00M | +73.4% |
| R&D Expenses | $416.00M$350.00M | +18.9% |
| SG&A Expenses | $198.00M$157.00M | +26.1% |
| Operating Expenses | $614.00M$509.00M | +20.6% |
| Operating Income | $688.00M$317.00M | +117.0% |
| Interest Expense | $15.00M$12.00M | +25.0% |
| Net Income | $583.00M$208.00M | +180.3% |
| EPS (Basic) | $0.02$0.01 | +151.3% |
| EPS (Diluted) | $0.02$0.01 | +162.9% |
| Shares Outstanding (Basic) | 23.88B21.36B | +11.8% |
| Shares Outstanding (Diluted) | 25.32B25.36B | −0.2% |
05—Questions
Frequently Asked Questions
What were the primary drivers of NVIDIA's revenue growth in Q2 FY18?
NVIDIA's revenue growth was primarily driven by strong demand in its GPU business, particularly in the gaming segment due to continued adoption of Pascal-based GeForce GTX platforms and significant demand for cryptocurrency mining. The datacenter segment also saw substantial growth, fueled by hyperscale and cloud customers for deep learning training and accelerated GPU computing. The Tegra Processor business also experienced significant growth, benefiting from automotive infotainment modules and gaming development platforms like the Nintendo Switch.
How did NVIDIA's profitability change compared to the prior year?
NVIDIA demonstrated significant improvements in profitability. Net income for Q2 FY18 more than doubled, increasing by 123% year-over-year to $583 million. This growth was supported by a 117% increase in income from operations, reflecting strong revenue growth and improved gross and operating margins. Diluted earnings per share also saw substantial growth, rising by 124% to $0.92.
What is NVIDIA's approach to returning capital to shareholders?
NVIDIA is committed to returning capital to shareholders through a combination of cash dividends and share repurchases. For fiscal year 2018, the company intended to return $1.25 billion to shareholders through these programs. As of July 30, 2017, NVIDIA had repurchased approximately $1.97 billion worth of its common stock under its authorized repurchase program.
Are there any significant legal proceedings that investors should be aware of?
NVIDIA is involved in ongoing patent infringement litigation with Polaris Innovations Limited, alleging infringement of six U.S. patents. NVIDIA is vigorously defending itself and challenging the validity of these patents through inter partes review proceedings with the USPTO and nullity actions in Germany. While NVIDIA believes the claims are without merit and does not expect a material adverse effect, the outcome of such litigation is inherently uncertain and could potentially impact financial results or operations.
06—Continue