10-QPeriod: Q3 FY2021

NVIDIA CORP Quarterly Report for Q3 Ended Oct 25, 2020

Filed November 18, 2020For Securities:NVDA

Summary

NVIDIA Corporation's (NVDA) third quarter fiscal year 2021 report shows robust growth driven by strong performance in its Graphics and Compute & Networking segments. Revenue reached $4.73 billion, a significant 57% increase year-over-year, demonstrating continued demand across its key market platforms, particularly Gaming and Data Center. The company's strategic acquisition of Mellanox continues to positively impact the Compute & Networking segment, contributing significantly to its 146% year-over-year revenue growth. Net income also saw substantial growth, reaching $1.34 billion, with diluted earnings per share at $2.12, up 46% from the prior year. The company ended the quarter with a strong cash position of $10.14 billion. NVIDIA is actively pursuing a major acquisition of Arm Holdings, valued at $40 billion, and has made an initial $2 billion payment. Despite supply chain challenges and the ongoing impact of COVID-19, NVIDIA's diversified revenue streams and strong market position in AI and gaming underscore its financial resilience and future growth potential.

Financial Highlights

54 data points
Beta

Revenue

$4.73B

62.6% Gross Margin

Net Income

$1.34B

28.3% Net Margin

EPS (Diluted)

$0.05

Total Assets

$26.88B

Cash & Equivalents

$2.25B

Free Cash Flow

$1.28B

Financial Statements
Beta
Revenue$4.73B
Cost of Revenue$1.77B
Gross Profit$2.96B
R&D Expenses$1.05B
SG&A Expenses$515.00M
Operating Expenses$1.56B
Operating Income$1.40B
Interest Expense$53.00M
Net Income$1.34B
EPS (Basic)$0.05
EPS (Diluted)$0.05
Shares Outstanding (Basic)24.72B
Shares Outstanding (Diluted)25.20B

Key Highlights

  • 1Revenue surged by 57% year-over-year to $4.73 billion, driven by broad-based strength.
  • 2Compute & Networking segment revenue more than doubled, up 146% year-over-year, largely due to the Mellanox acquisition and Ampere GPU ramp.
  • 3Net income increased by 49% to $1.34 billion, with diluted EPS growing 46% to $2.12.
  • 4The company announced a pending $40 billion acquisition of Arm Holdings, signaling a major strategic move.
  • 5Gross margin stood at a healthy 62.6%, though slightly down year-over-year due to acquisition-related charges.
  • 6NVIDIA maintained a strong liquidity position with $10.14 billion in cash, cash equivalents, and marketable securities.
  • 7Gaming revenue grew 37% year-over-year, benefiting from new product launches and sustained demand.

Frequently Asked Questions

NVIDIA's revenue growth of 57% year-over-year to $4.73 billion was primarily driven by exceptionally strong performance in both its Graphics and Compute & Networking segments. The Compute & Networking segment, in particular, saw a 146% increase due to the integration of Mellanox and the ramp of its Ampere architecture products in data centers and AI applications. The Gaming segment also continued its robust growth, up 37%, fueled by new GPU launches.

The pending $40 billion acquisition of Arm Holdings is a significant strategic move for NVIDIA. While the transaction is subject to regulatory approvals and is expected to close in early 2022, it aims to accelerate NVIDIA's vision for the future of computing. The company has already made a $2 billion initial payment for this acquisition, which is reflected in its cash flow. Investors should monitor regulatory developments and the strategic integration plans for Arm.

The acquisition of Mellanox, completed in April 2020, has had a substantial positive impact. Revenue from the Compute & Networking segment, which includes Mellanox's operations, surged by 146% year-over-year, contributing significantly to overall revenue growth and Data Center revenue. While the acquisition incurred some acquisition-related costs and amortization impacting gross margin, its strategic contribution to NVIDIA's data center and networking capabilities is evident in the strong segment performance.

NVIDIA acknowledges that the COVID-19 pandemic has created both demand benefits (e.g., for Gaming and Data Center) and supply chain challenges (limited capacity and components). The company states that its cash, cash equivalents, and marketable securities are sufficient to meet its liquidity needs for at least the next twelve months. Management is actively monitoring the situation and its potential impact on supply, demand, and overall business results.