10-QPeriod: Q3 FY2022

NVIDIA CORP Quarterly Report for Q3 Ended Aug 1, 2021

Filed August 20, 2021For Securities:NVDA

Summary

NVIDIA Corporation reported a robust second quarter for fiscal year 2022, demonstrating significant year-over-year growth across key financial metrics. Total revenue surged by 68% to $6.51 billion, driven by strong performance in both the Graphics and Compute & Networking segments. The Graphics segment saw an impressive 87% increase, largely fueled by high demand for GeForce GPUs, while the Compute & Networking segment grew by 46%, supported by the ramp-up of Ampere architecture products for data centers and AI applications, alongside contributions from the Mellanox acquisition. Profitability also saw substantial improvement, with income from operations jumping 275% to $2.44 billion and net income growing 282% to $2.37 billion. This performance was bolstered by a significant improvement in gross margin, which expanded by 600 basis points year-over-year, primarily due to the absence of a prior-year inventory step-up expense and higher average selling prices. NVIDIA's financial health remains strong, with cash, cash equivalents, and marketable securities totaling $19.65 billion, providing ample liquidity for future investments and operations.

Financial Highlights

56 data points
Beta

Revenue

$7.10B

65.2% Gross Margin

Net Income

$2.46B

34.7% Net Margin

EPS (Diluted)

$0.10

Total Assets

$40.63B

Cash & Equivalents

$1.29B

Free Cash Flow

$4.20B

Financial Statements
Beta
Revenue$7.10B
Cost of Revenue$2.47B
Gross Profit$4.63B
R&D Expenses$1.40B
SG&A Expenses$557.00M
Operating Expenses$1.96B
Operating Income$2.67B
Interest Expense$62.00M
Net Income$2.46B
EPS (Basic)$0.10
EPS (Diluted)$0.10
Shares Outstanding (Basic)24.99B
Shares Outstanding (Diluted)25.38B

Key Highlights

  • 1Revenue surged 68% year-over-year to $6.51 billion, driven by strong demand in both Gaming and Data Center markets.
  • 2Net income increased by an impressive 282% year-over-year to $2.37 billion, reflecting broad-based operational efficiencies and strong sales.
  • 3Gross margin improved significantly to 64.8% from 58.8% in the prior year, mainly due to favorable product mix and absence of acquisition-related expenses.
  • 4The pending acquisition of Arm Limited is progressing through regulatory approvals, with NVIDIA confident in its strategic rationale despite extended timelines.
  • 5Data Center revenue grew 35% year-over-year, highlighting continued strength in AI, HPC, and accelerated computing platforms.
  • 6NVIDIA introduced Low Hash Rate (LHR) GeForce GPUs to prioritize gaming customers amidst high demand for cryptocurrency mining.
  • 7Cash, cash equivalents, and marketable securities stood at $19.65 billion, providing robust liquidity and financial flexibility.

Frequently Asked Questions

NVIDIA's revenue growth was primarily driven by strong demand for its GeForce GPUs in the Gaming segment and the ramp-up of Ampere architecture products in the Data Center segment. The introduction of new high-end products and the acquisition of Mellanox also contributed significantly.

The acquisition of Arm Limited is moving through the regulatory review process in various jurisdictions, including the U.S., EU, and China. While discussions with regulators are taking longer than initially anticipated, NVIDIA remains confident in the deal's rationale and its benefits.

NVIDIA acknowledged the demand for its GPUs from cryptocurrency mining but has introduced Low Hash Rate (LHR) versions of its GeForce GPUs to limit their effectiveness for Ethereum mining, aiming to prioritize gamers. They also offer specific Cryptocurrency Mining Processors (CMP) for miners.

The pandemic has led to increased demand in certain segments like Gaming and Data Center as people work, learn, and play from home. However, NVIDIA also noted potential supply chain disruptions and uncertainties regarding future demand. The company has sufficient liquidity to manage its operations and the pending acquisition.