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Nvidia Reports Strong 1Q 2015, Following Error

Nvidia GPU Logo Nvidia GPU Logo

As we had reported, Nvidia announced very strong preliminary earnings for the fiscal first quarter of 2015, calendar Q1 2014. They were supposed to announce their earnings today, May 8th, however someone had mistakenly sent the preliminary earnings announcement to 100 internal users and they decided to make those figures public to avoid any potential insider trading issues.

In terms of Nvidia’s earnings [NASDAQ:NVDA] themselves, the company reported for their fiscal first quarter of 2015, which is actually the first calendar quarter of 2014, earnings of $136 million on $1.1 billion in revenue, which is down sequentially from the fourth quarter where Nvidia is traditionally their strongest. As a result, it is expected to see that their revenue was down 4% quarter over quarter and profit down the same amount. In fact, it is actually really good to only take a 4% quarter over quarter reduction from your strongest quarter, most companies generally see a much larger decrease because of how big their third and fourth quarters are for their business. So, then, it comes as no surprise that when compared to the same quarter a year ago, Nvidia was actually up 16% in terms of revenue ($954 million last year vs. $1,102 this year) and 85% in terms of profitability, which is HUGE. Nvidia took in $77.9 million in profit in their first quarter last year, compared to $136 million this year which accounts for the 85% GAAP increase. Now, if you look at their non-GAAP EPS, then you’ll see that it is a slightly more moderated 61% increase, but even so, it indicates Nvidia is strong as ever, even with some weaker business units.

GAAP EPS were $0.24, up 85% from $0.13 a year ago and down 4% from $0.25 in the previous quarter, and non-GAAP earnings were $0.29, up 61% from $0.18 and down 9% from $0.32 in the previous quarter. Nvidia also saw their gross margin grow to 54.8 % from the previous quarter’s 54.1 % to the same quarter a year ago’s 54.3.


Nvidia Quarterly Revenue by Business Unit

As you can see above, Nvidia’s revenue in their GPU business was actually down quarter over quarter, considering the seasonality of GPU sales, but still up 14% year over year. This is primarily because of Nvidia’s renewed strength in their mobile GPU business in laptops where they saw their strongest marketshare since 2010.  They also saw some renewed strength in their Tegra processor division, which saw growth thanks to their automotive design wins which are now shipping inside Audi’s vehicles. This is combined with Nvidia’s continued strength in their Quadro and Tesla business which has continually buoyed the company’s profitability for the past few years and appears to continue to do so, but to a lesser degree this quarter. Overall revenue was up 16% year over year, meaning that Nvidia continues to improve their strength especially with their high-end products where they saw growth as high as 50%. And even though notebook sales and volumes went down, Nvidia still saw growth in their side of the business, selling the dedicated GPU.

The good thing for Nvidia is that they’ve diversified the placement of their Tegra business with smartphones, tablets and automotive. For their competitors, who are more mobile-heavy, they are experiencing much better growth in their mobile business because of their exposure in automotive in addition to tablets and smartphones. Even though, realistically, Nvidia is still needing a lot of help with their smartphone design wins when compared to their competitors. Perhaps, with Tegra K1 they will get much better pull with Tegra than they did with the Tegra 4 SoC.

Nvidia’s outlook for the next quarter are effectively flat in Q2, in terms of both revenue and operating expenses. As a result of today’s announcements and the company’s outlook, the shares of NVDA are actually trading down 3%, which is disappointing considering the fact that their outlook isn’t necessarily bad and they weren’t necessarily doing poorly.