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Nvidia Reports Strong Earnings for Q3

Nvidia GPU Logo Nvidia GPU Logo

Nvidia (NASDAQ:NVDAreported fairly mixed numbers across the board for its fiscal Q3 2015 quarter, which is represented mostly by the calendar third quarter of the year.

In the third quarter, Nvidia reported a record $1.23 billion in revenues and profit of $173 million, which translates to an EPS of $0.31. This is compared to the previous quarter, where Nvidia saw $1.103 billion in revenue and $128 million in profit or an EPS of $0.22. Nvidia also improved over the same quarter a year ago even more significantly where that quarter only had $1.054 billion in revenue and $119 million in revenue  or an EPS of $0.20. Nvidia saw both revenue and profitability increase double digits for both quarter over quarter and year over year, which should make any investor in Nvidia very happy. The margins did slip almost a whole percentage point, but they also significantly improved revenue and profitability.

NVDA Table

Nvidia’s revenue increase to $1.23 billion can be attributed to growth across the board for the company in multiple business segments. Revenue for its GPU business grew 13% from the previous quarter and notebooks grew 36%, fueled by the release of its new Maxwell GTX GeForce consumer cards and mobile gaming GPUs. Nvidia states that mobile gaming notebooks more than doubled from a year ago, indicating much stronger PC gaming growth than analysts had been dooming and glooming.

Tesla GPU sales increased strongly, representing another record quarter for revenue driven mostly by large project wins in GPU compute with cloud providers and government customers. The company also saw Quadro revenue continue to be strong, also helped along by its launch of the new Quadro line, including the K5200, which is squarely aimed at Adobe users. As a result, the whole business unit saw a 13% increase in revenue due to the Maxwell release and seasonal increase in consumer PCs, which is going to only continue into the next quarter.

Tegra processors grew 51 percent from a year ago, mostly led by automotive infotainment systems, mobile devices, embedded systems and SHIELD tablet sales. Automotive infotainment revenue alone nearly doubled year over year, which can strongly be attributed to Tegra’s renewed strength compared to last year. As a whole the business unit saw revenue go up 11% sequentially. Nvidia has won some seriously significant automotive design wins, including Honda and will create a very good baseline of sales for Nvidia in the Tegra business unit regardless of mobile device seasonality.

Nvidia also saw a $66 million license payment from Intel from their settlement and licensing agreement.

Nvidia guided its revenue to be about $1.2 billion, essentially flat with the last quarter. They also expect margins to stay about the same if not increase a bit from the last quarter and operating expenditures to increase slightly. Overall, next quarter should really be a fantastic one for Nvidia as it is traditionally the strongest quarter for most of their consumer products and they are currently putting the hurting on AMD in consumer GPU sales, they are also in the newly announced HTC Nexus 9, which means that Tegra shipments should be very good in the fourth quarter and should drive up its profitability in the business segment. Overall, Nvidia’s expectations for Q4 are very conservative and there’s a very good chance they will outperform significantly.