High-performance processor designer NVIDIA (NVDA 3.17%) reported earnings after the closing bell on Tuesday, covering the first quarter of fiscal year 2018. Here's what investors need to know.
NVIDIA's first-quarter results: The raw numbers
|
Metric |
Q1 2018 |
Q1 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$1.94 billion |
$1.31 billion |
48% |
|
Net income |
$507 million |
$208 million |
144% |
|
GAAP earnings per share (diluted) |
$0.79 |
$0.35 |
126% |
Data source: NVIDIA.
What happened with NVIDIA this quarter?
- Sales nearly tripled year over year in the data-center segment, starting from $143 million in the year-ago quarter. This division now accounts for more than one-fifth of Nvidia's total sales, up from 11% a year ago.
- Automotive sales increased by 24%, landing at $140 million. Gaming revenues rose 49% year over year to $1.03 billion. Sales were down in the professional visualization and OEM segments.
- Free cash flows declined from $263 million to $229 million. The large differences between cash flows and net income sprang from shifts in NVIDIA's working capital structure. For example, inventories more than doubled to $821 million, and accounts receivable rose 87% to land at $976 million.
NVIDIA's management provided some financial guidance for the second quarter of 2018:
- Revenue should stop near $1.95 billion, roughly 36% above the second quarter of fiscal year 2017.
- Unadjusted earnings should land near $435 million, or $0.68 per share, based on the midpoints of the expected gross margins, operating expenses, and tax rates. The calculated earnings-per-share figure assumed a stable share count, but do note that NVIDIA's diluted share base has grown 7% larger over the past four quarters.
Image source: Nvidia.
What management had to say
In a prepared statement, NVIDIA founder and CEO Jensen (Jen-Hsun) Huang underscored his company's data-center prospects.
"The AI revolution is moving fast and continuing to accelerate," Huang said. "One industry after another is awakening to the power of GPU deep learning and AI [artificial intelligence], the most important technology force of our time."
In particular, this quarter's data-center wins included large-scale cloud computing installations and powerful deep-learning systems.
Looking ahead
NVIDIA's new chip architecture continues to deliver great results for the company. The next task on Huang's agenda will be to keep the market momentum going. The company is making inroads in the gaming console market, and the automotive computing sector offers a tantalizing long-term growth story.
Archrival Advanced Micro Devices (AMD 1.94%) also has a brand-new slate of graphics processor designs on the table, receiving similar accolades and strong sales. But NVIDIA is raising the bar with strong next-quarter guidance, while AMD expects its sales growth to settle down.
If that's a sign that NVIDIA is executing more effectively than AMD, then Huang and his investors are on the right track. Time will tell the full story.
