NVIDIA Q1 FY 2020 Earnings Report: Post-Crypto Reset
by Brett Howse on May 17, 2019 7:10 PM EST- Posted in
- GPUs
- NVIDIA
- Financial Results
This week NVIDIA announced their earnings for the first quarter of their 2020 fiscal year, and although the crash in crypto-currency has been a boom for gamers wanting to buy GPUs, it has not been as welcome to the company’s Form 10-Q. Revenue for Q1 2020 fell 31% to $2.22 billion, with gross margin falling 6.1% from 64.5% to 58.4%. Operating expenses at the company were up 21% despite the downturn in revenue, with NVIDIA spending $132 million more this quarter on R&D than the same period a year ago. Operating income was down 72% to $358 million, although thanks to $44 million in interest income and $5 million in income tax benefit, net income came in at $394 million. Even though net was higher than operating, net was still down 68% compared to Q1 2019. This resulted in earnings-per-share of $0.64, down 68% from the $1.98 a year ago.
| NVIDIA Q1 2020 Financial Results (GAAP) | |||||
| Q1'2020 | Q4'2019 | Q1'2019 | Q/Q | Y/Y | |
| Revenue | $2220M | $2205M | $3207M | +1% | -31% |
| Gross Margin | 58.4% | 54.7% | 64.5% | +3.7% | -6.1% |
| Operating Income | $358M | $294M | $1295M | +22% | -72% |
| Net Income | $394M | $567M | $1244M | -31% | -68% |
| EPS | $0.64 | $0.92 | $1.98 | -30% | -68% |
Although seeing such a drop is never good, some perspective is required. NVIDIA’s 2019 fiscal year was a standout. Revenue in Q1 2019 was $3.2 billion, with a net income of $1.2 billion. But if you go back to Q1 2018, revenue was $1.9 billion, and net income was $507 million, which is much closer to Q1 2020. Comparing Q1 2018 to Q1 2020 has 2020 up 14.6% on revenue, and net income down 28.6%. Clearly the inflated results thanks to a perfect storm for NVIDIA’s 2019 financials has ended though, and the company has been thrust back to reality. Luckily reality for the company is that a Q1 of $2.2 billion makes it easily their second best Q1 ever, so I think they’ll be OK.
Jumping into individual segments within the company, there are basically two products NVIDIA sells: GPU and Tegra. NVIDIA further breaks these down into subcategories, but NVIDIA at its heart is still a GPU company and its results prove that out. GPU revenue accounted for 91% of the company’s revenue, at $2.022 billion USD, and this segment had an operating income of $669 million. A year ago when crypto was king, GPU was $2.765 billion in revenue with an operating income of $1.394 billion. Revenue for GPU was down due to drops in gaming and data center revenue, as well as not having $289 million in revenue for cryptocurrency mining processors (CMP).
Tegra on the other hand was only $198 million in revenue for Q1 2020, with an operating loss of $44 million. A year ago, Tegra was $442 million in revenue and the segment was in the black, with an operating income of $97 million. The big drop for Tegra is a decline in SoC modules for gaming, which you can read as Nintendo Switch sales for the most part.
NVIDIA then shuffles all of these results into several other categories. Gaming is their largest, and Gaming had revenue of $1.05 billion, which is down 39% from a year ago. NVIDIA attributes this drop due to a decline in GPU shipments as well as a decline in SoC modules for gaming consoles.
Professional Visualization, which features the Quadro brand, had revenue of $266 million, up 6% from a year ago. NVIDIA has seen growth in both desktop and laptop workstation products compared to 2019.
Data Center had revenue for Q1 of $634 million, which is down 10% from a year ago. NVIDIA has seen some slowdown in the hyperscale and enterprise purchases of GPUs, but some growth in inference which has offset the drop somewhat.
Automotive had revenue of $166 million, up 14% from a year ago, attributed to growth in AI cockpit modules.
Finally, OEM and Other revenue was $99 million, down 74% from a year ago, which is not surprising since this is where NVIDIA stuck it’s CMP sales, meaning this entire drop can be attributed directly to cryptocurrency.
| NVIDIA Quarterly Revenue Comparison (GAAP) ($ in millions) |
|||||
| In millions | Q1'2020 | Q4'2019 | Q1'2019 | Q/Q | Y/Y |
| Gaming | $1055 | $954 | $1723 | +11% | -39% |
| Professional Visualization | $266 | $293 | $251 | -9% | +6% |
| Datacenter | $634 | $679 | $701 | -7% | +10% |
| Automotive | $166 | $163 | $145 | +2% | +14% |
| OEM & IP | $99 | $116 | $387 | -15% | -74% |
After a stellar FY 2019, the company has had to hit reset a bit. Q1 is well down compared to 2019, but luckily for the company, not so far off the year previous. Looking ahead to Q2 2020, NVIDIA is expecting revenue of $2.55 billion, plus or minus 2%, and gross margins 59.2% plus or minus 0.5%.
Source: NVIDIA Investor Relations
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Thud2 - Saturday, May 18, 2019 - link
They shouldn't have fu**ed the gamers. They're happy to go to the underdog.Cellar Door - Saturday, May 18, 2019 - link
Sadly with the lack of proper competition - they are sticking to the Apple-like price strategy, taking a hit now but hoping to protect the premium brand status.nevcairiel - Saturday, May 18, 2019 - link
Except there is no underdog. If AMD can't make anything to directly compete with a 2080 Ti or even a plain 2080, what choice does one have if I want that level of performance?wumpus - Saturday, May 18, 2019 - link
Once you look at it from the "how many gigatexels can I provide to the screen" you are committed to paying the performance leader whatever they demand. A better question would be to compare games (or whatever software you are using) with resolutions and framerates.Sadly, AMD still falls flat here. 4K@60 was promised with Vega (might be possible with VII), but I'm not expecting much from Navi. 1080@144 and 1440@144 are also wildly popular, and I suspect only that the Vega boards can only handle the first. There's still a market for 1080@60Hz, but regardless how many more casual gamers prefer that level, there's little money for the RX580 in it.
Sony should be pushing AMD to finally make 4K@60Hz a reality on AMD GPUs (if only the PS5 console). Whether that leads to [any] Navi being capable of that is another story. MS will have a similar story with Arcturus, but that is still way off AMD's roadmap.
WinterCharm - Saturday, May 18, 2019 - link
Radeon VII can *definitely* deliver 4k 60. It's roughly on par with a RTX 2080 or 1080Ti, both of which are capable of 4K gaming.As for 1440p gaming, Vega is capable, but expensive thanks to its HBM. Navi will fix that by using GDDR6.
Skeptical123 - Sunday, May 19, 2019 - link
I've watched people say stuff like "Radeon (blank) can *definitely* deliver ..." for a few generations now and every time it has failed to meet such expectations. I hope AMD bucks that trend but don't hold your breath. And keep in mind even if the new AMD card is what you say they will at best match Nvidia's card from 2017...Alexvrb - Sunday, May 19, 2019 - link
Vega 56 for $300 isn't a terrible deal (not sure what their profit margin looks like though, but it's temporary), but hopefully AMD can offer that level of performance for less money. I know they're not making a run at the performance crown any time soon, but if they can bring serious competition to the mainstream, that will help the majority of gamers more.Alexvrb - Sunday, May 19, 2019 - link
The thing about high-refresh monitors is... you don't have to run at that max refresh all the time to get a lot of the benefits. It's not like the old days where you've got a fixed-rate 60hz panel and you have to choose between vsync or occasional tearing, or manage to run settings low enough that you never drop below 60 (not very efficient, from a graphical standpoint).Anyone getting a gaming display at this point should be getting a FreeSync panel... then you benefit at a huge range of framerates, especially with a decent sync range plus LFC, both of which are very common for such a high refresh panel.
So while I agree with your general sentiment, even if your framerate is fluctuating a bit and averaging around somewhere in the 90-120 range, you're still going to get a better experience than you're giving credit for. 30+ used to be considered playable (honestly still is depending on the type of game), with ~60 being ideal for anything short of a twitch shooter. Yes, times have changed, but 90+ is still pretty darn good. So the whole @144 thing is a bit misleading.
yannigr2 - Sunday, May 19, 2019 - link
Why should AMD throw extra resources on the GPU front? People whining that there is no competition and IF AMD manages to create something that is competitive to Nvidia's top offerings, what are those same people going to do? Let me tell you what they will do. They will say "Thank you AMD for forcing Nvidia drop prices", then they will go and buy an Nvidia card at the new, discounted price (but still much higher than AMD's prices) and laugh at the faces of AMD funs for being poor peasants buying cheap AMD stuff, doing all the hard marketing job online 24/7.AMD should stay at what it makes best and in the market that is the most important and where it has the best chances to succeed. CPUs for servers and PCs. People enjoying all those years promoting Nvidia's monopolistic business model with all those proprietary techs, should pay the extra price with a BIG smile.
yannigr2 - Sunday, May 19, 2019 - link
EDIT: doing all the hard marketing job online 24/7 FOR NVIDIA.