Today NVIDIA announced their earnings for the third quarter of their fiscal year 2016 (yes their fiscal year is almost a full year ahead of calendar) and the company posted record revenues for this quarter at $1.305 billion. This is up 7% from last year, and 13% from last quarter. Gross margin was 56.3%, with an operating income of $245 million and a net income of $246 million for the quarter. This resulted in diluted earnings per share of $0.44, which was up 42% year-over-year.

NVIDIA Q3 2016 Financial Results (GAAP)
  Q3'2016 Q2'2016 Q3'2015 Q/Q Y/Y
Revenue (in millions USD) $1305 $1153 $1225 +13% +7%
Gross Margin 56.3% 55.0% 55.2% +1.3% +1.1%
Operating Income (in millions USD) $245 $76 $213 +222% +15%
Net Income $246 $26 $173 +846% +42%
EPS $0.44 $0.05 $0.31 +780% +42%

NVIDIA also reports Non-GAAP figures, which excludes stock-based compensation and acquisition costs, restructuring, and warranty. Gross margin was slightly higher at 56.5% compared to GAAP results, with operating income at $308 million and net income of $255 million. Earnings per share on a Non-GAAP basis were $0.46. The Non-GAAP numbers are important this quarter because of the large write-down NVIDIA took last quarter on their Icera modem division.

NVIDIA Q3 2016 Financial Results (Non-GAAP)
  Q3'2016 Q2'2016 Q3'2015 Q/Q Y/Y
Revenue (in millions USD) $1305 $1153 $1225 +13% +7%
Gross Margin 56.5% 56.6% 55.5% -0.1% +1.0%
Operating Income (in millions USD) $308 $231 $264 +33% +17%
Net Income $255 $190 $220 +34% +16%
EPS $0.46 $0.34 $0.39 +35% +18%

NVIDIA saw great gains in GPU sales, which are the bulk of the company. GPU based revenue was up 12% year-over-year and up 16% over last quarter, with gaming GPU revenue up 40% over last year, and now sits at record levels. The Quadro side of the house did not fare so well, with revenues of $190 million, which is up 8% over last quarter, but down 8% compared to the same time last year. Tesla and GRID revenue was $80 million, growing since last quarter 13%, but down 8% year-over-year.

Tegra processors are still a mixed bag for NVIDIA. They have tried their hand in the mobile phone and tablet space, but with little success, but they have seen good performance from Tegra in automotive applications, and this continues to be the growth area for Tegra. For the quarter, Tegra revenue was $129 million, which is down 23% year-over-year. This decline is due to the tablet and smartphone space, because their automotive attributed revenue was $79 million, which is up 11% since last quarter and up more than 50% year-over-year. There is still hope for Tegra, but it appears to be less and less likely to be in the tablet space. NVIDIA did win the Google Pixel C tablet but it’s unclear yet how it will fare in the difficult tablet market.

NVIDIA also still receives $66 million per quarter from Intel due to a patent license agreement.

NVIDIA Quarterly Revenue Comparison (GAAP)
In millions Q3'2016 Q2'2016 Q3'2015 Q/Q Y/Y
GPU $1110 $959 $991 +16% +12%
Tegra Processor $129 $128 $168 +1% -23%
Other $66 $66 $66 flat flat

During Q3 2016, NVIDIA paid back $53 million in dividends to shareholders and bought back 4.6 million shares. Their goal for FY 2016 is to repay $800 million, and through three quarters, they are now at $604 million. NVIDIA is planning on paying approximately $1.0 billion to shareholders for their next fiscal year.

Breaking down the numbers a bit more, NVIDIA has seen big growth in the gaming segment, with revenues increasing from $468 million since Q1 FY 2015 to $761 million this quarter. Year-over-year, the gaming market has grown 44%, at a time when the PC industry as a whole has contracted. PC gaming appears to be alive and well. This has covered the drop in NVIDIA’s other segments, with the biggest drop being PC & Tegra OEM, which fell from $350 million in revenue last year to just $192 million this quarter, which is a drop of 45% year-over-year. Automotive is growing, but it is still some ways away from matching the Tablet market for sales.

Overall, any time you can set a record for a quarter it is clearly good news. Not all of NVIDIA’s business is growing as quickly as they would like, but luckily for them, their largest segment is the one that is growing at a much quicker pace than the rest of the industry.

Looking ahead to next quarter, NVIDIA is expecting revenues of $1.30 billion, plus or minus 2%, with GAAP margins of 56.7%.

Source: NVIDIA Investor Relations

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  • Mondozai - Thursday, November 5, 2015 - link

    This matches the previous pattern of their latest releases: Geforce gaming GPUs are growing gangbusters. In their last quarter, revenue from geforce GPUs grew by a stunning 50% year over year. Now we see this.

    Yes, they are probably stealing (some) thunder from AMD but most analysts agree that PG gaming as a whole is growing healthily. This is why I put little faith "dGPUs are doomed, doomed I tell you!" meme. Most non-gaming entry level dGPUs are getting butchered by iGPUs from Intel, which is why we're seeing overall declines but this masks the rise of PC gaming.

    This is also in a perverse way good for all PC gamers. NV as a company is trying to diversify, but what we're seeing is that outside of their promising yet tiny automotive business, they are actually becoming MORE reliant on PC gaming.

    I mean their Tegra business was supposed to be their insurance option, yet for all intents and purposes, it's a losing business in the tablet space and NV has given up altogether in the smartphone space.

    So this is good, in a sense. Because it means that NV now has no choice but to focus laser-like on PC gaming because this is not just their legacy business - it's actually the business that is growing fast for them. Their diversification strategy has failed, by and large, and we're going to reap the benefits of that.
  • Samus - Friday, November 6, 2015 - link

    The problem is AMD isn't competitive enough with pricing. Take the R9 380 vs the GTX 960. They're identically priced, yet the 960 is usually faster with nearly half the TDP.

    People make a big deal about the memory bus but AMD's architecture calls for a wider bus because it can saturate it, NVidia's Maxwell architecture has incredibly strong image compression so even 4GB VRAM on a 128-bit bus can be mostly utilized (most people say it realistically caps out around 3GB though.)

    Fans can throw virtual fists back and forth all they want, but the numbers prove who the real winner is. AMD could succeed if they just priced their cards realistically, which would mean cutting all of them from top to bottom, including the Fury, around 20%. Now, the holiday season, would be a good time to do it too because NVidia wouldn't be able to react with a price drop or new incentive until after Christmas.

    C'mon AMD, JUST DO IT.
  • JesseKramer - Friday, November 6, 2015 - link

    "R9 380 vs the GTX 960. They're identically priced, yet the 960 is usually faster with nearly half the TDP."

    What on earth?

    R9 380 is faster than a GTX 960 by 10-20%
  • Samus - Friday, November 6, 2015 - link

    LOL, do you care to provide graphs where this mythical R9 380 is 10-20% faster than a GTX960? 20% faster would make it as fast as a GTX 780. All the benchmarks I've seen show the R9 380 is practically on-par with the R9 280, which isn't a surprise because its the same damn GPU clocked higher. It's important to point out the R9 285 and even the R9 280X are both faster than the R9 380, which is just embarrassing, even more so than NVidia's GTX 960's 128-bit memory bus. The saving grace of the GTX 960 is Maxwell's texture compression does a decent job of filling up over 3GB of the 4GB models VRAM. Yes, Tonga fills more memory with textures and can run higher resolutions than GTX 960's Maxwell, mostly due to the 256-bit memory bus, but at the end of the day, Maxwell is a far more efficient GPU and can really stretch its legs to show superiority. It isn't more powerful, but it doesn't have to be because its more balanced.

    But as I said, they take blows all day long between games, resolutions, and who's benchmarking them. But one thing can't be disputed. GTX 960 is cheaper, and it uses a LOT less power.
  • JesseKramer - Friday, November 6, 2015 - link

    I notice you aren't backing your claims up with any sources either.

    380 is faster than 285 and 960.

    380 and 280 are not the same GPU. Tahiti vs Tonga isn't the same as Hawaii vs Granada.

    380 is GCN 1.2, 280 is GCN 1.0

    2GB video cards are a terrible idea, even with great compression and only at 1080p. It is becoming a real bottle neck in current games.
  • JesseKramer - Friday, November 6, 2015 - link

    "Take the R9 380 vs the GTX 960. They're identically priced"

    "GTX 960 is cheaper"

    Which is it?

    The 960 certainly uses less power, ~70watts less in average gaming load. But it is slower.
  • defaultluser - Friday, November 6, 2015 - link

    I'm sorry, but you're wrong. This review compared two factory-overclocked cards:

    The result? They perform EXACTLY THE SAME.

    "The big question, should you chose NVIDIA GTX 960 4GB or AMD R9 380 4GB? Honestly, they trade blows in performance, one is faster here, and the other is faster there. You will have to look closely at the games you play to differentiate between one or the other. The MSI GTX 960 GAMING 4G has a lot of overclocking potential. When overclocked the GTX 960 and R9 380 perform more similar than not. If you are wondering which one is more "future proof" both will be able to run DX12 games in Windows 10. The key factor to look at is pricing and the factory overclock you get out of the box. Take your time, do some research and chose the one that is priced better at the time, and has a high factory overclock."
  • JesseKramer - Friday, November 6, 2015 - link

    Sure, if you look at a review from the 4th of August which only contains five games.

    The TPU chart I linked to is from the 28th of October and averages fifteen games.
  • Samus - Saturday, November 7, 2015 - link

    Wow JesseKramer you are just full of excuses now. You cherry-picked a single review or simply ignored the fact that the reviewed card was overclocked.

    Listen, you can be an AMD fanboy all you want here, it doesn't matter. But facts are facts, NVidia is killing AMD at a rate where AMD will be bankrupt if they don't do something soon. And that is bad for everybody.

    My advice was simply to drop their prices.
  • JesseKramer - Saturday, November 7, 2015 - link

    Not arguing either of those points, I'm brand agnostic. nvidia certainly has all the market share

    Possibly good advice, though I'd argue AMD has always pulled the price lever, and it hasn't seemed to have helped.

    But I stand by my statement, the 380 is faster than the 960.

    I'm certainly not cherry picking, I'd argue you are.

    And you've changed your stance.

    First it was "yet the 960 is usually faster"

    Then it was "they take blows all day long"

    And you made a couple of other statements that are just plain wrong

    "R9 285 and even the R9 280X are both faster than the R9 380"

    Sure the 280x is faster than the 285 (as it should be it has a bunch more processors) But the 380 is faster than the 285.

    "20% faster would make it as fast as a GTX 780"

    No, it would take about 35-40% more performance for a 960 to equal a 780

    "R9 380 is practically on-par with the R9 280, which isn't a surprise because its the same damn GPU clocked higher."

    They are not the same GPU. Tahiti vs Tonga isn't the same as Hawaii vs Granada.
    380 is GCN 1.2, 280 is GCN 1.0

    You are also ignoring that the HardOCP review is from four months ago. Four months of driver updates and games patches later, perhaps the landscape has changed somewhat, no?

    But go right ahead, throw the fanboy term around, ad hominem all you like. it doesn't strengthen your argument, it actually undermines it.

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