NVIDIA Earnings Report Q4 2019: Crypto Pain But Full Year Gain
by Brett Howse on February 14, 2019 8:35 PM EST- Posted in
- GPUs
- NVIDIA
- Financial Results
This afternoon, NVIDIA announced their earnings for the fourth quarter of their 2019 fiscal year, which ended January 27. As expected, revenues were sharply hit by the crash of the cryptocurrency markets, and the Santa Clara company faced a year-over-year revenue drop of $706 million, or 24%, with fourth-quarter revenues of $2.2 billion. Gross margin fell to 54.7%, down 7.2% from Q4 2018. Operating income was down a dramatic 73% to $294 million, although net income was only down 49%, coming in at $567 million. This resulted in diluted earnings-per-share of $0.92, down 48% from a year ago.
| NVIDIA Q4 2019 Financial Results (GAAP) | |||||
| Q4'2019 | Q3'2019 | Q4'2018 | Q/Q | Y/Y | |
| Revenue | $2205M | $3181M | $2911M | -31% | -24% |
| Gross Margin | 54.7% | 60.4% | 61.9% | -5.7% | -7.2% |
| Operating Income | $294M | $1058M | $1073M | -72% | -73% |
| Net Income | $567M | $1230M | $1118M | -54% | -49% |
| EPS | $0.92 | $1.97 | $1.78 | -53% | -48% |
For the full fiscal year though, earnings were still very solid, with revenue up 21% to $11.7 billion, and an overall gross margin of 61.2%, up 1.3% from 2018. Operating income was $3.8 billion, up 19%, and net income was $4.1 billion, up 36%. Earnings-per-share for all of 2019 came in at $6.63, 38% higher than 2018.
NVIDIA’s growth thanks to Cryptocurrency was mostly found in their gaming GPU lineup sales, so unsurprisingly the GPU business saw the biggest revenue drop of any segment. Year-over-year, NVIDIA’s GPU business fell 20%, and compared to the previous quarter, it’s down 29%. Still, the GPU side of the house still brought in $1.98 billion in revenue.
Tegra is the other business unit, and it had revenues of only $225 million, down 50% from a year ago. Tegra includes automotive, SoCs for consoles, and embedded devices, and NVIDIA states that most of this decline is due to declines in gaming platforms.
Breaking the units down into markets, Gaming continues to be the biggest segment of NVIDIA, although not by the wide margin we are accustomed to. Gaming brought in $954 million in revenue, down 45% from a year ago where Gaming was $1.7 billion in revenue.
Professional Visualization was up 15% from Q4 2018, with revenues of $293 million, and Automotive was up 23% to $163 million. OEM and IP was down 36% though, thanks to the drop in SoC sales for consoles.
Datacenter continues to be a growth market for NVIDIA, with revenue up 12% to $679 million, encroaching on Gaming as the highest revenue segment for the company. Clearly they’ve done well to diversify and create product segments for the datacenter, and it pays extra dividends when your core business has a weak quarter like this one.
| NVIDIA Quarterly Revenue Comparison (GAAP) ($ in millions) |
|||||
| In millions | Q4'2019 | Q3'2019 | Q4'2018 | Q/Q | Y/Y |
| Gaming | $954 | $1764 | $1739 | -46% | -45% |
| Professional Visualization | $293 | $305 | $254 | -4% | +15% |
| Datacenter | $679 | $792 | $606 | -14% | +50% |
| Automotive | $163 | $172 | $132 | -5% | +23% |
| OEM & IP | $116 | $148 | $180 | -31% | -24% |
For Q1 2020, NVIDIA is expecting revenues to be $2.2 billion, plus or minus 2%, with gross margins between 58.3% and 59.3%.
It will likely take a couple more quarters to get a feel for how everything has shaken out with the decline in Crypto GPU purchases clearly hitting the company hard. NVIDIA has made some pretty major gains that have certainly taken a beating, but they do have some new products on the market currently which might help alleviate the situation.
Source: NVIDIA Investor Relations
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PeachNCream - Friday, February 15, 2019 - link
Recession would be fine right now. I like buying at a discount, but I don't think NVIDIA's slide is a predictor of overall market health. Crypto declines combined with foolish pricing on the RTX GPUs are two readily identifiable factors. A third is the age of current generation consoles. As most popular games are console-first releases, they target console hardware capabilities so the need for more PC graphics power is diminished over the life of each console generation. PC games are typically treated as second-class so in order for computer gaming hardware to enjoy success, the dependency is on console companies to release a next generation of systems. Ugh, it sucks playing second fiddle by being a PC gamer, but that's where all of us sit, at the mercy of Sony's PS-Whatever and Microsoft's XB-Next.stanleyipkiss - Friday, February 15, 2019 - link
No CEO should survive numbers like these.Korguz - Friday, February 15, 2019 - link
um yea.. how is nvidia's CEO to blame for the crypto mining crashing ??Samus - Friday, February 15, 2019 - link
by depending on it in the first place. nVidia had been consistently profitable for years prior to the crypto boom.MrSpadge - Friday, February 15, 2019 - link
How did they depend on it? They took the extra sales and profits, and are now adjusting back to business as usual. Would they have been better off by not selling any GPUs for crypto-mining and just staying at their current level, omitting a few billions of profits?CiccioB - Friday, February 15, 2019 - link
Depending on what?You probably have not understood nothing of what is written in this article, leave alone economics and financials by themselves.
nvidia has differentiated its product portfolio quite well, with revenues coming from the professional market which are about the same of those coming from the gaming market (when non doped by cripto) and other division doing more or less well as offshoots that may create new well sustained branches in the near future.
In a very difficult quarter they managed to get more than half a billion dollars of NET INCOME keeping the gross margin to a quite high level and announcing a better grow for the next quarter, that is they are not and will not sell at a discount their products.
See what the competition has done in previous and has announced for the next quarter.
The fall of their stock values just depends on the diminished big returns that they previously had (and promised) in the past, not because the company is not doing well.
They just returned to the levels previous crypto booming (with increased revenue nonetheless) and they'll start growing as they did from 1996 to 2016.
What they they just need is to get one on home console customer to accelerate the adoption rate of the new technology they are developing, leaving the old struggling competition in the dust with their mint new 7nm architecture that with 16GB of HBM at 1TB/s just managed to get to the performance levels of a 1080Ti 3 years later with even higher power consumption.
StevoLincolnite - Sunday, February 17, 2019 - link
Price/Performance AMD generally has nVidia beat though...And consoles are extremely cost sensitive, so obviously nVidia isn't going to be the best choice for those devices.
CiccioB - Monday, February 18, 2019 - link
In a quarter where nvidia has seen almost half of its gaming GPU not selling they made 500+ millions of NET INCOME.In the same quarter, where AMD has sold tons of Zen CPU it has seen and NET INCOME of $28. I write it just not to be misunderstood: twenty eight millions.
Can you see who's trying to sell something at a discount? Can you see who's trying to compete with behemoth solutions vs smart and less energy hungry ones and doing that they have to sell the GPU at lower the production cost?
If nvidia manages to get MS or Sony as their customer for a future console AMD gfx division is dead as they'll loose the extra work needed to get some more TF from GCN. AMD will find itself a complete generation back the competition (and now that Intel is coming they have to hope that they'll not be the last ones again). And that will be true as long as AMD will continue use the poor GCN architecture.
wumpus - Wednesday, February 20, 2019 - link
TL;DR. Wall Street is full of humans, so expect them to blame anyone but themselves for their own faults.Who cares about blame? Not Wall Street. Even if you had a year of simply picking money off the ground (how the crypto boom must have looked like to GPU vendors), Wall Street will see that as "the new normal" and demand even higher profits "what have you done for me lately".
There's also the issue that Wall Street assumed that crypto *was* the new normal, and bought stock at a price assuming that. When it was clear that wasn't true the stock made a similar crash to Earth. It also hasn't quite finished. It broke $35/share for the first time in 2016 (almost never above $30 before that), and is still $160 (not sure what the support is, I don't think AMD was any more competitive in 2016).
There are a lot of questions about whether the money from crypto was made to look like a "new normal" (since crypto buyers bought the same chips, it isn't like nVidia really cared). But that likely will involve a long drawn out suit that nobody will win except the lawyers (although I don't expect it will cost nVidia that much, proving such things is next to impossible).
https://www.nasdaq.com/symbol/nvda/
Samus - Friday, February 15, 2019 - link
wow.