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NVIDIA Announces Q4 FY 2014 Results: Above Expectations!

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Subject: Editorial
Manufacturer: NVIDIA

It wouldn’t be February if we didn’t hear the Q4 FY14 earnings from NVIDIA!  NVIDIA does have a slightly odd way of expressing their quarters, but in the end it is all semantics.  They are not in fact living in the future, but I bet their product managers wish they could peer into the actual Q4 2014.  No, the whole FY14 thing relates back to when they made their IPO and how they started reporting.  To us mere mortals, Q4 FY14 actually represents Q4 2013.  Clear as mud?  Lord love the Securities and Exchange Commission and their rules.

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The past quarter was a pretty good one for NVIDIA.  They came away with $1.144 billion in gross revenue and had a GAAP net income of $147 million.  This beat the Street’s estimate by a pretty large margin.  As a response, trading of NVIDIA’s stock has gone up in after hours.  This has certainly been a trying year for NVIDIA and the PC market in general, but they seem to have come out on top.

NVIDIA beat estimates primarily on the strength of the PC graphics division.  Many were focusing on the apparent decline of the PC market and assumed that NVIDIA would be dragged down by lower shipments.  On the contrary, it seems as though the gaming market and add-in sales on the PC helped to solidify NVIDIA’s quarter.  We can look at a number of factors that likely contributed to this uptick for NVIDIA.

Click here to read the rest of NVIDIA's Q4 FY2014 results!

Add-in sales were brisk primarily due to the release of quite a few next generation titles which leverage DX11 functionality.  Users who have machines several years old still have the CPU horsepower to handle these new titles, but have found a need to upgrade their graphics cards.  The variety and selection of titles for the PC matches or exceeds that of the Xbox or Playstation consoles.  Steam sales and a thriving independent game development scene have also added impetus for PC gaming.  We must also consider that only just recently have the next generation consoles hit the market, and the launch titles for those products are not necessarily in the realm of “a killer app”.

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JHH will be seeing this view for a while due to NVIDIA postponing the construction of their new office buildings.

All of the other products in NVIDIA’s portfolio showed a decline year over year.  Quadro stayed about even but had a weaker quarter as compared to last.  Tesla also saw a decline quarter over quarter due to large scale build-out schedules.  Tegra saw a drop due to the lack of overall pickup of Tegra 4 throughout this year.  Even though Tegra 3 was not a huge seller, Tegra 4 was worse.  Tegra 4 is seeing some uptake in the automotive market due to some strategic partnerships and what looks to be some very aggressive software development help from NVIDIA with their customers.  There is a lot of internal optimism for the Tegra K1 and the Denver based, 64 bit Tegra a bit further down the line.  The addition of the Kepler graphics technology to their ARM based offerings is a very strong move by NVIDIA that could pay off with increased marketshare for their products.  The recently released Tegra 4i could create a positive uptake for Tegra overall due to the inclusion of the LTE/programmable modem.

Net income is down as compared to last year, and this is attributed to a higher operating income.  My guess is that NVIDIA continues to pour as much money as possible into SOC development.  NVIDIA certainly did not burst upon the SOC scene as they were hoping to.  They are a niche player when compared to the Qualcomms and Samsungs of the world.  They do have very valuable graphics IP which looks to play a more important part this coming year.  NVIDIA also has no real choice but to pursue the SOC market.  While the PC Graphics division is still the prime mover for the company, SOCs will be the future.  I can foresee that in about 10 years the value proposition of a standalone graphics card for most use cases will be nearly nonexistent.  To ensure that NVIDIA stays relevant, they have to address the SOC market very aggressively.  As we have seen with AMD and Intel and their inclusion of competent graphics capabilities with their CPUs, NVIDIA must go the route of including a competent CPU with their graphics.

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With the inclusion of the Icera programmable modem, the Tegra 4i could be a breakout product for NVIDIA.  Could be...

Revenue for this next quarter is expected to be in the $1.05 billion range.  Seasonality again rears its ugly head, but NVIDIA looks to have at least one more major release for the desktop this year.  Overall the company seems healthy and they keep finances under control.  It is interesting to see that NVIDIA gained marketshare this past quarter with all of the rage about coin mining and AMD graphics cards.  I wonder if the engineers at NVIDIA are upset that they didn’t provide better GPGPU capabilities with Kepler to take advantage of the potential market for cryptocurrency mining?

NVIDIA just keeps chugging along, but this year will certainly be important in terms of the SOC strategy.  Tegra 4i with the integrated modem could be a relatively successful product, but we also have their Denver based products to look forward to.  The Denver version of K1 was shown up and running at CES and we can assume that they are continuing development on that 64 bit product.  No timeline has been given for its introduction, but the best guess would be a late Q3 release.  Until the point where they can offer a much more compelling product in the SOC market, NVIDIA will rely on their strong graphics portfolio to keep them heading into 2014 (FY2015).

February 13, 2014 | 01:47 PM - Posted by ImmenseBrick (not verified)

They can thank me for paying through the nose for a gtx 780 TI. Sorry AMD, maybe next time.

February 13, 2014 | 02:29 PM - Posted by Jim cherry (not verified)

Truthfully I don't see them being a major soc in mobile any time soon. I think QUALCOMM has ip that's making it hard to have lte in developed markets with other chip vendors. Add to that the fact qaulcomm and mediatek have multiple skus to offer oems. Of course being a niche soc provider can be successful if per say more niche gaming devices were to take off. However right now those devices ouya, shield , and gamestiq are examples of why NVidia is in for another disappointing year with tegra.

February 13, 2014 | 02:34 PM - Posted by Anonymous (not verified)

CIO - Nvidia Will Shun Mainstream Phones with Tegra 4i, CEO Says
http://www.cio.com/article/748173/Nvidia_Will_Shun_Mainstream_Phones_wit...

The first products with the company's Tegra 4i processor, which has an integrated software-based modem, will be announced by the end of this quarter, Huang said. The chip itself was announced early last year.

Nvidia dabbled in the budget smartphone market with its Tegra 3, which appeared in devices from HTC, Lenovo, Fujitsu, Motorola and others. But its successor chip, the Tegra 4, was a disappointment and Nvidia couldn't hold onto that market, said Jim McGregor, principal analyst at Tirias Research.

Nvidia isn't willing to compete in that market with single- or dual-core chips, partly because its products are high-performance and the company can't afford the lower returns.

"The devices they have aren't designed for the budget market," McGregor said.

i500 modem is only compatible with AT&T networks in the U.S. so good luck with that Nvidia.

February 13, 2014 | 09:27 PM - Posted by renz (not verified)

i heard there was a reason why nvidia choose AT&T to certify their modem. but JHH mention they did not target US as their main market for their modem

February 13, 2014 | 03:59 PM - Posted by OLDIRTYPRIEST

i bought two titans last year and they spat in my face with the 780.... never again nvidia.

February 13, 2014 | 04:29 PM - Posted by pdjblum

Both AMD and Nvidia live and die by the success of their graphics card's division. All the rest is window dressing for the analysts. Both companies owe everything to pc gamers. Neither company would earn a penny without us. Too bad they don't treat us accordingly. I have no doubt the graphics card division made all the profit and the other divisions lost money. Revenues went up but earnings went down, both probably because of the other divisions. AMD would be bankrupt today if not for ATI. Fuck Nvidia for trying to sell g sync retro kits for $200 and fuck AMD for countering with free sync when they have no intention of moving it forward in a speedy manner. And who the fuck cares about rev and earnings expectations on a tech site; leave that crap to the wsj or other appropriate news sources where it is readily available. Yeah, of course you are obliged to mention it. Just ranting. Sorry Josh.

February 13, 2014 | 10:08 PM - Posted by Josh Walrath

LOL!  Good points, btw.  Neither really sits on a solid foundation in the current environment... well, oddly enough, AMD has more of a foundation because they offer a greater variety of products.  Still...  Rant appreciated!

February 13, 2014 | 11:12 PM - Posted by me (not verified)

Good points? I would like to welcome pdjblum to the real world where companies, especially publicly traded ones, strive to maximize income. There comes a point when you should realize these companies are not your friends. They may act friendly but that's mainly to gain your business and the moment they realize they can cut customer service and make the same or more they would.

As to who the fuck cares about rev and earnings expectations on a tech site? Financial earnings give us insights into companies and their actions. Is Nvidia going to continue their pricing scheme? Their financial reports indicate that it's working for them. Why is AMD consistently delaying products and behind in features? Because they don't have the money to spend on R&D partly because their margins are significantly lower. Financial reports can give us hints on whether AMD can make Mantle a success, what new market's they're trying to push their products into, which product divisions may be introducing new products, whether high pricing due to low inventory levels is going to continue, any partnerships they're likely pursuing and even to make a point like AMD and Nvidia are supported by the success of their graphics card divisions. Like it or not money does make the world go round (contrary to the popular belief that it's physics).

February 14, 2014 | 12:05 AM - Posted by Anonymous (not verified)

"Why is AMD consistently delaying products and behind in features?"

Are you high?

AMD has had DX11.1 & 11.2 compliant hardware.
DX 11.1 since Jan 2012
DX 11.2 since Oct 2013

Nvidia has yet to release there first DX11.1 compliant chip.

Bridgeless multi-gpu. CrossFire scales better than SLI in newer games engine by up to 20%.

February 14, 2014 | 01:01 AM - Posted by renz (not verified)

but it does not make nvidia cannot do what amd can. nvidia already explain the things they did not include in kepler are not going to affect gaming aspect at all. also don't be surprise who actually able to influence MS on DX11.2 feature. remember when AMD says that their drivers have a bit of problem with DX11.2 around mid last year because they did not expect what MS been doing with DX11.2. cross fire scale better than SLI is nothing new. but in the end while the numbers are ahead it doesn't really picture the whole experience. the frame latency stuff has been discussed by reviewer for years but AMD don't really care about it since back then most reviewer only describe how they feel about it. when reviewer site able to come with hard data showing the problem only then they try to fix it.

February 14, 2014 | 03:04 AM - Posted by Anonymous (not verified)

AMD was referring to there DX 11.1 hardware and it only needed a driver update. The article is here on PCPer.com

http://www.pcper.com/news/Graphics-Cards/GCN-Based-AMD-7000-Series-GPUs-...

Its been 2yrs since Nvidia released Kepler and no driver will help it be DX 11.1 or DX 11.2

February 14, 2014 | 04:17 AM - Posted by renz (not verified)

"Our GPUs based on Kepler architecture are ready for DX 11.2 and will immediately support these features."

http://blogs.nvidia.com/blog/2013/10/17/windows-8-1-2/

February 14, 2014 | 05:31 AM - Posted by Anonymous (not verified)

Supporting certain DX 11.2 feature doesn't make them DX 11.2 compliant

http://msdn.microsoft.com/en-us/library/windows/desktop/ff476346(v=vs.85).aspx

February 14, 2014 | 06:04 AM - Posted by renz (not verified)

it does not but it doesn't stop them from using gaming related feature from DX11.1/11.2

February 14, 2014 | 06:55 AM - Posted by Anonymous (not verified)

"With the inclusion of the Icera programmable modem, the Tegra 4i could be a breakout product for NVIDIA. Could be..."

The breakout product is the Tegra K1, and its ability to run the full desktop versions of openGL, openCL, etc.
This mobile CPU will be based on the desktop Kepler DNA, and it should play nice with the full desktop Nvidia drivers. If any SOC could be the first to run Steam OS on a tablet, it is the Tegra K1, but more so the K1 with the Custom ARMv8 ISA based denver SKU, that Nvidia announced at CES. The only thing that worries me is Nvidia's CEO ranting about android! android is fine for consumption, but if you are touting this mobile processor as having all of the desktop functionality, why not try to market it to users that need a full Linux distro, for running some of their desktop applications on the K1's "compute cores" and Denver CPUs. A tablet running a full linux distro(Steam,others) would make a great graphics tablet at an affordable price, comparied to the Intel based windows 8.* graphics tablets, and not be tied in to any app store ecosystem, should the user want it that way. Graphics/GPGPU is what is needed for mobile tablet devices, for work as well as play, and Nvidia should be marketing the Tegra K1 for both uses, and not just for android based consumption. I really hope Gabe starts to develop a Steam OS for tablets, beacuse I would be first in line to buy the device, knowing that Steam OS is Debian based, I could run all of my open source desktop graphics applications on a tablet.

February 14, 2014 | 08:01 AM - Posted by renz (not verified)

well actually nvidia also put their hopes on Win RT.

February 14, 2014 | 12:48 PM - Posted by Anonymous (not verified)

RT is an point of sale device for the M$ store, Just Hell NO to that, I will never buy a tablet running windows RT, or Android as the only choice! If a tablet running Steam OS comes to the market, then that tablet will be the choice for a low cost creation platform, Steam OS being Debian based. But windows and Android, are tied to app stores, and it would be a great shame if a tablet prosessor with the potential of the Tegra K1(denver cores) was wasted on a platform that could only run, or was rooted to Android, or windows RT. It is just a matter of time, maybe with the Apple A8, before Apple has a tablet that runs OSX, and then Apple will have more of the graphics tablet market, but will Apple be able to match the Tegra K1 in graphice ability. And Nvidia should have been smart enough not to get in bed with M$, beacuse Nvidia found itself thrown out in the dump, along side all those AOL CDs, and Zunes. Nvidia has a chance to get into the ARM based laptop market with some of their future Denver based APU type SOCs and should never get itself tied to M$'s sinking ship. Nvidia needs to make the K1 tablet SKUs assoicated with fully functioning OSs and not RT or Android. Nvidia has a short amount of time before AMD counters the K1, with x86 and ARM ISA based AMD APUs, for the tablet, that can also run the full versions of OpenGl, OpenCL, etc. If I were Nvidia's CEO I would be giving Gabe, and the Debian developers free K1 (A15, and Denver) development tablet platforms, and have them get a full versions of Steam OS, and Debian Stable(currently wheezy) running on these new devices. WinTel is not the way to go for mobile, and both M$ and Intel do not have much of the mobile market, and for sure, Intel will not be able to match Nvidia's K1 kepler based graphics, on any device, just try and high end game on any Intel product, without a descrete GPU in the PCI slot.

POS (point of sale) devices to the M$ store, is all you will get with hardware tied to M$'s RT, but what you also get is that OTHER POS meaning when you by a device tied to RT only!

February 17, 2014 | 02:57 PM - Posted by asdf (not verified)

Since when is doing better than expected a good thing when you're still doing really bad?

It's like losing $900 in a bad trade and be happy because it could been $1000.

February 17, 2014 | 03:59 PM - Posted by svnowviwvn

You mean for AMD right because Nvidia is doing great whereas AMD not so good.

February 17, 2014 | 11:44 PM - Posted by asdf (not verified)

Why the AMD bash?

Tegra is down a whopping a 48%. Totally murdered.
2013 revenue is down a 4%.
2013 net income is down a 20%.

Not doing great. Not at all.

February 18, 2014 | 04:27 AM - Posted by renz (not verified)

that might be true for year over year but for quarter over quarter the sales of tegra are increasing.

February 18, 2014 | 03:01 PM - Posted by asdf (not verified)

I know. Even with that boost in the 4th quarter the revenue was down 48%.

It's easy post a 18% increment Q/Q when you're selling basically zero.

March 1, 2014 | 04:02 AM - Posted by Anonymous (not verified)

WinIntVidiaTel 4 life !

March 1, 2014 | 04:04 AM - Posted by Anonymous (not verified)

My AMD keeps conking out where screen goes a tan color with vertical lines.
Never AMD again !

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