Subject: Editorial | February 9, 2017 - 06:59 PM | Josh Walrath
Tagged: TSMC, Samsung, Results, quadro, Q4, nvidia, Intel, geforce, Drive PX2, amd, 2017, 2016
It is most definitely quarterly reports time for our favorite tech firms. NVIDIA’s is unique with their fiscal vs. calendar year as compared to how AMD and Intel report. This has to do when NVIDIA had their first public offering and set the fiscal quarters ahead quite a few months from the actual calendar. So when NVIDIA announces Q4 2017, it is actually reflecting the Q4 period in 2016. Clear as mud?
Semantics aside, NVIDIA had a record quarter. Gross revenue was an impressive $2.173 billion US. This is up slightly more than $700 million from the previous Q4. NVIDIA has shown amazing growth during this time attributed to several factors. Net income (GAAP) is at $655 million. This again is a tremendous amount of profit for a company that came in just over $2 billion in revenue. We can compare this to AMD’s results two weeks ago that hit $1.11 billion in revenue and a loss of $51 million for the quarter. Consider that AMD provides CPUs, chipsets, and GPUs to the market and is the #2 x86 manufacturer in the world.
The yearly results were just as impressive. FY 2017 featured record revenue and net income. Revenue was $6.91 billion as compare to FY 2016 at $5 billion. Net income for the year was $1.666 billion with comparison to $614 million for FY 2016. The growth for the entire year is astounding, and certainly the company had not seen an expansion like this since the early 2000s.
The core strength of the company continues to be gaming. Gaming GPUs and products provided $1.348 billion in revenue by themselves. Since the manufacturing industry was unable to provide a usable 20 nm planar product for large, complex ASICs companies such as NVIDIA and AMD were forced to innovate in design to create new products with greater feature sets and performance, all the while still using the same 28 nm process as previous products. Typically process shrinks accounted for the majority of improvements (more transistors packed into a smaller area with corresponding switching speed increases). Many users kept cards that were several years old due to there not being a huge impetus to upgrade. With the arrival of the 14 nm and 16 nm processes from Samsung and TSMC respectively, users suddenly had a very significant reason to upgrade. NVIDIA was able to address the entire market from high to low with their latest GTX 10x0 series of products. AMD on the other hand only had new products that hit the midrange and budget markets.
The next biggest area for NVIDIA is that of the datacenter. This has seen tremendous growth as compared to the other markets (except of course gaming) that NVIDIA covers. It has gone from around $97 million in Q4 2016 up to $296 million this last quarter. Tripling revenue in any one area is rare. Gaming “only” about doubled during this same time period. Deep learning and AI are two areas that required this type of compute power and NVIDIA was able to deliver a comprehensive software stack, as well as strategic partnerships that provided turnkey solutions for end users.
After datacenter we still have the visualization market based on the Quadro products. This area has not seen the dramatic growth as other aspects of the company, but it remains a solid foundation and a good money maker for the firm. The Quadro products continue to be improved upon and software support grows.
One area that promises to really explode in the next three to four years is the automotive sector. The Drive PX2 system is being integrated into a variety of cars and NVIDIA is focused on providing a solid and feature packed solution for manufacturers. Auto-pilot and “co-pilot” modes will become more and more important in upcoming models and should reach wide availability by 2020, if not a little sooner. NVIDIA is working with some of the biggest names in the industry from both automakers and parts suppliers. BMW should release a fully automated driving system later this year with their i8 series. Audi also has higher end cars in the works that will utilize NVIDIA hardware and fully automated operation. If NVIDIA continues to expand here, eventually it could become as significant a source of income as gaming is today.
There was one bit of bad news from the company. Their OEM & IP division has seen several drops over the past several quarters. NVIDIA announced that the IP licensing to Intel would be discontinued this quarter and would not be renewed. We know that AMD has entered into an agreement with Intel to provide graphics IP to the company in future parts and to cover Intel in potential licensing litigation. This was a fair amount of money per quarter for NVIDIA, but their other divisions more than made up for the loss of this particular income.
NVIDIA certainly seems to be hitting on all cylinders and is growing into markets that previously were unavailable as of five to ten years ago. They are spreading out their financial base so as to avoid boom and bust cycles of any one industry. Next quarter NVIDIA expects revenue to be down seasonally into the $1.9 billion range. Even though that number is down, it would still represent the 3rd highest quarterly revenue.
Subject: Editorial | January 31, 2017 - 11:14 PM | Josh Walrath
Tagged: Vega, ryzen, quarterly results, Q4 2016, Q4, FY 2016, amd, AM4
Today AMD announced their latest quarterly earnings. There was much speculation as to how well or how poorly the company did, especially in light of Intel’s outstanding quarter and their record year. Intel has shown that the market continues to be strong, even with the popular opinion that we are in a post-PC world. Would AMD see a strong quarter, or would Intel take further bites out of the company?
The results for AMD are somewhere in between. It was not an overly strong quarter, but it was not weak either. AMD saw strength in the GPU market with their latest RX series of GPUs for both desktop and mobile applications. Their CPU sales seemingly were flat with limited new products in their CPU/APU stack. AMD is still primarily shipping 32nm and 28nm products and will not introduce 14nm products until Ryzen in late Q1 of this year. While AMD has improved their APU offerings at both mobile and desktop TDPs, they still rely on Carrizo and the Bristol Ridge derivative to provide new growth. The company’s aging Piledriver based Vishera CPUs still comprise a significant portion of sales for the budget and midrange enthusiast markets.
The company had revenues of $1.11B US for Q4 with a $51M net loss. Q3 featured revenues of $1.31B, but had a much larger loss of $293M. The primary factor for that loss was the $340M charge for the adjusted wafer start agreement that AMD has with GLOBALFOUNDRIES. AMD did make less this past quarter, but they were able to winnow their loss down to the $51M figure.
While AMD stayed steady with the CPU/APU and GPU markets, their biggest decline came in the semi-custom products. This is understandable due to the longer lead times on these products as compared to AMD’s CPUs/APUs and GPUs. The console manufacturers purchase these designs and then pay out royalties as the chips are produced. Sony and Microsoft each had new console revisions for this holiday season that feature new SoC designs from AMD for each. To hit the holiday rush these companies made significant orders in Q2 and Q3 of this year to allow delivery in Q4. Once those deliveries are made then Sony and Microsoft dramatically cut orders to allow good sell-through in Q4 and not have massive unsold quantities in Q1 2017. With royalties down with fewer chips being delivered, AMD obviously suffers at the hand of seasonality typically one quarter sooner than Intel or NVIDIA does.
For the year AMD had nearly $300M more in revenue as compared to 2015. 2016 ended at $4.27B as compared to 2015’s $3.99B. This is generally where AMD has been for the past decade, but is lower than they have seen in years past with successful parts like Athlon and their Athlon 64 parts. In 2005 AMD had $5.8B in revenue. We see that AMD still has a way to go before matching some of their best years as a company.
One of the more interesting aspects is that even through these quarterly losses AMD has been able to increase their cash on hand. AMD was approaching some $700M a few years back and with the losses they were taking it would not be all many years before liquidity was non-existent. AMD has been able to build that up to $1.26B at the end of this quarter, giving them more of a cushion to rely upon in tight times.
AMD’s year on year improvement is tangible, but made more impressive when considering how big of an impact the $340M charge that the WSA incurred. This shows that AMD has been very serious about cutting expenses and monetizing their products to the best of their ability.
This coming year should show further improvement for AMD due to a more competitive product stack in CPUs, APUs, and GPUs. AMD announced that Ryzen will be launching sometimes this March, hitting the Q1 expectations that the company had in the second half of 2016. Previous to that AMD thought they could push out limited amounts of Ryzen chips in late Q4 2016, but that did not turn out to be the case. AMD has shown off multiple Ryzen samples running anywhere from 3.2 GHz base with a potential engineering sample with a boosted speed up to 4 GHz. Ryzen looks far more competitive against Intel’s current and upcoming products than AMD has in years.
The GPU side will also be getting a boost in the first half of 2017. It looks like the high end GPU Vega will be launching in Q2 2017. AMD has addressed the midrange and budget markets with the Polaris based chips but has been absent at the high end with 14nm chips. AMD still produces and sells Fury and Nano based offerings that somewhat address the area above the midrange, but they do not adequately compete with the NVIDIA GTX 1070 and 1080 products. Vega looks to be competitive with what NVIDIA has at the high end, and there is certainly a pent up demand for an AMD card in that market.
AMD had a solid 2016 that showed that the current management team could successfully lead the company through some very challenging times. The company continues to move forward and we shall see new products with CPUs, GPUs, and motherboards that should all materially contribute to and expand AMD’s bottom line.
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.
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.
Quarter Down but Year Up
Yesterday NVIDIA released their latest financial results for Q4 2012 and FY2012. There was some good and bad mixed in the results, but overall it was a very successful year for NVIDIA.
Q4 saw gross revenue top $953.2 million US with a net income of $116 million US. This is about $53 million less in gross revenue and $62 million down in net income as compared to last quarter. There are several reasons as to why this happened, but the majority of it appears to be due to the hard drive shortage affecting add-in sales. Simply put, the increase in hard drive prices caused most OEMs to take a good look at the price points of the entire system, and oftentimes would cut out the add-in graphics and just use integrated.
Tegra 3 promises a 50% increase in revenue for NVIDIA this coming year.
Two other reasons for the lower than expected quarter were start of the transition to 28 nm products based on Kepler. They are ramping up production on 28 nm and slowing down 40 nm. Yields on 28 nm are not where they expected them to be, and there is also a shortage of wafer starts for that line. This had a pretty minimal affect overall on Q4, but it will be one of the prime reasons why revenue looks like it will be down in Q1 2013.
Q4-2012 In a Nutshell
Tis the reporting season. Yes, that time of year when some of the major players in the computing world get together and tell us all how well they did this past quarter. Ok, so they do not necessarily get together to announce results, but they sure time them that way. Today was AMD’s turn (and Apple’s), and the results were not nearly as positive as what Intel had to offer a few days ago.
Q4 2011 was flat in terms of revenue as compared to Q3. The company had gross revenue of $1.69 billion and had a net income loss of $177 million. That net income is not necessarily a bad result, but more on that later. Margins rose to 46%, which is still a far cry from Intel’s 65% for the past quarter. Gross revenue was up 2% from last year, which considering the marketplace and Intel’s dominance, is a solid win for AMD.
When we start talking about non-GAAP results, AMD had a net income of $138 million. The difference between those two numbers (a loss vs. a nice profit) is that the loss came from one time writeoffs. AMD has lowered its stake in GLOBALFOUNDRIES to 8.8%, and in so doing incurred a hefty charge. This is not so much money lost as it is lost value in the company.
I got your $13.9 Billion over here...
Intel had a record quarter. Are we tired of hearing that yet? I guess that depends on who a person is investing with. Earlier this quarter Intel warned that their results could be negatively affected by the current hard drive shortage that we are experiencing. Apparently, this was a factor, but it did not stop Intel from still having a record quarter.
Q4 2011 turned out to be gangbusters for Intel. They reported gross revenue of $13.9 billion, which is significantly higher than the expected $13.74 billion analysts were predicting. Net income came in at $3.4 billion with an impressive 65.5% gross margin. The overall year was also record setting at $54 billion gross revenue and $12.9 billion net income. For comparison, AMD has a gross revenue of about $6.8 billion and a net income of around $300 million. 2010 was a record year for Intel in that they surpassed $40 billion in revenue for the first time in the company’s history, and this year saw revenue over $10 billion higher. Intel is certainly hitting their stride, and they do not look to slow down anytime soon.