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NVIDIA (NVDA) Stock Up on Q2 Earnings Beat, Guides Well
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Shares of NVIDIA Corp. (NVDA - Free Report) went up more than 2% in after-hours trading yesterday, after the company reported better-than-expected second-quarter fiscal 2017 results. Also, an encouraging third quarter revenue guidance positively impacted the share price.
The company posted earnings (including stock-based compensation but excluding other one-time items) of 44 cents per share for the quarter, up on a year-over-year basis. The Zacks Consensus Estimate was pegged at 37 cents.
Revenues
Revenues not only increased 23.9% year over year to $1.428 billion but also surpassed the Zacks Consensus Estimate of $1.355 billion. The year-over-year increase was primarily due to better-than-expected growth across all the platforms, that is, GPUs gaming platform, Professional Visualization, datacenter and Tegra automotive platforms.
Revenues from the GPU business increased 25% year over year to $1.2 billion, driven by strength in GeForce GPUs and Gaming revenues. Revenues from Gaming GPU increased 18% on a year-over-year basis. Revenues from datacenter (including Tesla and Grid) came in at $151 million, up more than 50% on a year-over-year basis.
Tegra processor revenues on the other hand increased 30% from the year-ago quarter and came in at $166 million, primarily due to better-than-expected growth in Tegra development services and automotive. Automotive revenues for the quarter came in at $119 million, up 68% year over year.
Moving to Professional Visualization, revenues from Quadro increased 22% year over year and came in at $214 million. The increase was mainly due to strong demand in real-time rendering tools and mobile workstations.
Margins
NVIDIA’s adjusted gross margin (including stock-based compensation but excluding other one-time items) expanded 155 basis points (bps) from the year-ago quarter to 57.8%. In dollar terms, gross profit came in at $826 million, up 27.3% from the year-ago quarter, primarily due to strength in GeForce GPU gaming platform and a higher revenue base.
Adjusted operating expenses increased 7.9% from the year-ago quarter to $502 million, as the company continued to invest in sales, general and administrative activities and higher research and development expenses. As a percentage of revenues, operating expenses however decreased 518 bps from the year-ago quarter to 35.2%.
NVIDIA’s adjusted operating margin was up 673 bps from the year-ago quarter to 22.7%, reflecting growth in its GeForce GTX GPU business and lower operating expenses as a percentage of revenues. In dollar terms, adjusted operating income increased from $184 million to $324 million.
NVIDIA’s adjusted net income for the quarter came in at $264.7 million compared with $143 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
NVIDIA exited the quarter with cash, cash equivalents and marketable securities of $4.88 billion compared with $4.75 billion in the previous quarter. Free cash flow in the quarter came in at $151 million, while cash flow from operations was $184 million. NVIDIA’s total debt (including current portion) was $1.43 billion.
During the first half of fiscal 2017, the company repurchased shares worth $509 million and paid a cash dividend of $124 million. NVIDIA also announced a quarterly dividend of 11.5 cents per share (payable on Sep 16, 2016).
Guidance
For the third quarter of fiscal 2017, NVIDIA expects revenues of approximately $1.68 billion (+/-2%). The Zacks Consensus Estimate is pegged at $1.446 billion.
Non-GAAP gross margin is expected to be 58% (+/-50 bps). Non-GAAP operating expenses are expected to be approximately $465 million. Capital expenditures are expected to be roughly in the range of $35 million to $45 million. Non-GAAP tax rate is expected to be 21% (+/-1%).
NVIDIA posted better-than-expected second-quarter fiscal 2017 results and provided an encouraging third-quarter revenue guidance. Also, revenues increased year over year, primarily due to growth across all its four platforms.
Furthermore, we believe that NVIDIA’s innovative product pipeline and strength in gaming and high-end notebook GPUs keep it well positioned. We also believe that the higher adoption of NVIDIA’s Tegra processors could act as a catalyst, going forward.
Nonetheless, competition from the likes of Intel (INTC - Free Report) and QUALCOMM Inc. (QCOM - Free Report) remains a near-term headwind.
NVIDIA has a Zacks Rank #2 (Buy).
Investors may also consider Facebook, Inc. from the tech space, sporting a Zacks Rank #1 (Strong Buy).
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NVIDIA (NVDA) Stock Up on Q2 Earnings Beat, Guides Well
Shares of NVIDIA Corp. (NVDA - Free Report) went up more than 2% in after-hours trading yesterday, after the company reported better-than-expected second-quarter fiscal 2017 results. Also, an encouraging third quarter revenue guidance positively impacted the share price.
The company posted earnings (including stock-based compensation but excluding other one-time items) of 44 cents per share for the quarter, up on a year-over-year basis. The Zacks Consensus Estimate was pegged at 37 cents.
Revenues
Revenues not only increased 23.9% year over year to $1.428 billion but also surpassed the Zacks Consensus Estimate of $1.355 billion. The year-over-year increase was primarily due to better-than-expected growth across all the platforms, that is, GPUs gaming platform, Professional Visualization, datacenter and Tegra automotive platforms.
Revenues from the GPU business increased 25% year over year to $1.2 billion, driven by strength in GeForce GPUs and Gaming revenues. Revenues from Gaming GPU increased 18% on a year-over-year basis. Revenues from datacenter (including Tesla and Grid) came in at $151 million, up more than 50% on a year-over-year basis.
Tegra processor revenues on the other hand increased 30% from the year-ago quarter and came in at $166 million, primarily due to better-than-expected growth in Tegra development services and automotive. Automotive revenues for the quarter came in at $119 million, up 68% year over year.
Moving to Professional Visualization, revenues from Quadro increased 22% year over year and came in at $214 million. The increase was mainly due to strong demand in real-time rendering tools and mobile workstations.
Margins
NVIDIA’s adjusted gross margin (including stock-based compensation but excluding other one-time items) expanded 155 basis points (bps) from the year-ago quarter to 57.8%. In dollar terms, gross profit came in at $826 million, up 27.3% from the year-ago quarter, primarily due to strength in GeForce GPU gaming platform and a higher revenue base.
Adjusted operating expenses increased 7.9% from the year-ago quarter to $502 million, as the company continued to invest in sales, general and administrative activities and higher research and development expenses. As a percentage of revenues, operating expenses however decreased 518 bps from the year-ago quarter to 35.2%.
NVIDIA’s adjusted operating margin was up 673 bps from the year-ago quarter to 22.7%, reflecting growth in its GeForce GTX GPU business and lower operating expenses as a percentage of revenues. In dollar terms, adjusted operating income increased from $184 million to $324 million.
NVIDIA’s adjusted net income for the quarter came in at $264.7 million compared with $143 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
NVIDIA exited the quarter with cash, cash equivalents and marketable securities of $4.88 billion compared with $4.75 billion in the previous quarter. Free cash flow in the quarter came in at $151 million, while cash flow from operations was $184 million. NVIDIA’s total debt (including current portion) was $1.43 billion.
During the first half of fiscal 2017, the company repurchased shares worth $509 million and paid a cash dividend of $124 million. NVIDIA also announced a quarterly dividend of 11.5 cents per share (payable on Sep 16, 2016).
Guidance
For the third quarter of fiscal 2017, NVIDIA expects revenues of approximately $1.68 billion (+/-2%). The Zacks Consensus Estimate is pegged at $1.446 billion.
Non-GAAP gross margin is expected to be 58% (+/-50 bps). Non-GAAP operating expenses are expected to be approximately $465 million. Capital expenditures are expected to be roughly in the range of $35 million to $45 million. Non-GAAP tax rate is expected to be 21% (+/-1%).
NVIDIA CORP Price, Consensus and EPS Surprise
NVIDIA CORP Price, Consensus and EPS Surprise | NVIDIA CORP Quote
Our Take
NVIDIA posted better-than-expected second-quarter fiscal 2017 results and provided an encouraging third-quarter revenue guidance. Also, revenues increased year over year, primarily due to growth across all its four platforms.
Furthermore, we believe that NVIDIA’s innovative product pipeline and strength in gaming and high-end notebook GPUs keep it well positioned. We also believe that the higher adoption of NVIDIA’s Tegra processors could act as a catalyst, going forward.
Nonetheless, competition from the likes of Intel (INTC - Free Report) and QUALCOMM Inc. (QCOM - Free Report) remains a near-term headwind.
NVIDIA has a Zacks Rank #2 (Buy).
Investors may also consider Facebook, Inc. from the tech space, sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>