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Nvidia Posted Record High Revenue in Fiscal 3Q16

Paige Tanner

NVIDIA and Skyworks Report Strong Earnings in Fiscal 3Q16

Quarterly earnings update

As the semiconductor earnings season nears its end, Nvidia (NVDA) and Skyworks (SWKS) announced strong quarterly earnings on November 5, 2015. At a time when companies like Western Digital (WDC) and Micron Technology (MU) reported falling revenues due to the slowdown in their PC shipments, Nvidia had a different story to tell.

Nvidia beat analysts’ estimates with record high revenue

In fiscal 3Q16, Nvidia’s revenue rose 7% YoY (year-over-year) to a record high of $1.3 billion, and its non-GAAP (generally accepted accounting principles) EPS (earnings per share) rose 42% YoY to $0.46. This was above the analysts’ estimate of $1.18 billion in revenue and $0.35 EPS.

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The company’s record high revenue was driven by demand for GeForce GTX GPUs (graphics processing unit) used in gaming and automotive systems. After the earnings release, Nvidia’s shares rose 9.6% in the after-hours trading session. The company’s shares have increased 38% so far in 2015.

Profitability

We will now look at the company’s non-GAAP figures, which exclude stock-based compensation and costs related to acquisition, restructuring, and warranty. On a non-GAAP basis, Nvidia’s gross margin rose from 55.5% in fiscal 3Q15 to 56.5% in fiscal 3Q16. Its operating income rose 17% YoY to $308 million, and its net income rose 16% YoY to $255 million during the quarter. The company has been undergoing restructuring, in which it is dissolving its Icera modem operations.

Cash position

In fiscal 3Q16, Nvidia generated $255 million in cash from its operating activities and paid $53 million in dividend payments. The company announced a quarterly cash dividend of $0.115 per share, up 18% from $0.0975 per share.

As of October 25, 2015, the company’s total cash reserves stood at $4.73 billion. The company intends to use the cash to return $800 million to shareholders in the remainder of fiscal 2016 through dividends and share buybacks. The company expects to return about $1.0 billion to shareholders in fiscal 2017.

In the next part of this series, we will look at various segments driving the company’s revenue growth. If you are bullish about Nvidia, you can consider the PowerShares QQQ ETF (QQQ). QQQ has 0.29% exposure in the company’s stock.

Continue to Next Part

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