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pww.comNVIDIA Corporation, Q2 2020 Earnings Call, Aug 15, 2019 - NasdaqGS:NVDA

NasdaqGS:NVDA

Colette M. Kress [Executive VP & CFO] 💬

Colette M. Kress, the Executive Vice President and Chief Financial Officer of NVIDIA, provided several updates and insights during the Q2 2020 Earnings Call on August 15, 2019. Here is a detailed summary of her statements:

  1. Q2 Revenue Overview:

    • Q2 revenue was $2.58 billion, in line with the outlook, down 17% year-on-year and up 16% sequentially.

  2. Gaming Business:

    • Revenue of $1.31 billion was down 27% year-on-year and up 24% sequentially.
    • Strong sequential growth due to the launch of the RTX SUPER lineup for desktop gamers, a record number of gaming laptops, and the introduction of RTX Studio laptops for creators.
    • The SUPER lineup delivers up to a 24% performance boost compared to the initial Turing GPUs launched a year earlier and has received a great response.
    • Excitement around ray-tracing titles like Call of Duty: Modern Warfare, Cyberpunk 2077, Watch Dogs: Legion, and Wolfenstein: Youngblood.
    • The laptop business continues to be a standout growth driver with over 100 gaming laptop models being ramped up.
    • RTX Studio laptops, designed for creators, deliver performance up to 7x faster than the MacBook Pro.
    • Sequential growth also benefited from the production ramp of two new models of the Nintendo Switch gaming console.

  3. Data Center Business:

    • Revenue was $655 million, down 14% year-on-year and up 3% sequentially.
    • Vertical industries showed sequential and year-over-year growth, driven by expanding AI workloads.
    • Hyperscale business was impacted by relatively weak overall spending at a handful of CSPs.
    • Solid sales of NVIDIA GPUs for cloud use, with growing engineering focus on AI.
    • Announced breakthroughs for the fastest training and inference of the BERT model for natural language processing.
    • Record-breaking performance on MLPerf benchmarks, achieving up to 80% speed-ups in just 7 months.
    • NVIDIA AI platform getting progressively faster with monthly optimization and performance improvements to CUDA-X AI libraries.
    • Introduced the DGX SuperPOD AI supercomputer, which debuted at #22 on the TOP500 list of the world's fastest supercomputers.
    • Announced plans to make NVIDIA's full stack of AI and HPC software available to the ARM ecosystem by the end of the year.
    • Pending acquisition of Mellanox progressing as expected, with regulatory approval in the U.S. and ongoing engagement with regulators in Europe and China.

  4. Professional Visualization:

    • Revenue reached $291 million, up 4% from the prior year and up 9% sequentially.
    • Growth led by record revenue for mobile workstations with strong demand for new thin and light form factors.
    • Over 40 design and creative applications with RTX technology announced by leading software vendors.

  5. Automotive Business:

    • Q2 revenue was $209 million, up 30% from a year ago and up 26% sequentially.
    • Reflects growing adoption of next-generation AI cockpit solutions and autonomous vehicle development projects.
    • Announced a new partnership with the Volvo Group to develop AI and autonomous trucks utilizing NVIDIA's end-to-end AI platform.

  6. GAAP and Non-GAAP Financial Measures:

    • Q2 GAAP gross margins were 59.8% and non-GAAP were 60.1%, up sequentially, reflecting higher automotive development services, a favorable mix in gaming, and lower component costs.
    • GAAP operating expenses were $970 million, and non-GAAP operating expenses were $749 million, up 19% and 8% year-on-year, respectively.
    • GAAP EPS was $0.90, down 49% from a year earlier. Non-GAAP EPS was $1.24, down 36% from a year ago.

  7. Outlook for Q3 Fiscal 2020:

    • Expected revenue of $2.9 billion, plus or minus 2%.
    • GAAP and non-GAAP gross margins expected to be 62% and 62.5%, respectively, plus or minus 50 basis points.
    • GAAP and non-GAAP operating expenses expected to be approximately $980 million and $765 million, respectively.
    • GAAP and non-GAAP tax rates expected to be 10%, plus or minus 1%, excluding discrete items.
    • Capital expenditures expected to be approximately $100 million to $120 million.

  8. Closing Remarks:

    • Upcoming events include participation in the Jefferies conference and the Citi Global Technology Conference.

Throughout the call, Colette M. Kress provided detailed financial insights and outlooks, emphasizing the company's strong performance and growth prospects across various business segments.

Simona Jankowski [Former Vice President of Investor Relations] 💬

Simona Jankowski, the Former Vice President of Investor Relations for NVIDIA, began the call by welcoming everyone and introducing the NVIDIA representatives present: Jen-Hsun Huang, President and Chief Executive Officer, and Colette Kress, Executive Vice President and Chief Financial Officer.

She reminded participants that the call was being webcast live on NVIDIA's Investor Relations website and would be available for replay until the conference call to discuss the financial results for the third quarter of fiscal 2020.

Jankowski also stated that the content of the call is NVIDIA's property and cannot be reproduced or transcribed without prior written consent.

Furthermore, she noted that during the call, forward-looking statements based on current expectations would be made, subject to risks and uncertainties. She directed listeners to the disclosure in the earnings release, the most recent Form 10-K and 10-Q, and any reports filed on Form 8-K with the Securities and Exchange Commission for a discussion of factors that could affect future financial results and business.

Finally, she informed the audience that non-GAAP financial measures would be discussed during the call, and reconciliations of these measures to GAAP financial measures could be found in the CFO commentary posted on the company's website. After these introductory remarks, she turned the call over to Colette Kress.