This afternoon NVIDIA announced their results for the second quarter of their 2021 fiscal year, closing out on an exceptional quarter for the company that set numerous revenue records. With over $3.8 billion in revenue, Q2’FY21 was not only NVIDIA’s biggest quarter yet, however for the first time NVIDIA’s datacenter revenue has surpassed their gaming revenue, the traditional cornerstone of the company. Thanks to the Mellanox acquisition as well as ongoing A100 accelerator sales, the datacenter market has, at long last, become NVIDIA’s single largest revenue segment.

NVIDIA Q2 FY2021 Financial Results (GAAP)
  Q2'FY2021 Q2'FY2020 Q1'FY2021 Q/Q Y/Y
Revenue $3866M $2579M $3080M +26% +50%
Gross Margin 58.8% 59.8% 65.1% -6.3% -1.0%
Operating Income $651M $571M $1028M -33% +14%
Net Income $622M $552M $917M -32% +13%
EPS $0.99 $0.90 $1.47 -33% +10%

For Q2’FY21, NVIDIA booked $3.87B in revenue. Compared to the year-ago quarter, this is a jump in revenue of 50%, making it not only NVIDIA’s best Q2 yet, but their biggest quarter overall. And while NVIDIA’s relative profitability took a hit due to GAAP accounting rules, the company still booked $622M in net income for the quarter, 13% more than in Q1’FY20.

Impacting NVIDIA’s results both positively and negatively was the Mellanox acquisition, which closed at the start of Q2. Mellanox added another 14% to NVIDIA’s revenue – all in the datacenter segment – helping to fuel NVIDIA’s new highs. At the same, however, closing the acquisition came with additional one-time charges for NVIDIA, cutting into NVIDIA’s profit margins. As a result, NVIDIA’s gross margin for the quarter was 58.8%, down 1 percentage point from last year, and several percentage points from last quarter.

NVIDIA Quarterly Revenue Comparison (GAAP)
($ in millions)
In millions Q2'FY2021 Q2'FY2020 Q1'FY2021 Q/Q Y/Y
Gaming $1654 $1313 $1339 +24% +26%
Professional Visualization $203 $291 $307 -34% -30%
Datacenter $1752 $655 $1141 +54% +167%
Automotive $111 $209 $155 -28% -47%
OEM & IP $146 $111 $138 +6% +32%

Breaking down NVIDIA’s revenue by platform, the big news here is NVIDIA’s datacenter revenue, which at $1.752B, has for the first time has surpassed NVIDIA’s gaming revenue. A significant contributor to this shift was Mellanox’s networking products, which contributed over 30% to NVIDIA’s datacenter revenues. But even without Mellanox’s gear, NVIDIA’s comparable GPU-centric datacenter revenue would be over $1.2B, surpassing even last quarter’s numbers.

Among several firsts, Q2 is also the first full quarter for A100 revenue for NVIDIA. Even a quarter later, A100 production is still ramping – and is nowhere near the majority of NVIDIA’s datacenter GPU sales – but the high performance (and highly profitable) accelerator is helping to further grow NVIDIA’s already sizable datacenter GPU revenues.

Overall, datacenter revenue overtaking gaming revenue has been a long time coming for NVIDIA, and an important step in the company’s long-term goal of diversifying beyond graphics. While it’s arguably taken longer than CEO Jensen Huang would perhaps have liked to see, there’s no longer a question of whether NVIDIA has “made it” as a compute company rather than a gaming graphics company – and this is a big factor in NVIDIA’s market cap recently surpassing Intel’s.

Meanwhile NVIDIA’s gaming revenue, even after being bumped from the lead spot in terms of revenue, closed out on another record quarter with $1.65B in revenue. This was up almost 25% on both a yearly and quarterly basis, with NVIDIA finding itself the unusual beneficiary of the current coronavirus pandemic. With people largely staying isolated and staying home, video gaming is on the rise, and according to NVIDIA this has also boosted gaming GPU and SoC sales.

Going forward, it will be interesting to see if gaming revenue remains solidly in second-place for NVIDIA, or if it and datacenter revenue end up jockeying for position. Both segments are expected to grow, especially as NVIDIA prepares for the impending launch of their next generation of GeForce video cards. A strong showing late in the year could give gaming revenue one more – and possibly its last – hurrah as NVIDIA’s largest segment.

Meanwhile NVIDIA’s professional visualization segment once again brought up third place for the company. That segment saw just $203M in revenue, which is down significantly both on a quarterly and yearly basis. After enjoying a mild bump in Q1 due to the coronavirus pandemic, office closures and other changes have begun suppressing ongoing demand, with both laptop and desktop sales declining. For the same reason, this has driven higher sales of virtualization/cloud products for remote working, but not by enough to offset PC losses.

NVIDIA’s automotive business was also a victim of COVID, with the segment pulling in just $111M in revenue for the quarter. This was down on both a quarterly and yearly basis, with the latter representing a 47% drop in revenues. According to comments made on NVIDIA’s earnings call, automotive production bottomed out in April due to COVID, hurting revenue for the segment.

ended up being something of a laggard for Q1’FY21. The segment booked $155M in revenue, which is down 7% from the year-ago quarter. NVIDIA’s automotive business moves at a much different pace than its GPU businesses – in part because it’s not set to really take off until self-driving cars become a retail reality – so the business tends to ebb and flow.

Finally, NVIDIA booked $146M in OEM & IP revenue for Q2. Among other things, this is the segment where NVIDIA books its entry-level laptop GPU sales, and it’s those products that helped to drive higher revenues here.

Wrapping things up, looking ahead to Q3 of FY2021, NVIDIA’s current predictions call for another record quarter. The company is expecting around $4.4B in revenue, and gross margins are anticipated to recover to above 62% as well. On the product side of matters, Q3 should see additional ramping of NVIDIA’s A100 accelerators, and almost certainly will see the launch of new Ampere-based GeForce video cards from the company as well.

Source: NVIDIA

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  • dersteffeneilers - Thursday, August 20, 2020 - link

    I don't know in what universe you live, but typically, they add another performance tier at the same prices, just like they did all the years before. They just wanted more money this time because AMD had Vega and they needed moisturizer from all the laughing
  • lilkwarrior - Thursday, August 20, 2020 - link

    The fact is that a TI of the past would not have been $700 if it launched alongside the other cards or had the deep-learning capabilities of the RTX 2080TI. Furthermore, your rebuttal is insufficient of the fact that the 2080TI indeed replaced an initial Titan that has been $1000-$1200 for some time to me.

    Also note that the 2080TI is unapolgetically a 4K card, it has features you can't simply compare w/ cards of old to justify its price for the same reason you don't compare a $1100+ iPhone 11 Pro to the $800 prices high-end iPhones of old having far more sophisticated uses
  • Spunjji - Friday, August 21, 2020 - link

    The extent to which you're prepared to rationalize this on Nvidia's behalf is touching.
  • eddman - Thursday, August 20, 2020 - link

    It was. The entire 20 series line up was more expensive than their direct predecessors. Had 1080 Ti launched alongside 1080, it probably would have been priced at $850-$1000 range.

    Having new features does not excuse anything; DL, RT, whatever, doesn't matter. If each generation was supposed to be more expensive simply because of features, we'd be in the thousands of dollars range by now.

    Undoubtedly manufacturing costs do have an impact, but the main reason for such prices is always the lack of a proper competition. Remember what happened with 280 and 260 when 4870 launched? The 260 had a 576mm2 die.

    Besides, I don't see why a consumer would be so willing to defend higher prices.
  • michael2k - Thursday, August 20, 2020 - link

    This isn't a defense for higher prices, but a primer on economics and competition.

    If Intel or AMD had a higher performing part than NVIDIA, they would, rationally, charge more. So for the hypothetical OP's 3090 at $2k, that means Intel would have a better part at $2.2k and AMD an even more powerful part at $2.5k.

    If Nvidia couldn't compete on performance then they will have to release parts with a cheaper price, but the higher priced parts won't go away, it just means someone else can charge more instead.
  • eddman - Thursday, August 20, 2020 - link

    Obviously no one will price their top product low if they know it fairly outperforms the competition, but I'm not talking about only the top model, but the entire line up.

    4870 was slower than 280, and yet it forced a massive price cut upon nvidia, showing that the 200 line up was, in fact, overpriced.

    They didn't need to undercut nvidia in pricing and could've priced it at the same level as 260, but they did to capture market share, and were in relatively good financial situation to pull it off. That's what I mean by proper competition; not just competitive products, but a competitive company.

    Had AMD been in a better financial situation, they might've been able to pull the same tactic with the RX 5000 line if they decided to, but they weren't and needed to make as much money as possible with each card, so they stayed close to nvidia's pricing. They are still priced well, IMO, but nothing like the 4000 series.

    AMD being MIA for many months after RTX's launch, and still not being in an optimal financial situation when RX 5000 came out, allowed nvidia to raise the whole pricing field a level and keep at it.
  • Spunjji - Friday, August 21, 2020 - link

    A solid analysis here, @eddman.
  • Spunjji - Friday, August 21, 2020 - link

    It didn't replace the Titan, though. There's a Titan RTX.

    It is catastrophically overpriced compared with previous Ti cards. Performance went up but PP$ barely moved.
  • Spunjji - Friday, August 21, 2020 - link

    It didn't replace the Titan, though. There's a Titan RTX.

    It is catastrophically overpriced compared with previous Ti cards. Performance went up but PP$ barely moved.
  • Eliadbu - Wednesday, August 19, 2020 - link

    Remember while ago when Nvidia introduced the Titan first single GPU (for consumers) at 999$, people said who would buy that but here today 1.2k$ consumer card being sold like its a norm.
    we see companies stretching the limit on how much they charge the consumer for top end devices with ultra expensive and somewhat niche of cards if enough people buy those card then they know they can stretch the price even further for lower tier next gen cards.

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