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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  • PeachNCream - Thursday, August 20, 2020 - link

    On the other end of that spectrum, if you're willing to keep the resolution slider down and disable anti-aliasing, there are a lot of games that are well within reach of one to three generation old integrated graphics such that there is fun to be had without the cost of a dedicated GPU whatsoever and if enough people would eventually come around to that sort of thinking, charging over $1k for a graphics adapter would no longer be a realistic objective. I doubt that would ever happen given the amount of hype, dick waving, and competitiveness there is among people that play computer games though.
  • Eliadbu - Thursday, August 20, 2020 - link

    Sure there are good games that can run on bit dated integrated graphics. But the point is not hey you can play games on cheap hardware the point is prices of new hardware on all levels increase especially in the highend inproportionally to inflation, to manufacturing costs, to older generation transitions etc. Playing on old integrated graphics is step forward and two steps backwards, because advancement in hardware allow for more immersive and more detailed games, the solution is not resolving to austerity and limiting yourself but it is real competition that would force all players to lower prices. And I think that from certain budget people should use consoles due better bang for the buck.
  • Spunjji - Friday, August 21, 2020 - link

    This is an interesting point. Personally, I'm growing tired of the extremes to which GPU companies (mostly Nvidia, but AMD a little) are going just to keep shoving GPU performance up. Absurd TDPs with massive cooling devices to handle them, ridiculously large dies (mostly looking at Nvidia here), expensive and esoteric memory interfaces (AMD's turn here) with correspondingly complex PCB and VRM designs.

    I sometimes wonder what things would look like if maximum GPU board power had remained in sane single-slot ranges around 75W, with double-slot coolers available for silence. We'd still have exceeded Xbox One / PS4 level performance by now, but at far more sane costs to the end-user and the environment.

    Thing is, the main reason I can see for the increasing costs at the high-end is that the market isn't growing at the rate it used to. Without that growth, the only way to keep increasing revenues is increasing prices. GPUs have hit the same problem mobile phones did - they got too expensive and too slow on development to be replaced yearly. Both markets went for the same solution: raise ASP.
  • lilkwarrior - Wednesday, August 19, 2020 - link

    The 3090 could be considered a TI upgrade a gen early for 2080TI owners; considering that you can get the money back from a 2080TI in a matter of weeks & it probably won't have a successor for another 2 years again, it can be worth it for some people.
  • Jimbo11 - Wednesday, August 19, 2020 - link

    NVDA's organic growth was from $3.1 B to $3.3B in the last quarter, while all the rest was due to acquisition. Its data center has hardly grown, I am sorry.
  • Gondalf - Thursday, August 20, 2020 - link

    Umm yes you are right, the datacenter fuel is mainly thanks Mellanox, not more compute cards sold.
    More or less there is a 10% revenue increase Y/Y thanks to Nvidia itself. Good but nothing of stagghering.
    Nvidia as one of the worst bubble share of the trading market, right now is in the "very dangerous" list, with Tesla, Apple, AMD and many others in different sectors.
  • Tabalan - Thursday, August 20, 2020 - link

    Nvidia income grew from $2.6B, not $3.1B. Imo, there is no reason to compare Q/Q as market fluctuates during year. Y/Y is way better comparison.
  • michael2k - Thursday, August 20, 2020 - link

    You really mean you want either AMD or Intel to start charging $2k for a GPU.

    In other words, price competition to drive GPU prices down requires a competitor who can charge an equivalent price, first. If AMD or Intel can release a GPU that beats a 3090, as you put it, then they will charge more for it.

    In response, NV can either release a more powerful part, at an even higher price, or they can release a cheaper part if they can't compete on performance.

    Because right now if you want a cheaper GPU, you can definitely get a 2060 for $309, and by this time next year you can probably get something like a 3060 for $329 or the 2060 for under $299.
  • hanselltc - Wednesday, August 19, 2020 - link

    Wonder how will the next Q go with major gaming releases, considering Turing was somewhat of a dim release.
  • UltraWide - Thursday, August 20, 2020 - link

    Yeah good point. Jensen stated during the conference call that the next generation of Ampere GPUs will send the earnings even higher for the foreseeable future.

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