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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  • liquidaim - Thursday, August 20, 2020 - link

    delve a little deeper and we see that mellanox contributed ~550 million of that 1.752 billion in "datacenter" revenue. Therefor we conclude that in the reported quarter, the gaming revenue increased while datacenter compute revenue was flat... They will be closer to 50% datacenter compute in first calendar quarter of 2021 when graphics card sales should drop/flatline.
  • PandaBear - Thursday, August 20, 2020 - link

    So they got Mellanox, Compute, Mining, and Gaming. They just need to buy ARM and completely bypass Intel for the whole DC solution, and destroy Intel.
  • Zagor Te Nay - Sunday, August 23, 2020 - link

    For most people, gaming is just a hobby... and, as a hobby, falls under budget restrictions.

    Looking at Steam stats, both 208 and 2080 Ti are under 1% of share. Biggest "sellers" are 1060, 1050 Ti and 1050... followed by 1650, 1070 etc.

    I am on 1070 myself. What can I say? I have spent around NZD850, back in 2017, and will upgrade when I have noticeably better GPU in the same price range. 1070 was replacement for aging RX280, and improvement was big. Thinking of it, 1070 was a bit faster and cheaper than previous year's 980. 2070 would be GPU in the same price range now, but according to benchmarks, it is not going over 30% faster than 1070, in some games less.

    Doesn't sound like something to invest close to NZD1000.

    If 3070 gets in 2080 performance zone and keeps sub-NZD1000 price, maybe.

    But I'm thinking more and more, getting next gen console and stick with it for 5 years would be more justified, economically, than keeping up with Nvidia.
  • m00bee - Thursday, August 27, 2020 - link

    Tired of cheaters in every e-sport and triple A multiplayer FPS game.
    I'm considering, keep decent PC (with gtx1660) for CS:GO (that also can run valorant, old simcity, dotA) and moving next triple A title to console ( with XIM for mouse & keyboard) .

    So sorry for my broken english.
  • Levish - Wednesday, August 26, 2020 - link

    Sure, release no new graphics cards for 2+ years and the ones released not selling well to PC builders for gaming due to abysmal price/performance improvement over previous gen. You can make any sales trends look however you want with the right marketing. Release a 3080ti at the 980ti launch price ($650) at a minimum 25% performance improvement over the 2080ti and the tables would turn in weeks or months.

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