Daily Management Review

Nvidia's annual profit grew more than twice


Nvidia's net profit in the IV quarter of 2017 fiscal year increased by 21% QoQ and 216% YoY to $ 655 million. The figures were higher than analysts' expectations, but shares still fell.

Nvidia's net profit in the IV quarter of 2017 fiscal year (ended 29 January) increased by 21% QoQ and 216% YoY to $ 655 million.

Revenue in the IV quarter rose by 8% QoQ and 55% YoY to $ 2.17 billion. Nvidia’s adjusted earnings were $ 1.13 per share, while analysts polled by Thomson Reuters expected 83 cents per security. Experts' forecast revenue also fell short of the actual result.

Despite the strong financial performance, investors reacted to the statements negatively. This attitude affected the company's shares, which fell 1.3% to $ 114.87. Shares of Nvidia demonstrated the best dynamics in S&P 500’s calculation base in 2016. They have risen fivefold over the past 12 months.

Strong financial results are primarily obliged to Nvidia’s popular graphics processors. Revenue in this segment increased in the last quarter by 57% to $ 1.85 billion, in the automotive sector - by 37.6% to $ 128 million. Revenue from sales of Tegra processors used in smart phones, notebook computers, automotive electronics, etc., rose by 64% to $ 257 million.

At the end of fiscal year 2017, closed January 29, Nvidia's revenue increased by 38% and for the first time reached $ 6.91 billion. Net profit jumped 171% to $ 1.7 billion. Gross margin for the year rose to 270 b.p. to 58.8%, for the quarter - 100 b.p. QoQ and 300 b.p. YoY to 60.2%.

The company has returned to shareholders $ 1 billion for the past financial year, including $ 739 million in the form of a share buyback and $ 261 million - in the form of dividends. The figure is expected to rise to $ 1.25 billion in the current year.

Nvidia predicted that the revenue in the I quarter of 2018 fiscal years will reach $ 1.9 billion, plus or minus 2% (Thomson Reuters I/B/E/S forecasts $ 1,88 billion). Investments are expected to amount to $ 50-60 million.

NVIDIA is gradually shifting the emphasis on the development of artificial intelligence and autonomous vehicles, yet its revenue from gaming sector is still the largest operating segment, which stimulated NVIDIA growth in recent quarters.

On the other hand, unlike possible difficulties that companies in the gaming sector may face in the near future, development of autonomous vehicles is the best way to go for the processor giant, as the stand-alone segment continues to grow and has promising prospects.

NVIDIA announced a new collaboration with Audi at the recent Consumer Electronics Show 2017. The union is aimed to create an autonomous car by 2020. Critics believe that NVIDIA would face a number of questions from the market about the impact of this statement on the company in the short and long term. 

source: ft.com

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