Company Update (NASDAQ:NVDA): NVIDIA Corporation Reports Second Quarter Fiscal 2017 Financial Results

NVIDIA Corporation (NASDAQ:NVDA) reported revenue for the second quarter ended July 31, 2016, of $1.43 billion, up 24 percent from $1.15 billion a year earlier, and up 9 percent from $1.30 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.40, compared with $0.05 a year ago and up 21 percent from $0.33 in the previous quarter. Non-GAAP earnings per diluted share were $0.53, up 56 percent from $0.34 a year earlier and up 15 percent from $0.46 in the previous quarter.

“Strong demand for our new Pascal-generation GPUs and surging interest in deep learning drove record results,” said Jen-Hsun Huang, co-founder and chief executive officer, NVIDIA. “Our strategy to focus on creating the future where graphics, computer vision and artificial intelligence converge is fueling growth across our specialized platforms — Gaming, Pro Visualization, Datacenter and Automotive.”

“We are more excited than ever about the impact of deep learning and AI, which will touch every industry and market. We have made significant investments over the past five years to evolve our entire GPU computing stack for deep learning. Now, we are well positioned to partner with researchers and developers all over the world to democratize this powerful technology and invent its future,” he said.

Capital Return
During the first half of fiscal 2017, NVIDIA paid $509 million in share repurchases and $124 million in cash dividends.

NVIDIA will pay its next quarterly cash dividend of $0.115 per share on September 16, 2016, to all shareholders of record on August 25, 2016.

Q2 FY2017 Summary

($ in millions except earnings per share)   Q2 FY17   Q1 FY17   Q2 FY16   Q/Q   Y/Y
Revenue   $1,428   $1,305   $1,153   Up 9%   Up 24%
Gross margin   57.9%   57.5%   55.0%   Up 40 bps   Up 290 bps
Operating expenses   $509   $506   $558   Up 1%   Down 9%
Operating income   $317   $245   $76   Up 29%   Up 317%
Net income   $253   $196   $26   Up 29%   Up 873%
Diluted earnings per share   $0.40   $0.33   $0.05   Up 21%   Up 700%
($ in millions except earnings per share)   Q2 FY17   Q1 FY17   Q2 FY16   Q/Q   Y/Y
Revenue   $1,428   $1,305   $1,153   Up 9%   Up 24%
Gross margin   58.1%   58.6%   56.6%   Down 50 bps   Up 150 bps
Operating expenses   $448   $443   $421   Up 1%   Up 6%
Operating income   $382   $322   $231   Up 19%   Up 65%
Net income   $313   $263   $190   Up 19%   Up 65%
Diluted earnings per share   $0.53   $0.46   $0.34   Up 15%   Up 56%

NVIDIA’s outlook for the third quarter of fiscal 2017 is as follows:

  • Revenue is expected to be $1.68 billion, plus or minus two percent.
  • GAAP and non-GAAP gross margins are expected to be 57.8 percent and 58.0 percent, respectively, plus or minus 50 basis points.
  • GAAP operating expenses are expected to be approximately $530 million. Non-GAAP operating expenses are expected to be approximately $465 million.
  • GAAP and non-GAAP tax rates for the third quarter of fiscal 2017 are both expected to be 21 percent, plus or minus one percent.
  • Capital expenditures are expected to be approximately $35 million to $45 million.

Second Quarter Fiscal 2017 Highlights

During the second quarter, NVIDIA achieved progress in each of its four major platforms:


  • Introduced the first four members of its Pascal™ family of gaming GPUs: NVIDIA® GeForce® GTX 1080 and 1070, which have set records for speed and power efficiency; GTX 1060, which delivers immersive VR at strong value; and TITAN X, the most powerful consumer GPU ever built.
  • Released its first game, NVIDIA VR Funhouse, which uses enhanced graphics, interactive audio and simulated physics to bring a new level of immersion to VR.
  • Released NVIDIA Ansel, an in-game 360° capture tool, which enables gamers to take and share screenshots of their favorite in-game moments.

Professional Visualization:

  • Unveiled Quadro® P6000 to power the most advanced workstations, enabling designers to manipulate complex designs up to twice as fast as before.
  • Introduced in partnership with SMI an innovative rendering technique that uses eye tracking to enable developers to create more immersive VR environments.
  • Refreshed NVIDIA DesignWorks™ and NVIDIA VRWorks™ with new SDKs and updates that bring developers enhanced capabilities for interactive ray tracing, 360° video stitching and streaming and physically based materials.


  • Opened the path to virtualizing all enterprise applications with Tesla® M10, providing the industry’s highest user density.
  • Introduced Tesla P100 GPU accelerator for PCI Express-based servers, delivering substantial performance and value compared with CPU-based systems.
  • Unveiled its Inception Program which provides access to NVIDIA technology and expertise to support the growth of startups driving breakthroughs in deep learning and data science.


Shares of Nvidia are up nearly 3% to $61.30 in after-hours trading. NVDA has a 1-year high of $59.95 and a 1-year low of $20. The stock’s 50-day moving average is $52.63 and its 200-day moving average is $40.25.

On the ratings front, Nvidia has been the subject of a number of recent research reports. In a report released today, Morgan Stanley analyst Joseph Moore reiterated a Hold rating on NVDA, with a price target of $55, which reflects a potential downside of -7.9% from last closing price. Separately, yesterday, Barclays’ Blayne Curtis reiterated a Sell rating on the stock and has a price target of $40.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Joseph Moore and Blayne Curtis have a total average return of 5.7% and 8.5% respectively. Moore has a success rate of 57% and is ranked #709 out of 4110 analysts, while Curtis has a success rate of 67% and is ranked #363.

The street is mostly Bullish on NVDA stock. Out of 23 analysts who cover the stock, 15 suggest a Buy rating , 6 suggest a Hold and 2 recommend to Sell the stock. The 12-month average price target assigned to the stock is $50.34, which implies a downside of 15.7% from current levels.

NVIDIA Corp. is a visual computing company, connecting people through computer graphics. It is engaged in creating graphics chips, which is used in personal computers. The company operates through two segments: Graphics Processing Unit and Tegra Processor. The Graphics Processing Unit segment includes sales of the company’s GeForce discrete and chipset products that supports desktop and notebook PCs plus license fees from Intel and sales of memory products. The Tegra Processors segment provides processors that deliver superior visual and multimedia experience on tablets, smart phones and gaming devices while consuming minimal power.


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