Nvidia sees record profits, serious growth

February 14, 2013 // 11:53 a.m.

Tags: #financial #free-to-play #jen-hsun-huang #nvidia #quadro #tegra #tesla

Nvidia's latest financial figures are out, and if the global market is in a slump somebody forgot to tell the green camp: the company has shown impressive growth, but it's not in the PC market.

According to the company's quarterly earnings report, published late yesterday, its year-on-year revenue has hit a record high of $4.28 billion - 7.1 per cent up on last year's figures - despite a dip quarter-on-quarter that saw it end the year on a 8.1 per cent sequential slump. The company's quarterly net profit figure is the stand-out headliner, however, growing 50 per cent year-on-year to $174 million - despite a stock repurchase programme that saw the company spending $100 million in the last financial quarter and a further $46.9 million in dividends to shareholders, resulting in a dip from Q3's $209 million profit figure.

Nvidia's secret to riding out the flagging PC market is, if you hadn't guessed, Tegra. The company's system-on-chip processor division, responsible for one of the most popular chips for Android - and, more recently, Windows RT - tablets, grew its revenue 50 per cent in 2012 hitting a high of $540 million. While that's only a small fraction of the company's entire $4.28 billion turnover for the year, that figure is only likely to grow further in the coming years. Nvidia's GPU division, meanwhile, continues to dominate Nvidia's earnings, pulling in $3.2 billion in revenue for the financial year.

Speaking in an earnings call with press and analysts, Nvidia co-founder Jen-Hsun Huang was clear about his company's focus on growing its Tegra platform to account for a larger proportion of the company's revenue - a plan which, he claims, is going well. 'At this point we have more design wins [with Tegra 4] than we had at this point with Tegra 3,' Huang claims. 'You also heard we are now sampling our 4G LTE modem, and this is a pretty large market. It's still early in the overall modem market. It's about 150 million units large, projected this year, [and] growing about 50% per year. The overall connected device market is probably about one billion, north of a billion units.

'So there is a lot of LTE 4G modems that need to be shipped. And this is really the first year where we have the ability to engage the market. So we are really super excited about it. We are going to engage it very very hard. And we are sampling modems around the world now. And so those are good growth indicators for Tegra 4. In the first quarter, always we ramp down Tegra 3 as we ramp up Tegra 4. And hopefully in the future as we get more and more into lower-end devices where the lifecycle is a little longer, this transitional effect would be less pronounced. But this is something we expected and is something that will transition into Tegra 4 as fast as we can.
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With Tegra 4 expected to ship in volume in July this year, Huang was doing his best to push the technology ahead of rival devices from ARM's other licensees, like Qualcomm's currently-shipping Snapdragon S4 Pro or Samsung's upcoming eight-core Exynos Octa. '[Soon] you will see performance evaluations of Tegra 4, and I think you’ll be quite pleased with them. Tegra 4 is many times higher performance than Tegra 3 in many areas and it’s designed to be very high performance. There’s a lot of confidence in why we can deliver that performance leadership. We said that about Tegra 3 and I think we delivered on that. This is an area that we’re quite good at. So, whether it’s CPU performance or GPU performance or camera performance, these are three areas that we’ve made big breakthroughs on.'

That's not to say Nvidia is moving away from graphics, of course. During the call, Huang described Kepler as 'the best GPU we've ever built - the best GPU the industry has ever built,' promising to bring the same chipset to its Quadro workstation line as quickly as possible. As for its consumer line, Huang claimed that the explosion in free-to-play titles will help drive growth there too: 'We have always said that PC gaming is vibrant. We have said that PC gaming is in fact growing, and the reason for that is because the PC platform is open and it allows for a lot of innovation, not only for technology but also for business models.

'One of the most important new growth dynamic has to do with free to play. Free to play is really a wonderful business model. So ,these free to play platforms are fabulous for PCs - and it attracts new gamers.
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Naturally, nobody at Nvidia would be pushed on unannounced products or next-generation release schedules, but from the company's financials the future certainly looks bright.

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