Nvidia beats Street forecast with modest revenue, margin growth

Ah. Nothing to occupy one's Thursday afternoon like a new round of financial results. This time, it's Nvidia who's reported earnings for the first quarter of its 2014 fiscal year. (The quarter ended on April 28.)

Nvidia is reporting net income of $77.9 million on revenue of $954.7 million, which is up slightly from last year but down substantially from the previous quarter. Since Nvidia's fiscal Q4 overlapped with the holiday season, a decline is understandable. There's also the fact that newer tablets seem to be eschewing the company's Tegra SoCs in favor of silicon from the likes of Qualcomm.

Still, these numbers actually exceeded the expectations of Wall Street analysts. According to Reuters, analysts were, on average, forecasting revenue of $940.6 million for the quarter.

  Q1 FY'13 Q4 FY'13 Q1 FY'14
Revenue $924.9 million $1,106.9 million $954.7 million
Net income $60.4 million $174.0 million $77.9 million
Gross margin 50.1% 52.9% 54.3%

Jen-Hsun Huang, Nvidia's perpetually optimistic CEO, touts "another quarter of record margins." He also lauds the success of Nvidia's Kepler-based GPUs, which he says are "capturing share among gamers, strengthening our workstation and supercomputing segments, and will fuel new growth opportunities for our GRID server graphics solutions." Huang also predicts future growth from Nvidia's next-gen SoCs. "With Tegra 4 devices and Tegra 4i certification on the way, we're gearing up to return to growth in the second half," he says.

Nvidia's earnings announcement also includes an update on the firm's share repurchase program:

As previously announced, NVIDIA plans to return in excess of $1 billion this fiscal year to shareholders in the form of share repurchases and quarterly dividend payments. During the first quarter, NVIDIA returned $146.3 million to shareholders by repurchasing $100 million of shares, and paying $46.3 million of dividends, or $0.075 per share. As part of NVIDIA's capital return program, the company plans to continue its quarterly dividend program at $0.075 per share and to return additional cash of at least $750 million during fiscal 2014, largely through a structured share repurchase program.

For the ongoing second fiscal quarter, which will end in July, Nvidia expects revenue to hit $975 million, give or take a couple of percent. Gross margin should remain at the same level as this quarter—54.3%.

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