Nvidia revenue beats forecast, but profits fall

Just after the closing bell today, Nvidia posted financial results for its past fiscal quarter—technically the fourth quarter of its 2014 fiscal year, which ended on January 26. (Yes, Nvidia's fiscal years begin about 11 months early.)

The numbers don't look all that bad. Nvidia's revenue is 3% higher than it was at the same time last year, and if my math is right, the company has even beaten its own revenue forecast from November by 7% or so. However, while Nvidia's gross margin has risen by just over one point, net income has fallen by 16%.

  Q4 FY'14 Q3 FY'14 Q4 FY'13
Revenue $1.144 billion $1.054 billion $1.107 billion
Net income $147 million $119 million $174 million
Gross margin 54.1% 55.4% 52.9%

A look at the condensed financial statements in the company's press release suggests that Nvidia is spending more on R&D and taxes than it did a year ago. Also, the company's stock repurchase program and dividend payments apparently added up to $48 million last quarter. I'm not entirely sure how the stock buyback factors into the bottom line, though.

Anyhow, there's cause enough for optimism. So sayeth Nvidia founder and CEO Jen-Hsun Huang:

Quarterly revenue came in well above our outlook, driven by PC gaming, capping an outstanding year for our GPU business. . . . Tesla and Quadro both achieved record annual revenue. GRID cloud technology is being evaluated at hundreds of large enterprises worldwide. And Tegra K1 is disrupting the auto industry, paving the way to self-piloted cars. The groundbreaking work we are doing in visual computing is expanding the opportunities for our GPUs.

Since Nvidia's fiscal year has just ended, we can also compare revenue and profits for the company's 2013 and 2014 fiscal years:

  FY 2014 FY 2013
Revenue $4.130 billion $4.280 billion
Net income $440 million $563 million

The yearly figures are less rosy than the quarterly ones. Revenue is down about 3.5%, while net income has slumped by 22%.

Nvidia's earnings release also includes a forecast for the ongoing quarter. The company says it expects revenue of $1.05 billion plus or minus 2% with gross margin of 54.2%. The revenue figure would be an improvement over the first quarter of its 2014 fiscal year, when the company posted $954.7 million. However, the gross margin figure would be down very slightly from last year's 54.3%.

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