Impressions from the nVidia Earnings Call for Q1FY15

nVidia loves them some PC games. I guess they have to, as they were not selected to make GPU’s for either of the current generation consoles, obviously. Regardless of the potential hint of sour grapes in the voice of nVidia CEO Jen-Hsun Huang in today’s webcast, the truth is that mobile and PC gaming are big deals for nVidia, with them having seen quite remarkable growth in the quarter ending, and solid projections for continued growth throughout the remainder of the year. While today’s earnings call did not surface any direct reveals of new products, there are a few takeaways which can be inferred. And as a big PC and mobile gamer, I am pretty excited about most of them.

Preliminary financial results reports were mistakenly released to about 100 nVidia employees and/or board members earlier this week, so nVidia released the remaining earnings details in dribs and drabs throughout this week, some earlier than they would have normally, in order to ensure that they could not be cited for any insider trading violations. They released the complete report today, and followed up with the webcast this afternoon. Huang was joined by Executive Vice President and CFO Colette Kress.

The big news for me was that Desktop and Notebook GPU business grew 57% year-over-year, although sales had declined from the previous quarter to this one. Regardless, nVidia is seeing a significant up-tick in sales of dedicated GPU’s for both desktops and notebooks overall, despite the fact that the rest of the industry reports overall declining sales of the PC’s themselves. nVidia indicated that even though PC sales are declining, there is increased demand for their higher-end GPU’s, both in client devices for individual consumers, as well as for development assets for gaming companies. Huang indicated that despite the individual sales units of the current generation consoles, there was an install-base of over 10 million nVidia GeForce GPUs actively in use. He felt that the growth of his GPU business would continue in this market sector, fueled by demand from gamers for high-end GPU’s to play the latest and most demanding PC games. He also cited that there were over 30 million subscribers to their GeForce Experience web service. When asked if he thought there were still great games coming this year to fuel this business, Huang cited the ongoing performance of Titanfall, and the upcoming release of WatchDogs. He seemed to indicate that he felt that the former was selling best on the PC, but it seems pretty clear that sales of Titanfall are strongest on the XBox One. Of course, it is tough to say for certain without access to sales number of digital downloads from either the XBox One Store or EA’s Origin service.

The other exciting news for me to hear was nVidia’s plans for the mobile space, and Tegra K1. Huang indicated that nVidia was positioning itself for mobile in the same way that it did in the PC space way back when. The strategic intent for nVidia is to be a principal player and provider of visual computing for the mobile space while it is still relatively young, with an expectation that it will continue to grow and then nVidia can enjoy the benefit of even higher payouts as the market matures. They believe that Android will eventually become one of the largest gaming platforms, and so it is important that nVidia establish a position of strength early on.

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While not revealing a specific release date, Huang seemed to indicate that we could expect product driven by the company’s Tegra K1 processor in the 2nd half of this year. K1 is a multi-purpose chip with two variants; a 32-bit and a 64-bit model. The 64-bit model is going to be one of, if not the, highest performing 64-bit processors in the mobile space when it arrives, according to Huang. nVidia’s Tegra business has experienced three consecutive quarters of growth, and Huang and Kress expect that to continue. One of the other strategic desires for K1 is for it to offer a means for mobile device manufacturers to differentiate their offerings. I can only think that he was saying that it would offer a means for a mobile device manufacturer to not be wholly slaved to Qualcomm.

There were several topics discussed in the one hour earnings call that I did not touch on here. Automotive, Tesla, Grid, and their cloud and super-computing efforts. Two areas that did not leave me a warm and fuzzy were Huang’s responses to questions on their 28nm manufacturing process and their market share in comparison to other competitors. He indicated that on their 28nm process, they were doing “good” and “ok”, but his response was not full of the confidence that he had exuded while answering some other questions. And on market share (basically in comparison to either AMD for GPU’s or Qualcomm for mobile processors), he did not comment on the numbers. He just indicated that sales in both areas were doing well and that nVidia chips in those spaces were “the best”.

Regardless, it was a positive, upbeat earnings call for nVidia, and I walked away from it feeling the same. With an upgrade likely due to replace my Asus G75 sometime this year, I was happy to hear that nVidia is still bullish on gaming in all markets. I hope that this means we will see great desktop, notebook, and mobile parts this year that will fuel those who are passionate about gaming on those platforms, and the devs who we need to make the great content.

 

 

 

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Agasicles has been, and continues to be, all over the map, physically literally, and figuratively. When he is not changing diapers or chasing the dog, he tries to squeeze in some gaming, and even tries to write about it from time to time. He is also into movies, comics, and is trying to perfect the art of binge-streaming television seasons via various streaming services.

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