NVIDIA blows it out of the park with 39 percent higher earnings per share

NVIDIA surprised Wall Street analysts with better than anticipated financial results. The graphics chip designer posted first quarter revenue of $1.30 billion, up 13 percent year-over-year, and non-GAAP net income of $263 million, up 41 percent year-over-year. Diluted earnings per share came in at 46 cents, up 39 percent year-over-year and significanty better than analyst consensus of 32 cents per share.

The company notes it's enjoying growth in all of its platform and says deep learning is driving demand for NVIDIA GPUs. Gaming GPU related revenue soared 17 percent to $687 million and professional visualization was up 4 percent to $189 million.

Especially the datacenter division did really well by pulling in $143 million, up 63 percent on strong demand from deep learning applications, and automotive chip revenue also soared 47 percent to $113 million! The large gains in these units are partly offset by a 21 percent loss in revenue to $173 million in the OEM and IP segment, due to weak PC demand. One interesting observation here is that almost half of NVIDIA's revenue is now non-gaming related.

NVIDIA (NASDAQ: NVDA) today reported revenue for the first quarter ended May 1, 2016, of $1.30 billion, up 13 percent from $1.15 billion a year earlier, and down 7 percent from $1.40 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.33, up 38 percent from $0.24 a year ago and down 6 percent from $0.35 in the previous quarter. Non-GAAP earnings per diluted share were $0.46, up 39 percent from $0.33 a year earlier and down 12 percent from $0.52 in the previous quarter.

"We are enjoying growth in all of our platforms -- gaming, professional visualization, datacenter and auto," said Jen-Hsun Huang, co-founder and chief executive officer, NVIDIA. "Accelerating our growth is deep learning, a new computing model that uses the GPU's massive computing power to learn artificial intelligence algorithms. Its adoption is sweeping one industry after another, driving demand for our GPUs.

"Our new Pascal GPU architecture will give a giant boost to deep learning, gaming and VR. We are excited to bring a new wave of innovations to the markets we serve. Pascal processors are in full production and will be available later this month," he said.

Capital Return
During the first quarter, NVIDIA entered into a $500 million accelerated share repurchase agreement and paid $62 million in quarterly cash dividends.

For fiscal 2017, NVIDIA intends to return approximately $1.0 billion to shareholders through ongoing quarterly cash dividends and share repurchases.

NVIDIA will pay its next quarterly cash dividend of $0.115 per share on June 20, 2016, to all shareholders of record on May 26, 2016.

Investors were also thrilled by the upbeat outlook. NVIDIA (NVDA) shares were last seen trading at $38.19 percent in after-hours trading, a gain of 7.37 percent.

NVIDIA's outlook for the second quarter of fiscal 2017 is as follows:

Revenue is expected to be $1.35 billion, plus or minus two percent.

GAAP and non-GAAP gross margins are expected to be 57.7 percent and 58.0 percent, respectively, plus or minus 50 basis points.

GAAP operating expenses are expected to be approximately $500 million. Non-GAAP operating expenses are expected to be approximately $445 million.

GAAP and non-GAAP tax rates for the second quarter of fiscal 2017 are both expected to be 20 percent, plus or minus one percent.

Capital expenditures are expected to be approximately $30 million to $40 million.