NVIDIA Closes Fourth Quarter and Fiscal 2021 with New Streak of Record Profits

NVIDIA this afternoon closed the book on another record-breaking fiscal year, announcing its 2021 and Q4 2021 results for the company. For the last quarter of its fiscal year, NVIDIA posted just over $ 5 billion in revenue with a profit of $ 1,457 million, marking NVIDIA’s first quarter of $ 5 billion and setting revenue records at all times. levels. Meanwhile, for the full year, NVIDIA posted just under $ 16.7 billion in revenue, with net profit for the year of $ 4.3 billion.

Setting revenue and profit records, NVIDIA once again ended the year on a high note. The $ 5 billion in revenue they set aside turned in their best quarter in history, and a 61% jump from the quarter last year. Meanwhile, NVIDIA’s record $ 1,457 million in net income is an equally significant jump, surpassing the fourth quarter of 2020 by 53%.

NVIDIA’s gross margin for the quarter was equally strong. NVIDIA posted a gross margin of 63.1%, down slightly from NVIDIA’s record-breaking fourth quarter 2020 margin, but still incredibly comfortable for a factory-less semiconductor company.

Breaking down their revenue by segment, the big winner, as you might expect, has been NVIDIA’s gaming segment. Covering everything GeForce – video cards and services like GeForce Now – among the many records NVIDIA set for the fourth quarter was gaming revenue. For the quarter, NVIDIA recorded $ 2.495 billion in gaming revenue, barely half of all the company’s revenue.

Gaming revenue has been generated from a combination of gaming demand and mining, a thorny issue that NVIDIA is taking some pretty extreme measures to address. While the company is not completely hostile to industrial miners, the demand for hardware from Ethereum miners is distorting NVIDIA’s gaming market, and the volatility of this market makes it difficult to prepare for up and down swings. resulting in the mining market. This has led the company to take measures such as artificially limiting Ethereum’s performance on GeForce cards in the future, starting with the RTX 3060, and introducing a mining-focused companion card line with the next CMP parts.

The big revenue question on everyone’s mind is to what extent Ethereum mining contributed to NVIDIA’s bottom line for the fourth quarter; and the answer to this remains unclear. NVIDIA estimates that a significant number of video cards have been purchased by industrial miners, but since the bulk of their sales go to AIB partners, they cannot accurately track or quantify what these cards are used for. To that end, NVIDIA’s highly uncertain rough estimate is that mining generated $ 100-300 million in revenue for the quarter, a surprisingly small share of their overall gaming revenue. But, even if this range is correct, it has certainly been enough to tip the market scale towards empty shelves and disgruntled players.

As for the first quarter, NVIDIA plans to start CMP card shipments next month. The first month’s sales will be quite limited, with the company projecting only $ 15 million in revenue. But it’s a start; and the company will also split CMP sales over the next few quarters to help quantify the impact of mining on its results.

Looking ahead, NVIDIA’s other big driver for Q4 was the data center market. Bearing in mind that NVIDIA has folded the bulk of Mellanox’s revenue in this segment – so year-to-year comparisons are tricky – in the end, NVIDIA still sets revenue records for this segment. Interestingly, according to the Mellanox company, sales were actually down in the quarter, so the IT side of the data center market grew enough to absorb that decline and more.

Otherwise, the other segments of NVIDIA have been mixed. NVIDIA’s normally reliable business viewing segment is still feeling the impact of COVID to some extent; Now that the immediate rush of work-from-home purchases is over, desktop workstation GPU sales have not fully recovered from the COVID drop and mobile workstation sales are not enough to cover the difference. Meanwhile, NVIDIA’s OEM and IP business has been flat year over year, and automotive is down as some legacy infotainment products have been phased out.

As for the full picture of fiscal 2021, NVIDIA’s fourth quarter is the icing on the cake of what initially seemed like a shaky year for the company. Initially, the fear was that the tech industry would take a big hit from COVID – with NVIDIA’s fiscal year aligning almost perfectly with the onset of the pandemic – but the tech industry has instead benefited from the strong product demand. As a result, NVIDIA posted record revenue of $ 16.7 billion for the year, up 53% from FY2020. And the bottom line was just as strong, with NVIDIA posting a record profit of $ 4.3 billion, up 55% from the previous year.

Looking at NVIDIA’s business segments for the full year, the winners and losers in fiscal 2021 are generally the same as in Q4. The data center saw by far the strongest growth of the year, with revenue of 124% to just under $ 6.7 billion. As mentioned earlier, a big part of this is how NVIDIA has integrated Mellanox products into the segment. But even doing some groundwork to separate Mellanox’s contributions – according to NVIDIA, Mellanox contributed about 10% of the company’s revenue for fiscal 2021 – and that further grows the compute side of the centers’ business. nearly 70% data. The vast majority of them, in turn, were powered by NVIDIA’s A100 accelerator, which was introduced in the second quarter. NVIDIA continued to increase its A100 throughout the year, which was reflected in its steadily increasing quarterly results for data centers.

Meanwhile, gambling grew “only” 41%, to $ 7.8 billion for the year. Similar to the data center market, NVIDIA has launched its next-gen Ampere parts into the gaming market over the past few months, which has led to the usual surge in demand as gamers upgrade and build new ones. new systems. Ethereum mining has undoubtedly played a role in this regard, but NVIDIA is unable to significantly determine the total contribution that has been made. Going forward, the matter is potentially a significant risk for NVIDIA, because when the Ethereum bubble appears, much of that GeForce RTX gaming hardware will enter the second-hand market; so NVIDIA is keen to avoid another crypto hangover like 2018.

Otherwise, NVIDIA’s OEM and IP business grew 25% from 2020, which NVIDIA primarily attributes to improved entry-level laptop GPU sales. Meanwhile, professional viewing and automotive are down for the year as a whole, due to the previously mentioned COVID issues as well as the shift in NVIDIA’s automotive product line.

Finally, looking ahead to fiscal 2021 and the first quarter, NVIDIA approaches the year on an optimistic note. The company expects to report revenue of $ 5.3 billion for the quarter, with a gross margin of 63.8%.

In fact, the biggest limitation to NVIDIA’s growth opportunities during the year will likely be the continued industry-wide chip shortage. While NVIDIA isn’t making any meaningful projections for the full year, at least for the remainder of this quarter (Q1), the company expects more from the status quo; that is, chip supplies remain tight while demand remains high. For gamers in particular, NVIDIA predicts that channel inventories for GeForce parts will remain low throughout the quarter (even with the RTX 3060 launch tomorrow). So, at the moment, there is no indication that GeForce video cards will be any easier to obtain over the next few months.