NVIDIA this afternoon closed the book in another record fiscal year, announcing its earnings results for fiscal year 2021 and the fourth quarter of 2021 for the company. In the last quarter of its fiscal year, NVIDIA recorded just over $ 5 billion in revenue with a profit of $ 1457 million, marking NVIDIA’s $ 5 billion first quarter and setting record earnings across the board. Meanwhile, throughout the fiscal year, NVIDIA recorded just under $ 16.7 billion in revenue, with a net profit for the year of $ 4.3 billion.
| NVIDIA Q4 2021 financial results (GAAP) | |||||
| Q4’2021 | 3rd Q2021 | Q4’2020 | Q / Q | Y / Y | |
| Recipe | $ 5003M | $ 4726M | $ 3105M | + 6% | + 61% |
| Gross Margin | 63.1% | 62.6% | 64.9% | + 0.5% | -1.8% |
| Operating Income | $ 1507M | $ 1398M | $ 990M | + 8% | + 52% |
| net income | $ 1457M | $ 1336M | $ 950M | + 9% | + 53% |
| EPS | $ 2.31 | $ 2.12 | $ 1.53 | + 9% | + 51% |
Setting revenue and profit records, NVIDIA once again closed its year on a high. The $ 5 billion in revenue they set aside represented the best quarter in its history, and a 61% jump from the previous year’s quarter. Meanwhile, NVIDIA’s record of $ 1,457 million in net revenue is an equally significant jump, surpassing the fourth quarter of 2020 by 53%.
NVIDIA’s gross margin in the quarter was equally strong. NVIDIA recorded a gross margin of 63.1%, a slight decline from NVIDIA’s record margin in 4Q2020, but still incredibly comfortable for a semiconductor company without a factory.
| NVIDIA Quarterly Revenue Comparison (GAAP) ($ in millions) |
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| In millions | Q4’2021 | 3rd Q2021 | Q4’2020 | Q / Q | Y / Y |
| Games | $ 2,495 | $ 2271 | $ 1491 | + 10% | + 67% |
| Professional Viewing | $ 307 | $ 236 | $ 331 | + 30% | -7% |
| Data Center | $ 1903 | $ 1900 | $ 968 | Flat | + 97% |
| Automotive | $ 145 | $ 125 | $ 163 | + 16% | -11% |
| OEM and IP | $ 153 | $ 194 | $ 152 | -21% | + 1% |
Dividing its revenue by segment, the big winner, as you might expect, was the NVIDIA gaming segment. Covering all things GeForce – video cards and services like GeForce Now – among the many records that NVIDIA set for the fourth quarter was gaming revenue. In the quarter, NVIDIA posted $ 2,495 billion in gaming revenue, just a few inches below half of the company’s total revenue.
The targeting of this gaming revenue has been a mix of demand for games and mining, a thorny problem with which NVIDIA is taking extreme measures. While the company is not entirely hostile to industrial miners, the demand for hardware from Ethereum miners is disrupting the NVIDIA gaming market, and the market’s instability makes it difficult to prepare for the resulting up and down swings in the mining market. This led the company to take steps such as artificially limiting the performance of Ethereum on GeForce cards in the future, starting with the RTX 3060, and introducing a line of mining-focused cards with the CMP parts to come.
The big question related to profits in everyone’s mind is how much Ethereum mining contributed to NVIDIA’s fourth quarter financial results; and the answer to that remains hazy. NVIDIA believes that a significant number of video cards were purchased by industrial miners, but since most of their sales are to AIB partners, they cannot accurately track or quantify what these cards are being used for. To that end, NVIDIA’s very uncertain estimate is that mining generated $ 100 million to $ 300 million in revenue in the quarter, a surprisingly small part of its overall gaming revenue. But even if that range is right, it was certainly enough to tip the market’s scale towards empty shelves and unhappy players.
Looking ahead to the first quarter, NVIDIA expects to start shipping CMP cards next month. Sales for the first month will be quite limited, with the company projecting only $ 15 million in revenue. But it is a start; and the company will also release CMP sales in the coming quarters to help quantify the impact of mining on its financial results.
Moving on, NVIDIA’s other big change for the fourth quarter was the data center market. Bearing in mind that NVIDIA has doubled most of Mellanox’s revenue in this segment – so year-over-year comparisons are tricky – at the end of the day NVIDIA is still setting revenue records for this segment. Interestingly, according to the company, Mellanox’s sales fell in the quarter, so the computing side of the data center market grew enough to absorb that drop and then some.
Other than that, the other segments of NVIDIA have been a mixed bag. NVIDIA’s normally trusted professional viewing segment is still feeling the impact of COVID to some extent; now that the immediate shopping spree to work from home is over, GPU sales for desktop workstations have not fully recovered from the drop in COVID and sales of mobile workstations are not enough to cover the difference. Meanwhile, NVIDIA’s OEM and IP businesses have remained stable year after year, and the automotive sector has declined as some legacy infotainment products have been retired.
| NVIDIA’s annual financial results for fiscal year 2121 (GAAP) | |||
| FY2021 | FY2020 | FY2019 | |
| Recipe | $ 16675M | $ 10918M | $ 11716M |
| Gross Margin | 62.3% | 62.0% | 61.2% |
| Operating Income | $ 4532M | $ 2846 million | $ 3804M |
| net income | $ 4332M | $ 2796M | $ 4141M |
| EPS | $ 6.90 | $ 4.52 | $ 6.63 |
As for the full picture for fiscal year 2021, NVIDIA’s fourth quarter is the icing on the cake of what initially looked like an unstable year for the company. Initially, the fear was that the technology industry would take a major hit from COVID – with NVIDIA’s fiscal year almost perfectly aligned with the start of the pandemic – however, the technology industry has benefited from the high demand for products. As a result, NVIDIA posted a record $ 16.7 billion in revenue for the year, an increase of 53% over fiscal 2020. And net profit was equally strong, with NVIDIA recording a record profit of $ 4.3 billion, an increase of 55% over the previous year.
| Comparing NVIDIA Annual Revenue (GAAP) ($ in millions) |
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| In millions | FY2021 | FY2020 | FY2019 |
| Games | $ 7759 | $ 5518 | $ 6246 |
| Professional Viewing | $ 1053 | $ 1212 | $ 1130 |
| Data Center | $ 6696 | $ 2983 | $ 2,932 |
| Automotive | $ 536 | $ 700 | $ 641 |
| OEM and IP | $ 631 | $ 505 | $ 767 |
Looking at NVIDIA’s business segments for the entire year, the winners and losers of the FY2021 are generally the same as in the fourth quarter. The data center had the highest growth in the entire year, jumping 124% to just $ 6.7 billion in revenue. As mentioned earlier, much of this is how NVIDIA introduced Mellanox products to the segment. But even doing some basic work to separate Mellanox’s contributions – according to NVIDIA, Mellanox contributed about 10% to the company’s revenue in fiscal year 2121 – and that still has the computing side of the date business center growing by almost 70%. The vast majority of them, in turn, were driven by NVIDIA’s A100 accelerator, which was introduced in the second quarter. NVIDIA continued to increase the A100 over the fiscal year, which was reflected in its quarterly growth data center results.
Meanwhile, the game rose “only” 41% to $ 7.8 billion for the year. As in the data center market, NVIDIA has launched its next generation Ampere parts for the gaming market in recent months, which has generated the usual increase in demand as players upgrade and build new systems. Ethereum mining undoubtedly played a role in this too, however NVIDIA is unable to determine significantly what the total contribution was. Going forward, the issue is potentially a significant risk for NVIDIA, because when the Ethereum bubble bursts, much of the GeForce RTX gaming hardware will enter the second-hand market; therefore, NVIDIA is committed to avoiding another cryptographic hangover like 2018.
On the other hand, NVIDIA’s OEM and IP businesses increased by 25% compared to 2020, which NVIDIA is attributing mainly to the improved sales of entry-level laptop GPUs. Meanwhile, professional and automotive visualization dropped for the year as a whole, due to the previously mentioned problems of COVID, as well as the change in NVIDIA’s automotive product mix.
Finally, looking at FY2021 and the first quarter, NVIDIA is entering the year on an optimistic note. The company expects to record $ 5.3 billion in revenue for the quarter, with a gross margin of 63.8%.
In fact, the biggest constraint on NVIDIA’s growth opportunities throughout the year is likely to be the continued shortage of chips across the industry. Although NVIDIA is not making significant projections for the entire year, at least for the rest of this quarter (first quarter), the company expects more from the status quo; which means that the chip supply remains tight while demand remains high. For players in particular, NVIDIA is projecting that channel inventories for GeForce parts will remain low throughout the quarter (even with the launch of the RTX 3060 tomorrow). So at the moment, there are no signs that GeForce graphics cards will be easier to obtain in the coming months.