Robust business conditions in the PC gaming market led to high-double-digit profit growth in Nvidia Corp.'s first quarter of fiscal 2015.
The GPU chip maker reported that net income rose 75% from a year earlier but fell 7% from the fourth quarter of fiscal 2014 to $137 million. GAAP earnings per share rose 85% from a year earlier to $0.24.
Revenue rose 16% from a year earlier but fell 4% from the fiscal fourth quarter to $1.1 billion. Nvidia management attributed the drop to seasonal weakness.
The GPU business unit is Nvidia's largest revenue contributor, accounting for nearly 81% of its overall revenue. GPU unit sales grew 14% from a year earlier but fell 5% from the fourth quarter to $898 million. The company cited strong demand for its high-end GTX GeForce desktop and notebook GPUs, including its newly released GTX 750, the first GPU based on Maxwell, which generated sales growth of 57%.
Specifically, two areas of strength were desktop GPU demand in China, the US, and Europe and high-end gaming notebooks. However, revenue from notebook GPUs fell due to continued weakness in the notebook sector.
The fabless chip company said a richer mix of high-end desktop and notebook GPUs as a percentage of revenue contributed to higher gross margins in the quarter. The GAAP gross margin was 54.8%, versus 54.3% a year earlier and 54.1% in the fourth quarter.
GRID processors for server graphic solutions and Tesla devices for datacenter and high-performance servers and workstations also contributed to revenue growth.
Sales from Nvidia's Tegra mobile processors for tablets and smartphones increased 35% from a year earlier to $139 million, buoyed by healthy demand from the smartphone and automobile sectors. However, the gains were offset by slower growth in Android tablet SoC sales. Revenue from Tegra processors for automobiles grew more than 60%, while revenue associated with game consoles and embedded devices decreased.
Jen-Hsun Huang, the company's president and chief executive, said in a conference call with analysts Thursday that it expects to be in full production this year with the Tegra K1, a high-performance, 64-bit processor aimed at gaming, automotive, and differentiated products.
"TK1, as you know, is the most advanced GPU that's ever been built for mobile devices and it's taking the world's most advanced GPU, Kepler, and mobilizing it for the very first time," Huang said.
This quarter, the company expects to post revenue of $1.1 billion, plus or minus 2%, and GAAP and non-GAAP gross margins of approximately 53.7% and 54%, respectively. Revenue growth will depend on the steepness of the overall PC consumer market's seasonal decline, according to Nvidia management.
— Ismini Scouras is a freelance writer for EE Times.