NVIDIA Corporation (NASDAQ:NVDA) Q1 2020 Earnings Conference Call - Final Transcript

May 16, 2019 • 05:30 pm ET


NVIDIA Corporation (NASDAQ:NVDA) Q1 2020 Earnings Conference Call - Final Transcript


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Colette Kress

4K laptops that are more powerful than even next-generation consoles.

The content ecosystem for ray-traced games is gaining significant momentum. At the March Game Developers Conference, ray-tracing sessions were packed. Support for ray tracing was announced by the industry's most important game engines, Microsoft DXR, Epic's Unreal Engine and Unity. Ray tracing will be the standard for next-generation games.

In March, at our GPU Technology Conference, we also announced more details on our cloud gaming strategies through our GeForce NOW service and the newly announced GFN Alliance. GeForce NOW is a GeForce gaming PC in the cloud for the 1 billion PCs that are not game-ready, expanding our reach well beyond today's 200 million GeForce gamers. It's an open platform that allows gamers to play the games they own instantly in the cloud on any PC or Mac anywhere they like. The service currently has 300,000 monthly active users with 1 million more on the waitlist.

To scale out to millions of gamers worldwide, we announced the GeForce NOW Alliance, expanding GFN through partnerships with the global telecom providers. Softbank in Japan and LG Uplus in South Korea will be among the first to launch GFN later this year. NVIDIA will develop the software and manage the service and share the subscription revenue with alliance partners. GFN runs on NVIDIA's edge computing servers. As telcos race to offer the new services for their 5G network, GFN is an ideal new 5G application.

Moving to data center. Revenue was $634 million, down 10% year-on-year and down 7% sequentially, reflecting the pause in hyperscale spending. While demand from some hyperscale customers bounced back nicely, others paused or cut back. Despite the uneven demand drop -- backdrop, the quarter had significant positives consistent with the growth drivers we outlined on our previous earnings call. First, inference revenue was up sharply both year-on-year and sequentially with broad-based adoption across a number of hyperscale and consumer Internet companies. As announced at GTC, Amazon and Alibaba joined other hyperscalers such as Google, Baidu and Tencent in adopting the T4 in their data centers. A growing list of consumer Internet companies is also adapting our GPUs for inference, including LinkedIn, Expedia, Microsoft, PayPal, Pinterest, Snap and Twitter. The contribution of inference to our data center revenue is now well into the double-digit percent.

Second, we expanded our reach in enterprise, teaming up with major OEMs to introduce the T4 enterprise and edge computing servers. These are optimized to run the NVIDIA CUDA-X AI acceleration libraries for AI and data analytics. With an easy-to-deploy software stack from NVIDIA and our ecosystem partners, this wave of NVIDIA edge AI computing systems enables companies in the world's largest industries, transportation, manufacturing, industrial, retail, health care and agricultural, to bring intelligence to the edge where the customers operate.

And third, we made significant progress in data center rendering and graphics. We unveiled a new RTX Server configuration packing 40 GPUs into an 8 use case and up to 32 servers in