NVIDIA Corporation (NVDA) Earnings Call Transcript & Summary

Hi, everyone. Thanks for joining us today. 2020 was an extremely tough year with no end of challenges, millions of people tuned in to gaming to play, create and connect with one another. Steam saw the number of concurrent users increased by 40% over the previous year and more than double since 2018. Discord connected gamers with over 4 billion minutes of conversations and monthly active users reaching 140 million. That's nearly 3x as many as 2 years ago. Together, we watched over 100 billion hours of gaming content on YouTube. That's twice as much as 2018. And with physical sports largely on the sidelines, eSports has attracted legions of new fans. Viewership is nearly 0.5 billion people globally, up $100 million from 2018, with another 150 million viewers expected over the next 3 years. More than ever, gaming has become an integral part of our lives. Two years ago, we introduced a breakthrough in graphics, real-time ray tracing and AI-based DLSS. We called it RTX. Together with Microsoft and top developers and game engines, we set off to bring the visual realism of movies to fully interactive gaming. The momentum is unstoppable. As consoles and the rest of the ecosystem are now on board. Ray tracing is the new standard. Last fall, hot out of Jen-Hsun's oven, we launched our second-generation RTX, the GeForce RTX 30 series, Ampere architecture for gamers, and our biggest generational leap ever. Ampere features dedicated RT Cores to accelerate ray tracing. Tensor Cores for the performance boosting DLSS and new streaming multiprocessors together, delivering twice the performance of our prior generation. And our ultimate play is more than just beautiful graphics. We introduced low latency NVIDIA Reflex, so competitive gamers could be their best. And NVIDIA Broadcast, an AI-powered app that turns any room into a home broadcast studio. Over the past 4 months, we've launched 4 new Ampere-powered graphics cards from the ultimate BFGPU, the GeForce RTX 3090 priced at $1,499 to the $399 RTX 3060 Ti. Ampere has been our fastest selling architecture ever, selling almost twice as much as our prior generation. We know these products have been hard to find. I want to thank you for your patience as we continue to work hard to catch up. Last CES, we brought GeForce gaming to the cloud. GeForce now allows gamers to play their favorite PC games with RT and DLSS on from almost any device. Windows Laptops, Max, Chromebooks, Android and iOS devices and TVs, billions in total. GeForce now connects you to your favorite PC game stores, like Steam, Epic, Ubisoft and GOG, and free-to-play games like Fortnite, Apex and League of Legends. In all, over 800 PC games have been onboarded from 300 publishers, including 80 free-to-play games, with 6 million registered users, supported by our 25 global data centers, we streamed 200 million hours of gameplay in 2020. We hosted exclusive demos for the annual Game Awards show and stream Cyberpunk 2077 to GFN gamers the day of launch. RTX technology has set a whole new standard in gaming. From amazing Indie games like Pumpkin Jack to the fastest selling PC game of all time, Cyberpunk 2077. In fact, 36 games are now powered by RTX, including the #1 battle royale game, the #1 RPG, the #1 MMO and the #1 best-selling game of all time, Minecraft, and the list continues to grow. DLSS enables the great ray tracing experience in these games by delivering a big performance boost with awesome image quality. Let's take a look. [Presentation]

And today, we are announcing more games that support RTX. Call of Duty is the most successful FPS franchise ever. Starting with COD Modern Warfare in 2019 and then Black Ops Cold War, we've worked with Activision to bring ray tracing to the series. Call of Duty: Warzone, the franchise's free-to-play battle royale has over 85 million gamers. Building on our partnership with Activision, War Zone is adopting DLSS. Coming soon, every RTX gamer will see a boost in performance and competitiveness. Over the years, we have worked closely with Square Enix, including the world-famous final Fantasy and Tomb Raider series. Today, we would like to announce our latest partnership. We are bringing DLSS to Outriders, a brand-new IP from Square Enix, developed by People Can Fly, the creators of Bulletstorm, Outriders is a multi-player co-op shooter set in an original sci-fi universe. [Presentation]

Five Nights at Freddy's, the horror-themed indie hit, grew to become a massive popular franchise with over 30 million downloads and 30 billion YouTube views. Today we are announcing, with developer Steel Wool Studios, that the latest chapter, Five Nights at Freddy's: Security Breach, will feature RTX ray tracing and DLSS. You can expect a new level of immersion into Freddy's unique and frightening world. Five Nights at Freddy's: Security Breach is coming later this year. Here's a look at game footage our friends at Steel Wool put together for us. [Presentation]

This next game was developed by Shanghai TiGames, one of the top China developers emerging onto the global stage. F.I.S.T.: Forged In Shadow Torch, is a platformer that was inspired by classics such as Metroid and Castlevania. As an action game, F.I.S.T. features multiple weapons, numerous combos, upgradable skills and a classic arcade-style experience. NVIDIA worked closely with Shanghai TiGames to bring the game to life with ray tracing and DLSS. [Presentation]

eSports has become the preferred sport for tens of millions of gamers. 75% of GeForce gamers play competitive games like Fortnite, VALORANT and Apex Legends. And 99% of eSports pros are competing on GeForce. So we developed NVIDIA Reflex to help gamers get their best system latency from mouse click to display, Reflex has been a big hit among developers and gamers. Since the introduction in September, a dozen games have added support. Today, we are excited to announce that Rainbow Six Siege and Overwatch are adopting NVIDIA Reflex. Now 7 of the top 10 competitive shooters support the technology. We also wanted to give gamers a way to accurately measure system latency. In September, we announced 4 360Hz G-SYNC eSports displays that feature an innovative tool, the Reflex Latency Analyzer. The latency analyzer is to an eSports gamer what a heart rate monitor is to a runner, a critical tool for measuring system health and performance. With hardware built in the display, it measures full click-to-display latency. Today, we are announcing 5 new G-SYNC gaming monitors from Acer, AOC and ASUS, all featuring Reflex Latency Analyzer. These panels expand the Reflex ecosystem to include 1440p resolution and 34-inch ultrawide. The heart of the GeForce gaming platform is our family of GPUs and the 60-class is our most popular. The affordable price point is designed to bring the performance and features of our latest architecture to every gamer. For example, the GTX 1060 was one of our most successful GPUs we ever built. The GTX 1060 delivered a great generational leap in performance. It could power all the latest games at 1080p, 60 frames per second. The new games bring bigger worlds and cinematic graphics that demand more of the GPU. This is evident in the latest sequels to these AAA games, where the GTX 1060 struggles to keep up. For instance, gamers were playing Watch Dogs 2 with high settings at 60 frames per second. But with Watch Dogs: Legion released last October, they only get 24 frames per second. And an even bigger change is underway. Turn on ray tracing, and these games become unplayable on the 1060. With 90% of the installed base on GTX, now is the perfect time to deliver an RTX for every gamer. Let me introduce the new GeForce RTX 3060, which brings the power of Ampere, our second-generation RTX architecture, to every gamer. Twice the raster performance of the 1060 and 10x the ray tracing performance. The RTX 3060 powers the latest games with RTX on at 60 frames per second. [Presentation]

The RTX 3060 is a powerful GPU. It has 13 shader teraflops, 25 RT teraflops for ray tracing and 101 tensor teraflops to power DLSS. It has 12 gigabytes of G6 memory and starts at just $329. The RTX 3060 will be available worldwide in late February. Amazing gaming doesn't end at the desktop. Laptops are the fastest-growing gaming platform, increasing 7 times in 7 years. There are 50 million gaming laptops, which powered over 14 billion gaming hours last year. And the power of these laptops has inspired gamers to find new ways to play. In console mode, connected to a big screen TV using a controller or driving an ultrawide monitor with a keyboard and mouse. These high-performance machines also meet the needs of 45 million creators and everyone working and studying from home. Today, we are announcing a new generation of Ampere-powered laptops, with second-generation RTX and third-generation Max-Q technologies, delivering twice the power efficiency of previous generations. Nowhere does efficiency matter more than in the extremely power constrained environment of a modern gaming laptop. So 4 years ago, we introduced Max-Q. Max-Q is a system design approach that delivers high-performance in thin and light gaming laptops. It has fundamentally changed how laptops are built. Every aspect, the CPU, GPU, software, PCB design, power delivery, thermals are optimized for power and performance. Our third-generation Max-Q technologies use AI and new system optimizations to make high-performance gaming laptops faster and better than ever. Traditionally, gaming laptops set the power for the CPU and GPU, yet games and creative apps are dynamic and demands on the system change from frame to frame. Today, we are introducing Dynamic Boost 2.0, which, for the first time, uses AI to shift power between the CPU, GPU and now TPU memory, determining where it is needed most. The AI networks in Dynamic Boost 2.0 manage power on a per frame basis. So your laptop is constantly optimizing for maximum performance. The result is a larger performance boost than ever before. We are also introducing Whisper Mode 2.0, delivering a new level of acoustic control for gaming laptops. Whisper Mode has been reengineered from the ground up and is custom-built into each laptop at a system level. You pick your desired acoustics and Whisper Mode 2.0's AI-powered algorithms manage the CPU, GPU, system temperature and fan speeds to deliver great acoustics at the best possible performance. Next, we are introducing Resizable BAR, which leverages the advanced capabilities of PCI Express to boost gaming performance. Games use GPU memory for textures, shaders and geometry constantly updating as the player moves through the world. Today, only part of the GPU's memory can be accessed at any one-time by the CPU, requiring many memory updates. With Resizable BAR, the game can access the entire GPU memory, allowing for multiple updates at the same time, improving performance. Finally, DLSS is a breakthrough for gaming laptops. It uses AI and RTX tensor cores to deliver up to 2x the performance in the same power. A GPU needs to calculate almost 4 million pixels for a single 1440p frame. DLSS requires only a fraction of the pixels, which improves efficiency and increases performance. It also delivers more battery life when you're gaming on the go. Max-Q has reinvented the gaming laptop. Four years ago, the fastest laptops in the world were powered by a GTX 1080. Average 40 millimeter stick and weight over 9 pounds. After 4 years of innovation, Max-Q Gen 3 laptops are half the size, half the weight and deliver up to 10x the performance. More gamers are choosing to play on laptops. And with 95% of the installed base below the performance of the latest consoles, it's time to introduce a new generation. The RTX 3060 laptop is faster than anything on the market today, including the $2,500 RTX 2080 SUPER. It's 30% faster than the PlayStation 5 and delivers 90 frames per second on the latest games at Ultra settings 1080p. The RTX 3060 laptops start at just $999. Gamers know that 1440p displays with twice the pixels of 1080p provide the perfect mix of high-fidelity graphics and great performance. Yet they are missing on laptops. For years, we've been working behind the scenes with display manufacturers and OEMS. Now for the first time, 1440p displays will be widely available, introducing the GeForce RTX 3070 laptop, a 1440p gaming beast. It's 50% faster than the RTX 2070 and delivers 90 frames per second with Ultra settings at 1440p. RTX 3070 laptops start at $1,299. Finally, our flagship GeForce RTX 3080 laptop. With up to 16 gigabytes of G6 memory, it is the world's fastest laptop for gamers and creators. It delivers 100 frames per second with RTX on and starts at $1,999. Today, nearly 3/4 of laptop gamers play eSports. The resulting popularity of high refresh rate laptops continues to grow doubling this past year. I'm excited to announce that over half of the new 30 Series laptops will offer 240Hz or higher refresh rates. With the performance of our GeForce RTX 3080 laptop GPU, gamers will be able to play at 240 frames per second across top titles like Overwatch, Rainbow Six, VALORANT and Fortnite. And combined with NVIDIA Reflex, gamers can achieve sub-20 millisecond system latency, enabling them to play their absolute best. From videos, to photography, to 3D animation, the creation of digital content is exploding. NVIDIA Studio is our accelerated platform for creators, speeding up ray tracing and AI in over 50 applications, including Adobe Photoshop, DaVinci Resolve and Blender. And monthly studio drivers bring new features, faster performance and enhanced stability. Since the launch of Studio in 2019, there have been over 100 purpose-built Studio laptops and desktops from every major OEM. NVIDIA Ampere architecture takes Studio laptops to the next level. Rendering is up to 5x faster than Pascal. Video editors can work with 8K raw footage, use AI to simplify workflows and reduce encode times by up to 75%. Artists have up to 16 gigabytes of graphics memory to work with huge assets across multiple apps at the same time. RTX accelerated AI will change the way creators work. For example, Adobe Photoshop recently introduced Neural Filters, which uses AI to quickly make complex edits to photographs. Adobe Premiere Pro Auto Reframe uses AI to convert landscape video to Portrait while keeping the action front and center. In DaVinci Resolve 17, the new magic mask feature uses AI to speed up mask creation and tracking. NVIDIA OptiX AI Denoising in Blender cleans up noise on the fly, quickly resolving 3D images. And NVIDIA Omniverse Audio2Face uses AI to animate unrigged 3D characters based solely on an audio source. [Presentation]

Today, we're introducing over 70 laptops from every OEM, our biggest launch ever. These are the world's fastest laptops that give gamers and creators a huge variety to pick the right device for their needs, available beginning January 26, with prices starting at $999 let's take a look at what they can do. [Presentation]

RTX is the new standard and the momentum continues to grow. With most of the installed base underpowered for the latest games, we're bringing RTX to every gamer with the GeForce RTX 3060. Finally, as more gamers are choosing laptops, we're launching a new generation of RTX laptops, ready to play the most demanding games. Thanks, everyone, for tuning in today. And as always, thanks to all of our fans for all their support. And before we go, we've got one more treat for you. [Presentation]