NVIDIA Corporation
Q3 2015 Earnings Call Transcript

Published: 7 Nov 2014

[Operator:]

Good afternoon. My name is Cerci and I will be your conference operator today. At this time, I would like to welcome everyone to the NVIDIA Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period [Operator Instructions]. I will now turn the call over to Ms. Colette Kress, Executive Vice President and Chief Financial Officer with NVIDIA. Ms. Kress, you may begin your conference.

[Colette Kress:]

Thank you. Good afternoon, everyone and welcome to NVIDIA's conference call for the third quarter of fiscal 2015. With us on the call today from NVIDIA is Jen-Hsun Huang, President and Chief Executive Officer. First, I’d like to remind you that today’s call is being webcast on NVIDIA’s Investor Relations Web site. It is also being recorded. You can hear a replay by telephone until November 13, 2014. The webcast will be available for replay up until next quarter’s conference call to discuss Q4 financial results. The contents of today’s call is NVIDIA’s property. It cannot be reproduced or transcribed without our prior written consent. During the course of this call, we may make forward-looking statements based on current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties and our actual results may differ materially. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today’s earnings release, our most recent Form 10-Q and the reports that we may file on Form 8-K with the Securities and Exchange Commission. All of our statements are made as of today, November 6, 2014 based on information currently available to us. Except as required by law, we assume no obligation to update any such statements. During this call, we will discuss non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures to GAAP financial measures in our CFO commentary, which is posted on our web site. With that let’s start. Third quarter results were strong, with record revenue and improved performance in each of our businesses. Our focus on creating platforms for PC, mobile and datacenter is paying off. Our PC gaming platform benefited from the enthusiastic reception of our new flagship GeForce GTX gaming processors based on Maxwell. Our 10th generation GPU architecture, Maxwell sets new standards for performance and power efficiency, introducing a range of new features for gamers and game developers. Real time dynamic global illumination is a lead forward in replicating the true interaction of light in the gaming environment. Other new technologies render games at higher frame rates with very low power, heat and noise. Both the desktop versions of these processors, the GTX 980 and the GTX 970 and their notebook counterparts have won extraordinary support from reviewers. Forbes wrote of our new GPUs

[Operator:]

Thank you [Operator Instructions]. And the first question comes from the line of Stephen Chin with UBS. Please proceed with your question.

[Stephen Chin:]

First question I have is just to go deeper on some of the PC gaming trends [indiscernible]. Could you talk a little bit about how much strength you saw from a seasonal perspective for PC gaming and how much of it might have been from the new Maxwell product launch?

[Jen-Hsun Huang:]

Yes, Stephen. First of all, you know that the gaming business is expanding globally. And we’re seeing great strength in Asia. We’re seeing great strength in developing countries. We’re seeing incredible enthusiasm around MOBA, which is an online battle arena gameplay style. It’s crossing over from being just video games to now being e-sports. And so the cultural implication of video games is getting greater and greater. There are several factors that drives our gaming business. One is whenever we see a really exciting new game come to market, games like Assassins Creed or Batman or some of the amazing Ubisoft games that we’ve been seeing, Battlefield, Call of Duty, these incredible franchises that has millions of followers. And the second factor is whenever we introduce a new GPU architecture that is a huge leap from previous generations. Right now one of the most exciting things going on is driving beyond 1080p. 4k monitors are getting more and more cost effective. And without something like Maxwell, it's really hard to enjoy the full fidelity of a 4k display. And so these things all contribute. But I think at the highest level, gaming is just expanding globally. And now with Maxwell and a brand new architecture that gives us a huge leap from previous generation, we’re going to draw people out to upgrade to Maxwell so that they can take their gaming experience to the next level. Now for the near term, Q3 of course we benefited tremendously from the Maxwell launch. Overall for the year, PC gaming for us was up over 30%. And so that gives you a sense of how PC gaming is expanding. Going into Q4, you’re going to see some pretty amazing franchise titles coming out. It's the holiday season. And so we’re looking forward to quite a good year in PC gaming. But overall PC gaming is expanding.

[Stephen Chin:]

Okay, great. That’s helpful. And for my follow up, just to touch upon the GRID business, so you mentioned the early customer access program for GRID with VMware. Any thoughts on the timing for how long that qualification cycle might take? And what kind of I guess brand profile we might expect going into next year for GRID and Tegra as a whole? Thank you.

[Jen-Hsun Huang:]

Well, our datacenter business overall had a record quarter. And we’re seeing expansion in our datacenter business in multiple ways. And I appreciate you recognizing GRID. We entered into a partnership with VMware to support early adaptors of vSphere, which is supporting our GRID Virtual GPU technology. With this VMware and GRID platform, NVIDIA GRID platform, you can now virtualize all of enterprise, all the way out to the clients, and you can make it possible for the most graphics intensive applications. Whether new or legacy PC applications, you can now virtualized it, stream the graphics to any heterogeneous device that your company decides to support. And we’re seeing enthusiasm all over the world. In fact, since we announced this collaboration with them to develop the market together, we’ve seen thousands of companies try GRID. It’s easy to try. You might want to try it yourself. Just type in try GRID on the web and it will take you to a Web site and will download a small client and you can enjoy with the GRID experience and see what it’s like. We have thousands of interested companies. We’ve selected many around the world. Many of them are very large enterprises, who have several different needs. Some companies because their campus is quite large, and so it’s hard for IT departments to support all of the various workstations and PCs that are scattered all over campus. Universities are the same way. Sometimes it’s because the workforce has large fluctuations. Maybe they use a lot of contractors, maybe it’s because students graduate every year. And so there's a lot of different reasons why virtualizing the enterprise desktop is incredibly valuable to these companies. As usual, enterprise validation and certification take some time. And so I don’t know -- I can’t give you a particular schedule, but I can tell you that the trials are going really well. And now because of VMware, we can now engage 90% of the world’s virtualization opportunities and the size of opportunities that we’re now looking at is getting larger and larger.

[Colette Kress:]

Next question?

[Operator:]

Our next question comes from the line of Joe Moore with Morgan Stanley. Please proceed with your question.

[Joe Moore:]

Following up on the gaming question; the more than doubling in notebook gaming. Can you give us some context around that? That seems like a big growth rate. Is that a global phenomenon or is that kind of more regional and what do you think is driving that strength?

[Jen-Hsun Huang:]

Thanks a lot Joe. For the very first time in history we’ve been able to get a GPU architecture that is able to do in a notebook form factor, achieve a level of performance that is on parity, on par with desktop PCs. This is a really-really big deal. In a thin notebook, Maxwell GPU, because it’s two times the performance power factor compared to Kepler, which is already the most energy efficient GPU we’ve ever built and the most energy efficient GPU in the world today, we lapped by a factor of two. And as a result we’re able to bring to the notebook form factors, a level of performance that’s on par with desktop. Now gamers don’t have to choose. It’s really just the matter of what kind of platform you’re enjoying. And we know that a lot of people like laptops. So it's just that for gamers, until now, they’ve not been able to gain access to that level of performance without Maxwell. So this is a big deal for us and we’re quite excited about the Maxwell ramp and it's just beginning to ramp. My expectation is that we’re going to continue to grow the notebook gaming business for some time here.

[Joe Moore:]

And then also on the client GPU business, can you talk a little bit about pricing? And it seems like your competitor hasn’t had the success you guys have had and it sounds like it’s being relatively price aggressive. They’ve talked about that. Can you just talk about the pricing environment and does that competitive dynamic affect you guys at all?

[Jen-Hsun Huang:]

Well, it’s really related to value I think. Our strategy with GeForce has really moved away from a component pricing model for several years. And it’s the reason why the value that is received by our gamers and appreciated by gamers continues to grow. We’ve really taken much more of a software rich approach. Even though our GPU architecture is now far and away the best in the world, it’s the most energy efficient, it's the highest performance. It has amazing technology like VXGI that was just announced recently. Although at the foundational technology, it is far and away the best, if you look at the software environment, what we call the GFE, the GeForce experience console that’s on top, we really think about the GeForce as a GeForce gaming PC platform now. The software intensity of it is quite high. If you have GeForce Experience, your ability to enjoy games at it fullest is really incomparable. And so I think that people don’t choose component A to component B anymore. Overtime we see a lot more return customers and once you get on the GeForce platform, you tend to stay on the GeForce platform. And our goal is just keep adding more and more value to the GeForce gamers that are to join the GeForce platform to earn their loyalty over time, and I think we're doing really good job there. I'm really proud of the team for their work here. And the results kind of show it.

[Operator:]

The next question comes from the line of Vivek Arya with Bank of America. Please proceed with your question.

[Unidentified Analyst:]

This is Shankar on behalf of Vivek. I have a question regarding the attach rates in traditional PC market. Do you see the declining attach rates in traditional PC to become a drag at some point? And if so, what kind of impact do you expect to see?

[Jen-Hsun Huang:]

PC OEMs represent about less than 25% of our GPU business and much less than 25% of our overall business already. And within that there are some moving parts. PCs are becoming thinner and lighter, in some cases and as result they tend to not have GPUs attached. In some cases the PCs are becoming application specific PCs, like gaming notebooks, in which case the GPU not only is attached but the GPU becomes quite powerful indeed. On the other hand, workstation notebooks are growing. And so there's a lot of different moving parts, but I would say the mainstream commodity notebook PC, we have been seeing lower and lower GPU attach for quite a long time and it’s not a surprise to us.

[Unidentified Analyst:]

Got it. On the datacenter cloud market, the recent market adoption of HPC as a core processor with Intel Xeon processors, do you see that as a stumbling block towards growing your datacenter and cloud revenue?

[Jen-Hsun Huang:]

Well FPGAs have been around for 30 years and they've been used all kinds of applications, far and wide in all kinds of areas. GPU accelerated datacenters is really quite a new phenomenon. And the benefit of a GPU accelerated datacenter is that the amount of total computational resource you could bring to bear is really quite amazing. It’s not really practical, not really logical that one person or small team designing an FPGA could achieve the level of computational throughput that the NVIDIA R&D department with thousands and thousands of engineers, refining a singular architecture called CUDA over the years [indiscernible]. So it’s not logical that that could happen. And then secondarily in CUDA, programming our GPUs is far, far, far easier than programming an FPGA. The R&D cost is a lot lower. The rate or iteration is much higher. And so that’s one of the reasons why Tesla has yet another record quarter. The number of platforms that support Tesla is growing all over the world and I think it’s a foregone conclusion that accelerated computing could add a lot of value in many areas of computing.

[Operator:]

The next question comes from the line of Harlan Sur with JPMorgan. Please proceed with your question.

[Harlan Sur:]

Looking into your revenue guidance for Q4, can you just tell us if your GeForce PC gaming segment is growing quarter-over-quarter and maybe that’s potentially being offset by your PC OEM business? Jen-Hsun, as you mentioned, we just had the big launch of Call of Duty Advanced Warfare. We've got the Assassin's Creed launch coming up soon. We've got several other blockbuster games in November. So I would assume that your PC gaming is up sequentially in January, but wanted to get your thoughts.

[Jen-Hsun Huang:]

Yes, Harlan I appreciate that. We're expecting our gaming platforms and our enterprise datacenter platforms to be up quarter-to-quarter. Those are benefitting from both industry adoption of our platforms, as well as the fact that we are going into a brand new product cycle with Maxwell. We're also expecting our OEM business to be down sequentially, but our guidance reflects all that.

[Harlan Sur:]

And then as you mentioned continued strength in enterprise, we’ve got the [indiscernible] microprocessor ramp going into datacenters and HPCs. It was about 10% of the mix for Intel in Q3. One of the first big adopters, like I said does tend to be HPC and datacenter. So the question is how much of this is contributing to the strength in Tesla and potentially your GRID based products or is it more just sort of with Tesla and GRID, just prior design wins that are finally starting to ramp or maybe a combination of both?

[Jen-Hsun Huang:]

Well Tesla and GRID are both delivering record numbers at the moment, and they're driven by the fact that the enterprise adoption of our platforms are increasing. But in the grand scheme of things, they are still a small percentage of the world’s overall servers. And so my sense is that those matters are important but they’re not significant. Most of our adoptions tend to be related to new applications or an OEM certifying a new server for GRID, and there's a whole bunch of servers being certified right now, or a cloud datacenter service -- a service provider who is able to deploy their service using machine learning service or a natural language processing service or a music tagging service or some service that requires our GPUs deployed into production. And so those tend to the large reasons why we grow, more so than the microprocessor that it's attached to.

[Operator:]

The next question comes from the line of Blayne Curtis with Barclays Capital. Please proceed with you question.

[Chris Hemmelgarn:]

This is Chris Hemmelgarn on Blayne. Congrats on a good quarter. First, I was curious, with Intel’s new Broadwell platform looking to launch late first half -- some point in the first half of Q -- of next year, are you guys, I guess concerned about any more pronounced seasonality in Q1 ahead of that product launch or would you expect kind of just general typical seasonal trends this year?

[Jen-Hsun Huang:]

Our OEM business is just a smaller and smaller part of our overall business driver. Most of the platforms that we offer engage specific vertical markets, whether it’s gaming or high performance computing or enterprise virtualization or the cloud services with service providers who are the automotive industry. And so these verticals tend to be much more important in how we think about our business. We also see now that our OEMs or our OEM partners go into a new product cycle when we launch a new product. And so when there's a new Maxwell GPU recently, every notebook OEM in the world offered a brand new gaming notebook, irrespective of the rest of the platform and the reception of those notebooks have been fantastic. It’s been so successful for us in the notebook gaming business, that for the very first time HP and Lenovo, both joined our GeForce gaming platform and offered gaming notebooks under their own brands. And so we’re excited about the work that we’re doing here. We’re seeing more and more this type of dynamic as we continue to transition our Company’s business model from components business attached to other components to a platform model, where we engage vertical markets where we serve.

[Chris Hemmelgarn:]

And I guess follow-up, just turning to automotive business, obviously going quite well for you. You’ve highlighted strength in infotainment this past quarter. It sounds like in December the new Tesla launching is going to support some type of autonomous driving. You guys had mentioned that at your last Analyst Day, I believe that that was one big opportunity for Tegra. I was just curious as to where you thought we were hitting a point where that could be a meaningful driver? You talked about the auto business doubling in consecutive years. Do you see some of these new opportunities – I guess a continued path for growth beyond that? Just kind of interested in your general thoughts?

[Jen-Hsun Huang:]

Well, we came into automotive industry because we think that the car is going to contain some of the powerful computers that we have and the future of the car is going to have computing in and not just infotainment, but the entire digital cockpit will be drive by computers and because of better and better auto-piloted capabilities, the car will become quite rich in supercomputing capabilities over time. And so this -- just in general, the car industry is quite a rich opportunity for our computing focus. Whether it's seeing around the car using visual computing technologies, or presenting information to the driver in all kinds of rich ways, whether it’s Infotainment or your digital cockpit or heads up display or other technologies in the future, visual computing is going to play a huge role in the future of cars. So we’re quite excited about the opportunities there.

[Operator:]

The next question comes from the line of Rajvindra Gill with Needham & Company. Please proceed with your question.

[Rajvindra Gill:]

Congratulations on very good results. Question on the GRID traction. In the past you talked about some design engagements and some metrics around that. I was wondering if you could perhaps update us a little bit on the trajectory of GRID in the enterprise as they begin to realize the leverage of cloud based visual computing.

[Jen-Hsun Huang:]

Well we continue to track it. We’re over a 1,000 trials around the world. And we’re going to focus our energy, because we now have OEM partners and virtualization platform partners like VMware and Citrix who all have sales forces that are out there selling the platform now. We’re going to focus our energy to continue to evangelize GRID and to help the top customers, the top and the large engagements adopt GRID in trial and doing their trial performance of GRID. And so we’re going to continue to track them and the number of opportunities continue to grow. I just mentioned earlier, as we partnered with VMware to take vSphere around the world, the number of customers who have come out to ask to be early adopters and to be part of the trial program is really quite exciting. And we put a web self-trial service up on the cloud called Try GRID and I encourage you all to try it. Thousands and thousands of companies have come out to try it. And so I think it stands to reason that enterprises around the world would like to virtualize their entire enterprise. It’s more secure. It’s more cost effective. It allows for a mobile work force, and in many industries quite a dynamic work force. The work force could ramp up and down pretty dramatically from season to season and because they work with a lot of contractors, they could be onsite and off and change quite rapidly. And so GRID virtualizes all of their workstations and PCs and makes it a lot easier for enterprises to support their dynamic work force. And so there's a lot of different reasons why GRID is just a really fantastic extension of the entire enterprise virtualization movement. And so it’s the reason why all of these OEMs are supportive of GRID and why they’re taking it to market.

[Rajvindra Gill:]

And my follow up question, on the fourth quarter revenue guidance, you had mentioned that the gaming platforms would be up sequentially and enterprise datacenter would be up sequentially. So that would imply that the Tegra business is down sequentially, in order to hit the numbers for the midpoint of the guidance. Just wondering is that's just normal seasonality that you’re seeing in Tegra for Q4 or if there's any other issues that are going on there? If you could elaborate on Tegra going into Q4, that would be helpful. Thank you.

[Jen-Hsun Huang:]

Well, our strategy is to continue to advance our own platforms that are addressing these local markets. And when I said the gaming platform was going to be up sequentially, I meant that our PC desktop, our PC notebook and our SHIELD gaming platforms would all be up sequentially. They would each all be up sequentially. Our OEM business will be down sequentially and part of it is PC OEMs and part of it is device OEMs.

[Colette Kress:]

Operator, do we have another question? Operator, can you hear us? We can’t hear you.

[Operator:]

Sorry about that. Technical difficulty. Our next question comes from the line of Alex Guana with JMP Securities. Please proceed with your question.

[Alex Guana:]

Jen-Hsun, I know earlier that you addressed the issue of Broadwell being a little slower to market. But I'm kind of curious from a process technology perspective. Does the trouble that Intel is having with 14 nanometer mean anything to you as you work to bring FinFET technology to market? Does it make you nervous about your own timelines or does it make you more excited that you’re going to be in a position to maybe compete with a like for like transistor technology in the 2015 timeframe?

[Jen-Hsun Huang:]

Well, first of all, we have a lot of different levers. I’ve been asked in the past about Moore's Law and I believe in Moore's Law. But Moore's Law is not just about physics. Moore's Law is also about architecture and innovation. And it’s really in the final analysis about performance and it's really into final analysis about clever ideas. And if you take a look at Maxwell, Maxwell improved on Kepler by a factor of two times on the performance power factor. That’s really quite substantial and arguably unheard of. That’s incredibly -- that’s much faster than Moore's Law. And so I believe in continued improvement in that area and that we have continue to add value through architecture, through design, through process and the combination of all that through software. All of those are levers for us. We’re excited about the next generation of FinFET. The way that we deal with that that, you know that we've had quite a few scars in the past as we ramped up new process technology and we’ve been better and better and better at it. And the reason why is because we have just an extraordinary team in advanced technology group working deeply with our foundry partners and ensuring through real creation of test chips and rigorous test methodologies and development methodologies that ensure that when we are ready to ramp that the processors are ready for us. And I can tell you that for the next couple of nodes, I feel pretty good about it because of that work.

[Alex Guana:]

Okay. And you touched on what I also wanted to talk about Maxwell in the market right now. I'm wondering, can you give me an example or us an example I should say of some of the gaming titles or the evolution of the industry that’s starting to take advantage of Maxwell’s capabilities right now? And I'm wondering if the clear advantage Maxwell has in the market is leading into any progress on the licensing front? Thanks.

[Jen-Hsun Huang:]

Every gamer who buys Maxwell will immediately benefit from Maxwell, in literally every single game they play. And they will enjoy in one of three ways. If you are a desktop gamer and you’re playing one of the most advanced games out there, you’re going to benefit. And it’s likely that you have a GTX 560 or GTX 660 or GTX 760 or GTX 670. There are 10 million gamers who have GPUs that are GeForce’s that are installed in their systems that can benefit from a Maxwell upgrade. And when they install Maxwell, they’re going to get the benefit of that 2x. They’re going to either get better visual quality at the same frame rate or much higher frame rate at an even better and bigger quality. And so there's a lot of different ways they can enjoy that. If you are a notebook gamer, Maxwell allows you to enjoy desktop level of performance for the very first time in your laptop. And then even if you had a game, and this is what’s really cool about Maxwell. Even if you have a game that already is running at 60 frames per second on your 1080p monitor, the thing that’s really cool about Maxwell is that we can now render to effectively a 4k resolution on our chip and we’ll display it at 1080p on your monitor. And so all of a sudden your 1080p monitor improves in fidelity, as if you had a 4k monitor. So there's a lot of different ways that you can enjoy it. Our licensing discussions are very active. And we have many in important stages. And I think at the highest level, the way to think about why we add value to several players in the industry is that the mobile device market is really commoditizing. And by adding NVIDIA GPU to their SoC, they can differentiate head and shoulders above the rest of the industry. And although there's a lot of different ways to differentiate, having the best processor in your mobile device is arguably the first way and arguably the best way of doing it. And so I think Maxwell surely adds value in that process. Tegra K1 adds an enormous amount of value in helping to validate the importance of our GPU and mobile applications. And so all of that helps.

[Colette Kress:]

Operator, next question? Operator, we’re having a challenge hearing you. Can we get the next question?

[Operator:]

Sorry about that. Technical difficulties. Our next question comes from the line of Hans Mosesmann with Raymond James. Please proceed with your question.

[Hans Mosesmann:]

Congratulations guys. Couple of questions there. On process node migrations, also to Alex question, what’s the roadmap on the GPU side of the equation? Are you going to skip 20 nanometer and go straight to FinFET?

[Jen-Hsun Huang:]

Hans, we haven’t announced our next generation products yet. And so we've got lot of great surprises for you guys and I'm excited about our next generation GPU. But right now we're enjoying ramping Maxwell. This is a brand new product cycle, and I don’t remember our product cycle in our Company’s history where we've had the lead that we have, the richness of applications in the gaming industry that we're ramping into, nor the number of vertical markets that we now serve, from gaming to design to cloud to high-performance computing, that we now serve that we're ramping this architecture into. And so Maxwell is unquestionably at this point a home run and we're just savoring the moment and ramping the living daylights out of it.

[Hans Mosesmann:]

Okay, fair enough. And then as a follow-up Jen-Hsun. The game console guys have had a good year of a new product cycle to them. How do you compare this cycle for them versus PC gaming and Android gaming for that matter.

[Jen-Hsun Huang:]

I would say that the early adaptors of the game console market will enjoy every single platform. I've got everyone. And they'll have the PC, they'll have game consoles. But my sense is that the game console platform is not likely to enjoy the hay days when it was really unambiguously the only and the best game platform to enjoy games. It's just not true anymore. There are just too many other ways to enjoy games. The PC has become the world’s largest game platform. China, the developing countries around the world, PC is a piece of platform they already own. They can upgrade it two, three, four times without having to change the basic platform. So the total of cost of ownership of a game PC is quite attractive. And the games are incredible. And so PC has become unambiguously the largest platform in the world today. Tencent is the largest game company. You could see how they're doing. And then of course, mobile. How can we ignore the largest operating system in the world, Android and why it won’t become a premier game platform is beyond imagination really. And so I think that there's too many other ways to enjoy games now, for the game console to enjoy the hay days of the past. But we'll see. The thing that I do know is this, without any question is that the PC is continuing to expand the number of titles. Great titles are coming to the PC. It's is continuing to grow and the quality of titles is growing up ever so fast. And then mobile gaming is going to be right around the corner.

[Operator:]

The next question comes from the line of Sanjay Chaurasia [ph]. Please proceed with your question.

[Unidentified Analyst:]

Jen-Hsun, one question on Tesla. Some of your peers who are participating in the HPC market, they are highlighting some increased visibility. I was just wondering if you could give us any color on your visibility into Tesla. It has proven to be a little bit lumpy in the past. I was just wondering what kind of visibility you are seeing in this environment today?

[Jen-Hsun Huang:]

Well, the number of applications that run on Tesla is growing and that is not a lumpy factor and it’s continuing to grow. The number of customers of Tesla is growing. The number of industries that Tesla is servicing is growing. I think what really is happening is that it is now conventional wisdom that the accelerated computing model that we invented with Tesla is going to be a very important model for computing for as long as we see now. And when we go to Supercomputing this year and I hope that all of you keep an eye on it; I think Supercomputing is going to help us understand where accelerated computing fits in the psychology of computing around the world. I think it really is at the tipping point if not past, that accelerated computing can play a very important role in the whole field of computing. There's some applications where accelerating computing just utterly, utterly shines. Of course imaging is an area that accelerated computing does incredibly well. The number of applications related to understanding images and processing images, from satellites, from cameras all over the world, from smartphones from all over the world, understanding images is going to be just, if not the killer app, one of the major killer apps that we're looking at. This is a global phenomenon with all kinds of interesting applications. So high performance computing, accelerated computing at this point is really quite synonymous and I think that all the visibility that you see is just confirmation that we are down the right path.

[Unidentified Analyst:]

And you earlier said that obviously Tesla is a very small percentage of overall compute in datacenter. In that sense what is the kind of growth profile you have in your mind? How do you see this business growing over the next two to three years?

[Jen-Hsun Huang:]

Well, I think that someday all datacenters will be accelerated and because we’re starting from a very small base, it explains why Tesla is one of our largest growth opportunities. And for two consecutive quarters, we’ve now seen record quarters and the number of partners that are supporting Tesla is growing and the depth of which they support Tesla is increasing. And so I think Tesla is going to be a large business over time and I would be very surprised if there are important or large datacenters anywhere in the world that aren’t somehow accelerated by GPUs.

[Operator:]

There are no further questions at this time. I'll turn the call back to our speakers.

[Colette Kress:]

Thank you, operator. Thanks everyone for joining us. We look forward to talking to you the next time on our Q4 earnings call.

[Operator:]

Ladies and gentlemen, that does conclude the conference call for today. We thank you for participation and ask that you please disconnect your lines.