Good afternoon. My name is Circe, 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 speaker's remarks, there will be a question and answer period. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. 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.
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 Jensen 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 website. It is also being recorded. You can hear a replay by telephone until November 13th, 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 website. 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 data center 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 leap 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, "They are higher performing and more power efficient than the previous generation and design win abounds.
That's pretty much a trifecta in the mobile market. Commenting on the desktop versions, Hardware Canucks called the GeForce GTX 980 a market-changing graphics card that is backstopped by an impressive GPU architecture. We launched Maxwell in a groundbreaking event for the gaming community called Game24. This live stream 24-hour celebration included gaming tournaments, modding competitions, and celebrity commentators. As it moved across the globe, along the way, we drew more than 1.3 million Twitch viewers in 120 countries. In the mobile platform space, the SHIELD Tablet, the latest extension of our SHIELD family of devices, enjoyed solid demand during the quarter. The ultimate tablet made for gamers, it features the extreme performance of our Tegra K1 mobile processor and the precision control of the SHIELD wireless controller. SHIELD Tablet sales have extended into many worldwide markets, and the 32 gigabyte LTE model has been recently added to the lineup.
Very soon, SHIELD Tablet will be upgraded to Google's latest OS, Android 5.0 Lollipop. Tegra K1 was also featured in the Google Nexus 9 tablet, launched last month in a 64-bit version. Powered by our Project Denver CPU, Tegra K1 is the first Arm processor for Android to take advantage of the Android 5.0 support for 64-bit architectures. Tegra K1 is also now in Chromebooks from Acer and HP. Tegra technology continues to make strong headway in the automotive segment as well. Last month's Paris Auto Show, Honda announced that three of its popular models will come standard in the European market with the Tegra-based infotainment and navigation system. This marks the first in-vehicle infotainment system to use the Android operating system running on Tegra.
Tegra will enable Honda Connect to deliver a touch screen experience like the intuitive experience you'd expect from a phone or tablet, with crisp graphics that respond instantly to gestures like pinch, zoom, and swipe, but is designed for safe operation in a car. Honda now joins Volkswagen in our stable of mainstream auto brands relying on Tegra, complementary luxury brands like Audi, BMW, Lamborghini, and Tesla Motors. Our enterprise businesses also had a strong quarter, benefiting from new products and industry trends that fuel demand for them. Our Quadro professional graphic solutions, including processors based on the new Maxwell GPU architecture, are enjoying the fast ramp-up of any Quadro product in our history. They are being shipped by all of our major OEMs and adopted by global enterprise companies. This new lineup provides up to two times improvement in application performance and data handling capability.
In the data center platform space, NVIDIA GRID graphics virtualization continues to gain momentum. Thousands of companies have come forward worldwide to experience cloud-based GPU-accelerated virtual desktops through our tryGRID online demonstration. Also, a program we launched in August with VMware for early customer access to GRID virtualized GPUs is driving wide global interest. Initial customers include aircraft maker Airbus, the international construction group, CH2M Hill, and healthcare provider MetroHealth. Other early notable GRID customers include Villanova University and Halliburton. Our Tesla accelerated data center platform continues to grow as HPC customers and cloud service providers deploy large Tesla-powered systems. Fueling Tesla growth is the rapid rise of machine learning, particularly among mobile web service companies like Baidu, that are standardizing on Tesla as their common platform.
As noted in the story in the current issue to Wired, GPUs are exceptionally well suited for parallel processing tasks like speech recognition, image, and natural language processing. IBM unveiled its first OpenPOWER-based system featuring Tesla GPU accelerators, which can significantly enhance Java, big data, and technical computing applications. IBM announced plans to accelerate their enterprise applications using Tesla GPUs, including their nearly pervasive IBM DB2 with BLU Acceleration database software. We are excited about this month's Supercomputing 2014 conference in New Orleans, where we will be demonstrating the latest breakthrough in supercomputing and visualization based on our Tesla accelerated computing platform. Let's take a more detailed look at the financials. Revenue growth year-over-year was driven by strength of GeForce GPUs for gaming related to our launch in Q3 of Maxwell GTX GPUs, as well as the strength in data center GPUs and auto infotainment systems.
GPU business revenue grew 13% from a year earlier. Revenue from GeForce GPUs for gaming desktops and notebooks grew 36%, fueled by continued strength in PC gaming, including Maxwell. Within this segment, gaming notebooks performed particularly well, more than doubling from a year ago levels. Tesla for high-performance computing increased strongly, representing another record quarter of revenue driven by large project wins with cloud service providers and government customers. Quadro revenue remained strong, with our new product platform launched in August, delivering industry-leading graphics and rendering performance. Tegra processor sales grew 51% from a year ago, led by auto infotainment systems, mobile devices, embedded systems, and the onset of the SHIELD Tablet sales. Auto infotainment systems revenue nearly doubled year-over-year. Revenue was up 11% from the second quarter of fiscal 2015. Moving to gross margins.
GAAP gross margins was 55.2%, in line with our outlook for the quarter, down 90 basis points from last quarter. Non-GAAP gross margin was 55.5%, also in line with our outlook and down 90 basis points sequentially. The gross margin reflected continued strength in our GPU margins for PC platforms, inclusive of the product transition to Maxwell-based GPUs for the desktop, notebook, and workstation. Our margins from the above-mentioned PC platforms and data center and cloud GPUs were partially offset by the impact of Tegra processor margins, which are lower than the company's overall average. GAAP operating expenses for the third quarter were $463 million, in line with our outlook and up 2% from Q2. Non-GAAP operating expenses were $415 million, lower than our outlook and inclusive of legal fees associated with our litigation against Samsung and Qualcomm.
The operating expense discipline reflects continued management of our investment in both R&D and capital expenditures to enhance our return on invested capital. GAAP operating income was $213 million, up 51% from the prior year's third quarter, reflecting strong revenue growth from higher margin GPUs and contained operating expenses. GAAP net income was $173 million, up 45% from a year earlier, driven by increased operating profit from strong revenue and margins. GAAP earnings per diluted share of $0.31 increased 55% from $0.20 per diluted share in the year-ago quarter, reflecting net income growth and share repurchases. Turning to some key balance sheet items. During the third quarter, we paid $46 million in cash dividends and repurchased 16.8 million shares under a structured repurchase agreement entered into during the quarter.
During the first three quarters of fiscal year 2015, we paid $140 million in cash dividends and repurchased 44.2 million shares. As a result, we have returned to shareholders $950 million during the first three quarters of fiscal year 2015. Since the restart of our capital return program in the fourth quarter of fiscal 2013, we have returned approximately $2.17 billion. This return represents 136% of our cumulative free cash flow for fiscal years 2013, 2014, and 2015 to date and reflects the acceleration of our capital return program from cash generated in prior years. As we transition into fiscal year 2016, as part of our ongoing commitment to deliver shareholder value through capital return, we are pleased to announce our intention to return approximately $600 million to shareholders through ongoing quarterly cash dividends and share repurchases in fiscal year 2016.
Accounts receivable at the end of Q3 were $563 million, up from $470 million in Q2. The sequential increase was primarily due to the mid-quarter launch of our Maxwell-based GPUs and the late quarter project shipments in our data center business compared with last quarter. DSO at quarter end was 42 days, up from 39 days in Q2. Inventory at the end of Q3 was $408 million, up from $387 million in the prior quarter. The sequential increase included the ramping of Maxwell-based GPUs, coupled with decreases in products based on previous generation architectures. DSI at quarter end was 68 days, down from 73 days at the end of Q2. Cash flow from operating activities was $216 million, up from $96 million in the prior quarter and from $162 million a year earlier.
Our operating cash flow grew 33% year-over-year, reflecting higher net income from revenue growth and contained operating expenses, partially offset by higher accounts receivable. Free cash flow was $176 million in the third quarter. Depreciation and amortization expense amounted to $55 million. Capital expenditures were $40 million. Turning to the outlook for the fourth quarter of fiscal 2015. We expect revenue for the fourth quarter to be $1.2 billion, plus or minus 2%. The year-over-year growth is reflective of our continued strength in gaming for the PC, the notebook, and mobile platforms. Additionally, we expect growth from our enterprise platforms. Our GAAP and non-GAAP gross margins are expected to be 55.2% and 55.5%, respectively, plus or minus 50 basis points. The gross margin outlook is in line with our gross margin results in Q3, as high-end GTX GPUs and data center results will contribute to the strong gross margins.
GAAP operating expenses are expected to be approximately $470 million, non-GAAP operating expenses are expected to be approximately $422 million, inclusive of legal fees associated with our litigation against Samsung and Qualcomm. Excluding these legal fees, we expect operating expenses to remain near Q3 levels. GAAP and non-GAAP tax rates for the fourth quarter of fiscal 2015 are both expected to be 18%, plus or minus 1%. This estimate is a percentage point lower than our previous outlook and is consistent with our tax rate in the third quarter, excluding any discrete tax events. We are pleased with our record revenue for both the quarter and year to date, with strength across all platforms and businesses. Profitability, as measured by earnings per diluted share, increased 55% for the first nine months of fiscal 2015 compared with the prior year.
Our tenth-generation GPU, Maxwell, displayed a strong showing with stellar reviews and an innovative launch. We continue to embark on large engagements in data center and cloud with outstanding partners, IBM, HP, Dell, Citrix, and VMware. Auto continues to gain ground with continued wins, including Honda this quarter. Tegra K1 through SHIELD and Nexus 9 continues to be praised for its technology achievement and expansion of Android gaming. We continue our transformation into a business focused on visual computing platforms, allowing us to realize continued success in consumer PC and mobile gaming, as well as in cloud data centers, supercomputers, professional design, and automobiles. That concludes our prepared remarks. We will now take questions. Please limit yourself to one question and one follow-up.
Thank you. Ladies and gentlemen, if you'd like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you'd like to withdraw your registration, please press the one followed by the three. If you're using a speakerphone, please lift your handset before entering your request. Our first question comes to the line of Steven Chin with UBS. Please proceed with your question.
Hi. Thanks for taking my questions, and congratulations on the strong results. First question I have is just to go deeper on some of the PC gaming trends. Jensen, 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?
Steven, thanks a lot. First of all, the gaming business is expanding globally. 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 esports. 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 Assassin's 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. 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. Without something like Maxwell, it's really hard to enjoy the full fidelity of a 4K display. These things all contribute. I think at the highest level, gaming is just expanding globally. 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 a nearer term, Q3, of course, we benefited tremendously from the Maxwell launch. Overall for the year, PC gaming for us was up over 30%. 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. We're looking forward to quite a good year in PC gaming. Overall, PC gaming is expanding.
Okay, great. That's helpful. For my follow-up, just to touch upon the GRID business. 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 ramp profile we might expect going into next year for GRID and Tesla as a whole? Thank you.
Well, our data center business overall had a record quarter, and we're seeing expansion in our data center business in multiple ways. I appreciate you recognizing GRID. We entered into a partnership with VMware to support early adopters of vSphere, which is supporting our GRID virtual GPU technology. With this VMware and 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 virtualize it, stream the graphics to any heterogeneous device that your company decides to support. 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 tryGRID on the web. It'll take you to a website. It'll download a small client. You can enjoy 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, 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. There's a lot of different reasons why virtualizing the enterprise desktop is incredibly valuable to these companies. As usual, enterprise validation and certification takes some time. I don't know.
I can't give you a particular schedule. I can tell you the trials are going really well. Now because of VMware, we can now engage 90% of the world's virtualization opportunities. The size of opportunities that we're now looking at is getting larger and larger.
Okay, thank you.
Our next question comes from the line of Joe Moore with Morgan Stanley. Please proceed with your question.
Great. Thank you. 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 more regional? What do you think is driving that strength?
Yeah. 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 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 leapt by a factor of two. 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 a matter of what kind of platform you enjoy, and we know that a lot of people like laptops.
It's just that for gamers until now, they've not been able to gain access to that level of performance without Maxwell. This is a big deal for us. 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 yet.
Okay, great. Thank you for that. Also on the client GPU business, can you talk a little bit about pricing? 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?
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 a reason why the value that is received by our gamers and appreciated by our 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 level, 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 its fullest is really incomparable. I think that people don't choose component A to component B anymore. Over time, we see a lot more return customers, and once you get on the GeForce platform, you tend to stay on the GeForce platform. Our goal is to just keep adding more and more value to the GeForce gamers that are to join the GeForce platform and to earn their loyalty over time. I'm really proud of the team for the work here, and the results show it.
Great. Thank you very much.
The next question comes from the line of Vivek Arya with Bank of America. Please proceed with your question.
Hi. Thanks for letting me ask a question. This is Shankar on behalf of Vivek. I have a question regarding the attach rates in traditional PC markets. Do you see the declining attach rates in traditional PC to become a drag at some point? If so, what kind of impact do you expect to see?
Yeah. PC OEMs represent about less than 25% of our GPU business and much less than 25% of our overall business already. Within that, there are some moving parts. PCs are becoming thinner and lighter in some cases, and as a 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. So there's a lot of different moving parts. I would say the mainstream commodity notebook PC, we've been seeing lower and lower GPU attach for quite a long time, and it's not a surprise to us.
Got it. On the data center cloud market, there's a recent market adoption of using FPGA as a co-processor with Intel Xeon processors. Do you see that as a stumbling block towards growing your data center and cloud revenue?
Well, FPGAs have been around for 30 years, and they've been used in all kinds of applications far and wide in all kinds of areas. GPU-accelerated data centers is really quite a new phenomenon, and the benefit of a GPU-accelerated data center 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 a 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.
Yeah
Right? It's not logical that could happen. Secondarily, programming CUDA, programming our GPUs is far, far, far easier than programming an FPGA. The R&D cost is a lot lower, the rate of iteration is much higher. 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.
Perfect. Thank you so much.
Yeah. Thanks a lot, Shankar.
The next question comes to the line of Harlan Sur with JP Morgan. Please proceed with your question.
Execution. 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? Jensen, as you mentioned, we just had the big launch of Call of Duty: Advanced Warfare. We've got Assassin's Creed launch coming up soon. We've got several other blockbuster games in November. I would assume that your PC gaming is up sequentially in January, but wanted to get your thoughts.
Yeah, Harlan, I appreciate that. We're expecting our gaming platforms and our enterprise data center platforms to be up quarter-to-quarter. Those are benefiting 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. Our guidance reflects all of that.
Yep, makes a lot of sense. Thank you for that. As you mentioned, continued strength in enterprise. We've got the Grantley server microprocessor ramp going into data centers 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 data centers. 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?
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. In the grand scheme of things, they're still a small percentage of the world's overall servers. 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 data center service, a service provider who's 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. Those tend to be the large reasons why we grow more so than the microprocessor that it's attached to.
Got it. Thanks, Jensen.
Yeah. Thanks a lot.
The next question comes to the line of Blayne Curtis with Barclays. Please proceed with your question.
Hi, guys. This is Chris Hemmelgarn on for Blayne, thanks very much for taking the question and congrats on a good quarter. First, I was just curious with Intel's new Broadwell platform, looking to launch kind of, I don't know, late first half or at some point in the first half 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 general typical seasonal trends this year?
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 or the automotive industry. 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. 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. 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. We're really excited about the work that we're doing here. We're seeing more and more of this type of dynamic as we continue to transition our company's business model from a components business attached to other components, to a platform model where we engage vertical markets where we serve.
That's very helpful. Thanks. I guess to follow up, just turning to the automotive business, obviously going quite well for you. You 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 was one big opportunity for Tegra. I was just curious as to whether 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.
Well, we came into the automotive industry because we think that the car is going to contain some of the most powerful computers that we have. The future of the car is going to have computing in not just infotainment, but the entire digital cockpit will be driven by computers. Because of better and better autopiloted capabilities, the car will become quite rich in supercomputing capabilities over time. 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. We're quite excited about the opportunities there.
Thanks much.
Yeah, thanks a lot, Chris.
The next question comes from the line of Rajvindra Gill with Needham & Company. Please proceed with your question.
Yes, thanks. Congratulations on very good results. A 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.
Well, we continue to track it. We're over 1,000 trials around the world. 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 largest engagements, adopt GRID and during their trial performance of GRID. 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.
We put a web self-trial service up on the cloud called tryGRID, and I encourage you all to try it. Thousands and thousands of companies have come out to try it. 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 workforce and in many industries, quite a dynamic workforce. The workforce could ramp up and down pretty dramatically from season to season. Because they work with a lot of contractors They could be on-site and off-site, and change quite rapidly. GRID virtualizes all of their workstations and PCs and makes it a lot easier for enterprises to support their dynamic workforce. There's a lot of different reasons why GRID is just a really fantastic extension of the entire enterprise virtualization movement.
It's the reason why all of these OEMs are supportive of GRID and why they're taking it to market.
For my follow-up question, on the fourth quarter revenue guidance, you had mentioned that the gaming platforms would be up sequentially and the enterprise data center would be up sequentially. That would imply that the Tegra business is down sequentially in order to hit the numbers for the midpoint of the guidance. Just wondering if 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.
Well, our strategy is to continue to advance our own platforms that are addressing these vertical markets. 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.
Okay. Got it. That's helpful. Thank you.
Yep, you're welcome.
Operator, do we have another question?
We're still on.
Operator, can you hear us? We can't hear you.
Sorry about that technical difficulty. Our next question comes from the line of Alex Gauna with JMP Securities. Please proceed with your question.
Hey, Jensen. I know earlier that you addressed the issue of Broadwell being a little slower to market, but I'm curious from a process technology perspective, does the trouble that Intel's 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 time frame? Thanks.
Well, first of all, we have a lot of different levers. I've been asked in the past about Moore's Law. I believe in Moore's Law. Moore's Law is not just about physics. Moore's Law is also about architecture and innovation. It's really in the final analysis about performance. It's really in the final analysis about clever ideas. If you take a look at 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 much faster than Moore's Law. I believe in continued improvement in that area, and that we have to 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. 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 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 process is 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.
Okay, thanks. 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 to any progress on the licensing front. Thanks.
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 GeForce GTX 560 or a GeForce GTX 660 or 760 or 670. There are 10 million gamers who have GPUs, GeForce's installed in their systems that can benefit from a Maxwell upgrade. 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 visual quality. There's a lot of different ways they can enjoy that.
If you're a notebook gamer, Maxwell allows you to enjoy desktop level of performance for the very first time in your laptop. 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 we can now render to effectively a 4K resolution on our chip, and we'll display it at 1080p on your monitor. All of a sudden, your 1080p monitor improves in fidelity as if you had a 4K monitor. 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.
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. By adding NVIDIA GPU to their SoC, they can differentiate head and shoulders above the rest of the industry. 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. 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 on mobile applications. All of that helps.
Okay. Thank you. Great quarter. Congratulations.
Yeah, thanks a lot. I appreciate that.
Operator, next question. Operator, we're having a challenge hearing you. Can we get the next question?
Sorry about that, technical difficulties. Our next question comes from the line of Hans Mosesmann with Raymond James. Please proceed with your question.
Thanks. Congratulations, guys. Couple of questions. On process node migrations, off of that 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?
Hans, first of all, thanks for the question. We haven't announced our next generation products yet. We've got a lot of great surprises for you guys, and I'm excited about our next generation GPU. Right now, we're enjoying ramping Maxwell. This is a brand new product cycle, and I don't remember a 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. Maxwell is unquestionably, at this point, a home run, and we're just savoring the moment and ramping the living daylights out of it.
Okay, fair enough. Just as a follow-up, Jensen, the game console guys have had a good year of a new product cycle for them. How do you compare this cycle for them versus PC gaming and Android gaming for that matter?
I would say that the early adopters of the game console market will enjoy every single platform. I've got every one, they'll have the PC, they'll have game consoles. My sense is that the game console platform is not likely to enjoy the heydays when it was really unambiguously the only and the best game platform to enjoy games. It's just not true anymore. There's 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 platform they already own. They can upgrade it two or three, four times without having to change the basic platform. The total cost of ownership of a game PC is quite attractive. The games are incredible. The PC has become unambiguously the largest platform in the world today.
Tencent is the largest game company. You can see how they're doing. 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. I think that there's just too many other ways to enjoy games now for the game console to enjoy the heydays of the past. We'll see. I think 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 that are coming to the PC is continuing to grow, and the quality of titles is growing up ever so fast. Mobile gaming is going to be right around the corner.
Thank you.
Yeah. Thanks a lot, Hans.
The next question comes from the line of Sanjay Chaurasia. Please proceed with your question.
Hi, Jensen. 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're seeing in this environment today.
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 serving 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. When we go to supercomputing this year, and I hope that all of you, computing 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 are some applications where accelerated computing just 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, that 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. 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're down the right path.
You earlier said that obviously Tesla is a very small percentage of overall compute in data center. 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?
Well, I think that someday all data centers will be accelerated. Because we're starting from a very small base, it explains why Tesla is one of our largest growth opportunities. 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. I think Tesla is going to be a large business over time, and I would be very surprised if there are important or large data centers anywhere in the world that aren't somehow accelerated by GPUs.
Thank you so much.
Yeah. Thanks a lot.
Okay, there's no further questions at this time. I'll turn the call back to our speakers.
Great. Thank you, operator. Thanks, everyone, for joining us. We look forward to talking to you the next time on our Q4 earnings call.
Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.