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NVIDIA Reports Financial Results for Third Quarter Fiscal Year

NVIDIA Reports Financial Results for Third Quarter Fiscal Year 2013 
NVIDIA Initiates Dividend; Extends Share-Repurchase Authorization 
SANTA CLARA, CA -- (Marketwire) -- 11/08/12 --  NVIDIA (NASDAQ: NVDA) 


 
--  Record revenue of $1.20 billion.
--  GAAP net income was $209.1 million, or $0.33 per diluted share.
    Non-GAAP net income was $245.5 million, or $0.39 per diluted share.
--  GAAP gross margin was a record 52.9 percent. Non-GAAP gross margin was
    a record 53.1 percent.
--  NVIDIA initiated quarterly dividend of 7.5 cents a share.

  
NVIDIA (NASDAQ: NVDA) today reported record revenue of $1.20 billion
for the third quarter of fiscal 2013 ended Oct. 28, 2012, up 15.3
percent from the previous quarter and up 12.9 percent from a year
earlier. 
The company also announced that it is initiating the payment of a
quarterly cash dividend, and extending its existing $2.7 billion
share-repurchase program, initiated in August 2004, through December
2014. 
"Investments in our new growth strategies paid off this quarter in
record revenues and margins," said Jen-Hsun Huang, president and
chief executive officer of NVIDIA. "Kepler GPUs are winning across
the special-purpose PC markets we serve, from gaming to design to
supercomputing. And Tegra is powering some of the most innovative
tablets, phones and cars in the market." 
He continued: "We are pleased to start paying our shareholders a
quarterly cash dividend. We have confidence in our businesses and our
continued ability to grow. Given our strong financial position and
ongoing ability to generate cash, we are well positioned to continue
investing in our future."  


 
                                                                            
                                                                            
                                                                            
----------------------------------------------------------------------------
                     GAAP Quarterly Financial Comparison                    
----------------------------------------------------------------------------
 (in millions except per                                                    
        share data)        Q3 FY13  Q2 FY13  Q3 FY12     Q/Q         Y/Y    
----------------------
------------------------------------------------------
Revenue                   $1,204.1 $1,044.3 $1,066.2    up 15.3%    up 12.9%
----------------------------------------------------------------------------
Gross margin                 52.9%    51.8%    52.2%  up 1.1 p.p  up 0.7 p.p
----------------------------------------------------------------------------
Operating expenses          $384.4   $401.1   $359.6   down 4.2%     up 6.9%
----------------------------------------------------------------------------
Net income                  $209.1   $119.0   $178.3    up 75.6%    up 17.3%
----------------------------------------------------------------------------
Earnings per share           $0.33    $0.19    $0.29    up 73.7%    up 13.8%
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                  Non-GAAP Quarterly Financial Comparison*                  
----------------------------------------------------------------------------
 (in millions except per                                                    
        share data)        Q3 FY13  Q2 FY13  Q3 FY12     Q/Q         Y/Y    
----------------------------------------------------------------------------
Revenue                   $1,204.1 $1,044.3 $1,066.2    up 15.3%    up 12.9%
----------------------------------------------------------------------------
Gross margin                 53.1%    52.0%    52.5%  up 1.1 p.p  up 0.6 p.p
----------------------------------------------------------------------------
Operating expenses          $344.8   $342.5   $317.6     up 0.7%     up 8.6%
----------------------------------------------------------------------------
Net income                  $245.5   $170.4   $217.0    up 44.0%    up 13.1%
----------------------------------------------------------------------------
Earnings per share           $0.39    $0.27    $0.35    up 44.4%    up 11.4%
----------------------------------------------------------------------------

 
*Non-GAAP earnings excluded stock-based compensation, amortization of
acquisition-related intangible assets, other acquisition-related
costs, a contribution expense in the second quarter of fiscal 2013,
and the tax impact associated with such items.  
Outlook 
Our outlook for the fourth quarter of fiscal 2013 is as follows: 


 
--  Revenue is expected to be between $1.025 billion and $1.175 billion.
    
    
--  GAAP and non-GAAP gross margins are expected to be flat relative to
    the prior quarter, 52.9 percent and 53.1 percent, respectively.
    
    
--  GAAP operating expenses are expected to be approximately $400 million;
    non-GAAP operating expenses are expected to be approximately $359
    million.
    
    
--  GAAP and non-GAAP tax rates are expected to be approximately 20
    percent and 19 percent, respectively, plus or minus one percentage
    point. This estimate excludes any discrete tax events that may occur
    during the quarter, which, if realized, may increase or decrease our
    actual fourth quarter GAAP and non-GAAP tax rates. If the U.S.
    research tax credit is reinstated into tax law, we estimate our annual
    effective tax rate for the fiscal year 2013 to be approximately 16
    percent.

  
Depreciation and amortization for the fourth quarter is estimated to be
approximately $58 million to $60 million. Capital expenditures are
expected to be in the range of $60 million to $70 million. 
Diluted shares for the fourth quarter are expected to be
approximately 629 million. 
Dividend and Share-Repurchase Program 
The quarterly dividend of 7.5 cents per share, 30 cents on an annual
basis, is equivalent to a yield of about 2.4 percent, based on the
Nov. 7 closing price of $12.61. It will be payable on Dec. 14, 2012
to all shareholders of record on Nov. 23, 2012.  
Since NVIDIA initiated its repurchase program in August 2004, NVIDIA
has spent $1.46 billion to repurchase 90.9 million shares of its
common stock. NVIDIA is authorized, subject to certain
specifications, to spend up to an additional $1.24 billion
repurchasing shares of its common stock. 
Any future repurchases would be made in the open market, in privately
negotiated transactions or in structured share-repurchase programs,
and may be made from time to time or in one or more larger
repurchases. The program will be conducted in compliance with the
Securities and Exchange Commission's Rule 10b-18 and applicable legal
requirements and shall be subject to market conditions and other
factors. The repurchases would be funded from available working
capital. 
Cash, cash equivalents and marketable securities at the end of the
third quarter of fiscal 2013 were $3.43 billion. 
Third Quarter Fiscal 2013 and Recent Highlights:  


 
--  Microsoft launched its NVIDIA Tegra(R) 3-based Surface RT to
    critical acclaim.
    
    
--  NVIDIA's new energy-efficient Kepler(TM) GPU architecture continued
    to make excellent headway:
    
    
    --  Kepler-based gaming was extended to new, lower price po
ints with
        the launch of the GeForce(R) 660 Ti, GeForce GTX 660, GeForce
        GTX 650 Ti and GeForce GTX 650.
    --  Kepler made further inroads in supercomputing, as Oak Ridge
        National Laboratory announced that it had completed Titan, the
        world's fastest open-science supercomputer. Titan gets 90 percent
        of its processing power from 18,688 NVIDIA Tesla(R) GPUs.
    --  Kepler moved further into Apple's lineup, with the NVIDIA
        Quadro(R) K5000 for Mac Pro users.
    --  NVIDIA launched the VGX(TM) K2 GPU, also based on the Kepler
        GPU, for cloud-based workstation graphics.

  
CFO Commentary
 Commentary on the quarter by Karen Burns, NVIDIA
interim chief financial officer, is available at www.nvidia.com/ir. 
Conference Call and Webcast Information 
 NVIDIA will conduct a
conference call with analysts and investors to discuss its third
quarter fiscal 2013 financial results and current financial prospects
today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen
to the call, please dial (706) 679-2572. A live webcast (listen-only
mode) of the conference call will be accessible at the NVIDIA
investor relations web site www.nvidia.com/ir and at
www.streetevents.com. The webcast will be recorded and available for
replay until the company's conference call to discuss its financial
results for its fourth quarter fiscal 2013. 
Non-GAAP Measures 
 To supplement NVIDIA's Condensed Consolidated
Statements of Operations and Condensed Consolidated Balance Sheets
presented in accordance with GAAP, the company uses non-GAAP measures
of certain components of financial performance. These non-GAAP
measures include non-GAAP gross profit, non-GAAP gross margin,
non-GAAP operating expenses, non-GAAP income tax expense, non-GAAP
net income, non-GAAP net income, or earnings, per share, and free
cash flows. In order for NVIDIA's investors to be better able to
compare its current results with those of previous periods, the
company has shown a reconciliation of GAAP to non-GAAP financial
measures. These reconciliations adjust the related GAAP financial
measures to exclude stock-based compensation, amortization of
acquisition-related intangible assets, other acquisition-related
costs, a non-recurring contribution expense, and the associated tax
impact of these items, where applicable. Free cash flow is calculated
as GAAP net cash provided by operating activities less purchases of
property and equipment and intangible assets. NVIDIA believes the
presentation of its non-GAAP financial measures enhances the user's
overall understanding of the company's historical financial
performance. The presentation of the company's non-GAAP financial
measures is not meant to be considered in isolation or as a
substitute for the company's financial results prepared in accordance
with GAAP, and our non-GAAP measures may be different from non-GAAP
measures used by other companies. 
About NVIDIA
 NVIDIA (NASDAQ: NVDA) awakened the world to computer
graphics when it invented the GPU in 1999. Today, its processors
power a broad range of products from smart phones to supercomputers.
NVIDIA's mobile processors are used in cell phones, tablets and auto
infotainment systems. PC gamers rely on GPUs to enjoy spectacularly
immersive worlds. Professionals use them to create visual effects in
movies and design everything from golf clubs to jumbo jets. And
researchers utilize GPUs to advance the frontiers of science with
high-performance computing. The company holds more than 5,000 patents
issued, allowed or filed. For more information, see www.nvidia.com. 
Certain statements in this press release including, but not limited
to, statements as to: investments in our new growth strategies;
Kepler GPUs winning across the special-purpose PC markets we serve;
Tegra powering innovative tables, phones and cars in the market; the
initiation and ongoing maintenance of a cash dividend program; the
extension of our existing share-repurchase program; our continued
growth; the strength of our business and financial position; our
ongoing ability to generate cash; the company's financial outlook for
the fourth quarter of fiscal 2013; and the company's tax rate for the
fourth quarter and fiscal year 2013 are forward-looking statements
that are subject to risks and uncertainties that could cause results
to be materially different than expectations. Important factors that
could cause actual results to differ materially include: global
economic conditions; our reliance on third parties to manufacture,
assemble, package and test our products; the impact of technological
development and competition; development of new products and
technologies or enhancements to our existing product and
technologies; market acceptance of our products or our partners
products; design, manufacturing or software defects; changes in
consumer preferences or demands; changes in industry standards and
interfaces; unexpected loss of performance of our products or
technologies when integrated into systems; as well as other factors
detailed from time to time in the reports NVIDIA files with the
Securities and Exchange Commission, or SEC, including its Form 10-Q
for the fiscal period ended July 29, 2012. Copies of reports filed
with the SEC are posted on the company's website and are available
from NVIDIA without charge. These forward-looking statements are not
guarantees of future performance and speak only as of the date
hereof, and, except as required by law, NVIDIA disclaims any
obligation to update these forward-looking statements to reflect
future events or circumstances. The share repurchase program does not
obligate NVIDIA to acquire any particular amount of common stock and
the program may be modified or suspended at any time at the company's
discretion. 
Copyright 2012 NVIDIA Corporation. All rights reserved. NVIDIA, the
NVIDIA logo, Tegra, Kepler, Quadro, GeForce, VGX and Tesla are
trademarks and/or registered trademarks of NVIDIA Corporation in the
U.S. and/or other countries. Other company and product names may be
trademarks of the respective companies with which they are
associated. Features, pricing, availability, and specifications are
subject to change without notice.   


 
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME                
                    (In thousands, except per share data)                   
                                 (Unaudited)                                
                                                                            
                                                                            
                                Three Months Ended      Nine Months Ended   
                             ----------------------- -----------------------
                             October 28, October 30, October 28, October 30,
                                 2012        2011        2012        2011   
                             ----------- ----------- ----------- -----------
                                                      
                      
Revenue                      $ 1,204,110 $ 1,066,180 $ 3,173,257 $ 3,044,736
Cost of revenue                  567,452     509,463   1,532,516   1,478,232
                             ----------- ----------- ----------- -----------
Gross profit                     636,658     556,717   1,640,741   1,566,504
Operating expenses                                                          
  Research and development       284,180     256,498     849,275     735,743
  Sales, general and                                                        
   administrative                100,261     103,129     326,800     304,779
                             ----------- ----------- ----------- -----------
    Total operating expenses     384,441     359,627   1,176,075   1,040,522
                             ----------- ----------- ----------- -----------
Operating income                 252,217     197,090     464,666     525,982
Interest and other income,                                                  
 net                               1,411       7,697      11,265      12,837
                             ----------- ----------- ----------- -----------
Income before income tax                                                    
 expense                         253,628     204,787     475,931     538,819
Income tax expense                44,548      26,514      87,368      73,754
                             ----------- ----------- ----------- -----------
Net income                   $   209,080 $   178,273 $   388,563 $   465,065
                             =========== =========== =========== ===========
                                                                            
Basic net income per share   $      0.34 $      0.29 $      0.63 $      0.77
                             =========== =========== =========== ===========
Diluted net income per share $      0.33 $      0.29 $      0.62 $      0.76
                             =========== =========== =========== ===========
                                                                            
Shares used in basic per                                                    
 share computation               622,352     607,063     619,043     600,563
Shares used in diluted per                                                  
 share computation               628,845     613,560     625,973     614,688
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
                                                                            
                                                     October 28, January 29,
                                                         2012        2012   
                                                     ----------- -----------
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash, cash equivalents and marketable securities   $ 3,434,772 $ 3,129,576
  Accounts receivable, net                               444,944     336,143
  Inventories                                            428,983     340,297
  Prepaid expenses and other current assets              116,128      99,342
                                                     ----------- -----------
    Total current assets                               4,424,827   3,905,358
                                                                            
Property and equipment, net                              566,540     560,072
Goodwill                                                 641,030     641,030
Intangible assets, net                                   331,248     326,136
Other assets                                             111,499     120,332
                                                     ----------- -----------
    Total assets                                     $ 6,075,144 $ 5,552,928
                                                     =========== ===========
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Accounts payable                                   $   390,265 $   335,072
  Accrued liabilities and other current liabilities      601,094     594,886
                                                     ----------- -----------
    Total current liabilities                            991,359     929,958
                                                                            
Other long-term liabilities                              341,312     455,807
Capital lease obligations, long term                      19,627      21,439
Stockholders' equity                                   4,722,846   4,145,724
                                                     ----------- -----------
    Total liabilities and stockholders' equity       $ 6,075,144 $ 5,552,928
                                                     =========== ===========
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES            
                   (In thousands, except per share data)                    
                                (Unaudited)                                 
                                                                            
                         Three Months Ended            Nine Months Ended    
                 ---------------------------------- ----------------------- 
                 October 28,  July 29,  October 30, October 28, October 30, 
                     2012       2012        2011        2012        2011    
                 ----------- ---------- ----------- ----------- ----------- 
                                                                            
GAAP gross                                                                  
 profit          $   636,658 $  540,719 $   556,717 $ 1,640,741 $ 1,566,504 
 GAAP gross                                   
                              
  margin                52.9%      51.8%       52.2%       51.7%       51.4%
                                                                            
   Stock-based                                                              
    compensation                                                            
    expense                                                                 
    included in                                                             
    cost of                                                                 
    revenue (A)        2,489      2,649       3,049       7,664       8,274 
                 ----------- ---------- ----------- ----------- ----------- 
Non-GAAP gross                                                              
 profit          $   639,147 $  543,368 $   559,766 $ 1,648,405 $ 1,574,778 
                 =========== ========== =========== =========== =========== 
 Non-GAAP gross                                                             
  margin                53.1%      52.0%       52.5%       51.9%       51.7%
                                                                            
GAAP operating                                                              
 expenses        $   384,441 $  401,096 $   359,627 $ 1,176,075 $ 1,040,522 
   Stock-based                                                              
    compensation                                                            
    expense                                                                 
    included in                                                             
    operating                                                               
    expense (A)      (30,580)   (29,606)    (30,180)    (93,229)    (92,644)
   Amortization                                                             
    of                                                                      
    acquisition-                                                            
    related                                                                 
    intangible                                                              
    assets            (4,402)    (4,065)     (5,399)    (12,809)    (12,149)
   Other                                                                    
    acquisition-                                                            
    related                                                                 
    costs (B)         (4,666)    (4,794)     (6,413)    (14,631)    (15,230)
   Contribution                                                             
    expense (C)            -    (20,127)          -     (20,127)          - 
                 ----------- ---------- ----------- ----------- ----------- 
Non-GAAP                                                                    
 operating                                                                  
 expenses        $   344,793 $  342,504 $   317,635 $ 1,035,279 $   920,499 
                 =========== ========== =========== =========== =========== 
                                                                            
GAAP net income  $   209,080 $  119,046 $   178,273 $   388,563 $   465,065 
   Total pre-tax                                                            
    impact of                                                               
    non-GAAP                                                                
    adjustments       42,137     61,241      45,041     148,460     128,297 
   Income tax                                                               
    impact of                                                               
    non-GAAP                                                                
    adjustments       (5,755)    (9,839)     (6,302)    (23,583)    (17,092)
                 ----------- ---------- ----------- ----------- ----------- 
Non-GAAP net                                                                
 income          $   245,462 $  170,448 $   217,012 $   513,440 $   576,270 
                 =========== ========== =========== =========== =========== 
                                                                            
Diluted net                                                                 
 income per                                                                 
 share                                                                      
   GAAP          $      0.33 $     0.19 $      0.29 $      0.62 $      0.76 
                 =========== ========== =========== =========== =========== 
   Non-GAAP      $      0.39 $     0.27 $      0.35 $      0.82 $      0.94 
                 =========== ========== =========== =========== =========== 
                                                                            
Shares used in                                                              
 diluted net                                                                
 income per                                                                 
 share                                                                      
 computation         628,845    623,143     613,560     625,973     614,688 
                                                                            
Metrics:                                                                    
   GAAP net cash                                                            
    flow                                                                    
    provided by                                                             
    operating                                                               
    activities   $   181,485 $  200,886 $   244,417 $   373,163 $   498,638 
   Purchase of                                                              
    property and                                                            
    equipment                                                               
    and                                                                     
    intangible                                                              
    assets           (44,684)   (61,944)    (39,035)   (135,551)    (93,553)
                 ----------- ---------- ----------- ----------- ----------- 
   Free cash                                                                
    flow         $   136,801 $  138,942 $   205,382 $   237,612 $   405,085 
                 =========== ========== =========== =========== =========== 
                                                                            
                                                                            
                                                                            
----------------------------------------------------------------------------
                                                                            
(A) Excludes                                                                
stock-based                                                                 
compensation as                                                             
follows:                 Three Months Ended            Nine Months Ended    
                 ---------------------------------- ----------------------- 
                 October 28,  July 29,  October 30, October 28, October 30, 
                     2012       2012        2011        2012        2011    
                 ----------- ---------- ----------- ----------- ----------- 
   Cost of                                                                  
    revenue      $     2,489 $    2,649 $     3,049 $     7,664 $     8,274 
   Research and                                                             
    development  $    20,056 $   18,885 $    19,308 $    60,148 $    59,594 
   Sales,                                                                   
    general and                                                             
    administra-
    tive         $    10,524 $   10,721 $    10,872 $    33,081 $    33,050 
                                                                            
(B) Other acquisition-related costs are comprised of transaction costs,     
compensation charges and restructuring costs related to the acquisition of  
Icera, Inc. that was completed on June 10, 2011.                            
                                                                            
(C) Net present value of a $25 million chartitable contribution pledged on  
June 12, 2012 to Stanford Hospital and Clinic, payable over a ten year      
period.                                                                     
                                                                            
----------------------------------------------------------------------------
                                                                            
                                                                            
                                         
                                   
                             NVIDIA CORPORATION                             
                 RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK                 
                                                                            
                                                          Q4 FY2013 Outlook 
                                                          ----------------- 
                                                                            
GAAP gross margin                                                      52.9%
  Impact of stock-based compensation (A)                                0.2%
                                                          ----------------- 
Non-GAAP gross margin                                                  53.1%
                                                          ================= 
                                                                            
                                                                            
                                                          Q4 FY2013 Outlook 
                                                          ----------------- 
                                                            (In millions)   
                                                                            
GAAP operating expenses                                   $           400.0 
  Stock-based compensation expense included in operating                    
   expense                                                            (32.0)
  Amortization of acquisition-related intangible assets                (4.0)
  Other acquisition-related costs (B)                                  (5.0)
                                                                            
                                                          ----------------- 
Non-GAAP operating expenses                               $           359.0 
                                                          ================= 
                                                                            
----------------------------------------------------------------------------
(A) Represents $2.7 million of stock-based compensation expense included in 
cost of revenue.                                                            
(B) Other acquisition related costs are comprised primarily of compensation 
charges related to the acquisition of Icera, Inc. that was completed on June
10, 2011.                                                                   
----------------------------------------------------------------------------

  
For further information, contact: 
Rob Csongor
Investor Relations
NVIDIA Corporation
(408) 566-6373
rcsongor@nvidia.com 
Robert Sherbin
Corporate Communications
NVIDIA Corporation
(408) 566-5150
rsherbin@nvidia.com 
 
 
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