NVIDIA Financial Results for First Quarter Fiscal 2015

NVIDIA Financial Results for First Quarter Fiscal 2015 
Adds Second Quarter Outlook and Dividend Dates to May 6 Release 
SANTA CLARA, CA -- (Marketwired) -- 05/08/14 --  NVIDIA (NASDAQ:
NVDA)  


 
--  Revenue of $1.103 billion.
    
    
--  GAAP net income of $136.5 million, or $0.24 per diluted share.
    Non-GAAP net income of $166.1 million, or $0.29 per diluted share.
    
    
--  GAAP and non-GAAP gross margins of 54.8 percent and 55.1 percent,
    respectively.

  
NVIDIA has reported revenue for the first quarter of fiscal 2015, ended
April 27, 2014, of $1.103 billion, up 16 percent from a year earlier
and down 4 percent from $1.144 billion in the previous quarter. 
NVIDIA reported its financial results earlier this week because a
preliminary draft had been inadvertently emailed to an internal
distribution list of about 100 individuals. Figures contained in the
May 6 release are unchanged in this release. 
GAAP earnings per diluted share were $0.24, up 85 percent from $0.13
a year earlier, and down 4 percent from $0.25 in the previous
quarter. Non-GAAP earnings per diluted share were $0.29, up 61
percent from $0.18 a year earlier and down 9 percent from $0.32 in
the previous quarter. 
NVIDIA will pay its next quarterly cash dividend of $0.085 per share
on June 13, 2014, to all stockholders of record on May 22, 2014.
NVIDIA expects that a portion of this dividend payment may be
considered a return of capital for U.S. federal income tax purposes. 
"First quarter results benefited from gains in PC gaming and our
continued progress in the data center and cloud," said Jen-Hsun
Huang, president and chief executive officer of NVIDIA. "Nearly 600
enterprises worldwide are now evaluating GRID, our virtual GPU server
platform. VMware announced support for GRID to enable GPU-accelerated
enterprise virtualization. And with IBM, Dell and HP now selling our
GPUs in their high-volume servers, we expect large-scale data centers
to be a significant source of growth."  


 
                                                                            
----------------------------------------------------------------------------
                     GAAP Quarterly Financial Comparison                    
----------------------------------------------------------------------------
 (in millions except                                                        
    per share data)     Q1 FY15    Q4 FY14    Q1 FY14      Q/Q        Y/Y   
----------------------------------------------------------------------------
Revenue                 $1,102.8   $1,144.2     $954.7    down 4%     up 16%
----------------------------------------------------------------------------
Gross margin               54.8%      54.1%      54.3%  up 70 bps  up 50 bps
----------------------------------------------------------------------------
Operating expenses        $452.8     $452.3     $435.8       flat      up 4%
----------------------------------------------------------------------------
Net income                $136.5     $146.9      $77.9    down 7%     up 75%
----------------------------------------------------------------------------
Earnings per share         $0.24      $0.25      $0.13    down 4%     up 85%
----------------------------------------------------------------------------
                                                                            
                                                                            
----------------------------------------------------------------------------
                   Non-GAAP Quarterly Financial Comparison                  
----------------------------------------------------------------------------
 (in millions except                                                        
   per share data)     Q1 FY15    Q4 FY14    Q1 FY14       Q/Q        Y/Y   
----------------------------------------------------------------------------
Revenue                $1,102.8   $1,144.2     $954.7     down 4%     up 16%
----------------------------------------------------------------------------
Gross margin              55.1%      53.8%      54.6%  up 130 bps  up 50 bps
----------------------------------------------------------------------------
Operating expenses       $410.8     $407.8     $396.2       up 1%      up 4%
----------------------------------------------------------------------------
Net income               $166.1     $187.5     $113.8    down 11%     up 46%
----------------------------------------------------------------------------
Earnings per share        $0.29      $0.32      $0.18     down 9%     up 61%
----------------------------------------------------------------------------

 
Among highlights of the first quarter of fiscal 2015, NVIDIA:  


 
--  Expanded its annual GPU Technology Conference, with 25 percent growth
    in attendees and sessions.
    
    
--  Refreshed its notebook GPU line-up with new GeForce(R) GTX(TM)
    800M series products, including its first Maxwell(TM)-based
    products.
    
    
--  Disclosed first details of its Pascal(TM) GPU architecture, which
    will succeed Maxwell.  Pascal will feature NVLink(TM) interconnect
    technology, which will be incorporated in future POWER8 CPUs from IBM,
    and also 3D memory.
    
    
--  Announced that NVIDIA GRID(TM) technology is available on the VMware
    Horizon DaaS Platform.
    
    
--  Launched Jetson(TM) TK1, a development platform aimed at automotive,
    robotics and embedded applications.
    
    
--  Joined with IBM, Google and others to launch the OpenPOWER Foundation,
    an initiative to bring IBM's POWER CPU to mainstream servers.

  
NVIDIA's outlook for the second quarter of fiscal 2015 is as follows:  


 
--  Revenue is expected to be $1.1 billion, plus or minus two percent.
    
    
--  GAAP and non-GAAP margins are expected to be approximately 53.7
    percent and 54.0 percent, respectively.
    
    
--  GAAP operating expenses are expected to be approximately $457 million;
    non-GAAP operating expenses are expected to be approximately $414
    million.
    
    
--  GAAP and non-GAAP tax rates for the second quarter and annual fiscal
    2015 are both expected to be 20 percent, plus or minus one percent.
    These estimates exclude any discrete tax events that may occur during
    the quarter, which, if realized, may increase or decrease our actual
    effective tax rates.
    
    
--  Capital expenditures are expected to be approximately $40 million for
    the second quarter of fiscal 2015.

  
CFO Commentary 
Commentary on the quarter by Colette Kress, NVIDIA chief financial
officer, is available at http://investor.nvidia.com/.  
Conference Call and Webcast Information
 NVIDIA will conduct a
conference call with analysts and investors to discuss its first
quarter fiscal 2015 financial results and current financial prospects
today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen
to the conference call, dial (303) 223-2684; no password is required.
A live webcast (listen-only mode) of the conference call will be
accessible at the NVIDIA investor relations web site
http://investor.nvidia.com/ 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 second
quarter fiscal 2015. 
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 other income and expense, non-GAAP income tax
expense, non-GAAP net income, non-GAAP net income, or earnings, per
share, and free cash flow. 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, legal
settlements, a credit related to a weak die/packaging material set,
acquisition-related costs, other expenses, a gain on sale of a
non-affiliated investment, interest expense related to the
amortization of debt discount, 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. 
To Keep Current on NVIDIA:  


 
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--  Keep up with the NVIDIA Blog.
--  Use the Pulse news reader to subscribe to the NVIDIA Daily News feed.

 
                                                                            
                             NVIDIA CORPORATION                             
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME                
                    (In thousands, except per share data)                   
                                 (Unaudited)                                
                                                                            
                                                                            
                                                       Three Months Ended   
                                                    ------------------------
                                                     April 27,    April 28, 
                                                        2014         2013   
                                                    -----------  -----------
                                                                            
Revenue                                             $ 1,102,787  $   954,739
Cost of revenue                                         498,585      436,171
                                                    -----------  -----------
Gross profit                                            604,202      518,568
Operating expenses                                                          
  Research and development                              334,263      327,161
  Sales, general and administrative                     118,580      108,626
                                                    -----------  -----------
    Total operating expenses                            452,843      435,787
                                                    -----------  -----------
Operating income                                        151,359       82,781
  Interest income                                         5,710        5,076
  Interest expense                                       11,471          853
  Other income, net                                      17,684        1,058
                                                    -----------  -----------
Income before income tax expense                        163,282       88,062
Income tax expense                                       26,766       10,171
                                                    -----------  -----------
Net income                                          $   136,516  $    77,891
                                                    ===========  ===========
                                                                            
Net income per share:                                                       
  Basic                                             $      0.24  $      0.13
                                                    ===========  ===========
  Diluted                                           $      0.24  $      0.13
                                                    ===========  ===========
                                                                            
Weighted average shares used in per share                                   
 computation:                                                               
  Basic                                                 559,092      616,872
  Diluted                                               570,422      619,302
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
                                                                            
                                                  April 27,     January 26, 
                                                     2014           2014    
                                                -------------  -------------
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash, cash equivalents and marketable                                     
   securities                                   $   4,347,817  $   4,671,810
  Accounts receivable, net                            396,438        426,357
  Inventories                                         393,280        387,765
  Prepaid expenses and other current assets           136,263        138,779
                                                -------------  -------------
    Total current assets                            5,273,798      5,624,711
                                                                            
Property and equipment, net                           570,802        582,740
Goodwill                                              643,179        643,179
Intangible assets, net                                277,530        296,012
Other assets                                           99,354        104,252
                                                -------------  -------------
    Total assets                                $   6,864,663  $   7,250,894
                                                =============  =============
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Accounts payable                              $     309,008  $     324,391
  Accrued liabilities and other current                                     
   liabilities                                        588,937        621,105
                                                -------------  -------------
    Total current liabilities                         897,945        945,496
                                                                            
Long-term debt                                      1,363,276      1,356,375
Other long-term liabilities                           419,774        475,125
Capital lease obligations, long-term                   16,683         17,500
Stockholders' equity                                4,166,985      4,456,398
                                                -------------  -------------
                                                                            
    Total liabilities and stockholders' equity  $   6,864,663  $   7,250,894
                                                =============  =============
                                                                            
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES            
                   (In thousands, except per share data)                    
                                (Unaudited)                                 
                                                                            
                                             Three Months Ended             
                                ------------------------------------------- 
                                  April 27,     January 26,     April 28,   
                                     2014           2014           2013     
                                -------------  -------------  ------------- 
                                                                            
GAAP gross profit               $     604,202  $     619,242  $     518,568 
  GAAP gross margin                      54.8%          54.1%          54.3%
                                                                            
    Stock-based compensation                                                
     expense included in cost                                               
     of revenue (A)                     2,919          2,777          2,653 
    Legal settlement                        -          1,450              - 
    Credit from a weak                                                      
     die/packaging material set                                             
     (B)                                    -         (7,782)             - 
                                -------------  -------------  ------------- 
Non-GAAP gross profit           $     607,121  $     615,687  $     521,221 
                                =============  =============  ============= 
  Non-GAAP gross margin                  55.1%          53.8%          54.6%
                                                                            
GAAP operating expenses         $     452,843  $     452,318  $     435,787 
    Stock-based compensation                                                
     expense included in                                                    
     operating expense (A)            (32,602)       (33,427)       (30,744)
    Acquisition-related costs                                               
     (C)                               (9,441)        (9,250)        (8,861)
    Other expense (D)                       -         (1,845)             - 
                                -------------  -------------  ------------- 
Non-GAAP operating expenses     $     410,800  $     407,796  $     396,182 
                                =============  =============  ============= 
                                                                            
GAAP other income and expense   $      11,923  $       1,964  $       5,281 
    Gain on sale of non-                                                    
     affiliated investments           (16,982)        (3,074)             - 
    Interest expense related to                                             
     amortization of debt                                                   
     discount                           6,901          4,600              - 
                                -------------  -------------  ------------- 
Non-GAAP other income and                                                   
 expense                        $       1,842  $       3,490  $       5,281 
                                =============  =============  ============= 
                                                                            
GAAP net income                 $     136,516  $     146,917  $      77,891 
    Total pre-tax impact of                                                 
     non-GAAP adjustments              34,881         42,493         42,258 
    Income tax impact of non-                                               
     GAAP adjustments                  (5,342)        (1,924)        (6,348)
                                -------------  -------------  ------------- 
Non-GAAP net income             $     166,055  $     187,486  $     113,801 
                                =============  =============  ============= 
                                                                            
Diluted net income per share                                                
    GAAP                        $        0.24  $        0.25  $        0.13 
                                =============  =============  ============= 
    Non-GAAP                    $        0.29  $        0.32  $        0.18 
                                =============  =============  ============= 
                                                                            
Shares used in diluted net                                                  
 income per share computation         570,422        577,356        619,302 
                                                                            
Metrics:                                                                    
    GAAP net cash flow provided                                             
     by operating activities    $     151,022  $     400,712  $     175,650 
    Purchase of property and                                                
     equipment and intangible                                               
     assets                           (29,068)       (66,374)       (65,667)
                                -------------  -------------  ------------- 
    Free cash flow              $     121,954  $     334,338  $     109,983 
                                =============  =============  ============= 
                                                                            
----------------------------------------------------------------------------
                                                                            
                                                                            
(A) Excludes stock-based                                                    
 compensation as follows:                    Three Months Ended             
                                ------------------------------------------- 
                                  April 27,     January 26,     April 28,   
                                     2014           2014           2013     
                                -------------  -------------  ------------- 
    Cost of revenue             $       2,919  $       2,777  $       2,653 
    Research and development    $      20,494  $      21,548  $      21,935 
    Sales, general and                                                      
     administrative             $      12,108  $      11,879  $       8,809 
                                                                            
(B) Release of the remaining warranty reserve related to a weak             
 die/packaging material set, as of January 26, 2014.                        
                                                                            
(C) Consists of amortization of acquisition-related intangible assets,      
 transaction costs, compensation charges, and other credits related to      
 acquisitions.                                                              
                                                                            
(D) Includes intangible asset write-off and legal settlement costs, net of  
 credits.                                                                   
                                                                            
                                                                            
----------------------------------------------------------------------------
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                 RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK                 
                                                                            
                                                          Q2 FY2015 Outlook 
                                                          ----------------- 
                                                                            
GAAP gross margin                                                      53.7%
  Impact of stock-based compensation                                    0.3%
                                                          ----------------- 
Non-GAAP gross margin                                                  54.0%
                                                          ================= 
                                                                            
                                                          Q2 FY2015 Outlook 
                                                          ----------------- 
                                                            (In millions)   
                                                                            
GAAP operating expenses                                   $             457 
  Stock-based compensation expense and acquisition-                         
   related costs                                                        (43)
                                                          ----------------- 
Non-GAAP operating expenses                               $             414 
                                                          ================= 

 
About NVIDIA 
Since 1993, NVIDIA (NASDAQ: NVDA) has pioneered the art and science
of visual computing. The company's technologies are transforming a
world of displays into a world of interactive discovery -- for
everyone from gamers to scientists, and consumers to enterprise
customers. More information at http://nvidianews.nvidia.com and
http://blogs.nvidia.com. 
Certain statements in this press release including, but not limited
to statements as to: a portion of the company's dividend payment
being considered a return of capital; the company's continued
progress in the data center and cloud; enterprises evaluating GRID;
large-scale data centers being a significant source of growth; the
Pascal GPU architecture succeeding Maxwell; the features of Pascal;
the company's financial outlook for the second quarter of, and
annual, fiscal 2015; and the company's tax rate for the second
quarter of fiscal 2015 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-K
for the fiscal period ended January 26, 2014. 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. 
Copyright 2014 NVIDIA Corporation. All rights reserved. NVIDIA, the
NVIDIA logo, GeForce, GeForce GTX, NVIDIA GRID, Jetson, NVLink,
Maxwell, Pascal, and SHIELD 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. 
For further information, contact: 
Chris Evenden
Investor Relations
NVIDIA Corporation
(408) 627-0608
cevenden@nvidia.com 
Robert Sherbin
Corporate Communications
NVIDIA Corporation
(408) 566-5150
rsherbin@nvidia.com 
 
 
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