SOURCE: NVIDIA

NVIDIA

August 07, 2014 16:20 ET

NVIDIA Financial Results for Second Quarter Fiscal 2015

SANTA CLARA, CA--(Marketwired - Aug 7, 2014) - NVIDIA (NASDAQ: NVDA)

  • Second quarter revenue of $1.10 billion, up 13 percent from a year earlier
  • GAAP diluted EPS of $0.22, up from $0.16 a year earlier; non-GAAP diluted EPS of $0.30, up from $0.23 a year earlier
  • Record GAAP gross margin of 56.1 percent; record non-GAAP gross margin of 56.4 percent

NVIDIA (NASDAQ: NVDA) today reported revenue for the second quarter ended July 27, 2014, of $1.10 billion, up 13 percent from $977 million a year earlier and in line with the previous quarter. Revenue for the first half was up 14 percent to a record $2.21 billion from $1.93 billion a year earlier.

GAAP earnings per diluted share for the quarter were $0.22, up 38 percent from $0.16 a year earlier and down 8 percent from the previous quarter. Non-GAAP earnings per diluted share were $0.30, up 30 percent from $0.23 a year earlier and up 3 percent from the previous quarter.

"We had a great quarter with strong gains in each of our three growth areas -- Gaming, Datacenter & Cloud, and Mobile," said Jen-Hsun Huang, president and chief executive officer of NVIDIA. "Our Tesla datacenter business is in high gear, benefiting from strong demand from cloud service providers, and our new SHIELD tablet is generating considerable excitement. ‎ NVIDIA's accelerating growth stems directly from investments in extending our visual computing leadership to the mobile-cloud revolution."

During the second quarter, NVIDIA paid $47 million in cash dividends and received 6.8 million shares under the $500 million structured repurchase agreement it entered into in the first quarter. During the first quarter, the company had paid $47 million in cash dividends and had received 20.6 million shares under the agreement. As a result, during the first half, NVIDIA has returned $594 million of the $1 billion it intends to return to shareholders in fiscal 2015.

NVIDIA will pay its next quarterly cash dividend of $0.085 per share on Sept. 12, 2014, to all stockholders of record on Aug. 21, 2014. NVIDIA expects that a portion of this dividend payment may be considered a return of capital for U.S. federal income tax purposes.

 
GAAP Quarterly Financial Comparison
($ in millions except earnings per share) Q2 FY15   Q1 FY15   Q2 FY14   Q/Q   Y/Y
Revenue $ 1,103   $ 1,103   $ 977   flat   up 13%
Gross margin   56.1%     54.8%     55.8%   up 130 bps   up 30 bps
Operating expenses $ 456   $ 453   $ 440   up 1%   up 4%
Net income $ 128   $ 137   $ 96   down 6%   up 33%
Diluted earnings per share $ 0.22   $ 0.24   $ 0.16   down 8%   up 38%
                         
                         
 
Non-GAAP Quarterly Financial Comparison
($ in millions except earnings per share) Q2 FY15   Q1 FY15   Q2 FY14   Q/Q   Y/Y
Revenue $ 1,103   $ 1,103   $ 977   flat   up 13%
Gross margin   56.4%     55.1%     56.3%   up 130 bps   up 10 bps
Operating expenses $ 411   $ 411   $ 401   flat   up 2%
Net income $ 173   $ 166   $ 133   up 4%   up 30%
Diluted earnings per share $ 0.30   $ 0.29   $ 0.23   up 3%   up 30%
                         
                         

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

  • Revenue is expected to be $1.20 billion, plus or minus two percent.

  • GAAP and non-GAAP gross margins are expected to be 55.2 percent and 55.5 percent, respectively, plus or minus 50 basis points.

  • GAAP operating expenses are expected to be approximately $463 million; non-GAAP operating expenses are expected to be approximately $416 million.

  • GAAP and non-GAAP tax rates for the third quarter and annual fiscal 2015 are both expected to be 19 percent, plus or minus one percentage point. This estimate excludes any discrete tax events that may occur during a quarter which, if realized, may increase or decrease NVIDIA's actual effective tax rates in such quarter.

  • Capital expenditures are expected to be approximately $40 million to $50 million.

Second Quarter Fiscal 2015 Highlights

During the second quarter, NVIDIA:

  • Extended its leading position in datacenter accelerated computing, with the world's 15 most efficient supercomputers all running NVIDIA® Tesla® GPUs, according to the latest Green500 list.

  • Surpassed 40 million installations in under two years of its GeForce Experience™ client, which provides game-ready drivers and optimal playable settings, and allows gameplay to be streamed and shared.

  • Invented the first-ever GPU acceleration technology for Adobe Illustrator CC, with performance up to 10x faster than previously possible. Adobe Illustrator CC is used by more than six million artists and designers worldwide.

  • Featured prominently at the Google I/O conference, where Google's new Android L was previewed. NVIDIA Tegra® K1 is the first processor to support Android L's advanced gaming capabilities; the first to bring GPU computing to mobile, evident in Google's Project Tango tablet, which features computer vision capabilities; and among the first to support Android TV.

  • Expanded the SHIELD™ family of gaming devices with the launch of the world's most advanced tablet built for gamers, the SHIELD tablet, along with the SHIELD wireless controller.

  • Accelerated the growth of its auto business, as BMW shipped new models, including the i8 and i3 with infotainment systems powered by Tegra. Volkswagen announced that, in addition to the Golf, Tegra will be included in the Passat launching later this year in Europe.

CFO Commentary
Commentary on the quarter by Colette Kress, NVIDIA's executive vice president and 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 second 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) 223-2680; 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 third 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 diluted 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, acquisition-related costs, gains and losses from non-affiliated investments, 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:

  • Keep up with the NVIDIA Blog.

  • Like NVIDIA on Facebook.

  • Connect with NVIDIA on LinkedIn.

  • Follow @NVIDIA on Twitter.

  • View NVIDIA videos on YouTube.

  • 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   Six Months Ended
    July 27,     July 28,   July 27,   July 28,
    2014     2013   2014   2013
                           
Revenue   $ 1,102,824     $ 977,238   $ 2,205,611   $ 1,931,977
Cost of revenue     483,850       431,700     982,435     867,871
Gross profit     618,974       545,538     1,223,176     1,064,106
Operating expenses                          
  Research and development     337,124       331,738     671,387     658,899
  Sales, general and administrative     118,671       108,266     237,251     216,892
    Total operating expenses     455,795       440,004     908,638     875,791
Operating income     163,179       105,534     314,538     188,315
  Interest income     6,829       3,865     12,539     8,941
  Interest expense     11,526       836     22,997     1,689
  Other income (expense), net     (3,857 )     3,257     13,827     4,315
Income before income tax expense     154,625       111,820     317,907     199,882
Income tax expense     26,649       15,372     53,415     25,543
Net income   $ 127,976     $ 96,448   $ 264,492   $ 174,339
                           
Net income per share:                          
  Basic   $ 0.23     $ 0.16   $ 0.47   $ 0.29
  Diluted   $ 0.22     $ 0.16   $ 0.46   $ 0.29
                           
Weighted average shares used in per share computation:                          
  Basic     558,223       585,345     558,657     601,109
  Diluted     570,572       592,006     570,599     606,051
                           
                           
 
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
         
         
    July 27,   January 26,
    2014   2014
ASSETS            
             
Current assets:            
  Cash, cash equivalents and marketable securities   $ 4,386,054   $ 4,671,810
  Accounts receivable, net     469,625     426,357
  Inventories     387,434     387,765
  Prepaid expenses and other current assets     134,473     138,779
    Total current assets     5,377,586     5,624,711
             
Property and equipment, net     556,911     582,740
Goodwill     643,179     643,179
Intangible assets, net     260,613     296,012
Other assets     95,430     104,252
    Total assets   $ 6,933,719   $ 7,250,894
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 261,627   $ 324,391
  Accrued liabilities and other current liabilities     607,102     621,105
    Total current liabilities     868,729     945,496
             
Long-term debt     1,370,249     1,356,375
Other long-term liabilities     374,113     475,125
Capital lease obligations, long-term     15,842     17,500
Stockholders' equity     4,304,786     4,456,398
    Total liabilities and stockholders' equity   $ 6,933,719   $ 7,250,894
             
             
                               
NVIDIA CORPORATION  
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES  
(In thousands, except per share data)  
(Unaudited)  
                         
    Three Months Ended     Six Months Ended  
    July 27,     April 27,     July 28,     July 27,     July 28,  
    2014     2014     2013     2014     2013  
                                         
GAAP gross profit   $ 618,974     $ 604,202     $ 545,538     $ 1,223,176     $ 1,064,106  
  GAAP gross margin     56.1 %     54.8 %     55.8 %     55.5 %     55.1 %
    Stock-based compensation expense included in cost of revenue (A)     2,656       2,919       2,168       5,575       4,821  
    Legal settlement     -       -       2,290       -       2,290  
Non-GAAP gross profit   $ 621,630     $ 607,121     $ 549,996     $ 1,228,751     $ 1,071,217  
  Non-GAAP gross margin     56.4 %     55.1 %     56.3 %     55.7 %     55.4 %
                                         
GAAP operating expenses   $ 455,795     $ 452,843     $ 440,004     $ 908,638     $ 875,791  
  Stock-based compensation expense included in operating expense (A)     (35,759 )     (32,602 )     (30,227 )     (68,361 )     (60,971 )
  Acquisition-related costs (B)     (9,173 )     (9,441 )     (8,964 )     (18,614 )     (17,825 )
Non-GAAP operating expenses   $ 410,863     $ 410,800     $ 400,813     $ 821,663     $ 796,995  
                                         
GAAP other income (expense), net   $ (8,554 )   $ 11,923     $ 6,286     $ 3,369     $ 11,567  
  Gains and losses from non-affiliated investments     2,500       (16,982 )     -       (14,482 )     -  
  Interest expense related to amortization of debt discount     6,973       6,901       -       13,874       -  
Non-GAAP other income (expense), net   $ 919     $ 1,842     $ 6,286     $ 2,761     $ 11,567  
                                         
GAAP net income   $ 127,976     $ 136,516     $ 96,448     $ 264,492     $ 174,339  
  Total pre-tax impact of non-GAAP adjustments     57,061       34,881       43,649       91,942       85,907  
  Income tax impact of non-GAAP adjustments     (11,606 )     (5,342 )     (6,767 )     (16,948 )     (13,115 )
Non-GAAP net income   $ 173,431     $ 166,055     $ 133,330     $ 339,486     $ 247,131  
                                         
Diluted net income per share                                        
  GAAP   $ 0.22     $ 0.24     $ 0.16     $ 0.46     $ 0.29  
  Non-GAAP   $ 0.30     $ 0.29     $ 0.23     $ 0.59     $ 0.41  
                                         
Shares used in diluted net income per share computation     570,572       570,422       592,006       570,599       606,051  
                                         
Metrics:                                        
                                         
  GAAP net cash flow provided by operating activities   $ 96,282     $ 151,022     $ 96,469     $ 247,304     $ 272,119  
  Purchase of property and equipment and intangible assets     (22,527 )     (29,068 )     (84,986 )     (51,595 )     (150,653 )
  Free cash flow   $ 73,755     $ 121,954     $ 11,483     $ 195,709     $ 121,466  
                                         
                                         
(A) Excludes stock-based compensation as follows:     Three Months Ended       Six Months Ended  
      July 27,       April 27,       July 28,       July 27,       July 28,  
      2014       2014       2013       2014       2013  
  Cost of revenue   $ 2,656     $ 2,919     $ 2,168     $ 5,575     $ 4,821  
  Research and development   $ 21,462     $ 20,494     $ 18,555     $ 41,956     $ 40,490  
  Sales, general and administrative   $ 14,297     $ 12,108     $ 11,672     $ 26,405     $ 20,481  
                                         
(B) Consists of amortization of acquisition-related intangible assets, transaction costs, compensation charges, and other credits related to acquisitions.  
   
   
       
NVIDIA CORPORATION  
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK  
   
    Q3 FY2015 Outlook  
         
GAAP gross margin     55.2 %
  Impact of stock-based compensation     0.3 %
Non-GAAP gross margin     55.5 %
         
      Q3 FY2015 Outlook  
      (In millions)  
         
GAAP operating expenses   $ 463  
  Stock-based compensation expense and acquisition-related costs     (47 )
Non-GAAP operating expenses   $ 416  
         
         

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: strong demand from cloud service providers; the company's growth stemming directly from investments in extending its visual computing leadership to the mobile-cloud revolution; the $1 billion the company intends to return to shareholders in fiscal 2015; a portion of the company's dividend payment being considered a return of capital; the company's financial outlook for the third quarter of fiscal 2015; and the company's tax rate for the third quarter and 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-Q for the fiscal period ended April 27, 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.

© 2014 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce Experience, Tegra, Tesla, NVIDIA GRID, 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.

Contact Information

  • 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