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NEWS RELEASE

Wednesday, February 12, 2014

NVIDIA Reports Financial Results for Fourth Quarter and Fiscal 2014

GPU Business Delivers Across Gaming, Workstation, High-Performance Computing

SANTA CLARA, CA - NVIDIA (NASDAQ: NVDA) today reported revenue for the fourth quarter of fiscal 2014, ended Jan. 26, 2014, of $1.14 billion, up 8.6 percent from $1.05 billion in the previous quarter.

  • Fiscal fourth quarter revenue of $1.14 billion.

  • Quarterly GAAP diluted EPS of $0.25, up from $0.20 in Q3; non-GAAP diluted EPS of $0.32, up from $0.26 in Q3.

  • Quarterly GAAP gross margin of 54.1 percent; non-GAAP gross margin of 53.8 percent.

SANTA CLARA, CA - NVIDIA (NASDAQ: NVDA) today reported revenue for the fourth quarter of fiscal 2014, ended Jan. 26, 2014, of $1.14 billion, up 8.6 percent from $1.05 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.25, up 25 percent from $0.20 in the previous quarter. Non-GAAP earnings per diluted share for the quarter were $0.32, up 23 percent from $0.26 in the previous quarter.

"Quarterly revenue came in well above our outlook, driven by PC gaming, capping an outstanding year for our GPU business," said Jen-Hsun Huang, president and chief executive officer of NVIDIA. "Tesla and Quadro both achieved record annual revenue. GRID cloud technology is being evaluated at hundreds of large enterprises worldwide. And Tegra K1 is disrupting the auto industry, paving the way to self-piloted cars. The groundbreaking work we are doing in visual computing is expanding the opportunities for our GPUs."

During the quarter, NVIDIA repurchased $37 million of stock and paid a dividend of $0.085 per share, equivalent to $48 million. During the year, NVIDIA returned $1.07 billion to shareholders -- $887 million towards the repurchase of 62 million shares and dividend payments totaling $181 million. NVIDIA will pay its next quarterly cash dividend of $0.085 per share on Mar. 20, 2014, to all shareholders of record on Feb. 27, 2014.

Revenue for the full year was $4.13 billion. GAAP earnings per diluted share for the year were $0.74 and non-GAAP earnings per diluted share for the year were $0.99.

GAAP Quarterly Financial Comparison
(in millions except earnings per share) Q4 FY14 Q3 FY14 Q4 FY13 Q/Q Y/Y
Revenue $1,144 $1,054 $1,107 up 9% up 3%
Gross margin 54.1% 55.4% 52.9% down 130 bps up 120 bps
Operating expenses $452 $443 $402 up 2% up 13%
Net income $147 $119 $174 up 24% down 16%
Earnings per share $0.25 $0.20 $0.28 up 25% down 11%
Non-GAAP Quarterly Financial Comparison
(in millions except earnings per share) Q4 FY14 Q3 FY14 Q4 FY13 Q/Q Y/Y
Revenue $1,144 $1,054 $1,107 up 9% up 3%
Gross margin 53.8% 55.7% 53.2% down 190 bps up 60 bps
Operating expenses $408 $405 $360 up 1% up 13%
Net income $187 $154 $215 up 22% down 13%
Earnings per share $0.32 $0.26 $0.35 up 23% down 9%

Among highlights of the fourth quarter of fiscal 2014, NVIDIA:

  • Grew GeForce® GTX™ GPU revenue nearly 50 percent over the fourth quarter of fiscal 2013.

  • Launched Tegra®K1, NVIDIA's next-generation mobile system-on-a-chip, extending the Kepler™ architecture across the company's entire line of processors.

  • Demonstrated Denver, NVIDIA's custom 64-bit ARM core inside Tegra K1. This was the first time Android had been shown running on 64-bit ARM.

  • Announced Audi is introducing a new Tegra-powered infotainment system, smart display and digital cockpit. Audi also announced it will use Tegra K1 to power its future piloted-driving initiatives.

  • Launched Tesla® K40, the world's fastest accelerator for supercomputing and big data analytics.

  • Partnered with IBM to build supercomputers for the HPC community and accelerate enterprise data analytics applications with GPUs.

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

  • Revenue is expected to be $1.05 billion, plus or minus two percent.

  • GAAP and non-GAAP gross margins are expected to be approximately 54.2 percent and 54.5 percent, respectively.

  • GAAP operating expenses are expected to be approximately $454 million; non-GAAP operating expenses are expected to be approximately $413 million.

  • GAAP and non-GAAP tax rates for the first quarter and annual fiscal 2015 are both expected to be 20 percent, plus or minus one percent. If the U.S. R&D tax credit is renewed, the tax rate is expected to be 16 percent.

  • Capital expenditures are expected to be approximately $45 million for the first quarter of fiscal 2015.

CFO Commentary
Commentary on the quarter by Colette Kress, NVIDIA 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 fourth quarter fiscal 2014 financial results and financial outlook today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen to the call, please dial (212) 231-2922. 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 first 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 interest and other income/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, a contribution expense, other expenses, a gain on sale of a non-affiliated investment, interest expense related to 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.

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NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
January 26, January 27, January 26, January 27,
2014 2013 2014 2013
Revenue $1,144,218 $1,106,902 $4,130,162 $4,280,159
Cost of revenue 524,976 521,300 1,862,399 2,053,816
Gross profit 619,242 585,602 2,267,763 2,226,343
Operating expenses
Research and development 336,641 298,007 1,335,834 1,147,282
Sales, general and administrative 115,677 104,022 435,702 430,822
Total operating expenses 452,318 402,029 1,771,536 1,578,104
Operating income 166,924 183,573 496,227 648,239
Interest income 4,156 4,693 17,119 19,908
Interest expense (7,935) (880) (10,443) (3,294)
Other income (expense), net 5,743 (1,278) 7,351 (2,814)
Income before income tax expense 168,888 186,108 510,254 662,039
Income tax expense 21,971 12,135 70,264 99,503
Net income $146,917 $173,973 $439,990 $562,536
Basic net income per share $0.26 $0.28 $0.75 $0.91
Diluted net income per share $0.25 $0.28 $0.74 $0.90
Shares used in basic per share computation 568,483 620,169 587,893 619,324
Shares used in diluted per share computation 577,356 622,018 594,517 624,957
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 26, January 27,
2014 2013
ASSETS
Current assets:
Cash, cash equivalents and marketable securities $4,671,810 $3,727,883
Accounts receivable, net 426,357 454,252
Inventories 387,765 412,467
Prepaid expenses and other current assets 138,779 180,656
Total current assets 5,624,711 4,775,258
Property and equipment, net 582,740 576,144
Goodwill 643,179 641,030
Intangible assets, net 296,012 312,332
Other assets 104,252 107,481
Total assets $7,250,894 $6,412,245
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $324,391 $356,428
Accrued liabilities and other current liabilities 621,105 619,795
Total current liabilities 945,496 976,223
Long-term debt 1,356,375 -
Other long-term liabilities 475,125 589,321
Capital lease obligations, long-term 17,500 18,998
Stockholders' equity 4,456,398 4,827,703
Total liabilities and stockholders' equity $7,250,894 $6,412,245
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
January October January January January
26, 2014 27, 2013 27, 2013 26, 2014 27, 2013
GAAP gross profit $619,242 $584,415 $585,602 $2,267,763 $2,226,343
GAAP gross margin 54.1% 55.4% 52.9% 54.9% 52.0%
Stock-based compensation expense included in cost of revenue (A) 2,777 3,090 2,826 10,688 10,490
Legal settlement 1,450 - - 3,740 -
Credit from a weak die/packaging material set (B) (7,782) - - (7,782) -
Non-GAAP gross profit $615,687 $587,505 $588,428 $2,274,409 $2,236,833
Non-GAAP gross margin 53.8% 55.7% 53.2% 55.1% 52.3%
GAAP operating expenses $452,318 $443,427 $402,029 $1,771,536 $1,578,104
Stock-based compensation expense included in operating expense (A) (33,427) (31,209) (32,943) (125,607) (126,172)
Acquisition-related costs (C) (9,250) (4,577) (8,698) (31,652) (36,138)
Contribution expense (D) - - - - (20,127)
Other expense (E) (1,845) (2,235) - (4,080) -
Non-GAAP operating expenses $407,796 $405,406 $360,388 $1,610,197 $1,395,667
GAAP interest and other income/expense, net $1,964 $496 $2,535 $14,027 $13,800
Gain on sale of a non-affiliated investment (3,074) - - (3,074) -
Interest expense related to amortization of debt discount 4,600 - - 4,600 -
Non-GAAP interest and other income/expense, net $3,490 $496 $2,535 $15,553 $13,800
GAAP net income $146,917 $118,734 $173,973 $439,990 $562,536
Total pre-tax impact of non-GAAP adjustments 42,493 41,111 44,467 169,511 192,927
Income tax impact of non-GAAP adjustments (1,924) (6,055) (3,507) (21,094) (27,090)
Non-GAAP net income $187,486 $153,790 $214,933 $588,407 $728,373
Diluted net income per share
GAAP $0.25 $0.20 $0.28 $0.74 $0.90
Non-GAAP $0.32 $0.26 $0.35 $0.99 $1.17
Shares used in diluted net income per share computation 577,356 588,752 622,018 594,517 624,957
Metrics:
GAAP net cash flow provided by operating activities $400,712 $162,315 $451,009 $835,146 $824,172
Purchase of property and equipment and intangible assets (66,374) (38,159) (47,758) (255,186) (183,309)
Free cash flow $334,338 $124,156 $403,251 $579,960 $640,863
(A) Excludes stock-based compensation as follows: Three Months Ended Twelve Months Ended
January October January January January
26, 2014 27, 2013 27, 2013 26, 2014 27, 2013
Cost of revenue $2,777 $3,090 $2,826 $10,688 $10,490
Research and development $21,548 $20,902 $22,009 $82,940 $82,157
Sales, general and administrative $11,879 $10,307 $10,934 $42,667 $44,015
(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) Net present value of a $25 million charitable contribution pledged on June 12, 2012 to Stanford Hospital and Clinic, payable over ten years.
(E) Includes intangible asset write-off, restructuring charge, and legal settlement costs, net of credits.
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q1 FY2015 Outlook
GAAP gross margin 54.2%
Impact of stock-based compensation 0.3%
Non-GAAP gross margin 54.5%
Q1 FY2015 Outlook
(In millions)
GAAP operating expenses $454
Stock-based compensation expense and acquisition-related costs (41)
Non-GAAP operating expenses $413

For further information, contact:

Hector Marinez:

Corp. Communications
t: +1 (408) 486 3443
e: hmarinez@nvidia.com

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: the evaluation of GRID cloud technology; the effects of Tegra K1; the expansion of opportunities for the company's GPUs; the company's financial outlook for the first quarter of fiscal 2015; and the company's tax rate for the first 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 October 27, 2013. 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, GeForce GTX, Tegra, Tesla, NVIDIA GRID and Kepler 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.

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