NVIDIA Announces Financial Results for Fourth Quarter and Fiscal 2020

February 13, 2020

NVIDIA today reported revenue for the fourth quarter ended Jan. 26, 2020, of $3.11 billion, up 41 percent from $2.21 billion a year earlier, and up 3 percent from $3.01 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $1.53, up 66 percent from $0.92 a year ago, and up 6 percent from $1.45 in the previous quarter. Non-GAAP earnings per diluted share were $1.89, up 136 percent from $0.80 a year earlier, and up 6 percent from $1.78 in the previous quarter.

For fiscal 2020, revenue was $10.92 billion, down 7 percent from $11.72 billion a year earlier. GAAP earnings per diluted share were $4.52, down 32 percent from $6.63 a year earlier. Non-GAAP earnings per diluted share were $5.79, down 13 percent from $6.64 a year earlier.

“Adoption of NVIDIA accelerated computing drove excellent results, with record data center revenue,” said Jensen Huang, founder and CEO of NVIDIA. “Our initiatives are achieving great success.

“NVIDIA RTX ray tracing is reinventing computer graphics, driving powerful adoption across gaming, VR and design markets, while opening new opportunities in rendering and cloud gaming. NVIDIA AI is enabling breakthroughs in language understanding, conversational AI and recommendation engines ― the core algorithms that power the internet today. And new NVIDIA computing applications in 5G, genomics, robotics and autonomous vehicles enable us to continue important work that has great impact.

“We are well positioned for the greatest technology trends of our time,” he said.

NVIDIA will pay its next quarterly cash dividend of $0.16 per share on March 20, 2020, to all shareholders of record on Feb. 28, 2020.  

Q4 Fiscal 2020 Summary

GAAP
($ in millions, except earnings per share) Q4 FY20 Q3 FY20 Q4 FY19 Q/Q Y/Y
Revenue $3,105 $3,014 $2,205 Up 3% Up 41%
Gross margin 64.9% 63.6% 54.7% Up 130 bps Up 1,020 bps
Operating expenses $1,025 $989 $913 Up 4% Up 12%
Operating income $990 $927 $294 Up 7% Up 237%
Net income $950 $899 $567 Up 6% Up 68%
Diluted earnings per share $1.53 $1.45 $0.92 Up 6% Up 66%

 

Non-GAAP
($ in millions, except earnings per share) Q4 FY20 Q3 FY20 Q4 FY19 Q/Q Y/Y
Revenue $3,105 $3,014 $2,205 Up 3% Up 41%
Gross margin 65.4% 64.1% 56.0% Up 130 bps Up 940 bps
Operating expenses $810 $774 $755 Up 5% Up 7%
Operating income $1,220 $1,156 $479 Up 6% Up 155%
Net income $1,172 $1,103 $496 Up 6% Up 136%
Diluted earnings per share $1.89 $1.78 $0.80 Up 6% Up 136%

Fiscal 2020 Summary

GAAP
($ in millions except earnings per share) FY20 FY19 Y/Y
Revenue $10,918 $11,716 Down 7%
Gross margin 62.0% 61.2% Up 80 bps
Operating expenses $3,922 $3,367 Up 16%
Operating income $2,846 $3,804 Down 25%
Net income $2,796 $4,141 Down 32%
Diluted earnings per share $4.52 $6.63 Down 32%

 

Non-GAAP
($ in millions except earnings per share) FY20 FY19 Y/Y
Revenue $10,918 $11,716 Down 7%
Gross margin 62.5% 61.7% Up 80 bps
Operating expenses $3,086 $2,826 Up 9%
Operating income $3,735 $4,407 Down 15%
Net income $3,580 $4,143 Down 14%
Diluted earnings per share $5.79 $6.64 Down 13%

NVIDIA’s outlook for the first quarter of fiscal 2021 does not include any contribution from the pending acquisition of Mellanox Technologies, Ltd. Discussions with China’s regulatory agency, the State Administration for Market Regulation, are progressing, and NVIDIA believes the acquisition will likely close in the early part of calendar 2020.

While the ultimate effect of the coronavirus is difficult to estimate, the company has reduced its revenue outlook for the first quarter of fiscal 2021 by $100 million to account for its potential impact.

  • Revenue is expected to be $3.00 billion, plus or minus 2 percent.
  • GAAP and non-GAAP gross margins are expected to be 65.0 percent and 65.4 percent, respectively, plus or minus 50 basis points.
  • GAAP and non-GAAP operating expenses are expected to be approximately $1.05 billion and $835 million, respectively.
  • GAAP and non-GAAP other income and expense are both expected to be income of approximately $25 million.
  • GAAP and non-GAAP tax rates are both expected to be 9 percent, plus or minus 1 percent, excluding any discrete items. GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which are expected to generate variability on a quarter by quarter basis.

Highlights

Since the end of the third quarter of fiscal 2020, NVIDIA has achieved progress in these areas:
  
Gaming

  • Grew momentum for ray tracing with the launch of such RTX-enabled games as Deliver Us The Moon, Wolfenstein: Youngblood and Bright Memory.
  • Brought its GeForce NOW™ cloud gaming service out of beta, opening up PC gaming to hundreds of millions of consumers who can now add a virtual GeForce® graphics card to their device and play games they own, as well as free-to-play games.
  • Brought its number of gaming laptops to a record 125 models, including the world’s first 14-inch GeForce RTX™ laptop, the ASUS ROG Zephyrus G14.
  • Continued to build G-SYNC® momentum at CES, with the launch of the ASUS ROG Swift 360, the world’s fastest monitor, with a 360Hz refresh rate; and with LG adopting G-SYNC in its new lineup of OLED TVs.

Data Center and Edge Computing

Professional Visualization

Automotive

  • Announced DRIVE AGX Orin™, an advanced software-defined platform for autonomous vehicles capable of achieving 200 TOPS, nearly 7x that of the previous generation SoC.

CFO Commentary

Commentary on the quarter by Colette Kress, NVIDIA’s executive vice president and chief financial officer, is available at https://investor.nvidia.com/home/default.aspx.

Conference Call and Webcast Information

NVIDIA will conduct a conference call with analysts and investors to discuss its fourth quarter and fiscal 2020 financial results and current financial prospects today at 2:30 p.m. Pacific time (5:30 p.m. Eastern time). A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, https://investor.nvidia.com/home/default.aspx. The webcast will be recorded and available for replay until NVIDIA’s conference call to discuss its financial results for its first quarter of fiscal 2021.

Non-GAAP Measures

To supplement NVIDIA’s condensed consolidated financial statements 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 from operations, non-GAAP other income, non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, non-GAAP diluted shares, 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 expense, legal settlement costs, acquisition-related and other costs, gains and losses from non-affiliated investments, 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 purchase 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 the company’s non-GAAP measures may be different from non-GAAP measures used by other companies.


 

 

NVIDIA CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
               
               
  Three Months Ended   Twelve Months Ended
  January 26,   January 27,   January 26,   January 27,
    2020       2019       2020       2019  
               
Revenue $ 3,105     $ 2,205     $ 10,918     $ 11,716  
Cost of revenue   1,090       998       4,150       4,545  
Gross profit   2,015       1,207       6,768       7,171  
Operating expenses              
Research and development   738       647       2,829       2,376  
Sales, general and administrative   287       266       1,093       991  
Total operating expenses   1,025       913       3,922       3,367  
Income from operations   990       294       2,846       3,804  
Interest income   41       42       178       136  
Interest expense   (12 )     (14 )     (52 )     (58 )
Other, net   (3 )     2       (2 )     14  
Total other income   26       30       124       92  
Income before income tax   1,016       324       2,970       3,896  
Income tax expense (benefit)   66       (243 )     174       (245 )
Net income $ 950     $ 567     $ 2,796     $ 4,141  
               
Net income per share:              
Basic $ 1.55     $ 0.93     $ 4.59     $ 6.81  
Diluted $ 1.53     $ 0.92     $ 4.52     $ 6.63  
               
Weighted average shares used in per share computation:            
Basic   612       609       609       608  
Diluted   621       619       618       625  
               


 

NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
       
       
  January 26,   January 27,
  2020   2019
ASSETS      
       
Current assets:      
Cash, cash equivalents and marketable securities $ 10,897   $ 7,422
Accounts receivable, net   1,657     1,424
Inventories   979     1,575
Prepaid expenses and other current assets   157     136
Total current assets   13,690     10,557
       
Property and equipment, net   1,674     1,404
Operating lease assets   618     -
Goodwill   618     618
Intangible assets, net   49     45
Deferred income tax assets   548     560
Other assets   118     108
Total assets $ 17,315   $ 13,292
       
LIABILITIES AND SHAREHOLDERS' EQUITY
       
Current liabilities:      
Accounts payable $ 687   $ 511
Accrued and other current liabilities   1,097     818
Total current liabilities   1,784     1,329
       
Long-term debt   1,991     1,988
Long-term operating lease liabilities   561     -
Other long-term liabilities   775     633
Total liabilities   5,111     3,950
       
Shareholders' equity   12,204     9,342
Total liabilities and shareholders' equity $ 17,315   $ 13,292
       


 

NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
               
               
  Three Months Ended   Twelve Months Ended
  January 26,   January 27,   January 26,   January 27,
  2020   2019   2020   2019
               
Cash flows from operating activities:              
Net income $ 950     $ 567     $ 2,796     $ 4,141  
Adjustments to reconcile net income to net cash provided by operating activities:            
Stock-based compensation expense   220       156       844       557  
Depreciation and amortization   106       78       381       262  
Deferred income taxes   23       (345 )     18       (315 )
Other   -       (10 )     5       (45 )
Changes in operating assets and liabilities:              
Accounts receivable   (202 )     794       (233 )     (149 )
Inventories   66       (156 )     597       (776 )
Prepaid expenses and other assets   22       13       77       (55 )
Accounts payable   104       (359 )     194       (135 )
Accrued and other current liabilities   157       109       54       256  
Other long-term liabilities   19       51       28       2  
Net cash provided by operating activities   1,465       898       4,761       3,743  
Cash flows from investing activities:              
Proceeds from maturities of marketable securities   -       964       4,744       7,232  
Proceeds from sales of marketable securities   2       314       3,365       428  
Purchases of marketable securities   -       (1,036 )     (1,461 )     (11,148 )
Purchases of property and equipment and intangible assets   (144 )     (203 )     (489 )     (600 )
Investments and other, net   (9 )     -       (14 )     (9 )
Net cash provided by (used in) investing activities   (151 )     39       6,145       (4,097 )
Cash flows from financing activities:              
Payments related to repurchases of common stock   -       (724 )     -       (1,579 )
Repayment of Convertible Notes   -       (3 )     -       (16 )
Dividends paid   (98 )     (98 )     (390 )     (371 )
Proceeds related to employee stock plans   2       3       149       137  
Payments related to tax on restricted stock units   (87 )     (50 )     (551 )     (1,032 )
Other   -       (4 )     -       (5 )
Net cash used in financing activities   (183 )     (876 )     (792 )     (2,866 )
Change in cash and cash equivalents   1,131       61       10,114       (3,220 )
Cash and cash equivalents at beginning of period   9,765       721       782       4,002  
Cash and cash equivalents at end of period $ 10,896     $ 782     $ 10,896     $ 782  
                 


 

NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)
               
  Three Months Ended   Twelve Months Ended
  January 26, October 27, January 27, January 26, January 27,
  2020   2019   2019   2020     2019
                   
GAAP gross profit $ 2,015     $ 1,916     $ 1,207     $ 6,768     $ 7,171  
GAAP gross margin   64.9 %     63.6 %     54.7 %     62.0 %     61.2 %
Stock-based compensation expense (A)   12       15       6       39       27  
Legal settlement costs   3       -       21       14       35  
Non-GAAP gross profit $ 2,030     $ 1,931     $ 1,234     $ 6,821     $ 7,233  
Non-GAAP gross margin   65.4 %     64.1 %     56.0 %     62.5 %     61.7 %
                   
GAAP operating expenses $ 1,025     $ 989     $ 913     $ 3,922     $ 3,367  
Stock-based compensation expense (A)   (208 )     (208 )     (150 )     (805 )     (530 )
Acquisition-related and other costs   (7 )     (7 )     (1 )     (30 )     (2 )
Legal settlement costs   -       -       (7 )     (1 )     (9 )
Non-GAAP operating expenses $ 810     $ 774     $ 755     $ 3,086     $ 2,826  
                   
GAAP income from operations $ 990     $ 927     $ 294     $ 2,846     $ 3,804  
Total impact of non-GAAP adjustments to income from operations   230       229       185       889       603  
Non-GAAP income from operations $ 1,220     $ 1,156     $ 479     $ 3,735     $ 4,407  
                   
GAAP other income $ 26     $ 32     $ 30     $ 124     $ 92  
Losses (Gains) from non-affiliated investments   -       -       (1 )     1       (12 )
Interest expense related to amortization of debt discount   -       1       -       2       2  
Non-GAAP other income $ 26     $ 33     $ 29     $ 127     $ 82  
                   
GAAP net income $ 950     $ 899     $ 567     $ 2,796     $ 4,141  
Total pre-tax impact of non-GAAP adjustments   230       230       184       890       593  
Income tax impact of non-GAAP adjustments (B)   (8 )     (26 )     (25 )     (106 )     (223 )
Tax benefit from income tax reform   -       -       (230 )     -       (368 )
Non-GAAP net income $ 1,172     $ 1,103     $ 496     $ 3,580     $ 4,143  
                   
Diluted net income per share                  
GAAP $ 1.53     $ 1.45     $ 0.92     $ 4.52     $ 6.63  
Non-GAAP $ 1.89     $ 1.78     $ 0.80     $ 5.79     $ 6.64  
                   
Weighted average shares used in diluted net income per share computation                  
GAAP   621       618       619       618       625  
Anti-dilution impact from note hedge   -       -       -       -       (1 )
Non-GAAP   621       618       619       618       624  
 
GAAP net cash provided by operating activities $ 1,465     $ 1,640     $ 898     $ 4,761     $ 3,743  
Purchase of property and equipment and intangible assets   (144 )     (104 )     (203 )     (489 )     (600 )
Free cash flow $ 1,321     $ 1,536     $ 695     $ 4,272     $ 3,143  
                   
 
                   
(A) Stock-based compensation consists of the following: Three Months Ended   Twelve Months Ended
  January 26, October 27, January 27, January 26, January 27,
  2020   2019   2019   2020   2019
Cost of revenue $ 12     $ 15     $ 6     $ 39     $ 27  
Research and development $ 140     $ 141     $ 99     $ 540     $ 336  
Sales, general and administrative $ 68     $ 67     $ 51     $ 265     $ 194  
(B) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or deficiencies related to stock-based compensation under GAAP accounting standard (ASU 2016-09).


 

NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
   
 
  Q1 FY2021 Outlook
   
GAAP gross margin   65.0 %
Impact of stock-based compensation expense   0.4 %
Non-GAAP gross margin   65.4 %
   
  Q1 FY2021 Outlook
  (In millions)
   
GAAP operating expenses $ 1,045  
Stock-based compensation expense, acquisition-related costs, and other costs   (210 )
Non-GAAP operating expenses $ 835  
   

About NVIDIA

NVIDIA’s (NASDAQ: NVDA) invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined modern computer graphics and revolutionized parallel computing. More recently, GPU deep learning ignited modern AI ― the next era of computing ― with the GPU acting as the brain of computers, robots and self-driving cars that can perceive and understand the world. More information at https://nvidianews.nvidia.com/. 

Certain statements in this press release including, but not limited to, statements as to: our initiatives achieving great success; the impacts of NVIDIA RTX ray tracing, NVIDIA AI and new NVIDIA computing applications in 5G, genomics, robotics, and autonomous vehicles; NVIDIA’s positioning for the greatest technology trends of our time; NVIDIA’s next quarterly cash dividend; the status of the China regulatory approval process and the expected timing of closing of the Mellanox acquisition; the ultimate effect of the coronavirus; NVIDIA’s financial outlook for the first quarter of fiscal 2021; NVIDIA’s expected tax rates for the first quarter of fiscal 2021; NVIDIA’s expectation to generate variability from excess tax benefits or deficiencies; and the benefits and impact of: GeForce NOW, Alibaba’s and Baidu’s recommendation engines running on NVIDIA AI, NVIDIA TensorRT7, NVIDIA Clara Federated Learning, Magnum IO, the new version of the NVIDIA Isaac software development kit, expanding the reach of RTX technology into Chaos Group’s V-Ray, Autodesk’s Arnold and Blender’s Cycles, and DRIVE AGX Orin 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 most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. 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.

© 2020 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Quadro, DRIVE AGX Orin, GeForce NOW, GeForce RTX, G-SYNC, NVIDIA Clara, NVIDIA Isaac, NVIDIA RTX, and TensorRT 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.

About NVIDIA

NVIDIA’s (NASDAQ: NVDA) invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined modern computer graphics and revolutionized parallel computing. More recently, GPU deep learning ignited modern AI ― the next era of computing ― with the GPU acting as the brain of computers, robots and self-driving cars that can perceive and understand the world. More information at https://nvidianews.nvidia.com/. 

Certain statements in this press release including, but not limited to, statements as to: our initiatives achieving great success; the impacts of NVIDIA RTX ray tracing, NVIDIA AI and new NVIDIA computing applications in 5G, genomics, robotics, and autonomous vehicles; NVIDIA’s positioning for the greatest technology trends of our time; NVIDIA’s next quarterly cash dividend; the status of the China regulatory approval process and the expected timing of closing of the Mellanox acquisition; the ultimate effect of the coronavirus; NVIDIA’s financial outlook for the first quarter of fiscal 2021; NVIDIA’s expected tax rates for the first quarter of fiscal 2021; NVIDIA’s expectation to generate variability from excess tax benefits or deficiencies; and the benefits and impact of: GeForce NOW, Alibaba’s and Baidu’s recommendation engines running on NVIDIA AI, NVIDIA TensorRT7, NVIDIA Clara Federated Learning, Magnum IO, the new version of the NVIDIA Isaac software development kit, expanding the reach of RTX technology into Chaos Group’s V-Ray, Autodesk’s Arnold and Blender’s Cycles, and DRIVE AGX Orin 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 most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. 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.

© 2020 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Quadro, DRIVE AGX Orin, GeForce NOW, GeForce RTX, G-SYNC, NVIDIA Clara, NVIDIA Isaac, NVIDIA RTX, and TensorRT 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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