NVIDIA Reports Financial Results for Third Quarter Fiscal 2011

Thursday, November 11, 2010

SANTA CLARA, CA -- NVIDIA (NASDAQ: NVDA)

  • Revenue of $843.9 million, up 4.0 percent from the second quarter
  • GAAP net income rose to $84.9 million, or $0.15 per diluted share, from the second quarter's GAAP net loss of $141.0 million, or $0.25 per share
  • GAAP gross margin increased to 46.5 percent from the second quarter's 16.6 percent

NVIDIA (NASDAQ: NVDA) today reported revenue of $843.9 million for the third quarter of fiscal 2011 ended Oct. 31, 2010, up 4.0 percent from the prior quarter and down 6.6 percent from $903.2 million from the same period a year earlier.

On a GAAP basis, the company recorded net income of $84.9 million, or $0.15 per diluted share, compared with a GAAP net loss of $141.0 million, or $0.25 per share, in the previous quarter and GAAP net income of $107.6 million, or $0.19 per diluted share, in the same period a year earlier. GAAP gross margin was 46.5 percent compared with 16.6 percent in the previous quarter and 43.4 percent in the same period a year earlier.

 

                                         Quarterly Highlights
    ($ in millions except per    -----------------------------------
     share data)                  Q3 FY2011   Q2 FY2011   Q3 FY2010
                                 ----------- ----------- -----------
     Revenue                       $843.9      $811.2      $903.2
                                 ----------- ----------- -----------
     GAAP:
      Gross margin                  46.5%       16.6%       43.4%
                                 ----------- ----------- -----------
      Net income (loss)             $84.9    ($141.0)      $107.6
                                 ----------- ----------- -----------
      Income (loss) per share       $0.15     ($0.25)       $0.19
                                 ----------- ----------- -----------

 

"We have turned the corner," said Jen-Hsun Huang, NVIDIA's president and chief executive officer. "We have restored our speed of execution and are regaining share in desktops. Only seven months after shipping our first processor based on the Fermi architecture, we have begun production on seven more GPUs, including the GeForce GTX 580, which sets a new standard for performance. The Fermi architecture is now in every segment of our desktop, notebook and workstation product lines.

"We've also made big strides this quarter in positioning ourselves at the center of cloud and mobile computing, which are transforming the computer landscape. Tesla now powers some of the world's fastest and greenest supercomputers. And Tegra will soon be featured in a range of smartphones and tablets we're building with our partners," he said.

Outlook

The outlook for the fourth quarter of fiscal 2011 is as follows:

  • Revenue is expected to be up 3 to 5 percent from the third quarter.
  • GAAP gross margin is expected to be flat.
  • GAAP operating expenses are expected to be approximately $300 million.
  • GAAP tax rate is expected to be 18 to 20 percent.

Third Quarter Fiscal 2011 Highlights:

  • NVIDIA held the second annual GPU Technology Conference, which highlighted the growth of parallel computing, with five times more papers submitted and twice as many sessions.
     
  • The Tianhe-1A supercomputer, which incorporates 7,168 GPUs, was unveiled as the world's fastest supercomputer. Housed in the National Supercomputer Center, in Tianjin, China, the system is three-times more energy efficient than an equivalent CPU-only system and takes up half as much floor space.
     
  • NVIDIA launched 12 new GPU products, including the NVIDIA® GeForce® GTS 450 and GT 430.
     
  • After quarter end, NVIDIA launched and shipped the GeForce GTX 580 graphics card, which was received positively by media and industry analysts.

CFO Commentary
Commentary on the quarter by David White, NVIDIA chief financial officer and executive vice president, is available at www.nvidia.com/investor.

Conference Call and Web Cast Information
NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter fiscal 2011 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 (212) 231-2900. A live Web cast (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 Web cast will be recorded and available for replay until the company's conference call to discuss its financial results for its fourth quarter fiscal 2011.

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 net income, non-GAAP net income 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 a charge related to the weak die/packaging material set that was used in certain versions of NVIDIA's previous generation MCP and GPU products, net of insurance reimbursements, a non-recurring charge related to a tender offer purchase, 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 the power of computer graphics when it invented the GPU in 1999. Since then, it has consistently set new standards in visual computing with breathtaking, interactive graphics available on devices ranging from tablets and portable media players to notebooks and workstations. NVIDIA's expertise in programmable GPUs has led to breakthroughs in parallel processing which make supercomputing inexpensive and widely accessible. The Company holds more than 1,600 patents worldwide, including ones covering designs and insights that are essential to modern computing. For more information, see www.nvidia.com.

Certain statements in this press release including, but not limited to, statements as to: the company's financial outlook for the fourth quarter of fiscal 2011; the company's market share in desktops; the benefits of GeForce GTX 580; the impact of cloud and mobile computing; Tegra design wins; and the impact of the company's patents on modern computing; 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: our reliance on third parties to manufacture, assemble, package and test our products; global economic conditions; development of faster or more efficient technology; the impact of technological development and competition; 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 August 1, 2010. 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 © 2010. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, and Fermi are trademarks or registered trademarks of NVIDIA Corporation in the United States and other countries around the world. 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 OPERATIONS
                  (In thousands, except per share data)
                                (Unaudited)


                           Three Months Ended         Nine Months Ended
                        ------------------------  -------------------------
                         October 31,  October 25,  October 31,  October 25,
                            2010         2009         2010         2009
                        -----------  ------------ ------------ -----------
Revenue                 $   843,912  $    903,206 $  2,656,933 $ 2,343,957

Cost of revenue             451,850       511,423    1,674,202   1,605,755
                        -----------  ------------ ------------ -----------

Gross profit                392,062       391,783      982,731     738,202
Operating expenses
  Research and
   development              204,527       197,948      633,267     692,600
  Sales, general and
   administrative            83,752        85,990      273,495     278,829
                        -----------  ------------ ------------ -----------
     Total operating
      expenses              288,279       283,938      906,762     971,429
                        -----------  ------------ ------------ -----------

Operating income (loss)     103,783       107,845       75,969    (233,227)

Interest and other
 Income (loss), net            (198)        2,362        9,294      11,512
                        -----------  ------------ ------------ -----------

Income (loss) before
 income tax expense         103,585       110,207       85,263    (221,715)

Income tax expense
 (benefit)                   18,723         2,630        3,768     (22,652)
                        -----------  ------------ ------------ -----------

Net income (loss)       $    84,862  $    107,577 $     81,495 $  (199,063)
                        ===========  ============ ============ ===========


Basic net income (loss)
 per share              $      0.15  $       0.20 $       0.14 $     (0.36)
                        ===========  ============ ============ ===========

Diluted net income
 (loss) per share       $      0.15  $       0.19 $       0.14 $     (0.36)
                        ===========  ============ ============ ===========

Shares used in basic
 per share computation      577,323       551,283      572,420     546,737

Shares used in diluted
 per share computation      582,648       574,381      584,500     546,737





                            NVIDIA CORPORATION
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (In thousands)
                                (Unaudited)

                                                    October 31, January 31,
                                                       2010        2010
                                                    ----------- -----------
ASSETS

Current assets:
  Cash, cash equivalents and marketable securities  $ 1,987,220 $ 1,728,227
  Accounts receivable, net                              399,502     374,963
  Inventories                                           377,812     330,674
  Prepaid expenses and other current assets              43,168      46,966
                                                    ----------- -----------

     Total current assets                             2,807,702   2,480,830

Property and equipment, net                             585,672     571,858
Goodwill                                                369,844     369,844
Intangible assets, net                                  112,642     120,458
Deposits and other assets                                39,719      42,928
                                                    ----------- -----------

     Total assets                                   $ 3,915,579 $ 3,585,918
                                                    =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                  $   324,770 $   344,527
  Accrued liabilities and other current liabilities     491,719     439,851
                                                    ----------- -----------

     Total current liabilities                          816,489     784,378

Other long-term liabilities                             177,851     111,950
Capital lease obligations, long term                     23,359      24,450

Stockholders' equity                                  2,897,880   2,665,140
                                                    ----------- -----------

     Total liabilities and stockholders' equity     $ 3,915,579 $ 3,585,918
                                                    =========== ===========





                            NVIDIA CORPORATION
          RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
                  (In thousands, except per share data)
                                (Unaudited)


                                         Three Months Ended
                             -----------------------------------------
                             October 31,   August 1,       October 25,
                                 2010         2010             2009
                             -----------  -----------      -----------

GAAP gross profit            $   392,062  $   134,292      $   391,783
  GAAP gross margin                 46.5%        16.6%            43.4%
    Net charge against cost
     of revenue arising from
     a weak die/packaging
     material set                      -      181,193  (A)     (24,115) (A)
    Stock option purchase
     charge related to cost
     of revenue                        -            -                -
                             -----------  -----------      -----------
Non-GAAP gross profit        $   392,062  $   315,485      $   367,668
                             ===========  ===========      ===========
  Non-GAAP gross margin             46.5%        38.9%            40.7%

GAAP operating expenses      $   288,279  $   309,499      $   283,938
    Net charge against
     operating expenses
     arising from a weak
     die/packaging
     material set                      -      (12,705) (A)         990  (A)
    Stock option purchase
     charge related to
     operating expenses                -            -                -
                             -----------  -----------      -----------
Non-GAAP operating expenses  $   288,279  $   296,794      $   284,928
                             ===========  ===========      ===========

GAAP net income (loss)       $    84,862  $  (140,961)     $   107,577
    Net charge arising from
     a weak die/packaging
     material set                      -      193,898  (A)     (25,105) (A)
    Stock option purchase
     charge                            -            -                -
    Income tax impact of
     non-GAAP adjustments              -      (32,828) (C)      (5,072) (C)
                             -----------  -----------      -----------
Non-GAAP net income (loss)   $    84,862  $    20,109      $    77,400
                             ===========  ===========      ===========

Diluted net income (loss)
 per share
    GAAP                     $      0.15  $     (0.25)     $      0.19
                             ===========  ===========      ===========
    Non-GAAP                 $      0.15  $      0.03      $      0.13
                             ===========  ===========      ===========

Shares used in GAAP diluted
 net income (loss) per share
 computation                     582,648      572,764          574,381
    Cumulative impact of
     non-GAAP adjustments              -        9,609  (D)           -
                             -----------  -----------      -----------
Shares used in non-GAAP
 diluted net income (loss)
 per share computation           582,648      582,373          574,381
                             ===========  ===========      ===========

Metrics:
GAAP net cash flow provided
 by / (used in) operating
 activities                  $   212,177  $    34,344      $   141,317
    Purchase of property and
     equipment and intangible
     assets                      (21,823)     (37,644)         (16,593)
                             -----------  -----------      -----------
Free cash flow               $   190,354  $    (3,300)     $   124,724
                             ===========  ===========      ===========



                                   Nine Months Ended
                             ----------------------------
                             October 31,      October 25,
                                 2010             2009
                             -----------      -----------

GAAP gross profit            $   982,731      $   738,202
  GAAP gross margin                 37.0%            31.5%
    Net charge against cost
     of revenue arising from
     a weak die/packaging
     material set                181,193  (A)      95,878  (A)
    Stock option purchase
     charge related to cost
     of revenue                        -           11,412  (B)
                             -----------      -----------
Non-GAAP gross profit        $ 1,163,924      $   845,492
                             ===========      ===========
  Non-GAAP gross margin             43.8%            36.1%

GAAP operating expenses      $   906,762      $   971,429
    Net charge against
     operating expenses
     arising from a weak
     die/packaging
     material set                (12,705) (A)       1,929  (A)
    Stock option purchase
     charge related to
     operating expenses                -         (128,829) (B)
                             -----------      -----------
Non-GAAP operating expenses  $   894,057      $   844,529
                             ===========      ===========

GAAP net income (loss)       $    81,495      $  (199,063)
    Net charge arising from
     a weak die/packaging
     material set                193,898  (A)      93,949  (A)
    Stock option purchase
     charge                            -          140,241  (B)
    Income tax impact of
     non-GAAP adjustments        (32,828) (C)     (16,652) (C)
                             -----------      -----------
Non-GAAP net income (loss)   $   242,565      $    18,475
                             ===========      ===========

Diluted net income (loss)
 per share
    GAAP                     $      0.14      $     (0.36)
                             ===========      ===========
    Non-GAAP                 $      0.41      $      0.03
                             ===========      ===========

Shares used in GAAP diluted
 net income (loss) per share
 computation                     584,500          546,737
    Cumulative impact of
     non-GAAP adjustments              -           17,761  (D)
                             -----------      -----------
Shares used in non-GAAP
 diluted net income (loss)
 per share computation           584,500          564,498
                             ===========      ===========

Metrics:
GAAP net cash flow provided
 by / (used in) operating
 activities                  $   241,124      $   418,562
    Purchase of property and
     equipment and intangible
     assets                      (76,547)         (55,026)
                             -----------      -----------
Free cash flow               $   164,577      $   363,536
                             ===========      ===========


(A) Excludes a charge related to the weak die/packaging material set that
    was used in certain versions of our previous generation chips, net of
    insurance reimbursement.
(B) During the three months ended April 26, 2009, the Company completed a
    tender offer to purchase outstanding stock options which resulted in a
    charge of $140.2 million, $11.4 million of which was associated with
    cost of revenue and $128.8 million with operating expenses.
(C) The income tax impact of non-GAAP adjustments has only been reported
    during fiscal quarters that include other GAAP to non-GAAP reconciling
    items, as well as in the full fiscal year results during which the GAAP
    to non-GAAP reconciling items occur. As such, any effective tax rate
    differences between GAAP and non-GAAP results that result from such
    adjustments have not been reported separately in the non-GAAP results
    for a fiscal quarter that does not contain other GAAP to non-GAAP
    reconciling items.
(D) Reflects an adjustment to diluted shares to reflect a non-GAAP net
    income versus a GAAP net loss.

 

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/.
© 2016 NVIDIA Corporation. All rights reserved. NVIDIA and the NVIDIA logo are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and 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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