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NVIDIA Reports Financial Results for Second Quarter Fiscal Year 2012

SANTA CLARA, CA, Aug 11, 2011 (MARKETWIRE via COMTEX) --

NVIDIA (NASDAQ: NVDA)

--  Revenue increased 5.7 percent to $1.02 billion from $962.0 million in
    the previous quarter.
--  GAAP net income was $151.6 million, or $0.25 per diluted share;
    non-GAAP net income was $193.5 million, or $0.32 per diluted share.
--  GAAP gross margin increased to 51.7 percent, a record for the fourth
    consecutive quarter; non-GAAP gross margin increased to 51.9 percent
    from the first quarter's 50.6 percent.

NVIDIA (NASDAQ: NVDA) today reported revenue of $1.02 billion for the second quarter of fiscal 2012 ended July 31, 2011, up 5.7 percent from the prior quarter, and up 25.3 percent from $811.2 million in the same period a year earlier.

(in millions except per      Q2 FY12     Q1 FY12     Q2 FY12     Q1 FY12
share data)                    GAAP        GAAP      NON-GAAP    NON-GAAP
                            ----------  ----------  ----------  ----------
Revenue                     $    1,017  $    962.0  $    1,017  $    962.0
                            ----------  ----------  ----------  ----------
Gross Margin                      51.7%       50.4%       51.9%       50.6%
                            ----------  ----------  ----------  ----------
Operating Expenses          $    351.3  $    329.6  $    306.0  $    296.8
                            ----------  ----------  ----------  ----------
Net Income                  $    151.6  $    135.2  $    193.5  $    165.7
                            ----------  ----------  ----------  ----------
Earnings Per Share          $     0.25  $     0.22  $     0.32  $     0.27
                            ----------  ----------  ----------  ----------

On a GAAP basis, the company recorded net income of $151.6 million, or $0.25 per diluted share, for the second quarter of fiscal 2012. This includes a two-cent dilutive impact from the Icera acquisition. It compares with net income of $135.2 million, or $0.22 per diluted share, in the prior quarter. In the same period a year earlier, the company had a net loss of $141.0 million, or $0.25 per diluted share.

On a non-GAAP basis -- which excludes stock-based compensation, amortization of acquisition-related intangible assets, other acquisition related costs, and the tax impact associated with these items -- net income was $193.5 million, or $0.32 per diluted share. That compares with net income of $165.7 million, or $0.27 per diluted share, in the prior quarter, and net income of $47.6 million, $0.08 per share, in the same period a year earlier.

GAAP gross margin was 51.7 percent, a fourth consecutive record, compared with 50.4 percent in the previous quarter and 16.6 percent in the same period a year earlier. Non-GAAP gross margin, at 51.9 percent, was also a record, and compares with 50.6 percent in the prior quarter and 39.2 percent in the same period a year earlier.

"We grew solidly this quarter," said Jen-Hsun Huang, NVIDIA president and chief executive officer. "Consumer demand for notebooks powered by our GeForce GPU, with its unique Optimus technology, resulted in record revenue for these products.

"The future of computing is mobile and visual. With Tegra's momentum and our growing GPU businesses, we are ideally positioned to lead the industry forward," he said.

Outlook

Our outlook for the third quarter of fiscal 2012 is as follows:

--  Revenue is expected to be up 4 to 6 percent from the second quarter

--  GAAP and non-GAAP gross margins are expected to be flat

--  GAAP operating expenses are expected to be in the range of $361
    million to $366 million; non-GAAP operating expenses are expected to
    be $319 million to $321 million

--  Our GAAP and non-GAAP tax rates are both expected to be 15 to 17
    percent

We estimate depreciation and amortization for the second quarter to be approximately $53 million to $57 million. Capital expenditures are expected to be in the range of $25 to $35 million.

Diluted shares for the third quarter are expected to be approximately 615 million.

Note: this outlook now includes Icera.

Second Quarter Fiscal 2012 and Recent Highlights:

--  NVIDIA completed the Icera acquisition on June 10, 2011.
--  NVIDIA launched the GeForce GTX 580M for gaming notebooks.
--  Optimus(TM), our notebook power-saving technology, is now available
    through our whole range of GPUs, top to bottom, and across three
    generations.
--  NVIDIA Tesla processors power the fastest supercomputer in Russia.
--  NVIDIA and its partners launched six new Tegra(R)-based superphones
    (up from two in the previous quarter), including the Motorola Photon
    4G and Samsung Galaxy R; and four new tablets, including the Samsung
    Galaxy Tab 10.1.

CFO Commentary Commentary on the quarter by Karen Burns, NVIDIA interim 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 second quarter fiscal 2012 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 (706) 679 2572. 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 third quarter fiscal 2012.

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, and non-GAAP net income per share. 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 reimbursement, stock-based compensation, amortization of acquisition-related intangible assets, other acquisition-related costs, and the associated tax impact of these items, where applicable. 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 1,900 issued 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 future of computing; Tegra's momentum; the strength of the company's GPU business; the company's positioning to shape the future of computing; the company's financial outlook for the third quarter of fiscal 2012; efforts to increase gross margin and control operating expenses; the company's strategic investments in the mobile space; and the effects 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: 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 May 1, 2011. 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 2011 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Tegra and Tesla 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.

                              NVIDIA CORPORATION
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share data)
                                 (Unaudited)
                           Three Months Ended         Six Months Ended
                        ------------------------  ------------------------
                          July 31,    August 1,     July 31,    August 1,
                            2011         2010         2011         2010
                        ------------ -----------  ------------ -----------
Revenue                 $  1,016,517 $   811,208  $  1,978,556 $ 1,813,021
Cost of revenue              491,233     676,916       968,769   1,222,352
                        ------------ -----------  ------------ -----------
Gross profit                 525,284     134,292     1,009,787     590,669
Operating expenses
  Research and development    247,721     210,635       479,245     428,740
  Sales, general and
   administrative             103,533      98,864       201,650     189,743
                         ------------ -----------  ------------ -----------
     Total operating
      expenses               351,254     309,499       680,895     618,483
                        ------------ -----------  ------------ -----------
Operating income (loss)      174,030    (175,207)      328,892     (27,814)
Interest and other income,
 net                           3,517       6,160         5,140       9,492
                        ------------ -----------  ------------ -----------
Income (loss) before
 income tax expense          177,547    (169,047)      334,032     (18,322)
Income tax expense
 (benefit)                    25,974     (28,086)       47,240     (14,955)
                        ------------ -----------  ------------ -----------
Net income (loss)       $    151,573 $  (140,961) $    286,792 $    (3,367)
                        ============ ===========  ============ ===========
Basic net income (loss)
 per share              $       0.25 $     (0.25) $       0.48 $     (0.01)
                        ============ ===========  ============ ===========
Diluted net income
 (loss) per share       $       0.25 $     (0.25) $       0.47 $     (0.01)
                        ============ ===========  ============ ===========
Shares used in basic per
 share computation           601,340     572,764       598,077     569,971
Shares used in diluted per
 share computation           613,934     572,764       615,552     569,971
                            NVIDIA CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                              (In thousands)
                                (Unaudited)
                                                   July 31,    January 30,
                                                     2011          2011
                                                ------------- -------------
ASSETS
Current assets:
  Cash, cash equivalents and marketable
   securities                                   $   2,474,496 $   2,490,563
  Accounts receivable, net                            419,944       348,770
  Inventories                                         361,911       345,525
  Prepaid expenses and other current assets            61,206        42,092
                                                ------------- -------------
    Total current assets                            3,317,557     3,226,950
Property and equipment, net                           550,896       568,857
Goodwill                                              593,513       369,844
Intangible assets, net                                358,136       288,745
Deposits and other assets                              93,512        40,850
                                                ------------- -------------
    Total assets                                $   4,913,614 $   4,495,246
                                                ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                              $     297,813 $     286,138
  Accrued liabilities and other current
   liabilities                                        662,486       656,544
                                                ------------- -------------
    Total current liabilities                         960,299       942,682
Other long-term liabilities                           241,353       347,713
Capital lease obligations, long term                   22,493        23,389
Stockholders' equity                                3,689,469     3,181,462
                                                ------------- -------------
    Total liabilities and stockholders' equity  $   4,913,614 $   4,495,246
                                                ============= =============
                            NVIDIA CORPORATION
           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
                   (In thousands, except per share data)
                                (Unaudited)
                            Three Months Ended          Six Months Ended
                      -----------------------------  ---------------------
                      July 31,   May 1,   August 1,   July 31,   August 1,
                        2011      2011       2010       2011        2010
                      --------  --------  ---------  ----------  ---------
GAAP gross profit     $525,284  $484,503  $ 134,292  $1,009,787  $ 590,669
  GAAP gross margin       51.7%     50.4%      16.6%       51.0%      32.6%
    Stock-based
     compensation
     expense included
     in cost of
     revenue (A)         2,748     2,477      2,289       5,225      4,092
    Net charge against
     cost of revenue
     arising from a
     weak die/packaging
     material set (B)        -         -    181,193           -    181,193
                      --------  --------  ---------  ----------  ---------
Non-GAAP gross profit $528,032  $486,980  $ 317,774  $1,015,012  $ 775,954
                      ========  ========  =========  ==========  =========
  Non-GAAP gross
   margin                 51.9%     50.6%      39.2%       51.3%      42.8%
GAAP operating
 expenses             $351,254  $329,641  $ 309,499  $  680,895  $ 618,483
    Stock-based
     compensation
     expense included
     in operating
     expense (A)       (33,202)  (29,262)   (22,342)    (62,464)   (45,716)
    Amortization of
     acquisition-related
     intangible assets  (4,454)   (2,296)    (2,295)     (6,750)    (4,591)
    Net charge against
     operating
     expenses arising
     from a weak
     die/packaging
     material set (B)        -         -    (12,705)          -    (12,705)
    Other acquisition-
     related costs (C)  (7,562)   (1,255)         -      (8,817)         -
                      --------  --------  ---------  ----------  ---------
Non-GAAP operating
 expenses             $306,036  $296,828  $ 272,157  $  602,864  $ 555,471
                      ========  ========  =========  ==========  =========
GAAP net income
 (loss)               $151,573  $135,219  $(140,961) $  286,792  $  (3,367)
    Total pre-tax
     impact of non-
     GAAP adjustments   47,966    35,290    220,824      83,256    248,297
    Income tax impact
     of non-GAAP
     adjustments        (5,994)   (4,796)   (32,217)    (10,790)   (28,325)
                      --------  --------  ---------  ----------  ---------
Non-GAAP net income   $193,545  $165,713  $  47,646  $  359,258  $ 216,605
                      ========  ========  =========  ==========  =========
Diluted net income
 (loss) per share
    GAAP              $   0.25  $   0.22  $   (0.25) $     0.47  $   (0.01)
                      ========  ========  =========  ==========  =========
    Non-GAAP          $   0.32  $   0.27  $    0.08  $     0.58  $    0.38
                      ========  ========  =========  ==========  =========
Shares used in diluted
 net income (loss) per
 share computation     613,934   613,474    572,764     615,552    569,971
Computation of Icera
 diluted net income
 (loss) impact:
    Net income (loss) $(12,437)
    Diluted net income
     (loss) per share $  (0.02)
                      ========
    Shares used in
     diluted net
     income (loss) per
     share computation 613,934
(A) Excludes stock-based
     compensation
     as follows:            Three months ended          Six months ended
                      ------------------------------ ----------------------
                       July 31,   May 1,   August 1,   July 31,   August 1,
                         2011      2011      2010        2011       2010
                      --------- --------- ---------- ----------- ----------
   Cost of revenue    $   2,748 $   2,477 $    2,289 $     5,225 $    4,092
   Research and
    development       $  21,697 $  18,589 $   14,532 $    40,286 $   29,146
   Sales, general and
    administrative    $  11,505 $  10,673 $    7,810 $    22,178 $   16,570
(B) Excludes a charge related to the weak die/packaging material set, net
    of insurance reimbursement.
(C) Other acquisition-related costs comprise of transaction costs,
    compensation charges and restructuring costs related to the acquisition
    of Icera, Inc.
                          NVIDIA CORPORATION
                RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
                             (In millions)
                                                     Q3 FY2012 Outlook
                                                --------------------------
                                                 October 30,   October 30,
                                                    2011          2011
                                                ------------  ------------
                                                     LOW          HIGH
                                                ------------  ------------
GAAP operating expenses                         $      360.5  $      365.5
  Stock-based compensation expense included in
   operating expense                                   (31.5)        (32.5)
  Amortization of acquisition-related
   intangible assets                                    (4.5)         (5.5)
  Other acquisition-related costs (A)                   (5.5)         (6.5)
                                                ------------  ------------
Non-GAAP operating expenses                     $      319.0  $      321.0
                                                ============  ============
(A) Other acquisition related costs comprise of transaction costs,
    compensation charges and restructuring costs related to the acquisition
    of Icera, Inc.

For further information, contact:
Rob Csongor
Investor Relations
NVIDIA Corporation
(408) 566-6373
rcsongor@nvidia.com

Robert Sherbin
Corporate Communications
NVIDIA Corporation
(408) 566-5150
rsherbin@nvidia.com

SOURCE: NVIDIA

mailto:rcsongor@nvidia.com
mailto:rsherbin@nvidia.com