Strong Segment Share Gains in Core Business Units Produce Record Revenue
SANTA CLARA, Calif., Nov. 9 /PRNewswire-FirstCall/ -- NVIDIA Corporation
(Nasdaq: NVDA) today reported financial results for the third quarter of
fiscal 2007 ended October 29, 2006.
For the third quarter of fiscal 2007, revenue increased to a record $820.6
million, compared to $583.4 million for the third quarter of fiscal 2006, an
increase of 41 percent. Net income computed in accordance with U.S. generally
accepted accounting principles (GAAP) for the third quarter of fiscal 2007 was
$106.5 million, or $0.27 per diluted share. GAAP net income for the third
quarter of fiscal 2007 includes expenses of $42.6 million, net of tax, which
is comprised primarily of stock-based compensation expense plus a one-time
charge associated with licensing certain patents.
Non-GAAP net income for the third quarter of fiscal 2007, which excludes
SFAS 123R and other stock-based compensation charges and the related tax
impact, was $149.2 million, or $0.39 per diluted share.
For the second quarter of fiscal 2007 ended July 30, 2006, previously
reported revenue was $687.5 million. GAAP net income for the second quarter
of fiscal 2007 was $86.8 million, or $0.22 per diluted share. GAAP net income
for the second quarter of fiscal 2007 includes stock-based compensation
expense net of tax of $25.3 million.
Non-GAAP net income for the second quarter of fiscal 2007, which excludes
SFAS 123R and other stock-based compensation charges and the related tax
impact, was $112.0 million, or $0.29 per diluted share.
Revenue for the nine months ended October 29, 2006 was a record $2.19
billion, compared to revenue of $1.74 billion for the nine months ended
October 30, 2005, an increase of 26 percent.
"The third quarter was one of the best in NVIDIA's history," said Jen-Hsun
Huang, president and CEO of NVIDIA. "For the third consecutive quarter, we
delivered record revenue as we continued to gain share in each of our core
businesses."
"This week, we made two announcements that set the foundation for
continued strong growth in the coming year and beyond. First, we announced the
GeForce 8800 and nForce 680i, which represent the most ambitious undertaking
in the history of the company. The GeForce 8800 is the world's first DX10
unified shader GPU. The nForce 680i is the highest performance motherboard
supporting Intel's exciting Core 2 Duo processors. The combination of GeForce
8800 and nForce 680i delivers what we believe are the perfect technologies to
support the biggest confluence of technology changes to hit our industry in
the last 10 years -- Windows Vista, DX10 and Blu-ray/HD. Second, we announced
the acquisition of PortalPlayer. By combining our GPU technology with
PortalPlayer's application processor expertise, we intend to be a major player
in the mobile industry by delivering the two most essential technologies for
next generation handheld devices," Huang said.
Third Quarter Fiscal 2007 and Recent Highlights:
Non-GAAP gross margin reached a Company high of 42.9 percent, an
increase of 20 basis points sequentially from the second quarter of
fiscal 2007. GAAP gross margin was 40.6 percent.
NVIDIA launched and shipped the NVIDIA GeForce(R) 8800 series GPUs, the
PC industry's first unified shader architecture GPU to support the
Microsoft DirectX 10 API.
NVIDIA launched and shipped the nForce(R) 680i SLI MCP, designed to
deliver the highest performance for Intel Core2 Quad and Core2
Duo-based PCs.
NVIDIA grew share in total standalone graphics, which includes desktop
and notebook PCs, to 55 percent, and is now the largest supplier of
standalone GPUs according to the Mercury Research Third Quarter 2006 PC
Graphics Report.
NVIDIA grew share in total desktop graphics to 33 percent, and is now
the largest supplier of desktop PC graphics according to Mercury
Research.
The NVIDIA GeForce Go notebook GPU product line achieved record revenue
for the third consecutive quarter. NVIDIA grew share to a leading 52
percent of the notebook standalone GPU segment. Notebook GPU revenue
grew 46 percent sequentially from fiscal Q2 2007 and more than 100
percent in revenue year-over-year.
The NVIDIA nForce MCP product line achieved record revenue for its
ninth consecutive quarter. NVIDIA nForce MCP revenue grew 35 percent
sequentially from fiscal Q2 2007 and more than doubled in revenue
year-over-year.
NVIDIA nForce MCPs increased their share of the AMD64 segment to 61
percent as reported in the Mercury Research Third Quarter Worldwide
Chipset Report 2006. NVIDIA is now the second largest core logic
supplier in the world, according to the Mercury Research Third Quarter
2006 PC Processors and Chipsets: Market Strategy and Forecast Report.
NVIDIA signed a definitive agreement to acquire Portal Player, Inc., a
leading supplier of semiconductors, firmware, and software for personal
media players and secondary display-enabled computers.
As previously announced, in June 2006 the Audit Committee of the Board of
Directors of NVIDIA began a review of the Company's stock option practices
based on results of an internal review voluntarily undertaken by management.
The Audit Committee's review covered the time from the Company's initial
public offering in 1999 to the current fiscal year and as previously
disclosed, found instances of the use of incorrect measurement dates for
certain option grants. The Audit Committee is being assisted by independent
legal counsel and outside accounting experts. At this time, the Audit
Committee has completed its forensic review of the option grants and is now
working with the Company's management to finalize the financial impact of
using incorrect measurement dates. NVIDIA will publish the balance sheet as of
the end of the third quarter and the statement of income for the nine months
ended October 29, 2006, as well as restated statements of income for the
comparable periods of fiscal 2006 as soon as practical upon completion of the
Audit Committee's review.
The Company's current and former independent registered public accounting
firms have not completed their review of the findings of the Audit Committee.
Our financial results for the second and third quarters of fiscal year 2007
are not audited and may change as a result of the ongoing Audit Committee
review. The stock option practices under review and related matters could
also lead to potential claims and proceedings relating to such matters,
including litigation or action by the Securities and Exchange Commission
and/or other regulatory agencies.
NVIDIA will conduct a conference call with analysts and investors to
discuss its third quarter fiscal 2007 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) 679-0543. A live Web cast (listen-only mode)
of the conference call will be held at the NVIDIA investor relations Web site
http://nvidia.com/ir and at http://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 2007.
Non-GAAP Measures
To supplement the Company's Consolidated Statements of Income presented in
accordance with GAAP, we use non-GAAP measures of certain components of
financial performance. These non-GAAP measures include non-GAAP net income,
non-GAAP basic and diluted net income per share, and other non-GAAP line items
from the Consolidated Statements of Income, including cost of revenue
information, gross profit, gross margin, operating expenses (including
research and development, and sales, general and administrative expenses) and
income tax expense. In order for our investors to be better able to compare
our current results with those of previous periods, we have shown a non-GAAP
presentation of our Consolidated Statements of Income as reconciled against
the GAAP presentation. Our non-GAAP results adjust our GAAP results to
exclude stock-based compensation and certain non-recurring charges associated
with settling IP matters and related tax differences. We believe the
presentation of our non-GAAP results enhances the user's overall understanding
of our historical financial performance. The presentation of our non-GAAP
financial results is not meant to be considered in isolation or as a
substitute for our 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 Corporation is the worldwide leader in programmable graphics
processor technologies. The Company creates innovative, industry-changing
products for computing, consumer electronics, and mobile devices. NVIDIA is
headquartered in Santa Clara, CA and has offices throughout Asia, Europe, and
the Americas. For more information, visit www.nvidia.com.
Certain statements in this press release including, but not limited to,
statements as to the features, uses, capabilities and performance of the
NVIDIA GeForce 8800 GPU and the NVIDIA nForce 680i MCP, our continued growth,
the benefits and impact of the PortalPlayer acquisition, the mobile industry,
the use of non-GAAP financial measures, and the release of a balance sheet at
the end of third quarter of fiscal year 2007 as well as statements of income
for the nine months ended October 29, 2006 and the comparable periods of
fiscal year 2006 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: delays in ramping new products into production;
manufacturing or software defects; market or customer acceptance of a
competitor's product instead of ours; difficulties in completing the
PortalPlayer acquisition including obtaining necessary regulatory and
stockholder approvals; the outcome of the Audit Committee's review;
finalization of the impact of the use of incorrect measurement dates; the
conclusions of the independent registered accounting firms based on the
results of their reviews; additional expenses that may be recorded; filing of
restated statements of income; development of faster or more efficient GPUs;
the impact of technological development and competition; general industry
trends; changes in industry standards and interfaces as well as other factors
detailed from time to time in the reports NVIDIA files with the Securities and
Exchange Commission including its Form 10-Q for the quarter ended April 30,
2006. Copies of reports filed with the SEC are posted on our 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.
NOTE: All company and/or product names may be trade names, trademarks
and/or registered trademarks of the respective owners with which they are
associated. Features, pricing, availability, and specifications are subject
to change without notice.
For further information, contact:
Michael Hara Calisa Cole
Investor Relations Public Relations
NVIDIA Corporation NVIDIA Corporation
(408) 486-2511 (408) 486-6263
mhara@nvidia.com ccole@nvidia.com
NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
October 29, July 30,
2006 2006
Revenue $820,572 $687,519
Cost of revenue (A) 486,630 395,391
Gross profit 333,942 292,128
Operating expenses:
Research and development (A) 140,732 127,257
Sales, general and administrative (A) 75,597 69,055
Total operating expenses 216,329 196,312
Operating income 117,613 95,816
Interest and other income, net 10,714 8,706
Income before income tax expense 128,327 104,522
Income tax expense (B) 21,816 17,769
Net income $106,511 $86,753
Basic net income per share $0.30 $0.25
Diluted net income per share $0.27 $0.22
Shares used in basic per share
computation (C) 352,657 350,244
Shares used in diluted per share
computation (C) 391,215 385,589
(A) Results include stock-based compensation expense as follows (in
thousands):
Three Months Ended
October 29, July 30,
2006 2006
Cost of revenue $2,305 $1,746
Research and development 18,730 16,588
Sales, general and administrative 10,700 10,532
Total stock-based compensation
expense $31,735 $28,866
(B) The effective income tax rate for the three months ended October 29,
2006 and July 30, 2006 was 17%.
(C) Reflects a two-for-one stock split effective on April 6, 2006.
NVIDIA CORPORATION
NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
October 29, 2006
Non-GAAP
Reported Entries Non-GAAP
Revenue $820,572 $-- $820,572
(2,305)(A)
Cost of revenue 486,630 (16,000)(B) 468,325
Gross profit 333,942 18,305 352,247
Operating expenses:
Research and development 140,732 (18,730)(A) 122,002
(10,700)(A)
Sales, general and administrative 75,597 (1,500)(B) 63,397
Total operating expenses 216,329 (30,930) 185,399
Operating income 117,613 49,235 166,848
Interest and other income, net 10,714 -- 10,714
Income before income tax expense 128,327 49,235 177,562
Income tax expense 21,816 6,594 (C) 28,410
Net income $106,511 $42,641 $149,152
Basic net income per share $0.30 $0.42
Diluted net income per share $0.27 $0.39
Shares used in basic per share
computation (D) 352,657 -- 352,657
Shares used in diluted per share
computation (D) 391,215 (6,389) 384,826 (E)
(A) Stock-based compensation expense.
(B) Results include $17.5 million of patent license fees for past usage.
(C) Income tax expense impact of non-GAAP entries.
(D) Reflects a two-for-one stock split effective on April 6, 2006.
(E) Excludes 6,389 shares to adjust diluted outstanding shares calculated
under SFAS 123R to conform to diluted outstanding shares calculated
under prior accounting standards (APB25).
NVIDIA CORPORATION
NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
July 30, 2006
Non-GAAP
Reported Entries Non-GAAP
Revenue $687,519 $-- $687,519
Cost of revenue 395,391 (1,746)(A) 393,645
Gross profit 292,128 1,746 293,874
Operating expenses:
Research and development 127,257 (16,588)(A) 110,669
Sales, general and administrative 69,055 (10,532)(A) 58,523
Total operating expenses 196,312 (27,120) 169,192
Operating income 95,816 28,866 124,682
Interest and other income, net 8,706 -- 8,706
Income before income tax expense 104,522 28,866 133,388
Income tax expense 17,769 3,573 (B) 21,342
Net income $86,753 $25,293 $112,046
Basic net income per share $0.25 $0.32
Diluted net income per share $0.22 $0.29
Shares used in basic per share
computation (C) 350,244 -- 350,244
Shares used in diluted per share
computation (C) 385,589 (5,069) 380,520 (D)
(A) Stock-based compensation expense.
(B) Income tax expense impact of non-GAAP entries.
(C) Reflects a two-for-one stock split effective on April 6, 2006.
(D) Excludes 5,069 shares to adjust diluted outstanding shares
calculated under SFAS 123R to conform to diluted outstanding shares
calculated under prior accounting standards (APB25).
SOURCE NVIDIA Corporation
CONTACT: Michael Hara, Investor Relations, +1-408-486-2511, or
mhara@nvidia.com, or Calisa Cole, Public Relations, +1-408-486-6263, or
ccole@nvidia.com, both of NVIDIA Corporation
