NVIDIA Announces Financial Results for First Quarter Fiscal 2018

Published: 4 months ago | Comments

Press Release

SANTA CLARA, CA – NVIDIA (NASDAQ: NVDA)

  • Revenue of $1.94 billion, up 48 percent from a year ago
  • GAAP EPS of $0.79, up 126 percent from a year ago
  • Non-GAAP EPS of $0.85, up 85 percent from a year ago
  • Broad growth across all platforms

NVIDIA (NASDAQ: NVDA) today reported revenue for the first quarter ended April 30, 2017, of $1.94 billion, up 48 percent from $1.30 billion a year earlier, and down 11 percent from $2.17 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.79, up 126 percent from $0.35 a year ago and down 20 percent from $0.99 in the previous quarter. Non-GAAP earnings per diluted share were $0.85, up 85 percent from $0.46 a year earlier and down 25 percent from $1.13 in the previous quarter.

“The AI revolution is moving fast and continuing to accelerate,” said Jensen Huang, founder and chief executive officer of NVIDIA. “NVIDIA’s GPU deep learning platform is the instrument of choice for researchers, internet giants and startups as they invent the future.

“Our Datacenter GPU computing business nearly tripled from last year, as more of the world’s computer scientists engage deep learning. One industry after another is awakening to the power of GPU deep learning and AI, the most important technology force of our time,” he said.

Capital Return
For fiscal 2018, NVIDIA intends to return $1.25 billion to shareholders through ongoing quarterly cash dividends and share repurchases. During the first quarter of fiscal 2018, NVIDIA paid $82 million in cash dividends.

NVIDIA will pay its next quarterly cash dividend of $0.14 per share on June 14, 2017, to all shareholders of record on May 23, 2017.

Q1 FY2018 Summary

GAAP
($ in millions except earnings per share)Q1 FY18Q4 FY17Q1 FY17Q/QY/Y
Revenue$1,937$2,173$1,305down 11%up 48%
Gross margin59.4%60.0%57.5%down 60 bpsup 190 bps
Operating expenses$596$570$506up 5%up 18%
Operating income$554$733$245down 24%up 126%
Net income$507$655$208down 23%up 144%
Diluted earnings per share$0.79$0.99$0.35down 20%up 126%
Non-GAAP
($ in millions except earnings per share)Q1 FY18Q4 FY17Q1 FY17Q/QY/Y
Revenue$1,937$2,173$1,305down 11%up 48%
Gross margin59.6%60.2%58.6%down 60 bpsup 100 bps
Operating expenses$517$498$443up 4%up 17%
Operating income$637$809$322down 21%up 98%
Net income$533$704$263down 24%up 103%
Diluted earnings per share$0.85$1.13$0.46down 25%up 85%

NVIDIA’s outlook for the second quarter of fiscal 2018 is as follows:

  • Revenue is expected to be $1.95 billion, plus or minus two percent.
  • GAAP and non-GAAP gross margins are expected to be 58.4 percent and 58.6 percent, respectively, plus or minus 50 basis points.
  • GAAP operating expenses are expected to be approximately $605 million. Non-GAAP operating expenses are expected to be approximately $530 million.
  • GAAP other income and expense is expected to be an expense of approximately $8 million, inclusive of additional charges from early conversions of convertible notes. Non-GAAP other income and expense is expected to be an expense of approximately $3 million.
  • GAAP and non-GAAP tax rates for the second quarter of fiscal 2018 are both expected to be 17 percent, plus or minus one percent, excluding any discrete items.
  • Weighted average shares used in the GAAP and non-GAAP diluted EPS calculations are dependent on the weighted average stock price during the quarter.
  • Capital expenditures are expected to be approximately $55 million to $65 million.

First Quarter Fiscal 2018 Highlights
During the first quarter, NVIDIA achieved broad progress.

Gaming:

  • Announced GeForce® GTX 1080 Ti, the world’s fastest gaming GPU.
  • Announced TITAN Xp for enthusiasts and researchers requiring extreme performance.

Datacenter:

  • Announced with Microsoft that it is bringing NVIDIA® Tesla® P100 and P40 GPUs to the Azure cloud.
  • Announced that NVIDIA Tesla accelerators designed for datacenter AI capabilities were added to Google Cloud, Tencent Cloud,IBM Cloud, and Baidu Cloud.
  • Announced that Tokyo Institute of Technology will use NVIDIA’s accelerated computing platform to create Japan’s fastest AI supercomputer, TSUBAME3.0.
  • Announced that Fujitsu is using 24 NVIDIA DGX-1™ AI systems to build a new AI supercomputer for RIKEN, Japan’s largest research center.
  • Announced together with Facebook the Caffe2 deep learning framework and Big Basin servers with Tesla P100 GPUs.
  • Announced plans to train 100,000 developers this year, a 10x increase over 2016, through the NVIDIA Deep Learning Institute.
  • Announced NVIDIA Jetson™ TX2, a high-performance, low-power computer platform for delivering AI at the edge, with deep learning and computer vision capabilities for robots, drones and smart cameras.

Automotive:

  • Announced with Bosch, the world’s largest auto supplier, plans to create a new Bosch-branded AI self-driving car computer.
  • Announced a collaboration with PACCAR, one of the world’s largest truck makers with brands including Peterbilt, Kenworth and DAF, to develop solutions for autonomous trucks.

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

Conference Call and Webcast Information
NVIDIA will conduct a conference call with analysts and investors to discuss its first quarter fiscal 2018 financial results and current financial prospects today at 2 p.m. Pacific time (5 p.m. Eastern time). To listen to the conference call, dial (877) 223-3864 in the United States or (574) 990-1377 internationally, and provide the following conference ID: 4018413. A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, http://investor.nvidia.com, 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 second quarter of fiscal 2018.

Non-GAAP Measures
To supplement NVIDIA’s Condensed Consolidated Statements of Income 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 income from operations, non-GAAP other income (expense), non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, non-GAAP diluted shares, revenue excluding Intel license, 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 costs, contributions, restructuring and other charges, gains from non-affiliated investments, interest expense related to amortization of debt discount, loss on early debt conversions, and the associated tax impact of these items, where applicable. Weighted average shares used in the non-GAAP diluted net income per share computation includes the anti-dilution impact of the company’s Note Hedge. 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 its 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
April 30,May 1,
20172016
Revenue$1,937$1,305
Cost of revenue787554
Gross profit1,150751
Operating expenses
Research and development411346
Sales, general and administrative185159
Restructuring and other charges1
Total operating expenses596506
Income from operations554245
Interest income1612
Interest expense(16)(12)
Other, net(18)(4)
Total other income (expense)(18)(4)
Income before income tax expense536241
Income tax expense2933
Net income$507$208
Net income per share:
Basic$0.86$0.39
Diluted$0.79$0.35
Weighted average shares used in per share computation:
Basic592537
Diluted641599
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
April 30,January 29,
20172017
ASSETS
Current assets:
Cash, cash equivalents and marketable securities$6,206$6,798
Accounts receivable, net976826
Inventories821794
Prepaid expenses and other current assets113118
Total current assets8,1168,536
Property and equipment, net539521
Goodwill618618
Intangible assets, net90104
Other assets4762
Total assets$9,410$9,841
LIABILITIES, CONVERTIBLE DEBT CONVERSION OBLIGATION AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$348$485
Accrued and other current liabilities420507
Convertible short-term debt215796
Total current liabilities9831,788
Long-term debt1,9841,983
Other long-term liabilities300271
Capital lease obligations, long-term46
Total liabilities3,2714,048
Convertible debt conversion obligation731
Shareholders’ equity6,1325,762
Total liabilities, convertible debt conversion obligation and shareholders’ equity$9,410$9,841
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)
Three Months Ended
April 30,January 29,May 1,
201720172016
GAAP gross profit$1,150$1,303$751
GAAP gross margin59.4%60.0%57.5%
Stock-based compensation expense (A)444
Legal settlement costs10
Non-GAAP gross profit$1,154$1,307$765
Non-GAAP gross margin59.6%60.2%58.6%
GAAP operating expenses$596$570$506
Stock-based compensation expense (A)(73)(68)(49)
Legal settlement costs(6)
Acquisition-related costs (B)(4)(4)(4)
Contributions(2)(3)
Restructuring and other charges(1)
Non-GAAP operating expenses$517$498$443
GAAP income from operations$554$733$245
Total impact of non-GAAP adjustments to income from operations837677
Non-GAAP income from operations$637$809$322
GAAP other income (expense)$(18)$(7)$(4)
Gains from non-affiliated investments(1)(3)
Interest expense related to amortization of debt discount247
Loss on early debt conversions146
Non-GAAP other income (expense)$(2)$2$
GAAP net income$507$655$208
Total pre-tax impact of non-GAAP adjustments998581
Income tax impact of non-GAAP adjustments(73)(36)(26)
Non-GAAP net income$533$704$263
Diluted net income per share
GAAP$0.79$0.99$0.35
Non-GAAP$0.85$1.13$0.46
Weighted average shares used in diluted net income per share computation
GAAP641660599
Anti-dilution impact from note hedge (C)(14)(36)(29)
Non-GAAP627624570
GAAP revenue$1,937$2,173$1,305
Revenue from Intel license(43)(66)(66)
Revenue excluding Intel license$1,894$2,107$1,239
GAAP net cash provided by operating activities$282$721$318
Purchase of property and equipment and intangible assets(53)(52)(55)
Free cash flow$229$669$263
(A) Excludes stock-based compensation as follows:Three Months Ended
April 30,January 29,May 1,
201720172016
Cost of revenue$4$4$4
Research and development$41$40$29
Sales, general and administrative$31$27$20
(B) Consists of amortization of acquisition-related intangible assets and compensation charges.
(C) Represents the number of shares that would be delivered upon conversion of the currently outstanding 1.00% Convertible Senior Notes Due 2018. Under GAAP, shares delivered in hedge transactions are not considered offsetting shares in the fully diluted share calculation until actually delivered.
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q2 FY2018 Outlook
GAAP gross margin58.4%
Impact of stock-based compensation expense0.2%
Non-GAAP gross margin58.6%
Q2 FY2018 Outlook
(In millions)
GAAP operating expenses$605
Stock-based compensation expense, acquisition-related costs, and other costs(75)
Non-GAAP operating expenses$530
Q2 FY2018 Outlook
(In millions)
GAAP other income (expense)$(8)
Loss on early debt conversions and interest expense related to amortization of debt discount5
Non-GAAP other income (expense)$(3)

Press Release

by WhyCry

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