- Revenue up 16 percent quarter-on-quarter to $903.2 million
- GAAP net income of $107.6 million, or $0.19 cents per diluted share
- GAAP gross margin of 43.4 percent; non-GAAP gross margin of 41.0
percent
- Cash flow from operating activities of $141.3 million; free cash flow of $124.7 million
Quarterly Results Highlights
($ in millions except per share data) Q3 FY2010 Q2 FY2010 Q3 FY2009
Revenue $ 903.2 $ 776.5 $ 897.7
GAAP:
Gross margin 43.4% 20.2% 41.0%
Net income (loss) $ 107.6 ($ 105.3) $ 61.7
Income (loss) per share $ 0.19 ($ 0.19) $ 0.11
Non-GAAP: (1)
Gross margin 41.0% 36.3% 41.9%
Net income $ 110.3 $ 37.7 $ 111.4
Income per share $ 0.19 $ 0.07 $ 0.20
---------- ---------- ----------
(1) See Non-GAAP Measures for an explanation of these figures.
"We continued to make progress in the third quarter with healthy market
demand across the board," said Jen-Hsun Huang, president and chief
executive officer, NVIDIA. "Revenue was up from a year ago, with
improvement in each of our PC, professional solutions and consumer
businesses. It's great to see us shipping orders with our Tegra
mobile-computing solution, and growing enthusiasm for our Tesla platform
for parallel computing in the server and cloud-computing markets."
Gross margin, on a GAAP basis, increased to 43.4 percent from 20.2 percent
in the previous quarter and 41.0 percent a year earlier. On a non-GAAP
basis, gross margin was 41.0 percent, up 4.7 points from the 36.3 percent
reported in the previous quarter but slightly off from 41.9 percent a year
earlier.
GAAP net loss for the nine months ended Oct. 25, 2009 was $199.1 million,
or $0.36 per share, compared to a net income of $117.6 million, or $0.20
per diluted share for the nine months ended Oct. 26, 2008. Non-GAAP net
income for the nine months ended Oct. 25, 2009, which excludes a
$93.9 million net charge related to the weak die/packaging material set
that was used in certain versions of our previous generation chips, a
non-recurring charge of $140.2 million in connection with a cash tender
offer to purchase employee stock options, stock-based compensation charges,
and their associated tax impact, was $101.4 million, or $0.18 per diluted
share, compared to a net income of $397.7 million, or $0.68 per diluted
share for the nine months ended Oct. 26, 2008.
Outlook
The outlook for the fourth quarter of fiscal 2010 is as follows:
- Revenue is expected to be up slightly, approximately 2 percent, from
the third quarter.
- GAAP gross margin is expected to be in the range of 40 to 42 percent.
- GAAP operating expenses are expected to be approximately $305 million.
- First major Tegra™ devices shipped: Microsoft's Zune HD and the
Samsung M1.
- Held first ever GPU Technology Conference, which was 50%
oversubscribed, with 1,500 attendees from 40 countries. More than 200
technical sessions were conducted, and presentations were made by 60
emerging companies that utilize the graphics processing unit (GPU).
- Introduced the next generation CUDA™ GPU architecture, codenamed
"Fermi." The Fermi architecture is the foundation for the world's first
computational GPUs, delivering breakthroughs in both graphics and parallel
computing.
- Oak Ridge National Laboratory announced plans to use Fermi to build a
new supercomputer, which is designed to be the world's fastest.
- Launched the industry's first development environment for massively
parallel computing. The tool, code-named "Nexus," is integrated into
Microsoft Visual Studio, so that developers will be able to use Visual
Studio and C++ to write applications that leverage Fermi GPUs.
- Launched NVIDIA® RealityServer®, a powerful combination of GPUs and
software that streams interactive, photorealistic 3D applications to any
web connected PC, laptop, netbook or smart phone.
- Adobe's new Flash Player 10.1 will be accelerated by GeForce®, NVIDIA ION™ and Tegra™ products, helping to bring uncompromised browsing of rich Web content to netbooks, smartphones and smartbooks.
NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter fiscal 2010 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 held 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 2010. 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 cost of revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income, non-GAAP net income per share, free cash flow and days sales in inventory. 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 chips, net of insurance reimbursements, a non-recurring charge related to a tender offer purchase, a non-recurring charge against cost of revenue related to a royalty dispute, a non-recurring restructuring charge against operating expenses, recurring stock-based compensation charges, 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. Days sales in inventory is computed using GAAP ending inventory multiply by the number of days in the period divided by the non-GAAP cost of revenue. 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 (
NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------------- ------------------------
October 25, October 26, October 25, October 26,
2009 2008 2009 2008
------------ ----------- ----------- ------------
Revenue $ 903,206 $ 897,655 $ 2,343,957 $ 2,943,719
Cost of revenue 511,423 529,812 1,605,755 1,911,116
------------ ----------- ----------- ------------
Gross profit 391,783 367,843 738,202 1,032,603
Operating expenses
Research and
development 197,948 212,360 692,600 644,100
Sales, general and
administrative 85,990 90,349 278,829 275,782
Restructuring charges - 8,338 - 8,338
------------ ----------- ----------- ------------
Total operating
expenses 283,938 311,047 971,429 928,220
------------ ----------- ----------- ------------
Operating income (loss) 107,845 56,796 (233,227) 104,383
Interest and other
income, net 2,362 4,207 11,512 23,038
------------ ----------- ----------- ------------
Income (loss) before
income tax expense 110,207 61,003 (221,715) 127,421
Income tax expense
(benefit) 2,630 (745) (22,652) 9,797
------------ ----------- ----------- ------------
Net income (loss) $ 107,577 $ 61,748 $ (199,063) $ 117,624
============ =========== =========== ============
Basic net income (loss)
per share $ 0.20 $ 0.11 $ (0.36) $ 0.21
============ =========== =========== ============
Diluted net income
(loss) per share $ 0.19 $ 0.11 $ (0.36) $ 0.20
============ =========== =========== ============
Shares used in basic
per share computation 551,283 543,807 546,737 551,623
Shares used in diluted
per share computation 574,381 564,536 546,737 590,490
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
October 25, January 25,
2009 2009
----------- -----------
ASSETS
Current assets:
Cash, cash equivalents and marketable securities $ 1,634,079 $ 1,255,390
Accounts receivable, net 397,820 318,435
Inventories 277,643 537,834
Prepaid expenses and other current assets 48,174 56,299
----------- -----------
Total current assets 2,357,716 2,167,958
Property and equipment, net 565,296 625,798
Goodwill 369,844 369,844
Intangible assets, net 127,817 147,101
Deposits and other assets 42,901 40,026
----------- -----------
Total assets $ 3,463,574 $ 3,350,727
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 321,530 $ 218,864
Accrued liabilities and other current liabilities 567,276 559,727
----------- -----------
Total current liabilities 888,806 778,591
Other long-term liabilities 126,373 151,850
Capital lease obligations, long term 24,760 25,634
Stockholders' equity 2,423,635 2,394,652
----------- -----------
Total liabilities and stockholders' equity $ 3,463,574 $ 3,350,727
=========== ===========
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
---------------------------------- ------------------------
October 25, July 26, October 26, October 25, October 26,
2009 2009 2008 2009 2008
--------- ----------- ---------- ----------- -----------
GAAP gross
profit $ 391,783 $ 156,723 $ 367,843 $ 738,202 $ 1,032,603
GAAP gross
margin 43.4% 20.2% 41.0% 31.5% 35.1%
Stock-based
compensation
expense
included in
cost of
revenue (A) 2,650 4,828 3,558 9,708 10,027
Net
warranty
charge
against
cost of
revenue
arising
from a
weak
die/packaging
material
set (B) (24,115) 119,993 - 95,878 195,954
Non-recurring
charge
related
to a
royalty
dispute - - 4,500 - 4,500
Stock
option
purchase
charge
related
to cost of
revenue
(C) - - - 11,412 -
--------- ----------- ---------- ----------- -----------
Non-GAAP
gross profit $ 370,318 $ 281,544 $ 375,901 $ 855,200 $ 1,243,084
========= =========== ========== =========== ===========
Non-GAAP
gross
margin 41.0% 36.3% 41.9% 36.5% 42.2%
GAAP net
income
(loss) $ 107,577 $ (105,302) $ 61,748 $ (199,063) $ 117,624
Stock-
based
compensation
expense (A) 22,982 25,376 38,384 82,471 120,873
Net
warranty
charge
against
cost of
revenue
arising
from a
weak
die/packaging
material
set (B) (25,105) 119,054 - 93,949 195,954
Restructuring
charges - - 8,338 - 8,338
Non-recurring
charge
related
to a
royalty
dispute - - 4,500 - 4,500
Stock
option
purchase
charge (C) - - - 140,241 -
Income tax
impact of
non-GAAP
adjustments 4,876 (1,398) (1,540) (16,212) (49,624)
--------- ----------- ---------- ----------- -----------
Non-GAAP net
income $ 110,330 $ 37,730 $ 111,430 $ 101,386 $ 397,665
========= =========== ========== =========== ===========
Diluted net
income
(loss) per
share
GAAP $ 0.19 $ (0.19) $ 0.11 $ (0.36) $ 0.20
========= =========== ========== =========== ===========
Non-GAAP $ 0.19 $ 0.07 $ 0.20 $ 0.18 $ 0.68
========= =========== ========== =========== ===========
Shares used
in GAAP
diluted net
income
(loss) per
share
computation 574,381 546,639 564,536 546,737 590,490
Impact of
non-GAAP
adjustments
on dilutive
share
computation (1,190) 15,996 (3,374) 16,291 (9,058)
--------- ----------- ---------- ----------- -----------
Shares used
in non-GAAP
diluted net
income per
share
computation 573,191 562,635 561,162 563,028 581,432
========= =========== ========== =========== ===========
Metrics:
GAAP net cash
flow
provided by
operating
activities $ 141,317 $ 135,117 $ 43,003 $ 418,562 $ 269,205
Purchase
of property
and equipment
and intangible
assets (16,593) (17,656) (109,008) (55,026) (364,695)
--------- ----------- ---------- ----------- -----------
Free cash
flow $ 124,724 $ 117,461 $ (66,005) $ 363,536 $ (95,490)
========= =========== ========== =========== ===========
GAAP cost of
revenue [1] $ 511,423 $ 619,797 $ 529,812 $ 1,605,755 $ 1,911,116
GAAP
inventory
[2] $ 277,643 $ 279,216 $ 523,988 $ 277,643 $ 523,988
Days in
period [3] 91 91 91 273 273
--------- ----------- ---------- ----------- -----------
GAAP days
sales in
inventory
[2]*[3]÷[1] 49 41 90 47 75
========= =========== ========== =========== ===========
GAAP revenue $ 903,206 $ 776,520 $ 897,655 $ 2,343,957 $ 2,943,719
Less:
Non-GAAP
gross
profit (370,318) (281,544) (375,901) (855,200) (1,243,084)
--------- ----------- ---------- ----------- -----------
Non-GAAP cost
of revenue
[4] $ 532,888 $ 494,976 $ 521,754 $ 1,488,757 $ 1,700,635
========= =========== ========== =========== ===========
GAAP ending
inventory
[5] $ 277,643 $ 279,216 $ 523,988 $ 277,643 $ 523,988
Days in
period [6] 91 91 91 273 273
Non-GAAP days
sales in
inventory
[5]*[6]÷[4] 47 51 91 51 84
========= =========== ========== =========== ===========
(A) Results include stock-based compensation expense as follows (in
thousands):
Three Months Ended Nine Months Ended
----------------------------------- -------------------------
October 25, July 26, October 26, October 25, October 26,
2009 2009 2008 2009 2008
---------- ------------ ----------- ------------ ------------
Cost of
revenue $ 2,650 $ 4,828 $ 3,558 $ 9,708 $ 10,027
Research and
development $ 12,853 $ 13,268 $ 22,740 $ 47,391 $ 71,500
Sales, general
and adminis-
trative $ 7,479 $ 7,280 $ 12,086 $ 25,372 $ 39,346
(B) 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.
(C) During the three months ended April 26, 2009, the Company completed a
tender offer to purchase an aggregate of 28.5 million outstanding stock
options for a total cash payment of $78.1 million. As a result of the
tender offer the Company incurred a charge of $140.2 million,
consisting of the remaining unamortized stock-based compensation
expenses associated with the unvested portion of the options tendered
in the offer, stock-based compensation expense resulting from amounts
paid in excess of the fair value of the underlying options, plus
associated payroll taxes and professional fees. The $140.2 million
stock option purchase charge for the three months ended April 26, 2009
relates to personnel associated with cost of revenue (for
manufacturing personnel), research and development, and sales, general
and administrative of $11.4 million, $90.5 million, and $38.3 million,
respectively.
Contact Information: For further information, contact: Michael Hara Investor Relations NVIDIA Corporation (408) 486-2511 mhara@nvidia.com Robert Sherbin Corporate Communications NVIDIA Corporation (408) 566-5150 rsherbin@nvidia.com