- Revenue of $811.2 million
- GAAP net loss of $141.0 million, or $0.25 per share
- Non-GAAP net income of $20.1 million, or $0.03 per diluted share
- GAAP gross margin of 16.6 percent
Quarterly Highlights
($ in millions except per ---------------------------------------------
share data) Q2 FY2011 Q1 FY2011 Q2 FY2010
------------- ------------- -------------
Revenue $811.2 $1,001.8 $776.5
------------- ------------- -------------
GAAP:
------------- ------------- -------------
Gross margin 16.6% 45.6% 20.2%
------------- ------------- -------------
Net income (loss) ($141.0) $137.6 ($105.3)
------------- ------------- -------------
Income (loss) per share ($0.25) $0.23 ($0.19)
------------- ------------- -------------
Results were impacted by a large inventory write-down and a charge related
to a weak die/packaging material set.
The inventory write-down was a consequence of weakened demand for consumer
graphics processing units (GPUs) as higher memory prices and economic
weakness in Europe and China led to a greater-than-expected shift to
lower-priced GPUs and PCs with integrated graphics.
The weak die/packaging material set was used in certain versions of
previous generation MCP (chipset) and GPU products shipped before July 2008
and used in notebook configurations. The charge, of $193.9 million,
includes additional remediation costs, as well as the estimated costs of a
pending settlement of a class action lawsuit consolidated in the District
Court for the Northern District of California in April 2009 related to this
same matter. The settlement is subject to certain approvals, including
final approval by the court. Excluding this die/packaging material charge
and the associated tax impact, non-GAAP net income was $20.1 million, or
$0.03 per diluted share.
"Rapidly changing market conditions made for a challenging quarter," said
Jen-Hsun Huang, NVIDIA's CEO and president. "We delivered excellent
results in Quadro professional graphics, Tesla GPU computing, and our Tegra
system-on-a-chip business. But our GeForce consumer business fell
significantly short of expectations amid weak PC demand in Europe and
China. Although demand among end-users remains uncertain, we expect to
drive revenue and grow market share with new products that are gaining
momentum in each of our businesses."
Outlook
The outlook for the third quarter of fiscal 2011 is as follows:
- Revenue is expected to be up 3 to 5 percent from the second quarter.
- GAAP gross margin is expected to increase to 46.5 to 47.5 percent.
- GAAP operating expenses are expected to be approximately $300 million.
- GAAP tax rate of 17 to 19 percent.
- NVIDIA launched and shipped the GeForce® GTX 460, bringing the gaming
benefits of the Fermi architecture to lower price points.
- NVIDIA launched and shipped a range of Quadro products based on the
Fermi architecture for workstation professionals.
- NVIDIA extended its reach in supercomputing as IBM started offering products based on Tesla; these also use Fermi-generation GPUs.
NVIDIA will conduct a conference call with analysts and investors to discuss its second 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 third 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 (
NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
------------------------ ------------------------
August 1, July 26, August 1, July 26,
2010 2009 2010 2009
----------- ----------- ----------- -----------
Revenue $ 811,208 $ 776,520 $ 1,813,021 $ 1,440,751
Cost of revenue 676,916 619,797 1,222,352 1,094,332
----------- ----------- ----------- -----------
Gross profit 134,292 156,723 590,669 346,419
Operating expenses
Research and
development 210,635 192,855 428,740 494,652
Sales, general and
administrative 98,864 73,975 189,743 192,839
----------- ----------- ----------- -----------
Total operating
expenses 309,499 266,830 618,483 687,491
----------- ----------- ----------- -----------
Operating loss (175,207) (110,107) (27,814) (341,072)
Interest and other
income, net 6,160 3,006 9,492 9,150
----------- ----------- ----------- -----------
Loss before income tax
expense (169,047) (107,101) (18,322) (331,922)
Income tax benefit (28,086) (1,799) (14,955) (25,282)
----------- ----------- ----------- -----------
Net loss $ (140,961) $ (105,302) $ (3,367) $ (306,640)
=========== =========== =========== ===========
Basic net loss per
share $ (0.25) $ (0.19) $ (0.01) $ (0.56)
=========== =========== =========== ===========
Diluted net loss per
share $ (0.25) $ (0.19) $ (0.01) $ (0.56)
=========== =========== =========== ===========
Shares used in basic
per share computation 572,764 546,639 569,971 544,463
Shares used in diluted
per share computation 572,764 546,639 569,971 544,463
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
August 1, January 31,
2010 2010
----------- -----------
ASSETS
Current assets:
Cash, cash equivalents and marketable securities $ 1,772,500 $ 1,728,227
Accounts receivable, net 395,934 374,963
Inventories 434,227 330,674
Prepaid expenses and other current assets 53,301 46,966
----------- -----------
Total current assets 2,655,962 2,480,830
Property and equipment, net 542,216 571,858
Goodwill 369,844 369,844
Intangible assets, net 118,879 120,458
Deposits and other assets 44,367 42,928
----------- -----------
Total assets $ 3,731,268 $ 3,585,918
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 280,041 $ 344,527
Accrued liabilities and other current liabilities 539,098 439,851
----------- -----------
Total current liabilities 819,139 784,378
Other long-term liabilities 127,881 111,950
Capital lease obligations, long term 23,734 24,450
Stockholders' equity 2,760,514 2,665,140
----------- -----------
Total liabilities and stockholders' equity $ 3,731,268 $ 3,585,918
=========== ===========
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended
----------------------------------
August 1, May 2, July 26,
2010 2010 2009
--------- -------- ---------
GAAP gross profit $ 134,292 $456,377 $ 156,723
GAAP gross margin 16.6% 45.6% 20.2%
Net charge against cost of
revenue arising from a weak
die/packaging material set 181,193 (A) - 119,993 (A)
Stock option purchase charge
related to cost of revenue - -
--------- -------- ---------
Non-GAAP gross profit $ 315,485 $456,377 $ 276,716
========= ======== =========
Non-GAAP gross margin 38.9% 45.6% 35.6%
GAAP operating expenses $ 309,499 $308,984 $ 266,830
Net charge against operating
expenses arising from a weak
die/packaging material set (12,705) (A) - 939 (A)
Stock option purchase charge
related to operating expenses - - -
--------- -------- ---------
Non-GAAP operating expenses $ 296,794 $308,984 $ 267,769
========= ======== =========
GAAP net income (loss) $(140,961) $137,594 $(105,302)
Net charge arising from a weak
die/packaging material set 193,898 (A) - 119,054 (A)
Stock option purchase charge - - -
Income tax impact of non-GAAP
adjustments (32,828) (C) - (3,080) (C)
--------- -------- ---------
Non-GAAP net income (loss) $ 20,109 $137,594 $ 10,672
========= ======== =========
Diluted net income (loss) per share
GAAP $ (0.25) $ 0.23 $ (0.19)
========= ======== =========
Non-GAAP $ 0.03 $ 0.23 $ 0.02
========= ======== =========
Shares used in GAAP diluted net
income (loss) per share
computation 572,764 590,997 546,639
Cumulative impact of non-GAAP
adjustments 9,609 (D) - 15,183 (D)
--------- -------- ---------
Shares used in non-GAAP diluted net
income (loss) per share
computation 582,373 590,997 561,822
========= ======== =========
Metrics:
GAAP net cash flow provided by /
(used in) operating activities $ 34,344 $ (5,397) $ 135,117
Purchase of property and
equipment and intangible
assets (37,644) (17,080) (17,656)
--------- -------- ---------
Free cash flow $ (3,300) $(22,477) $ 117,461
========= ======== =========
Six Months Ended
----------------------
August 1, July 26,
2010 2009
-------- --------
GAAP gross profit 590,669 346,419
GAAP gross margin 32.6% 24.0%
Net charge against cost of
revenue arising from a weak
die/packaging material set 181,193 (A) 119,993 (A)
Stock option purchase charge
related to cost of revenue - 11,412 (B)
-------- --------
Non-GAAP gross profit $771,862 $477,824
======== ========
Non-GAAP gross margin 42.6% 33.2%
GAAP operating expenses 618,483 687,491
Net charge against operating
expenses arising from a weak
die/packaging material set (12,705) (A) 939 (A)
Stock option purchase charge
related to operating expenses - (128,829) (B)
-------- --------
Non-GAAP operating expenses $605,778 $559,601
======== ========
GAAP net income (loss) (3,367) (306,640)
Net charge arising from a weak
die/packaging material set 193,898 (A) 119,054 (A)
Stock option purchase charge - 140,241 (B)
Income tax impact of non-GAAP
adjustments (32,828) (C) (11,580) (C)
-------- --------
Non-GAAP net income (loss) $157,703 $(58,925)
======== ========
Diluted net income (loss) per share
GAAP $ (0.01) $ (0.56)
======== ========
Non-GAAP $ 0.27 $ (0.11)
======== ========
Shares used in GAAP diluted net
income (loss) per share
computation 569,971 544,463
Cumulative impact of non-GAAP
adjustments 17,165 (D) -
-------- --------
Shares used in non-GAAP diluted net
income (loss) per share
computation 587,136 544,463
======== ========
Metrics:
GAAP net cash flow provided by /
(used in) operating activities $ 28,947 $277,245
Purchase of property and
equipment and intangible
assets (54,724) (38,433)
-------- --------
Free cash flow $(25,777) $238,812
======== ========
(A) Excludes a charge related to the weak die/packaging material set,
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.
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