NVIDIA (NASDAQ: NVDA) today reported revenue for the first quarter
ended April 28, 2019, of $2.22 billion compared with $3.21 billion
a year earlier and $2.21 billion in the previous quarter.
GAAP earnings per diluted share for the quarter
were $0.64, compared with $1.98 a year ago and $0.92 in the
previous quarter. Non-GAAP earnings per diluted share were $0.88
compared with $2.05 a year earlier and $0.80 in the previous
quarter.
“NVIDIA is back on an upward trajectory,” said
Jensen Huang, founder and CEO of NVIDIA. “We’ve returned to growth
in gaming, with nearly 100 new GeForce Max-Q laptops shipping. And
NVIDIA RTX has gained broad industry support, making ray tracing
the standard for next-generation gaming.
“Despite the near-term pause in demand from
hyperscale customers, the application of AI continues to
accelerate. AI adoption is accelerating in the world’s largest
industries, moving beyond the cloud to the edge where AI processing
has to be instantaneous. We’re excited about our pending
acquisition of Mellanox, which will help us drive data center
architecture for high performance computing and AI from the cloud
to the edge,” he said.
Capital Return
As previously communicated, NVIDIA intends to
return $3.00 billion to shareholders by the end of fiscal 2020,
including $700 million in share repurchases made during the fourth
quarter of fiscal 2019. In the first quarter of fiscal 2020, the
company returned $97 million in quarterly cash dividends.
NVIDIA will pay its next quarterly cash dividend
of $0.16 per share on June 21, 2019, to all shareholders of record
on May 31, 2019.
Q1 Fiscal 2020 Summary
GAAP |
($ in millions, except earnings per share) |
Q1 FY20 |
Q4 FY19 |
Q1 FY19 |
Q/Q |
Y/Y |
Revenue |
$2,220 |
$2,205 |
$3,207 |
Up 1% |
Down 31% |
Gross margin |
58.4% |
54.7% |
64.5% |
Up 370 bps |
Down 610 bps |
Operating expenses |
$938 |
$913 |
$773 |
Up 3% |
Up 21% |
Operating income |
$358 |
$294 |
$1,295 |
Up 22% |
Down 72% |
Net income |
$394 |
$567 |
$1,244 |
Down 31% |
Down 68% |
Diluted earnings per share |
$0.64 |
$0.92 |
$1.98 |
Down 30% |
Down 68% |
Non-GAAP |
($ in millions, except earnings per share) |
Q1 FY20 |
Q4 FY19 |
Q1 FY19 |
Q/Q |
Y/Y |
Revenue |
$2,220 |
$2,205 |
$3,207 |
Up 1% |
Down 31% |
Gross margin |
59.0% |
56.0% |
64.7% |
Up 300 bps |
Down 570 bps |
Operating expenses |
$753 |
$755 |
$648 |
-- |
Up 16% |
Operating income |
$557 |
$479 |
$1,428 |
Up 16% |
Down 61% |
Net income |
$543 |
$496 |
$1,285 |
Up 9% |
Down 58% |
Diluted earnings per share |
$0.88 |
$0.80 |
$2.05 |
Up 10% |
Down 57% |
NVIDIA’s outlook for the second quarter of
fiscal 2020 is as follows:
- Revenue is expected to be $2.55 billion, plus or minus 2
percent.
- GAAP and non-GAAP gross margins are expected to be 59.2 percent
and 59.5 percent, respectively, plus or minus 50 basis points.
- GAAP and non-GAAP operating expenses are expected to be
approximately $985 million and $765 million, respectively.
- GAAP and non-GAAP other income and expense are both expected to
be income of approximately $27 million.
- GAAP and non-GAAP tax rates are both expected to be 10 percent,
plus or minus 1 percent, excluding any discrete items. GAAP
discrete items include excess tax benefits or deficiencies related
to stock-based compensation, which are expected to generate
variability on a quarter by quarter basis.
Highlights
During the quarter, NVIDIA announced that it
reached a definitive agreement to acquire Mellanox Technologies,
Ltd. for $125 per share in cash, representing a total enterprise
value of approximately $6.9 billion. Once complete, the combination
is expected to be immediately accretive to NVIDIA’s non-GAAP gross
margin, non-GAAP earnings per share, and free cash flow. The
transaction is expected to close by the end of the calendar
year.
Since the end of the fourth quarter of fiscal
2019, NVIDIA has achieved progress in these areas:
Data Center
- Introduced the NVIDIA® CUDA-X AI™ platform for
accelerating data science.
- Announced availability of NVIDIA T4 Tensor Core GPUs from
leading OEMs, as well as Amazon Web Services.
- Partnered with top global system builders to create powerful
data-science workstations integrating NVIDIA Quadro RTX™ GPUs and
NVIDIA CUDA-X AI.
- Launched beta access to NVIDIA Quadro® Virtual Workstation
software in the Alibaba Cloud Marketplace.
- Teamed up with the American College of Radiology to use the
NVIDIA Clara™ AI toolkit to enable its members across the U.S. to
create and use AI for diagnostic radiology in their own
facilities.
Gaming
- Introduced the GeForce® GTX® 1660 Ti, GTX 1660 and GTX 1650
gaming GPUs with improved performance and efficiency for today’s
most popular games.
- Announced a record number of gaming laptop models based on
Turing GPUs from the world’s top makers, bringing the total
launched this year to nearly 100.
- Announced that real-time ray tracing is now integrated into
Unreal Engine and Unity, the world’s most popular commercial game
engines.
Professional Visualization
- Announced expanded adoption of NVIDIA RTX ray-tracing
technology by the world’s top 3D application providers.
- Unveiled the NVIDIA Omniverse open-collaboration platform
to simplify creative workflows for content creation.
Automotive
- Partnered with Toyota Research Institute-Advanced Development
to develop, train and validate self-driving vehicles.
- Unveiled NVIDIA DRIVE™ AP2X, a complete Level 2+ automated
driving solution encompassing DRIVE AutoPilot software, DRIVE AGX
and DRIVE validation tools.
- Introduced NVIDIA DRIVE AV Safety Force Field to enable safe,
comfortable driving experiences.
- Announced availability of the NVIDIA DRIVE Constellation™
autonomous vehicle simulation platform.
Edge Computing
- Launched Jetson Nano™, an AI computer that makes it possible to
create millions of small, low-cost, low-power devices.
- Announced free public availability of NVIDIA Isaac SDK™ as
a robotics developer toolbox for accelerating innovation and
deployment.
- Announced that the NVIDIA Jetson™ AI computer platform now
supports Amazon Web Services RoboMaker.
- Teamed up with AWS IoT Greengrass to enable customers to deploy
AI and deep learning to millions of connected devices with NVIDIA
Jetson.
- Collaborated with Microsoft to make cities smarter by
integrating NVIDIA DeepStream Edge AI and Microsoft Azure IoT.
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 2020
financial results and current financial prospects today at 2:30
p.m. Pacific time (5:30 p.m. Eastern time). A live webcast
(listen-only mode) of the conference call will be accessible at
NVIDIA’s investor relations website, http://investor.nvidia.com.
The webcast will be recorded and available for replay until
NVIDIA’s conference call to discuss its financial results for its
second quarter of fiscal 2020.
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, 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 and other costs, gains from non-affiliated
investments, interest expense related to amortization of debt
discount, the associated tax impact of these items, where
applicable, and the tax benefit from income tax reform. Weighted
average shares used in the non-GAAP diluted net income per share
computation includes the anti-dilution impact of our Note Hedge.
Free cash flow is calculated as GAAP net cash provided by operating
activities less purchase 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 the company’s 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 28, |
|
April 29, |
|
|
|
2019 |
|
2018 |
|
|
|
|
|
|
Revenue |
$ |
2,220 |
|
|
$ |
3,207 |
|
Cost of
revenue |
|
924 |
|
|
|
1,139 |
|
Gross profit |
|
1,296 |
|
|
|
2,068 |
|
Operating
expenses |
|
|
|
|
Research and
development |
|
674 |
|
|
|
542 |
|
|
Sales, general and
administrative |
|
264 |
|
|
|
231 |
|
|
|
Total operating expenses |
|
938 |
|
|
|
773 |
|
Income from
operations |
|
358 |
|
|
|
1,295 |
|
|
Interest
income |
|
44 |
|
|
|
25 |
|
|
Interest
expense |
|
(13 |
) |
|
|
(15 |
) |
|
Other, net |
|
- |
|
|
|
6 |
|
|
|
Total other income (expense) |
|
31 |
|
|
|
16 |
|
Income before
income tax |
|
389 |
|
|
|
1,311 |
|
Income tax expense
(benefit) |
|
(5 |
) |
|
|
67 |
|
Net income |
$ |
394 |
|
|
$ |
1,244 |
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
Basic |
$ |
0.65 |
|
|
$ |
2.05 |
|
|
Diluted |
$ |
0.64 |
|
|
$ |
1.98 |
|
|
|
|
|
|
|
Weighted average
shares used in per share computation: |
|
|
|
|
Basic |
|
607 |
|
|
|
606 |
|
|
Diluted |
|
616 |
|
|
|
627 |
|
|
|
|
|
|
|
|
NVIDIA CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In millions) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28, |
|
January 27, |
|
|
|
2019 |
|
2019 |
ASSETS |
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
Cash, cash
equivalents and marketable securities |
$ |
7,802 |
|
$ |
7,422 |
|
Accounts
receivable, net |
|
1,242 |
|
|
1,424 |
|
Inventories |
|
1,426 |
|
|
1,575 |
|
Prepaid expenses
and other current assets |
|
159 |
|
|
136 |
|
|
Total current assets |
|
10,629 |
|
|
10,557 |
|
|
|
|
|
|
Property and
equipment, net |
|
1,473 |
|
|
1,404 |
Operating lease
assets |
|
536 |
|
|
- |
Goodwill |
|
618 |
|
|
618 |
Intangible assets,
net |
|
54 |
|
|
45 |
Deferred income
tax assets |
|
601 |
|
|
560 |
Other assets |
|
110 |
|
|
108 |
|
|
Total assets |
$ |
14,021 |
|
$ |
13,292 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
$ |
368 |
|
$ |
511 |
|
Accrued and other
current liabilities |
|
815 |
|
|
818 |
|
|
Total current liabilities |
|
1,183 |
|
|
1,329 |
|
|
|
|
|
|
Long-term
debt |
|
1,988 |
|
|
1,988 |
Long-term
operating lease liabilities |
|
486 |
|
|
- |
Other long-term
liabilities |
|
660 |
|
|
633 |
|
|
Total liabilities |
|
4,317 |
|
|
3,950 |
|
|
|
|
|
|
Shareholders'
equity |
|
9,704 |
|
|
9,342 |
|
|
Total liabilities and shareholders' equity |
$ |
14,021 |
|
$ |
13,292 |
|
|
|
|
|
|
|
|
|
NVIDIA
CORPORATION |
|
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES |
|
(In millions, except per share data) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
April 28, |
|
January 27, |
|
April 29, |
|
|
|
2019 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
GAAP gross
profit |
$ |
1,296 |
|
|
$ |
1,207 |
|
|
$ |
2,068 |
|
|
GAAP gross
margin |
|
58.4% |
|
|
|
54.7% |
|
|
|
64.5% |
|
|
|
Stock-based compensation expense (A) |
|
4 |
|
|
|
6 |
|
|
|
8 |
|
|
|
Legal settlement costs |
|
10 |
|
|
|
21 |
|
|
|
- |
|
|
Non-GAAP gross
profit |
$ |
1,310 |
|
|
$ |
1,234 |
|
|
$ |
2,076 |
|
|
Non-GAAP gross
margin |
|
59.0% |
|
|
|
56.0% |
|
|
|
64.7% |
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses |
$ |
938 |
|
|
$ |
913 |
|
|
$ |
773 |
|
|
|
Stock-based compensation expense (A) |
|
(174 |
) |
|
|
(150 |
) |
|
|
(121 |
) |
|
|
Acquisition-related and other costs |
|
(10 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
Legal settlement costs |
|
(1 |
) |
|
|
(7 |
) |
|
|
(2 |
) |
|
Non-GAAP operating
expenses |
$ |
753 |
|
|
$ |
755 |
|
|
$ |
648 |
|
|
|
|
|
|
|
|
|
|
GAAP income from
operations |
$ |
358 |
|
|
$ |
294 |
|
|
$ |
1,295 |
|
|
|
Total impact of non-GAAP adjustments to income from operations |
|
199 |
|
|
|
185 |
|
|
|
133 |
|
|
Non-GAAP income from
operations |
$ |
557 |
|
|
$ |
479 |
|
|
$ |
1,428 |
|
|
|
|
|
|
|
|
|
|
GAAP other income
(expense) |
$ |
31 |
|
|
$ |
30 |
|
|
$ |
16 |
|
|
|
Gains from non-affiliated investments |
|
- |
|
|
|
(1 |
) |
|
|
(6 |
) |
|
|
Interest expense related to amortization of debt discount |
|
- |
|
|
|
- |
|
|
|
1 |
|
|
Non-GAAP other income
(expense) |
$ |
31 |
|
|
$ |
29 |
|
|
$ |
11 |
|
|
|
|
|
|
|
|
|
|
GAAP net income |
$ |
394 |
|
|
$ |
567 |
|
|
$ |
1,244 |
|
|
|
Total pre-tax impact of non-GAAP adjustments |
|
199 |
|
|
|
184 |
|
|
|
128 |
|
|
|
Income tax impact of non-GAAP adjustments (B) |
|
(50 |
) |
|
|
(25 |
) |
|
|
(87 |
) |
|
|
Tax benefit from income tax reform |
|
- |
|
|
|
(230 |
) |
|
|
- |
|
|
Non-GAAP net
income |
$ |
543 |
|
|
$ |
496 |
|
|
$ |
1,285 |
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share |
|
|
|
|
|
|
|
GAAP |
$ |
0.64 |
|
|
$ |
0.92 |
|
|
$ |
1.98 |
|
|
|
Non-GAAP |
$ |
0.88 |
|
|
$ |
0.80 |
|
|
$ |
2.05 |
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in diluted net income per share computation |
|
|
|
|
|
|
|
GAAP |
|
616 |
|
|
|
619 |
|
|
|
627 |
|
|
|
Anti-dilution impact from note hedge |
|
- |
|
|
|
- |
|
|
|
(1 |
) |
|
|
Non-GAAP |
|
616 |
|
|
|
619 |
|
|
|
626 |
|
|
|
|
|
|
|
|
|
|
GAAP net cash
provided by operating activities |
$ |
720 |
|
|
$ |
898 |
|
|
$ |
1,445 |
|
|
|
Purchase of property and equipment and intangible assets |
|
(128 |
) |
|
|
(203 |
) |
|
|
(118 |
) |
|
Free cash flow |
$ |
592 |
|
|
$ |
695 |
|
|
$ |
1,327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Stock-based compensation consists of the following: |
Three Months Ended |
|
|
|
April 28, |
|
January 27, |
|
April 29, |
|
|
|
|
2019 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
Cost of revenue |
$ |
4 |
|
|
$ |
6 |
|
|
$ |
8 |
|
|
|
Research and development |
$ |
114 |
|
|
$ |
99 |
|
|
$ |
74 |
|
|
|
Sales, general and administrative |
$ |
60 |
|
|
$ |
51 |
|
|
$ |
47 |
|
|
(B) Income tax impact of non-GAAP adjustments, including the
recognition of excess tax benefits or deficiencies related to
stock-based compensation under GAAP accounting standard (ASU
2016-09). |
|
|
NVIDIA
CORPORATION |
RECONCILIATION OF GAAP TO NON-GAAP
OUTLOOK |
|
|
|
|
|
|
Q2
FY2020Outlook |
|
|
|
GAAP gross
margin |
|
59.2 |
% |
|
Impact of stock-based compensation expense |
|
0.3 |
% |
Non-GAAP gross
margin |
|
59.5 |
% |
|
|
|
|
|
Q2
FY2020Outlook |
|
|
(In millions) |
|
|
|
GAAP operating
expenses |
$ |
985 |
|
|
Stock-based compensation expense, acquisition-related costs, and
other costs |
|
(220 |
) |
Non-GAAP operating
expenses |
$ |
765 |
|
|
|
|
|
About NVIDIA
NVIDIA’s (NASDAQ: NVDA) invention of the GPU in
1999 sparked the growth of the PC gaming market, redefined modern
computer graphics and revolutionized parallel computing. More
recently, GPU deep learning ignited modern AI - the next era of
computing - with the GPU acting as the brain of computers, robots
and self-driving cars that can perceive and understand the world.
More information at http://nvidianews.nvidia.com/.
For further information, contact:
Simona Jankowski |
|
Robert Sherbin |
Investor Relations |
|
Corporate Communications |
NVIDIA Corporation |
|
NVIDIA Corporation |
sjankowski@nvidia.com |
|
rsherbin@nvidia.com |
Certain statements in this press release
including, but not limited to, statements as to: NVIDIA being back
on an upward trajectory; NVIDIA returning to growth in gaming with
nearly 100 new GeForce Max-Q laptops shipping; NVIDIA RTX graphics
gaining broad industry support, making ray tracing the standard for
next-generation gaming; the near term pause in demand from
hyperscale customers; AI continuing to accelerate AI adoption
accelerating in the world’s largest industries moving beyond the
cloud to edge and it needing to be instantaneous; NVIDIA’s
excitement about the acquisition of Mellanox and it helping to
drive the data center architecture for high-performance computing
and AI from the cloud to the edge; NVIDIA’s intended capital return
through the end of fiscal 2020; NVIDIA’s next quarterly cash
dividend; NVIDIA’s financial outlook for the second quarter of
fiscal 2020; NVIDIA’s expected tax rates for the second quarter of
fiscal 2020; our expectation to generate variability from excess
tax benefits or deficiencies; the expected accretive financial
impact of the Mellanox transaction; the expected closing date of
the Mellanox acquisition; the performance, benefits and abilities
of our products; the availability of NVIDIA T4 Tensor Core GPUs,
NVIDIA Drive Constellation and NVIDIA Isaac SDK; our partnership
with top global system builders to create powerful data-science
workstations; our partnership with the American College of
Radiology enabling its members to create and use AI for diagnostic
radiology; the introduction of GeForce GTX 1660 Ti, GTX 1660
and GTX 1650 and its performance and impact; the number of gaming
laptop models using Turing GPUs; the expanded adoption of
NVIDIA RTX ray-tracing technology by the world’s top 3D providers;
NVIDIA Omniverse platform simplifying creative workflows for
content creation; our partnership with Toyota Research
Institute-Advanced Development to develop, train and validate
self-driving vehicles; NVIDIA DRIVE AV Safety Force Field enabling
safe, comfortable driving experiences; Jetson Nano making it
possible to create millions of small, low-cost, low-power devices;
our partnership with AWS IoT Greengrass to enable customers to
deploy AI and deep learning to millions of connected devices;
NVIDIA Jetson AI supporting Amazon Web Services RoboMaker; and our
collaboration with Microsoft to make cities smarter 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 most recent reports NVIDIA files with the
Securities and Exchange Commission, or SEC, including, but not
limited to, its annual report on Form 10-K and quarterly reports on
Form 10-Q. 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.
© 2019 NVIDIA Corporation. All rights reserved.
NVIDIA, the NVIDIA logo, CUDA-X AI, GeForce, GeForce GTX, Jetson,
Jetson Nano, NVIDIA AGX, NVIDIA Clara, NVIDIA DRIVE, NVIDIA DRIVE
Constellation, NVIDIA Isaac SDK, NVIDIA Omniverse, NVIDIA RTX,
Quadro and Quadro RTX 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.
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