NVIDIA Reports Financial Results for Third Quarter Fiscal Year 2013

Thu Nov 8, 2012 4:20pm EST

* Reuters is not responsible for the content in this press release.

  SANTA CLARA, CA, Nov 08 (Marketwire) -- 
NVIDIA (NASDAQ: NVDA)


--  Record revenue of $1.20 billion.
--  GAAP net income was $209.1 million, or $0.33 per diluted share.
    Non-GAAP net income was $245.5 million, or $0.39 per diluted share.
--  GAAP gross margin was a record 52.9 percent. Non-GAAP gross margin was
    a record 53.1 percent.
--  NVIDIA initiated quarterly dividend of 7.5 cents a share.

    

NVIDIA (NASDAQ: NVDA) today reported record revenue of $1.20 billion
for the third quarter of fiscal 2013 ended Oct. 28, 2012, up 15.3 percent
from the previous quarter and up 12.9 percent from a year earlier.

    The company also announced that it is initiating the payment of a
quarterly cash dividend, and extending its existing $2.7 billion
share-repurchase program, initiated in August 2004, through December 2014.

    "Investments in our new growth strategies paid off this quarter in record
revenues and margins," said Jen-Hsun Huang, president and chief executive
officer of NVIDIA. "Kepler GPUs are winning across the special-purpose PC
markets we serve, from gaming to design to supercomputing. And Tegra is
powering some of the most innovative tablets, phones and cars in the
market."

    He continued: "We are pleased to start paying our shareholders a
quarterly cash dividend. We have confidence in our businesses and our
continued ability to grow. Given our strong financial position and
ongoing ability to generate cash, we are well positioned to continue
investing in our future." 



----------------------------------------------------------------------------    
                GAAP Quarterly Financial Comparison
----------------------------------------------------------------------------
 (in millions except per
        share data)        Q3 FY13  Q2 FY13  Q3 FY12     Q/Q         Y/Y
----------------------------------------------------------------------------
Revenue                   $1,204.1 $1,044.3 $1,066.2    up 15.3%    up 12.9%
----------------------------------------------------------------------------
Gross margin                 52.9%    51.8%    52.2%  up 1.1 p.p  up 0.7 p.p
----------------------------------------------------------------------------
Operating expenses          $384.4   $401.1   $359.6   down 4.2%     up 6.9%
----------------------------------------------------------------------------
Net income                  $209.1   $119.0   $178.3    up 75.6%    up 17.3%
----------------------------------------------------------------------------
Earnings per share           $0.33    $0.19    $0.29    up 73.7%    up 13.8%
----------------------------------------------------------------------------

----------------------------------------------------------------------------
                  Non-GAAP Quarterly Financial Comparison*
----------------------------------------------------------------------------
 (in millions except per
        share data)        Q3 FY13  Q2 FY13  Q3 FY12     Q/Q         Y/Y
----------------------------------------------------------------------------
Revenue                   $1,204.1 $1,044.3 $1,066.2    up 15.3%    up 12.9%
----------------------------------------------------------------------------
Gross margin                 53.1%    52.0%    52.5%  up 1.1 p.p  up 0.6 p.p
----------------------------------------------------------------------------
Operating expenses          $344.8   $342.5   $317.6     up 0.7%     up 8.6%
----------------------------------------------------------------------------
Net income                  $245.5   $170.4   $217.0    up 44.0%    up 13.1%
----------------------------------------------------------------------------
Earnings per share           $0.39    $0.27    $0.35    up 44.4%    up 11.4%
----------------------------------------------------------------------------


    
*Non-GAAP earnings excluded stock-based compensation, amortization of
acquisition-related intangible assets, other acquisition-related costs, a
contribution expense in the second quarter of fiscal 2013, and the tax
impact associated with such items. 

    Outlook

    Our outlook for the fourth quarter of fiscal 2013 is as follows:


--  Revenue is expected to be between $1.025 billion and $1.175 billion.
    
    
--  GAAP and non-GAAP gross margins are expected to be flat relative to
    the prior quarter, 52.9 percent and 53.1 percent, respectively.
    
    
--  GAAP operating expenses are expected to be approximately $400 million;
    non-GAAP operating expenses are expected to be approximately $359
    million.
    
    
--  GAAP and non-GAAP tax rates are expected to be approximately 20
    percent and 19 percent, respectively, plus or minus one percentage
    point. This estimate excludes any discrete tax events that may occur
    during the quarter, which, if realized, may increase or decrease our
    actual fourth quarter GAAP and non-GAAP tax rates. If the U.S.
    research tax credit is reinstated into tax law, we estimate our annual
    effective tax rate for the fiscal year 2013 to be approximately 16
    percent.
    


    

Depreciation and amortization for the fourth quarter is estimated to
be approximately $58 million to $60 million. Capital expenditures are
expected to be in the range of $60 million to $70 million.

    Diluted shares for the fourth quarter are expected to be approximately
629 million.

    Dividend and Share-Repurchase Program

    The quarterly dividend of 7.5 cents per share, 30 cents on an annual
basis, is equivalent to a yield of about 2.4 percent, based on the Nov. 7
closing price of $12.61. It will be payable on Dec. 14, 2012 to all
shareholders of record on Nov. 23, 2012. 

    Since NVIDIA initiated its repurchase program in August 2004, NVIDIA has
spent $1.46 billion to repurchase 90.9 million shares of its common
stock. NVIDIA is authorized, subject to certain specifications, to spend
up to an additional $1.24 billion repurchasing shares of its common stock.

    Any future repurchases would be made in the open market, in privately
negotiated transactions or in structured share-repurchase programs, and
may be made from time to time or in one or more larger repurchases. The
program will be conducted in compliance with the Securities and Exchange
Commission's Rule 10b-18 and applicable legal requirements and shall be
subject to market conditions and other factors. The repurchases would be
funded from available working capital.

    Cash, cash equivalents and marketable securities at the end of the third
quarter of fiscal 2013 were $3.43 billion.

    Third Quarter Fiscal 2013 and Recent Highlights: 


--  Microsoft launched its NVIDIA Tegra(R) 3-based Surface RT to
    critical acclaim.
    
    
--  NVIDIA's new energy-efficient Kepler(TM) GPU architecture continued
    to make excellent headway:
    
    
    --  Kepler-based gaming was extended to new, lower price points with
        the launch of the GeForce(R) 660 Ti, GeForce GTX 660, GeForce
        GTX 650 Ti and GeForce GTX 650.
    --  Kepler made further inroads in supercomputing, as Oak Ridge
        National Laboratory announced that it had completed Titan, the
        world's fastest open-science supercomputer. Titan gets 90 percent
        of its processing power from 18,688 NVIDIA Tesla(R) GPUs.
    --  Kepler moved further into Apple's lineup, with the NVIDIA
        Quadro(R) K5000 for Mac Pro users.
    --  NVIDIA launched the VGX(TM) K2 GPU, also based on the Kepler
        GPU, for cloud-based workstation graphics.

    

CFO Commentary
 Commentary on the quarter by Karen Burns, NVIDIA
interim chief financial officer, is available at www.nvidia.com/ir.

    Conference Call and Webcast Information 
 NVIDIA will conduct a
conference call with analysts and investors to discuss its third quarter
fiscal 2013 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) 679-2572. A live webcast (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 webcast will be
recorded and available for replay until the company's conference call to
discuss its financial results for its fourth quarter fiscal 2013.

    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 income tax expense, non-GAAP net income, non-GAAP net
income, or earnings, per share, and free cash flows. 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, amortization
of acquisition-related intangible assets, other acquisition-related
costs, a non-recurring contribution expense, 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 (NASDAQ: NVDA) awakened the world to computer
graphics when it invented the GPU in 1999. Today, its processors power a
broad range of products from smart phones to supercomputers. NVIDIA's
mobile processors are used in cell phones, tablets and auto infotainment
systems. PC gamers rely on GPUs to enjoy spectacularly immersive worlds.
Professionals use them to create visual effects in movies and design
everything from golf clubs to jumbo jets. And researchers utilize GPUs to
advance the frontiers of science with high-performance computing. The
company holds more than 5,000 patents issued, allowed or filed. For more
information, see www.nvidia.com.

    Certain statements in this press release including, but not limited to,
statements as to: investments in our new growth strategies; Kepler GPUs
winning across the special-purpose PC markets we serve; Tegra powering
innovative tables, phones and cars in the market; the initiation and
ongoing maintenance of a cash dividend program; the extension of our
existing share-repurchase program; our continued growth; the strength of
our business and financial position; our ongoing ability to generate
cash; the company's financial outlook for the fourth quarter of fiscal
2013; and the company's tax rate for the fourth quarter and fiscal year
2013 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 reports NVIDIA files with the Securities and Exchange
Commission, or SEC, including its Form 10-Q for the fiscal period ended
July 29, 2012. 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. The share repurchase program does
not obligate NVIDIA to acquire any particular amount of common stock and
the program may be modified or suspended at any time at the company's
discretion.

    Copyright 2012 NVIDIA Corporation. All rights reserved. NVIDIA, the
NVIDIA logo, Tegra, Kepler, Quadro, GeForce, VGX and Tesla 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.

                             NVIDIA CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share data)
                                 (Unaudited)

                                Three Months Ended      Nine Months Ended
                             ----------------------- -----------------------
                             October 28, October 30, October 28, October 30,
                                 2012        2011        2012        2011
                             ----------- ----------- ----------- -----------

Revenue                      $ 1,204,110 $ 1,066,180 $ 3,173,257 $ 3,044,736
Cost of revenue                  567,452     509,463   1,532,516   1,478,232
                             ----------- ----------- ----------- -----------
Gross profit                     636,658     556,717   1,640,741   1,566,504
Operating expenses
  Research and development       284,180     256,498     849,275     735,743
  Sales, general and
   administrative                100,261     103,129     326,800     304,779
                             ----------- ----------- ----------- -----------
    Total operating expenses     384,441     359,627   1,176,075   1,040,522
                             ----------- ----------- ----------- -----------
Operating income                 252,217     197,090     464,666     525,982
Interest and other income,
 net                               1,411       7,697      11,265      12,837
                             ----------- ----------- ----------- -----------
Income before income tax
 expense                         253,628     204,787     475,931     538,819
Income tax expense                44,548      26,514      87,368      73,754
                             ----------- ----------- ----------- -----------
Net income                   $   209,080 $   178,273 $   388,563 $   465,065
                             =========== =========== =========== ===========

Basic net income per share   $      0.34 $      0.29 $      0.63 $      0.77
                             =========== =========== =========== ===========
Diluted net income per share $      0.33 $      0.29 $      0.62 $      0.76
                             =========== =========== =========== ===========

Shares used in basic per
 share computation               622,352     607,063     619,043     600,563
Shares used in diluted per
 share computation               628,845     613,560     625,973     614,688

                             NVIDIA CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                               (In thousands)
                                 (Unaudited)

                                                     October 28, January 29,
                                                         2012        2012
                                                     ----------- -----------
ASSETS

Current assets:
  Cash, cash equivalents and marketable securities   $ 3,434,772 $ 3,129,576
  Accounts receivable, net                               444,944     336,143
  Inventories                                            428,983     340,297
  Prepaid expenses and other current assets              116,128      99,342
                                                     ----------- -----------
    Total current assets                               4,424,827   3,905,358

Property and equipment, net                              566,540     560,072
Goodwill                                                 641,030     641,030
Intangible assets, net                                   331,248     326,136
Other assets                                             111,499     120,332
                                                     ----------- -----------
    Total assets                                     $ 6,075,144 $ 5,552,928
                                                     =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                   $   390,265 $   335,072
  Accrued liabilities and other current liabilities      601,094     594,886
                                                     ----------- -----------
    Total current liabilities                            991,359     929,958

Other long-term liabilities                              341,312     455,807
Capital lease obligations, long term                      19,627      21,439
Stockholders' equity                                   4,722,846   4,145,724
                                                     ----------- -----------
    Total liabilities and stockholders' equity       $ 6,075,144 $ 5,552,928
                                                     =========== ===========

                             NVIDIA CORPORATION
           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
                   (In thousands, except per share data)
                                (Unaudited)

                         Three Months Ended            Nine Months Ended
                 ---------------------------------- ----------------------- 
                 October 28,  July 29,  October 30, October 28, October 30, 
                     2012       2012        2011        2012        2011
                 ----------- ---------- ----------- ----------- ----------- 

GAAP gross
 profit          $   636,658 $  540,719 $   556,717 $ 1,640,741 $ 1,566,504 
 GAAP gross
  margin                52.9%      51.8%       52.2%       51.7%       51.4%

   Stock-based
    compensation
    expense
    included in
    cost of
    revenue (A)        2,489      2,649       3,049       7,664       8,274 
                 ----------- ---------- ----------- ----------- ----------- 
Non-GAAP gross
 profit          $   639,147 $  543,368 $   559,766 $ 1,648,405 $ 1,574,778 
                 =========== ========== =========== =========== =========== 
 Non-GAAP gross
  margin                53.1%      52.0%       52.5%       51.9%       51.7%

GAAP operating
 expenses        $   384,441 $  401,096 $   359,627 $ 1,176,075 $ 1,040,522 
   Stock-based
    compensation
    expense
    included in
    operating
    expense (A)      (30,580)   (29,606)    (30,180)    (93,229)    (92,644)
   Amortization
    of
    acquisition-
    related
    intangible
    assets            (4,402)    (4,065)     (5,399)    (12,809)    (12,149)
   Other
    acquisition-
    related
    costs (B)         (4,666)    (4,794)     (6,413)    (14,631)    (15,230)
   Contribution
    expense (C)            -    (20,127)          -     (20,127)          - 
                 ----------- ---------- ----------- ----------- ----------- 
Non-GAAP
 operating
 expenses        $   344,793 $  342,504 $   317,635 $ 1,035,279 $   920,499 
                 =========== ========== =========== =========== =========== 

GAAP net income  $   209,080 $  119,046 $   178,273 $   388,563 $   465,065 
   Total pre-tax
    impact of
    non-GAAP
    adjustments       42,137     61,241      45,041     148,460     128,297 
   Income tax
    impact of
    non-GAAP
    adjustments       (5,755)    (9,839)     (6,302)    (23,583)    (17,092)
                 ----------- ---------- ----------- ----------- ----------- 
Non-GAAP net
 income          $   245,462 $  170,448 $   217,012 $   513,440 $   576,270 
                 =========== ========== =========== =========== =========== 

Diluted net
 income per
 share
   GAAP          $      0.33 $     0.19 $      0.29 $      0.62 $      0.76 
                 =========== ========== =========== =========== =========== 
   Non-GAAP      $      0.39 $     0.27 $      0.35 $      0.82 $      0.94 
                 =========== ========== =========== =========== =========== 

Shares used in
 diluted net
 income per
 share
 computation         628,845    623,143     613,560     625,973     614,688 

Metrics:
   GAAP net cash
    flow
    provided by
    operating
    activities   $   181,485 $  200,886 $   244,417 $   373,163 $   498,638 
   Purchase of
    property and
    equipment
    and
    intangible
    assets           (44,684)   (61,944)    (39,035)   (135,551)    (93,553)
                 ----------- ---------- ----------- ----------- ----------- 
   Free cash
    flow         $   136,801 $  138,942 $   205,382 $   237,612 $   405,085 
                 =========== ========== =========== =========== =========== 

----------------------------------------------------------------------------

(A) Excludes
stock-based
compensation as
follows:                 Three Months Ended            Nine Months Ended
                 ---------------------------------- ----------------------- 
                 October 28,  July 29,  October 30, October 28, October 30, 
                     2012       2012        2011        2012        2011
                 ----------- ---------- ----------- ----------- ----------- 
   Cost of
    revenue      $     2,489 $    2,649 $     3,049 $     7,664 $     8,274 
   Research and
    development  $    20,056 $   18,885 $    19,308 $    60,148 $    59,594 
   Sales,
    general and
    administra-
    tive         $    10,524 $   10,721 $    10,872 $    33,081 $    33,050 

(B) Other acquisition-related costs are comprised of transaction costs,
compensation charges and restructuring costs related to the acquisition of
Icera, Inc. that was completed on June 10, 2011.

(C) Net present value of a $25 million chartitable contribution pledged on
June 12, 2012 to Stanford Hospital and Clinic, payable over a ten year
period.

----------------------------------------------------------------------------

                             NVIDIA CORPORATION
                 RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK

                                                          Q4 FY2013 Outlook 
                                                          ----------------- 

GAAP gross margin                                                      52.9%
  Impact of stock-based compensation (A)                                0.2%
                                                          ----------------- 
Non-GAAP gross margin                                                  53.1%
                                                          ================= 

                                                          Q4 FY2013 Outlook 
                                                          ----------------- 
                                                            (In millions)

GAAP operating expenses                                   $           400.0 
  Stock-based compensation expense included in operating
   expense                                                            (32.0)
  Amortization of acquisition-related intangible assets                (4.0)
  Other acquisition-related costs (B)                                  (5.0)

                                                          ----------------- 
Non-GAAP operating expenses                               $           359.0 
                                                          ================= 

----------------------------------------------------------------------------
(A) Represents $2.7 million of stock-based compensation expense included in 
cost of revenue.
(B) Other acquisition related costs are comprised primarily of compensation 
charges related to the acquisition of Icera, Inc. that was completed on June
10, 2011.
----------------------------------------------------------------------------

    


For further information, contact:

Rob Csongor
Investor Relations
NVIDIA Corporation
(408) 566-6373
rcsongor@nvidia.com

Robert Sherbin
Corporate Communications
NVIDIA Corporation
(408) 566-5150
rsherbin@nvidia.com 

Copyright 2012, Marketwire, All rights reserved.

-0-