NVIDIA Announces Financial Results for First Quarter Fiscal 2016

NVIDIA's outlook for the second quarter of fiscal 2016 is as follows:

  • Revenue is expected to be $1.01 billion, plus or minus two percent.

  • GAAP and non-GAAP gross margins are expected to be 55.7 percent and 56.0 percent, respectively, plus or minus 50 basis points.

  • GAAP operating expenses are expected to be approximately $474 million; non-GAAP operating expenses are expected to be approximately $425 million.

  • GAAP and non-GAAP tax rates for the second quarter of fiscal 2016 are expected to be 23 percent and 21 percent, respectively, plus or minus one percent.

  • The above GAAP outlook amounts exclude restructuring charges, which are expected to be in the range of $100 million to $125 million, primarily during fiscal 2016. These charges will consist of severance and other employee termination benefits, tax expense items and other costs associated with the wind-down, if the company is unable to sell the modem operations.

  • Capital expenditures are expected to be approximately $35 million to $45 million.

First Quarter Fiscal 2016 Highlights

During the first quarter, NVIDIA achieved progress in each of its platforms.

Gaming:

  • Launched NVIDIA® GeForce® GTX™ TITAN X GPU, the world's fastest GPU.
  • Introduced its first living-room entertainment device, NVIDIA SHIELD™, the world's first 4K smart TV platform that uses the Internet to connect you to a world of media, games, and apps.

Enterprise Graphics:

  • Introduced its roadmap for physically based rendering -- including Iray® 2015 rendering software; Quadro® M6000, the world's most powerful professional GPU; and the Quadro Visual Computing Appliance, with eight M6000 GPUs.

HPC & Cloud:

  • Drew more than 4,000 guests to the sixth annual GPU Technology Conference, which focused on deep learning and self-driving cars, and featured talks by leaders in these industries.
  • Major consumer web and cloud companies -- including Baidu, Facebook, Flickr/Yahoo, Microsoft and Twitter -- are using NVIDIA GPUs for deep learning.
  • Announced that its next-generation Pascal™ GPU architecture will accelerate deep learning applications 10X beyond the speed of current-generation Maxwell™ processors.

Automotive:

  • Announced availability of NVIDIA DRIVE™ PX, a powerful car computer that utilizes deep learning to enable self-driving capabilities.

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 2016 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 (303) 223-2696; no password is required. 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 fiscal 2016.

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 other income (expense), net, 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, acquisition-related costs, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, 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 our 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 our non-GAAP measures may be different from non-GAAP measures used by other companies.

To Keep Current on NVIDIA:

                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME                 
                    (In millions, except per share data)                    
                                (Unaudited)                                 
                                                                            
                                                                                                 
                                                                                                        Three  Months  Ended            
                                                                                              ----------------------------  
                                                                                                  April  26,            April  27,      
                                                                                                        2015                      2014          
                                                                                              -------------    -------------  
                                                                                                                                                        
Revenue                                                                                $              1,151    $              1,103  
Cost  of  revenue                                                                                    498                        499  
                                                                                              -------------    -------------  
Gross  profit                                                                                          653                        604  
Operating  expenses                                                                                                                    
    Research  and  development                                                              339                        334  
    Sales,  general  and  administrative                                            138                        119  
                                                                                              -------------    -------------  
        Total  operating  expenses                                                          477                        453  
                                                                                              -------------    -------------  
Operating  income                                                                                  176                        151  
    Interest  income                                                                                    9                            6  
    Interest  expense                                                                              (12)                      (11)
    Other  income  (expense),  net                                                          (1)                        17  
                                                                                              -------------    -------------  
Income  before  income  tax  expense                                                  172                        163  
Income  tax  expense                                                                                38                          26  
                                                                                              -------------    -------------  
Net  income                                                                          $                  134    $                  137  
                                                                                              =============    =============  
                                                                                                                                                        
Net  income  per  share:                                                                                                              
    Basic                                                                                $                0.24    $                0.24  
                                                                                              =============    =============  
    Diluted                                                                            $                0.24    $                0.24  
                                                                                              =============    =============  
                                                                                                                                                        
Weighted  average  shares  used  in  per  share                                                                      
  computation:                                                                                                                              
    Basic                                                                                                    549                        559  
    Diluted                                                                                                568                        570  
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS                                      
                                                                (In  millions)                                                              
                                                                  (Unaudited)                                                                
                                                                                                                                                        
                                                                                                                                                        
                                                                                                      April  26,        January  25,  
                                                                                                            2015                    2015        
                                                                                                  -------------  -------------
ASSETS                                                                                                                                            
                                                                                                                                                        
Current  assets:                                                                                                                          
    Cash,  cash  equivalents  and  marketable                                                                          
      securities                                                                        $              4,792  $              4,623
    Accounts  receivable,  net                                                                  455                      474
    Inventories                                                                                            438                      483
    Prepaid  expenses  and  other  current  assets                                147                      133
                                                                                                  -------------  -------------
        Total  current  assets                                                                  5,832                  5,713
                                                                                                                                                        
Property  and  equipment,  net                                                                547                      557
Goodwill                                                                                                      618                      618
Intangible  assets,  net                                                                          205                      222
Other  assets                                                                                                89                        91
                                                                                                  -------------  -------------
        Total  assets                                                                  $              7,291  $              7,201
                                                                                                  =============  =============
                                                                                                                                                        
LIABILITIES  AND  STOCKHOLDERS'  EQUITY                                                                                
                                                                                                                                                        
Current  liabilities:                                                                                                                
    Accounts  payable                                                              $                  222  $                  293
    Accrued  and  other  current  liabilities                                        661                      603
                                                                                                  -------------  -------------
        Total  current  liabilities                                                            883                      896
                                                                                                                                                        
Long-term  debt                                                                                      1,391                  1,384
Other  long-term  liabilities                                                                448                      489
Capital  lease  obligations,  long-term                                                13                        14
Stockholders'  equity                                                                          4,556                  4,418
                                                                                                  -------------  -------------
        Total  liabilities  and  stockholders'  equity      $              7,291  $              7,201
                                                                                                  =============  =============
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                      RECONCILIATION  OF  GAAP  TO  NON-GAAP  FINANCIAL  MEASURES                        
                                        (In  millions,  except  per  share  data)                                        
                                                                (Unaudited)                                                                  
                                                                                                                                                        
                                                                                          Three  Months  Ended                          
                                                                -------------------------------------------  
                                                                    April  26,          January  25,          April  27,      
                                                                          2015                      2015                      2014          
                                                                -------------    -------------    -------------  
                                                                                                                                                        
GAAP  gross  profit                              $                  653    $                  700    $                  604  
    GAAP  gross  margin                                            56.7%                    55.9%                    54.8%
                                                                                                                                                        
        Stock-based  compensation                                                                                                
          expense  included  in  cost                                                                                              
          of  revenue  (A)                                                  2                            3                            3  
                                                                -------------    -------------    -------------  
Non-GAAP  gross  profit                      $                  655    $                  703    $                  607  
                                                                =============    =============    =============  
    Non-GAAP  gross  margin                                    56.9%                    56.2%                    55.1%
                                                                                                                                                        
GAAP  operating  expenses                  $                  477    $                  468    $                  453  
        Stock-based  compensation                                                                                                
          expense  included  in                                                                                                        
          operating  expense  (A)                                (43)                      (39)                      (33)
        Acquisition-related  costs                                                                                              
          (B)                                                                      (9)                        (9)                        (9)
                                                                -------------    -------------    -------------  
  Non-GAAP  operating  expenses        $                  425    $                  420    $                  411  
                                                                =============    =============    =============  
                                                                                                                                                        
GAAP  other  income  (expense),                                                                                                
  net                                                        $                    (4)  $                    (3)  $                    12  
        Gains  and  losses  from  non-                                                                                            
          affiliated  investments                                  -                            -                        (17)
        Interest  expense  related  to                                                                                          
          amortization  of  debt                                                                                                      
          discount                                                              7                            7                            7  
                                                                -------------    -------------    -------------  
  Non-GAAP  other  income                                                                                                            
  (expense),  net                                  $                      3    $                      4    $                      2  
                                                                =============    =============    =============  
                                                                                                                                                        
GAAP  net  income                                  $                  134    $                  193    $                  137  
        Total  pre-tax  impact  of                                                                                                  
          non-GAAP  adjustments                                    63                          58                          35  
        Income  tax  impact  of  non-                                                                                              
          GAAP  adjustments                                          (10)                      (10)                        (6)
                                                                -------------    -------------    -------------  
  Non-GAAP  net  income                        $                  187    $                  241    $                  166  
                                                                =============    =============    =============  
                                                                                                                                                        
Diluted  net  income  per  share                                                                                                
    GAAP                                                    $                0.24    $                0.35    $                0.24  
                                                                =============    =============    =============  
    Non-GAAP                                            $                0.33    $                0.43    $                0.29  
                                                                =============    =============    =============  
                                                                                                                                                        
Weighted  average  shares  used  in                                                                                          
  diluted  net  income  per  share                                                                                              
  computation                                                                                                                                
    GAAP                                                                        568                        557                        570  
    Anti-dilution  impact  from                                                                                                  
      Note  Hedge  (C)                                                    (6)                          -                            -  
                                                                -------------    -------------    -------------  
    Non-GAAP                                                                562                        557                        570  
                                                                =============    =============    =============  
                                                                                                                                                        
Metrics:                                                                                                                                        
    GAAP  net  cash  provided  by                                                                                                  
      operating  activities                  $                  246    $                  443    $                  151  
    Purchase  of  property  and                                                                                                    
      equipment  and  intangible                                                                                                  
      assets                                                                  (30)                      (31)                      (29)
                                                                -------------    -------------    -------------  
    Free  cash  flow                                $                  216    $                  412    $                  122  
                                                                =============    =============    =============  
                                                                                                                                                        
                                                                                                                                                        
----------------------------------------------------------------------------
(A)  Excludes  stock-based                                                                                                        
  compensation  as  follows:                                        Three  Months  Ended                          
                                                                -------------------------------------------  
                                                                      April  26,          January  25,          April  27,    
                                                                          2015                      2015                      2014          
                                                                -------------    -------------    -------------  
    Cost  of  revenue                              $                      2    $                      3    $                      3  
    Research  and  development            $                    27    $                    24    $                    21  
    Sales,  general  and                                                                                                                
      administrative                              $                    16    $                    15    $                    12  
                                                                                                                                                        
(B)  Consists  of  amortization  of  acquisition-related  intangible  assets,            
  transaction  costs,  compensation  charges,  and  other  credits  related  to            
  acquisitions.                                                                                                                            
                                                                                                                                                        
(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  FY2016          
                                                                                                                              Outlook            
                                                                                                                  ------------------  
                                                                                                                                                        
GAAP  gross  margin                                                                                                            55.7%
    Impact  of  stock-based  compensation                                                                        0.3%
                                                                                                                  ------------------  
Non-GAAP  gross  margin                                                                                                    56.0%
                                                                                                                  ==================  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                            Q2  FY2016          
                                                                                                                              Outlook            
                                                                                                                  ------------------  
                                                                                                                        (In  millions)      
                                                                                                                                                        
GAAP  operating  expenses                                                                    $                            474  
    Stock-based  compensation  expense  and  acquisition-                                                  
      related  costs                                                                                                                (49)
                                                                                                                  ------------------  
Non-GAAP  operating  expenses                                                            $                            425  
                                                                                                                  ==================  
                                                                                                                                                        
                                                                                                                                                        
 




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