For First Six Months of Fiscal 2006, Company Achieves Record Revenue and Increases Net Income 426 Percent
For the second quarter of fiscal 2006, revenue was $574.8 million, compared to $456.1 million for the second quarter of fiscal 2005, an increase of 26 percent. Net income for the second quarter of fiscal 2006 was $74.8 million, or $0.41 per diluted share, compared to net income of $5.1 million, or $0.03 per diluted share, for the second quarter of fiscal 2005, a net income increase of 1,362 percent.
Revenue for the six months ended July 31, 2005 was a record $1.16 billion, compared to revenue of $928.0 million for the six months ended July 25, 2004. Net income for the six months ended July 31, 2005 was $139.3 million, or $0.77 per diluted share, compared to net income of $26.5 million, or $0.15 per diluted share, for the six months ended July 25, 2004, a net income increase of 426 percent.
"Our financial performance is a result of the successful execution and delivery of many market-leading products and platform-changing initiatives. Strong year-over-year revenue growth in our desktop GPU, MCP, and workstation product lines, combined with our intense focus on gross margin improvement led to our highest quarterly net income in three years," stated Jen-Hsun Huang, president and CEO at NVIDIA. "Our continued success underscores the importance of our key long-term growth strategies -- innovate and be the world GPU leader, expand and extend the reach of GPUs beyond the PC, and deliver total innovative market-defining platforms."
Second Quarter Fiscal 2006 and Recent Highlights:
-- Gross margin improved 710 basis points over the gross margin for the second quarter fiscal 2005.
-- The NVIDIA nForce(TM) product line revenue increased 128 percent year-over-year and has achieved record revenue for three consecutive quarters.
-- The NVIDIA Quadro(R) workstation product line revenue increased almost 40 percent year-over-year and achieved record revenue.
-- Introduced and simultaneously delivered two new GeForce (TM)7 graphics processing units (GPUs) -- the GeForce 7800 GTX and the GeForce 7800 GT -- designed for the enthusiast and performance desktop PC segments, respectively.
-- NVIDIA nForce4 SLI(TM) technology and dual GeForce 7800 GTX GPU are now featured in the new Dell XPS 600 desktop PC.
-- The NVIDIA GeForce 6600 GT GPU and the NVIDIA nForce4 SLI-based Asus A8N-SLI Deluxe motherboard earned the 2005 PC World "World Class" Award as best products of the year in hardware.
-- Introduced two new NVIDIA Quadro GPUs -- the NVIDIA Quadro FX 4500 and NVIDIA Quadro FX 3450 -- designed for the high-end and mainstream professional segments, respectively. Both GPUs support SLI technology.
-- NVIDIA extended share from 70 percent to 73 percent from the first calendar quarter of 2005 to the second calendar quarter of 2005 in the Performance DX9 Desktop GPU segment as reported in the Mercury Research Second Quarter PC Graphics Report 2005.
NVIDIA will conduct a conference call with analysts and investors to discuss its second quarter fiscal 2006 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 706-679-0543. A live Web cast (listen-only mode) of the conference call will be held at the NVIDIA investor relations Web site http://nvidia.com/ir and at http://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 2006.
NVIDIA Corporation is a worldwide leader in graphics and digital media processors. The Company's products enhance the end-user experience on consumer and professional computing devices. NVIDIA graphics processing units (GPUs), media and communications processors (MCPs), and wireless media processors (WMPs) have broad market reach and are incorporated into a variety of platforms, including consumer and enterprise PCs, notebooks, workstations, PDAs, mobile phones, and video game consoles. NVIDIA is headquartered in Santa Clara, California and employs more than 2,100 people worldwide. For more information, visit the Company's Web site at www.nvidia.com.
Certain statements in this press release including, but not limited to, our long-term growth strategies and initiatives, including being the world GPU leader, expanding the reach of the GPU beyond the PC, and delivery of total solutions and innovative platforms are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Such risks and uncertainties include, but are not limited to, continued market acceptance of new products and technologies, prohibitive pricing of new products and technologies, manufacturing costs and delays, demand for use of GPUs in devices other than the PC, continued demand for improved GPUs, difficulties in the development of new and enhanced products, the impact of technological development and competition, our dependence on third-party manufacturers, general industry trends including cyclical trends in the semiconductor and PC industries, the impact of competitive products and pricing alternatives, slower than expected or unanticipated changes in industry standards and interfaces and other risks detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission including its Form 10-Q for its quarter ended May 1, 2005. These forward-looking statements speak only as of the date of this release. NVIDIA disclaims any obligation to update these forward-looking statements.
NOTE: All company and/or product names may be trade names, trademarks and/or registered trademarks of the respective owners 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 Six Months Ended July 31, July 25, July 31, July 25, 2005 2004 2005 2004 Revenue $574,812 $456,061 $1,158,658 $927,966 Cost of revenue 357,278 315,968 730,971 639,037 Gross profit 217,534 140,093 427,687 288,929 Operating expenses: Research and development 85,814 85,420 171,727 163,170 Sales, general and administrative 51,683 50,874 99,741 98,080 Total operating expenses 137,497 136,294 271,468 261,250 Operating income 80,037 3,799 156,219 27,679 Interest and other income, net 5,219 2,600 9,592 5,407 Income before income tax expense 85,256 6,399 165,811 33,086 Income tax expense (A) 10,419 1,280 26,530 6,618 Net income $74,837 $5,119 $139,281 $26,468 Basic net income per share $0.44 $0.03 $0.83 $0.16 Diluted net income per share $0.41 $0.03 $0.77 $0.15 Shares used in basic per share computation 168,943 166,252 168,795 165,711 Shares used in diluted per share computation 180,790 177,419 180,612 177,999 (A) The effective income tax rate for the three and six months ended July 31, 2005 was 12.2%, and 16%, respectively. The effective income tax rate for the three and six months ended July 25, 2004 was 20%. NVIDIA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) July 31, January 30, 2005 2005 ASSETS Current assets: Cash, cash equivalents and marketable securities $717,546 $670,045 Accounts receivable, net 355,393 296,279 Inventories 300,955 315,518 Prepaid and other current assets 24,756 19,819 Deferred income tax asset 3,265 3,265 Total current assets 1,401,915 1,304,926 Property and equipment, net 178,951 178,955 Deposits and other assets 15,977 9,034 Goodwill 108,107 108,107 Intangible assets, net 23,268 27,514 Total assets $1,728,218 $1,628,536 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $221,047 $238,223 Accrued liabilities 204,451 182,077 Current portion of capital lease obligations -- 856 Total current liabilities 425,498 421,156 Deferred income tax liability 20,754 20,754 Long-term liabilities 6,733 8,358 Stockholders' equity 1,275,233 1,178,268 Total liabilities and stockholders' equity $1,728,218 $1,628,536