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NVIDIA Announces Financial Results for Fourth Quarter and Fiscal 2015

SANTA CLARA, CA -- (Marketwired) -- Feb 11, 2015 -- NVIDIA (NASDAQ: NVDA)

NVIDIA (NASDAQ: NVDA) today reported record revenue for the fourth quarter ended January 25, 2015, of $1.25 billion, up 9 percent from $1.14 billion a year earlier and up 2 percent from $1.23 billion the previous quarter.

Revenue for fiscal 2015 was a record $4.68 billion, up 13 percent from $4.13 billion a year earlier.

GAAP earnings per diluted share for the quarter were $0.35, up 40 percent from $0.25 a year earlier and up 13 percent from $0.31 in the previous quarter. Non-GAAP earnings per diluted share were $0.43, up 34 percent from $0.32 a year earlier and up 10 percent from $0.39 in the previous quarter.

GAAP earnings per diluted share for fiscal 2015 were $1.12, up 51 percent from $0.74 a year earlier. Non-GAAP earnings per diluted share were $1.42, up 43 percent from $0.99 a year earlier.

"Momentum is accelerating in each of our market-specialized platforms, driving record revenue in the quarter and full year," said Jen-Hsun Huang, president and chief executive officer of NVIDIA.

"GeForce and SHIELD are extending our reach in the rapidly growing global gaming market. Our DRIVE auto-computing platform is at the center of the advance toward self-driving cars. GRID is enabling enterprises to finally virtualize graphics-intensive applications. And our Tesla accelerated computing platform is helping to ignite the deep learning revolution.

"The success of these platforms highlights the growing importance of visual computing and the opportunities ahead for NVIDIA," he said.

During the fourth quarter, NVIDIA paid $46 million in cash dividends and repurchased 0.2 million shares. During fiscal 2015, the company paid $186 million in cash dividends and repurchased 44.4 million shares for $814 million. As a result, the company returned to shareholders $1.0 billion in fiscal 2015.

Since the restart of its capital return program in the fourth quarter of fiscal 2013, NVIDIA has returned approximately $2.22 billion to shareholders. This return represents 111 percent of the company's cumulative free cash flow for fiscal years 2013 through 2015, reflecting the acceleration of the capital return program from cash generated in previous years.

The company intends to return approximately $600 million to shareholders through ongoing quarterly cash dividends and share repurchases in fiscal 2016.

NVIDIA will pay its next quarterly cash dividend of $0.085 per share on March 19, 2015, to all shareholders of record on February 26, 2015. NVIDIA expects that a portion of this dividend payment may be considered a return of capital for U.S. federal income tax purposes.

                                                                            
----------------------------------------------------------------------------
                     GAAP Quarterly Financial Comparison                    
----------------------------------------------------------------------------
($ in millions                                                              
 except earnings                                                            
 per share)        Q4 FY15     Q3 FY15     Q4 FY14       Q/Q         Y/Y    
----------------------------------------------------------------------------
Revenue               $1,251      $1,225      $1,144       up 2%       up 9%
----------------------------------------------------------------------------
Gross margin           55.9%       55.2%       54.1%   up 70 bps  up 180 bps
----------------------------------------------------------------------------
Operating                                                                   
 expenses               $468        $463        $452       up 1%       up 4%
----------------------------------------------------------------------------
Net income              $193        $173        $147      up 12%      up 31%
----------------------------------------------------------------------------
Diluted earnings                                                            
 per share             $0.35       $0.31       $0.25      up 13%      up 40%
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                   Non-GAAP Quarterly Financial Comparison                  
----------------------------------------------------------------------------
($ in millions                                                              
 except earnings                                                            
 per share)        Q4 FY15     Q3 FY15     Q4 FY14       Q/Q         Y/Y    
----------------------------------------------------------------------------
Revenue               $1,251      $1,225      $1,144       up 2%       up 9%
----------------------------------------------------------------------------
Gross margin           56.2%       55.5%       53.8%   up 70 bps  up 240 bps
----------------------------------------------------------------------------
Operating                                                                   
 expenses               $420        $415        $408       up 1%       up 3%
----------------------------------------------------------------------------
Net income              $241        $220        $187      up 10%      up 29%
----------------------------------------------------------------------------
Diluted earnings                                                            
 per share             $0.43       $0.39       $0.32      up 10%      up 34%
----------------------------------------------------------------------------

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

Fourth Quarter Fiscal 2015 Highlights
During the fourth quarter, NVIDIA achieved progress in each of its market-specialized platforms:

Gaming:

Enterprise Graphics:

Accelerated Computing:

Automotive:

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 fourth quarter and fiscal 2015 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) 223-4365; 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 first quarter fiscal 2016.

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 other income and expense, non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted 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 stock-based compensation, legal settlements, a credit related to a weak die/packaging material set, acquisition-related costs, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, other 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.

To Keep Current on NVIDIA:

                                                                            
                             NVIDIA CORPORATION                             
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME                
                    (In thousands, except per share data)                   
                                 (Unaudited)                                
                                                                            
                                                                            
                                Three Months Ended     Twelve Months Ended  
                             ----------------------- -----------------------
                             January 25, January 26, January 25, January 26,
                                 2015        2014        2015        2014   
                             ----------- ----------- ----------- -----------
                                                                            
Revenue                      $ 1,250,514 $ 1,144,218 $ 4,681,507 $ 4,130,162
Cost of revenue                  550,911     524,976   2,082,030   1,862,399
                             ----------- ----------- ----------- -----------
Gross profit                     699,603     619,242   2,599,477   2,267,763
Operating expenses                                                          
  Research and development       348,253     336,641   1,359,725   1,335,834
  Sales, general and                                                        
   administrative                120,214     115,677     480,763     435,702
                             ----------- ----------- ----------- -----------
    Total operating expenses     468,467     452,318   1,840,488   1,771,536
                             ----------- ----------- ----------- -----------
Operating income                 231,136     166,924     758,989     496,227
  Interest income                  8,129       4,156      28,090      17,119
  Interest expense                11,594       7,935      46,133      10,443
  Other income, net                  188       5,743      13,890       7,351
                             ----------- ----------- ----------- -----------
Income before income tax                                                    
 expense                         227,859     168,888     754,836     510,254
Income tax expense                34,731      21,971     124,249      70,264
                             ----------- ----------- ----------- -----------
Net income                   $   193,128 $   146,917 $   630,587 $   439,990
                             =========== =========== =========== ===========
                                                                            
Net income per share:                                                       
  Basic                      $      0.35 $      0.26 $      1.14 $      0.75
                             =========== =========== =========== ===========
  Diluted                    $      0.35 $      0.25 $      1.12 $      0.74
                             =========== =========== =========== ===========
                                                                            
Weighted average shares used                                                
 in per share computation:                                                  
  Basic                          544,170     568,483     552,319     587,893
  Diluted                        556,573     577,356     563,068     594,517
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
                                                                            
                                                  January 25,   January 26, 
                                                      2015          2014    
                                                 ------------- -------------
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash, cash equivalents and marketable                                     
   securities                                    $   4,623,339 $   4,671,810
  Accounts receivable, net                             473,637       426,357
  Inventories                                          482,893       387,765
  Prepaid expenses and other current assets            133,428       138,779
                                                 ------------- -------------
    Total current assets                             5,713,297     5,624,711
                                                                            
Property and equipment, net                            557,282       582,740
Goodwill                                               618,179       643,179
Intangible assets, net                                 221,714       296,012
Other assets                                            90,896       104,252
                                                 ------------- -------------
    Total assets                                 $   7,201,368 $   7,250,894
                                                 ============= =============
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Accounts payable                               $     293,223 $     324,391
  Accrued liabilities and other current                                     
   liabilities                                         602,807       621,105
                                                 ------------- -------------
    Total current liabilities                          896,030       945,496
                                                                            
Long-term debt                                       1,384,342     1,356,375
Other long-term liabilities                            488,928       475,125
Capital lease obligations, long-term                    14,086        17,500
Stockholders' equity                                 4,417,982     4,456,398
                                                 ------------- -------------
    Total liabilities and stockholders' equity   $   7,201,368 $   7,250,894
                                                 ============= =============
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES            
                   (In thousands, except per share data)                    
                                (Unaudited)                                 
                                                                            
                            Three Months Ended         Twelve Months Ended  
                       ----------------------------  ---------------------- 
                        January   October   January    January     January  
                          25,       26,       26,        25,         26,    
                         2015      2014      2014       2015        2014    
                       --------  --------  --------  ----------  ---------- 
                                                                            
GAAP gross profit      $699,603  $676,698  $619,242  $2,599,477  $2,267,763 
  GAAP gross margin        55.9%     55.2%     54.1%       55.5%       54.9%
    Stock-based                                                             
     compensation                                                           
     expense included                                                       
     in cost of                                                             
     revenue (A)          3,426     3,021     2,777      12,022      10,688 
    Legal settlement          -         -     1,450           -       3,740 
    Credit from a weak                                                      
     die/packaging                                                          
     material set (B)         -         -    (7,782)          -      (7,782)
                       --------  --------  --------  ----------  ---------- 
  Non-GAAP gross                                                            
   profit              $703,029  $679,719  $615,687  $2,611,499  $2,274,409 
                       ========  ========  ========  ==========  ========== 
    Non-GAAP gross                                                          
     margin                56.2%     55.5%     53.8%       55.8%       55.1%
                                                                            
  GAAP operating                                                            
   expenses            $468,467  $463,383  $452,318  $1,840,488  $1,771,536 
    Stock-based                                                             
     compensation                                                           
     expense included                                                       
     in operating                                                           
     expense (A)        (39,044)  (38,414)  (33,427)   (145,819)   (125,607)
    Acquisition-                                                            
     related costs (B)   (9,169)   (9,572)   (9,250)    (37,355)    (31,652)
    Other expense ©         -         -    (1,845)          -      (4,080)
                       --------  --------  --------  ----------  ---------- 
  Non-GAAP operating                                                        
   expenses            $420,254  $415,397  $407,796  $1,657,314  $1,610,197 
                       ========  ========  ========  ==========  ========== 
                                                                            
  GAAP other income                                                         
   (expense), net      $ (3,277) $ (4,245) $  1,964  $   (4,153) $   14,027 
    Gains and losses                                                        
     from non-                                                              
     affiliated                                                             
     investments              -         -    (3,074)    (14,482)     (3,074)
    Interest expense                                                        
     related to                                                             
     amortization of                                                        
     debt discount        7,083     7,010     4,600      27,967       4,600 
                       --------  --------  --------  ----------  ---------- 
  Non-GAAP other                                                            
   income (expense),                                                        
   net                 $  3,806  $  2,765  $  3,490  $    9,332  $   15,553 
                       ========  ========  ========  ==========  ========== 
                                                                            
  GAAP net income      $193,128  $172,967  $146,917  $  630,587  $  439,990 
    Total pre-tax                                                           
     impact of non-                                                         
     GAAP adjustments    58,722    58,017    42,493     208,681     169,511 
    Income tax impact                                                       
     of non-GAAP                                                            
     adjustments        (10,783)  (10,549)   (1,924)    (38,280)    (21,094)
                       --------  --------  --------  ----------  ---------- 
  Non-GAAP net income  $241,067  $220,435  $187,486  $  800,988  $  588,407 
                       ========  ========  ========  ==========  ========== 
                                                                            
  Diluted net income                                                        
   per share                                                                
    GAAP               $   0.35  $   0.31  $   0.25  $     1.12  $     0.74 
                       ========  ========  ========  ==========  ========== 
    Non-GAAP           $   0.43  $   0.39  $   0.32  $     1.42  $     0.99 
                       ========  ========  ========  ==========  ========== 
                                                                            
  Shares used in                                                            
   diluted net income                                                       
   per share                                                                
   computation          556,573   558,201   577,356     563,068     594,517 
                                                                            
  Metrics:                                                                  
    GAAP net cash flow                                                      
     provided by                                                            
     operating                                                              
     activities        $442,729  $215,623  $400,712  $  905,656  $  835,146 
    Purchase of                                                             
     property and                                                           
     equipment and                                                          
     intangible assets  (31,045)  (39,741)  (66,374)   (122,381)   (255,186)
                       --------  --------  --------  ----------  ---------- 
    Free cash flow     $411,684  $175,882  $334,338  $  783,275  $  579,960 
                       ========  ========  ========  ==========  ========== 
                                                                            
                                                                            
----------------------------------------------------------------------------
(A) Excludes stock-                                                         
 based compensation as                                                      
 follows:                    Three Months Ended        Twelve Months Ended  
                       ----------------------------  ---------------------- 
                        January   October   January    January     January  
                          25,       26,       26,        25,         26,    
                          2015      2014      2014       2015        2014   
                       --------  --------  --------  ----------  ---------- 
    Cost of revenue    $  3,426  $  3,021  $  2,777  $   12,022  $   10,688 
    Research and                                                            
     development       $ 23,719  $ 22,680  $ 21,548  $   88,355  $   82,940 
    Sales, general and                                                      
     administrative    $ 15,325  $ 15,734  $ 11,879  $   57,464  $   42,667 
                                                                            
(B) Consists of amortization of acquisition-related intangible assets,      
 transaction costs, compensation charges, and other credits related to      
 acquisitions.                                                              
© Includes intangible asset write-off, restructuring charge, and legal    
 settlement cost, net of credits.                                           
----------------------------------------------------------------------------
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                 RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK                 
                                                                            
                                                        Q1 FY2016 Outlook   
                                                      --------------------- 
                                                                            
GAAP gross margin                                                      56.2%
  Impact of stock-based compensation                                    0.3%
                                                      --------------------- 
Non-GAAP gross margin                                                  56.5%
                                                      ===================== 
                                                                            
                                                        Q1 FY2016 Outlook   
                                                      --------------------- 
                                                          (In millions)     
                                                                            
GAAP operating expenses                               $                 478 
  Stock-based compensation expense and acquisition-                         
   related costs                                                        (53)
                                                      --------------------- 
Non-GAAP operating expenses                           $                 425 
                                                      ===================== 
                                                                            
                                                                            

About NVIDIA
Since 1993, NVIDIA (NASDAQ: NVDA) has pioneered the art and science of visual computing. The company's technologies are transforming a world of displays into a world of interactive discovery -- for everyone from gamers to scientists, and consumers to enterprise customers. More information at http://nvidianews.nvidia.com and http://blogs.nvidia.com.

Certain statements in this press release including, but not limited to statements as to: momentum accelerating in each of the company's market-specialized platforms; GeForce and SHIELD extending the company's reach in the rapidly growing global gaming market; GRID enabling enterprises to virtualize graphics-intensive applications; the Tesla accelerated computing platform helping to ignite the deep learning revolution; the growing importance of visual computing; the company's intent to return approximately $600 million to shareholders in fiscal 2016; a portion of the company's dividend payment being considered a return of capital; the company's financial outlook for the first quarter of fiscal 2016; the company's tax rates for the first quarter of fiscal 2016; and the benefits and features of the GeForce GTX 960 GPU, NVIDIA GRID vGPU, the NVIDIA Tesla Accelerated Computing Platform, the Tesla K80 dual-GPU accelerator, the Tegra X1 mobile processor and NVIDIA DRIVE 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 October 26, 2014. 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.

© 2015 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, GTX, Tegra, Tesla, GRID vGPU, Maxwell, NVLink, NVIDIA GRID, and SHIELD 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.

For further information, contact:

Arnab Chanda 
Investor Relations 
NVIDIA Corporation 
(408) 566-6616 

achanda@nvidia.com 

Robert Sherbin
Corporate Communications
NVIDIA Corporation
(408) 566-5150

rsherbin@nvidia.com