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NVIDIA Reports Financial Results for Third Quarter Fiscal 2014

SANTA CLARA, CA -- (Marketwired) -- Nov 07, 2013 -- NVIDIA (NASDAQ: NVDA)

NVIDIA (NASDAQ: NVDA) today reported revenue for the third quarter of fiscal 2014, ended Oct. 27, 2013, of $1.054 billion, up 7.9 percent from $977.2 million in the previous quarter.

GAAP earnings per diluted share were $0.20, up 25.0 percent from $0.16 in the previous quarter. Non-GAAP earnings per diluted share were $0.26, up 13.0 percent from $0.23 in the previous quarter.

NVIDIA also announced a 13 percent increase in the quarterly cash dividend to $0.085 per share ($0.34 per share on an annual basis) from $0.075 per share ($0.30 per share on an annual basis). NVIDIA will pay its next quarterly cash dividend of $0.085 per share on Dec. 13, 2013, to all stockholders of record on Nov. 21, 2013.

NVIDIA intends to return $1 billion in fiscal 2015 through stock repurchases and quarterly dividend payments. The company's board of directors has authorized an additional $1 billion under the company's stock repurchase program for a total of $1.286 billion available through the end of January 2016.

"Visual computing is increasingly important to more and more markets," said Jen-Hsun Huang, president and chief executive officer of NVIDIA. "It's creating demand for GPUs and opening up large opportunities. The proof can be seen in the proliferation of Tegra into new verticals like automotive and set-top boxes, in our all-time high Quadro and Tesla revenues, and in the record number of customer trials for our GRID datacenter initiative. At a time when many are struggling with the decline in the mainstream PC market, our visual computing leadership has positioned us well to grow with the accelerating adoption of GPUs in the cloud and the world of connected devices."

                                                                            
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                GAAP Quarterly Financial Comparison                         
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(in millions except                                                         
 per share data)        Q3 FY14   Q2 FY14  Q3 FY13       Q/Q         Y/Y    
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Revenue                $1,054.0   $977.2  $1,204.1      up 7.9%   down 12.5%
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Gross margin              55.4%    55.8%     52.9%  down 40 bps   up 250 bps
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Operating expenses       $443.4   $440.0    $384.4      up 0.8%     up 15.3%
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Net income               $118.7    $96.4    $209.1     up 23.1%   down 43.2%
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Earnings per share        $0.20    $0.16     $0.33     up 25.0%   down 39.4%
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             Non-GAAP* Quarterly Financial Comparison                       
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(in millions except                                                         
 per share data)        Q3 FY14   Q2 FY14  Q3 FY13       Q/Q         Y/Y    
----------------------------------------------------------------------------
Revenue                $1,054.0   $977.2  $1,204.1      up 7.9%   down 12.5%
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Gross margin              55.7%    56.3%     53.1%  down 60 bps   up 260 bps
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Operating expenses       $405.4   $400.8    $344.8      up 1.1%     up 17.6%
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Net income               $153.8   $133.3    $245.5     up 15.3%   down 37.3%
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Earnings per share        $0.26    $0.23     $0.39     up 13.0%   down 33.3%
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*Non-GAAP earnings excluded stock-based compensation, amortization of acquisition-related intangible assets, other acquisition-related costs or credits, a restructuring charge in the third quarter of fiscal 2014, a legal settlement charge in the second quarter of fiscal 2014, and the tax impact associated with such items.

The company's previously announced $750 million accelerated stock repurchase was completed on Oct. 22 with the delivery of an additional 14.6 million shares. In aggregate, we received 51.5 million shares at an average price of $14.56 per share. The common stock delivered to NVIDIA was placed into treasury stock.

Among highlights of the third quarter of fiscal 2014, NVIDIA:

NVIDIA's outlook for the fourth quarter of fiscal 2014 is as follows:

Diluted shares for the fourth quarter are expected to be approximately 578.5 million.

CFO Commentary and Earnings Presentation
Commentary on the quarter by Colette Kress, NVIDIA chief financial officer, and a presentation, are 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 2014 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 (212) 231-2922. 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 2014.

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 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, amortization of acquisition-related intangible assets, other acquisition-related costs or credits, a restructuring charge, a legal settlement, a 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.

To Keep Current on NVIDIA:

                                                                            
                             NVIDIA CORPORATION                             
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME                
                    (In thousands, except per share data)                   
                                 (Unaudited)                                
                                                                            
                             Three Months Ended        Nine Months Ended    
                         ------------------------- -------------------------
                          October 27,  October 28,  October 27,  October 28,
                             2013         2012         2013         2012    
                         ------------ ------------ ------------ ------------
                                                                            
Revenue                  $  1,053,967 $  1,204,110 $  2,985,944 $  3,173,257
Cost of revenue               469,552      567,452    1,337,423    1,532,516
                         ------------ ------------ ------------ ------------
Gross profit                  584,415      636,658    1,648,521    1,640,741
Operating expenses                                                          
  Research and                                                              
   development                340,294      284,180      999,193      849,275
  Sales, general and                                                        
   administrative             103,133      100,261      320,025      326,800
                         ------------ ------------ ------------ ------------
    Total operating                                                         
     expenses                 443,427      384,441    1,319,218    1,176,075
                         ------------ ------------ ------------ ------------
Operating income              140,988      252,217      329,303      464,666
Interest and other                                                          
 income, net                      496        1,411       12,063       11,265
                         ------------ ------------ ------------ ------------
Income before income tax                                                    
 expense                      141,484      253,628      341,366      475,931
Income tax expense             22,750       44,548       48,293       87,368
                         ------------ ------------ ------------ ------------
Net income               $    118,734 $    209,080 $    293,073 $    388,563
                         ============ ============ ============ ============
                                                                            
Basic net income per                                                        
 share                   $       0.20 $       0.34 $       0.49 $       0.63
                         ============ ============ ============ ============
Diluted net income per                                                      
 share                   $       0.20 $       0.33 $       0.49 $       0.62
                         ============ ============ ============ ============
                                                                            
Shares used in basic per                                                    
 share computation            580,870      622,352      594,363      619,043
Shares used in diluted                                                      
 per share computation        588,752      628,845      600,108      625,973
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
                                                    October 27,  January 27,
                                                       2013         2013    
                                                   ------------ ------------
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash, cash equivalents and marketable securities $  3,032,954 $  3,727,883
  Accounts receivable, net                              447,631      454,252
  Inventories                                           380,319      412,467
  Prepaid expenses and other current assets             188,937      180,656
                                                   ------------ ------------
    Total current assets                              4,049,841    4,775,258
                                                                            
Property and equipment, net                             595,418      576,144
Goodwill                                                643,179      641,030
Intangible assets, net                                  320,589      312,332
Other assets                                            102,346      107,481
                                                   ------------ ------------
    Total assets                                   $  5,711,373 $  6,412,245
                                                   ============ ============
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities:                                                        
  Accounts payable                                 $    333,283 $    356,428
  Accrued liabilities and other current                                     
   liabilities                                          652,644      619,795
                                                   ------------ ------------
    Total current liabilities                           985,927      976,223
                                                                            
Other long-term liabilities                             387,784      589,321
Capital lease obligations, long term                     17,015       18,998
Stockholders' equity                                  4,320,647    4,827,703
                                                   ------------ ------------
    Total liabilities and stockholders' equity     $  5,711,373 $  6,412,245
                                                   ============ ============
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES            
                   (In thousands, except per share data)                    
                                (Unaudited)                                 
                                                                            
                          Three Months Ended            Nine Months Ended   
                  ---------------------------------  ---------------------- 
                    October    July 28,    October     October     October  
                   27, 2013      2013     28, 2012    27, 2013    28, 2012  
                  ----------  ---------  ----------  ----------  ---------- 
                                                                            
GAAP gross profit $  584,415  $ 545,538  $  636,658  $1,648,521  $1,640,741 
 GAAP gross                                                                 
  margin                55.4%      55.8%       52.9%       55.2%       51.7%
  Stock-based                                                               
   compensation                                                             
   expense                                                                  
   included in                                                              
   cost of                                                                  
   revenue (A)         3,090      2,168       2,489       7,911       7,664 
  Legal                                                                     
   settlement              -      2,290           -       2,290           - 
                  ----------  ---------  ----------  ----------  ---------- 
Non-GAAP gross                                                              
 profit           $  587,505  $ 549,996  $  639,147  $1,658,722  $1,648,405 
                  ==========  =========  ==========  ==========  ========== 
 Non-GAAP gross                                                             
  margin                55.7%      56.3%       53.1%       55.6%       51.9%
                                                                            
GAAP operating                                                              
 expenses         $  443,427  $ 440,004  $  384,441  $1,319,218  $1,176,075 
  Stock-based                                                               
   compensation                                                             
   expense                                                                  
   included in                                                              
   operating                                                                
   expense (A)       (31,209)   (30,227)    (30,580)    (92,180)    (93,229)
  Amortization of                                                           
   acquisition-                                                             
   related                                                                  
   intangible                                                               
   assets             (4,906)    (3,980)     (4,402)    (12,801)    (12,809)
  Other                                                                     
   acquisition-                                                             
   related costs                                                            
   or credits (B)        329     (4,984)     (4,666)     (9,601)    (14,631)
  Contribution                                                              
   expense (C)             -          -           -           -     (20,127)
  Restructuring                                                             
   charge             (2,235)         -           -      (2,235)          - 
                  ----------  ---------  ----------  ----------  ---------- 
Non-GAAP                                                                    
 operating                                                                  
 expenses         $  405,406  $ 400,813  $  344,793  $1,202,401  $1,035,279 
                  ==========  =========  ==========  ==========  ========== 
                                                                            
GAAP net income   $  118,734  $  96,448  $  209,080  $  293,073  $  388,563 
  Total pre-tax                                                             
   impact of non-                                                           
   GAAP                                                                     
   adjustments        41,111     43,649      42,137     127,018     148,460 
  Income tax                                                                
   impact of non-                                                           
   GAAP                                                                     
   adjustments        (6,055)    (6,767)     (5,755)    (19,170)    (23,583)
                  ----------  ---------  ----------  ----------  ---------- 
Non-GAAP net                                                                
 income           $  153,790  $ 133,330  $  245,462  $  400,921  $  513,440 
                  ==========  =========  ==========  ==========  ========== 
                                                                            
Diluted net                                                                 
 income per share                                                           
  GAAP            $     0.20  $    0.16  $     0.33  $     0.49  $     0.62 
                  ==========  =========  ==========  ==========  ========== 
  Non-GAAP        $     0.26  $    0.23  $     0.39  $     0.67  $     0.82 
                  ==========  =========  ==========  ==========  ========== 
                                                                            
Shares used in                                                              
 diluted net                                                                
 income per share                                                           
 computation         588,752    592,006     628,845     600,108     625,973 
                                                                            
Metrics:                                                                    
  GAAP net cash                                                             
   flow provided                                                            
   by operating                                                             
   activities     $  162,315  $  96,469  $  181,485  $  434,434  $  373,163 
  Purchase of                                                               
   property and                                                             
   equipment and                                                            
   intangible                                                               
   assets            (38,159)   (84,986)    (44,684)   (188,812)   (135,551)
                  ----------  ---------  ----------  ----------  ---------- 
  Free cash flow  $  124,156  $  11,483  $  136,801  $  245,622  $  237,612 
                  ==========  =========  ==========  ==========  ========== 
                                                                            
                                                                            
----------------------------------------------------------------------------
                                                                            
(A) Excludes                                                                
 stock-based                                                                
 compensation as                                                            
 follows:                 Three Months Ended            Nine Months Ended   
                  ---------------------------------  ---------------------- 
                    October    July 28,    October     October     October  
                   27, 2013      2013     28, 2012    27, 2013    28, 2012  
                  ----------  ---------  ----------  ----------  ---------- 
  Cost of revenue $    3,090  $   2,168  $    2,489  $    7,911  $    7,664 
  Research and                                                              
   development    $   20,902  $  18,555  $   20,056  $   61,392  $   60,148 
  Sales, general                                                            
   and                                                                      
   administrative $   10,307  $  11,672  $   10,524  $   30,788  $   33,081 
                                                                            
                                                                            
(B) Consists of transaction costs, compensation charges, and other credits  
 related to acquisitions.                                                   
                                                                            
(C) Net present value of a $25 million charitable contribution pledged on   
 June 12, 2012 to Stanford Hospital and Clinic, payable over ten years.     
                                                                            
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                 RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK                 
                                                                            
                                                          Q4 FY2014 Outlook 
                                                          ----------------- 
                                                                            
GAAP gross margin                                                      54.2%
  Impact of stock-based compensation (A)                                0.3%
                                                          ----------------- 
Non-GAAP gross margin                                                  54.5%
                                                          ================= 
                                                                            
                                                          Q4 FY2014 Outlook 
                                                          ----------------- 
                                                            (In millions)   
                                                                            
GAAP operating expenses                                   $           450.0 
  Stock-based compensation expense included in operating                    
   expense                                                            (30.8)
  Amortization of acquisition-related intangible assets                (4.9)
  Other acquisition-related costs (B)                                  (4.3)
                                                                            
                                                          ----------------- 
Non-GAAP operating expenses                               $           410.0 
                                                          ================= 
                                                                            
----------------------------------------------------------------------------
(A) Represents $2.7 million of stock-based compensation expense included in 
 cost of revenue.                                                           
                                                                            
(B) Consists of transaction costs and compensation charges related to       
 acquisitions.                                                              
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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: the company's planned return of capital to shareholders and the form of return visual computing's importance; visual computing creating demand for GPUs and opening up large opportunities; proliferation of Tegra into new verticals; visual computing positioning us well; our growth opportunities; the company's financial outlook for the fourth quarter of fiscal 2014; and the company's tax rate for the fourth quarter of fiscal year 2014 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 28, 2013. 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.

© 2013 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, GeForce GTX, Quadro, Tegra, Tegra Note, NVIDIA GRID, G-SYNC, Kepler 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.

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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