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NVIDIA Announces Financial Results for First Quarter Fiscal 2016

SANTA CLARA, CA -- (Marketwired) -- May 07, 2015 -- NVIDIA (NASDAQ: NVDA)

NVIDIA (NASDAQ: NVDA) today reported revenue for the first quarter ended April 26, 2015, of $1.15 billion, up 4 percent from $1.10 billion a year earlier and down 8 percent from $1.25 billion the previous quarter.

GAAP earnings per diluted share for the quarter were $0.24, unchanged from $0.24 a year earlier and down 31 percent from $0.35 in the previous quarter. Non-GAAP earnings per diluted share were $0.33, up 14 percent from $0.29 a year earlier and down 23 percent from $0.43 in the previous quarter.

"The importance of visual computing is evident all around us," said Jen-Hsun Huang, president and chief executive officer of NVIDIA. "Our expertise in this field enables us to take a leading position to advance deep learning, virtual reality and self-driving cars.

"Our singular focus on visual computing is aligned with some of the most exciting growth opportunities in computing today," he said.

IP Litigation
The company is looking forward to its case against Samsung and Qualcomm, set to be heard in June at the U.S. International Trade Commission. Last month, NVIDIA received a favorable pretrial claim construction ruling in the case.

Icera Modem Operations
NVIDIA announced on May 5, 2015, that it will wind-down its Icera modem operations in the second quarter of fiscal 2016. It is open to a sale of the technology or operations.

The company estimates that it will recognize restructuring charges 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.

The Icera wind-down or sale is expected to benefit non-GAAP operating expenses in the second half of the year and the company will carefully invest in its growth initiatives of deep learning, self-driving cars and gaming. Non-GAAP operating expenses in fiscal 2016 are expected to be approximately flat with the previous year, excluding litigation costs, which are anticipated to be in the range of $70 million to $90 million as the company defends its intellectual property.

Capital Return
During the first quarter, NVIDIA paid $46 million in cash dividends and repurchased 2.4 million shares. As a result, it returned an aggregate of $99 million to shareholders.

It has announced a 15 percent increase in its quarterly cash dividend to $0.0975 per share, from $0.085 per share. NVIDIA will pay its next quarterly cash dividend of $0.0975 per share on June 12, 2015, to all stockholders of record on May 21, 2015.

It also has announced an increase in its intended return to shareholders in fiscal 2016 to $800 million from the previously stated $600 million, through quarterly cash dividends and share repurchases.

Further, the company's board of directors has extended the previously authorized repurchase program through December 2018 and authorized an additional $1.62 billion, for an aggregate of $2.00 billion available for repurchase.

                                                                            
----------------------------------------------------------------------------
                     GAAP Quarterly Financial Comparison                    
----------------------------------------------------------------------------
   ($ in millions except                                                     
    earnings per share)   Q1 FY16  Q4 FY15  Q1 FY15      Q/Q         Y/Y    
----------------------------------------------------------------------------
Revenue                    $1,151    $1,251   $1,103     down 8%       up 4%
----------------------------------------------------------------------------
Gross margin                56.7%     55.9%    54.8%   up 80 bps  up 190 bps
----------------------------------------------------------------------------
Operating expenses           $477      $468     $453       up 2%       up 5%
----------------------------------------------------------------------------
Net income                   $134      $193     $137    down 31%     down 2%
----------------------------------------------------------------------------
Diluted earnings per                                                        
 share                      $0.24     $0.35    $0.24    down 31%          --
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                   Non-GAAP Quarterly Financial Comparison                  
----------------------------------------------------------------------------
   ($ in millions except                                                     
    earnings per share)   Q1 FY16  Q4 FY15  Q1 FY15      Q/Q         Y/Y    
----------------------------------------------------------------------------
Revenue                    $1,151    $1,251   $1,103     down 8%       up 4%
----------------------------------------------------------------------------
Gross margin                56.9%     56.2%    55.1%   up 70 bps  up 180 bps
----------------------------------------------------------------------------
Operating expenses           $425      $420     $411       up 1%       up 3%
----------------------------------------------------------------------------
Net income                   $187      $241     $166    down 22%      up 13%
----------------------------------------------------------------------------
Diluted earnings per                                                        
 share                      $0.33     $0.43    $0.29    down 23%      up 14%
----------------------------------------------------------------------------
                                                                            

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

First Quarter Fiscal 2016 Highlights

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

Gaming:

Enterprise Graphics:

HPC & Cloud:

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 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 
                                                         ================== 
                                                                            
                                                                            

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 importance of visual computing; the company's leading position to advance deep learning, virtual reality and self-driving cars; the alignment of the company's singular focus on visual computing; the timing of the company's case against Samsung and Qualcomm; the timing of the wind-down of the Icera modem operations; the company's openness to a sale of the technology or operations; the amount, timing and composition of estimated restructuring charges; the impact of the Icera wind-down or sale; the company's investment in its growth initiatives of deep learning, self-driving cars and gaming; the amount of non-GAAP operating expenses in fiscal 2016; the amount of litigation costs; the company's intended return to shareholders in fiscal 2016 of $800 million; the company's financial outlook for the second quarter of fiscal 2016; the company's tax rates for the second quarter of fiscal 2016; and the benefits and features of the Pascal GPU architecture and NVIDIA DRIVE PX 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-K for the fiscal period ended January 25, 2015. 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, Iray, Maxwell, NVIDIA DRIVE, Pascal, Quadro, 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