NVIDIA Announces Financial Results for First Quarter Fiscal 2018

First Quarter Fiscal 2018 Highlights
During the first quarter, NVIDIA achieved broad progress.

Gaming:

  • Announced GeForce® GTX 1080 Ti, the world's fastest gaming GPU.
  • Announced TITAN Xp for enthusiasts and researchers requiring extreme performance.

Datacenter:

  • Announced with Microsoft that it is bringing NVIDIA® Tesla® P100 and P40 GPUs to the Azure cloud.
  • Announced that NVIDIA Tesla accelerators designed for datacenter AI capabilities were added to Google Cloud, Tencent Cloud, IBM Cloud, and Baidu Cloud.
  • Announced that Tokyo Institute of Technology will use NVIDIA's accelerated computing platform to create Japan's fastest AI supercomputer, TSUBAME3.0.
  • Announced that Fujitsu is using 24 NVIDIA DGX-1™ AI systems to build a new AI supercomputer for RIKEN, Japan's largest research center.
  • Announced together with Facebook the Caffe2 deep learning framework and Big Basin servers with Tesla P100 GPUs.
  • Announced plans to train 100,000 developers this year, a 10x increase over 2016, through the NVIDIA Deep Learning Institute.
  • Announced NVIDIA Jetson™ TX2, a high-performance, low-power computer platform for delivering AI at the edge, with deep learning and computer vision capabilities for robots, drones and smart cameras.

Automotive:

  • Announced with Bosch, the world's largest auto supplier, plans to create a new Bosch-branded AI self-driving car computer.
  • Announced a collaboration with PACCAR, one of the world's largest truck makers with brands including Peterbilt, Kenworth and DAF, to develop solutions for autonomous trucks.

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 2018 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 (877) 223-3864 in the United States or (574) 990-1377 internationally, and provide the following conference ID: 4018413. 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 of fiscal 2018.

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 income from operations, non-GAAP other income (expense), non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, non-GAAP diluted shares, revenue excluding Intel license, 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 expense, legal settlement costs, acquisition-related costs, contributions, restructuring and other charges, gains from non-affiliated investments, interest expense related to amortization of debt discount, loss on early debt conversions, 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 the company's 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 its non-GAAP measures may be different from non-GAAP measures used by other companies.

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                             NVIDIA CORPORATION                             
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME                 
                    (In millions, except per share data)                    
                                (Unaudited)                                 
                                                                            
                                                                            
                                                      Three Months Ended    
                                                   ------------------------ 
                                                    April 30,         May  1,      
                                                                                                              2017                  2016        
                                                                                                      -----------    -----------  
                                                                                                                                                        
Revenue                                                                                        $          1,937    $          1,305  
Cost  of  revenue                                                                                        787                    554  
                                                                                                      -----------    -----------  
Gross  profit                                                                                          1,150                    751  
Operating  expenses                                                                                                                    
    Research  and  development                                                                  411                    346  
    Sales,  general  and  administrative                                                185                    159  
    Restructuring  and  other  charges                                                        -                        1  
                                                                                                      -----------    -----------  
        Total  operating  expenses                                                              596                    506  
                                                                                                      -----------    -----------  
Income  from  operations                                                                          554                    245  
    Interest  income                                                                                      16                      12  
    Interest  expense                                                                                  (16)                  (12)
    Other,  net                                                                                              (18)                    (4)
                                                                                                      -----------    -----------  
        Total  other  income  (expense)                                                      (18)                    (4)
                                                                                                      -----------    -----------  
Income  before  income  tax  expense                                                      536                    241  
Income  tax  expense                                                                                    29                      33  
                                                                                                      -----------    -----------  
Net  income                                                                                  $              507    $              208  
                                                                                                      ===========    ===========  
                                                                                                                                                        
Net  income  per  share:                                                                                                              
    Basic                                                                                        $            0.86    $            0.39  
                                                                                                      ===========    ===========  
    Diluted                                                                                    $            0.79    $            0.35  
                                                                                                      ===========    ===========  
                                                                                                                                                        
Weighted  average  shares  used  in  per  share                                                                      
  computation:                                                                                                                              
    Basic                                                                                                        592                    537  
    Diluted                                                                                                    641                    599  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS                                      
                                                                (In  millions)                                                              
                                                                  (Unaudited)                                                                
                                                                                                                                                        
                                                                                                                                                        
                                                                                                          April  30,      January  29,
                                                                                                                2017                  2017      
                                                                                                        -----------    -----------
ASSETS                                                                                                                                            
                                                                                                                                                        
Current  assets:                                                                                                                          
    Cash,  cash  equivalents  and  marketable  securities    $          6,206    $          6,798
    Accounts  receivable,  net                                                                    976                    826
    Inventories                                                                                              821                    794
    Prepaid  expenses  and  other  current  assets                                  113                    118
                                                                                                        -----------    -----------
        Total  current  assets                                                                    8,116                8,536
                                                                                                                                                        
Property  and  equipment,  net                                                                  539                    521
Goodwill                                                                                                        618                    618
Intangible  assets,  net                                                                              90                    104
Other  assets                                                                                                  47                      62
                                                                                                        -----------    -----------
        Total  assets                                                                        $          9,410    $          9,841
                                                                                                        ===========    ===========
                                                                                                                                                        
LIABILITIES,  CONVERTIBLE  DEBT  CONVERSION  OBLIGATION  AND  SHAREHOLDERS'  EQUITY
                                                                                                                                                        
Current  liabilities:                                                                                                                
    Accounts  payable                                                                    $              348    $              485
    Accrued  and  other  current  liabilities                                          420                    507
    Convertible  short-term  debt                                                              215                    796
                                                                                                        -----------    -----------
        Total  current  liabilities                                                              983                1,788
                                                                                                                                                        
Long-term  debt                                                                                        1,984                1,983
Other  long-term  liabilities                                                                  300                    271
Capital  lease  obligations,  long-term                                                    4                        6
                                                                                                        -----------    -----------
        Total  liabilities                                                                          3,271                4,048
                                                                                                                                                        
Convertible  debt  conversion  obligation                                                7                      31
                                                                                                                                                        
Shareholders'  equity                                                                            6,132                5,762
                                                                                                        -----------    -----------
        Total  liabilities,  convertible  debt  conversion                                                    
          obligation  and  shareholders'  equity                        $          9,410    $          9,841
                                                                                                        ===========    ===========
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                      RECONCILIATION  OF  GAAP  TO  NON-GAAP  FINANCIAL  MEASURES                        
                                        (In  millions,  except  per  share  data)                                        
                                                                (Unaudited)                                                                  
                                                                                                                                                        
                                                                                                Three  Months  Ended                    
                                                                            -------------------------------------  
                                                                              April  30,      January  29,          May  1,      
                                                                                    2017                  2017                  2016        
                                                                            -----------    -----------    -----------  
                                                                                                                                                        
GAAP  gross  profit                                          $          1,150    $          1,303    $              751  
    GAAP  gross  margin                                                    59.4%                60.0%                57.5%
    Stock-based  compensation  expense  (A)                    4                        4                        4  
    Legal  settlement  costs                                                -                        -                      10  
                                                                            -----------    -----------    -----------  
Non-GAAP  gross  profit                                  $          1,154    $          1,307    $              765  
                                                                            ===========    ===========    ===========  
    Non-GAAP  gross  margin                                            59.6%                60.2%                58.6%
                                                                                                                                                        
GAAP  operating  expenses                              $              596    $              570    $              506  
    Stock-based  compensation  expense  (A)                (73)                  (68)                  (49)
    Legal  settlement  costs                                                -                        -                      (6)
    Acquisition-related  costs  (B)                                (4)                    (4)                    (4)
    Contributions                                                                (2)                      -                      (3)
    Restructuring  and  other  charges                              -                        -                      (1)
                                                                            -----------    -----------    -----------  
Non-GAAP  operating  expenses                      $              517    $              498    $              443  
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
GAAP  income  from  operations                      $              554    $              733    $              245  
    Total  impact  of  non-GAAP  adjustments                                                                            
      to  income  from  operations                                      83                      76                      77  
                                                                            -----------    -----------    -----------  
Non-GAAP  income  from  operations              $              637    $              809    $              322  
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
GAAP  other  income  (expense)                      $              (18)  $                (7)  $                (4)
    Gains  from  non-affiliated                                                                                                  
      investments                                                                    -                      (1)                    (3)
    Interest  expense  related  to                                                                                              
      amortization  of  debt  discount                                2                        4                        7  
    Loss  on  early  debt  conversions                              14                        6                        -  
                                                                            -----------    -----------    -----------  
Non-GAAP  other  income  (expense)              $                (2)  $                  2    $                  -  
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
GAAP  net  income                                              $              507    $              655    $              208  
    Total  pre-tax  impact  of  non-GAAP                                                                                    
      adjustments                                                                  99                      85                      81  
    Income  tax  impact  of  non-GAAP                                                                                          
      adjustments                                                                (73)                  (36)                  (26)
                                                                            -----------    -----------    -----------  
Non-GAAP  net  income                                      $              533    $              704    $              263  
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
Diluted  net  income  per  share                                                                                                
    GAAP                                                                $            0.79    $            0.99    $            0.35  
                                                                            ===========    ===========    ===========  
    Non-GAAP                                                        $            0.85    $            1.13    $            0.46  
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
Weighted  average  shares  used  in                                                                                          
  diluted  net  income  per  share                                                                                              
  computation                                                                                                                                
    GAAP                                                                                641                    660                    599  
    Anti-dilution  impact  from  note  hedge                                                                            
      (C)                                                                                (14)                  (36)                  (29)
                                                                            -----------    -----------    -----------  
    Non-GAAP                                                                        627                    624                    570  
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
GAAP  revenue                                                    $          1,937    $          2,173    $          1,305  
    Revenue  from  Intel  license                                    (43)                  (66)                  (66)
                                                                            -----------    -----------    -----------  
Revenue  excluding  Intel  license              $          1,894    $          2,107    $          1,239  
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
GAAP  net  cash  provided  by  operating                                                                                  
  activities                                                      $              282    $              721    $              318  
    Purchase  of  property  and  equipment                                                                                
      and  intangible  assets                                            (53)                  (52)                  (55)
                                                                            -----------    -----------    -----------  
Free  cash  flow                                                $              229    $              669    $              263  
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
----------------------------------------------------------------------------
(A)  Excludes  stock-based  compensation                                                                              
as  follows:                                                                          Three  Months  Ended                    
                                                                            -------------------------------------  
                                                                              April  30,      January  29,          May  1,      
                                                                                    2017                  2017                  2016        
                                                                            -----------    -----------    -----------  
    Cost  of  revenue                                          $                  4    $                  4    $                  4  
    Research  and  development                        $                41    $                40    $                29  
    Sales,  general  and  administrative      $                31    $                27    $                20  
                                                                                                                                                        
(B)  Consists  of  amortization  of  acquisition-related  intangible  assets  and      
compensation  charges.                                                                                                              
                                                                                                                                                        
(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  FY2018      
                                                                                                                                  Outlook        
                                                                                                                            -------------  
                                                                                                                                                        
GAAP  gross  margin                                                                                                            58.4%
    Impact  of  stock-based  compensation  expense                                                        0.2%
                                                                                                                            -------------  
Non-GAAP  gross  margin                                                                                                    58.6%
                                                                                                                            =============  
                                                                                                                                                        
                                                                                                                                Q2  FY2018      
                                                                                                                                  Outlook        
                                                                                                                            -------------  
                                                                                                                            (In  millions)  
                                                                                                                                                        
GAAP  operating  expenses                                                                              $                  605  
    Stock-based  compensation  expense,  acquisition-related  costs,                            
      and  other  costs                                                                                                            (75)
                                                                                                                            -------------  
Non-GAAP  operating  expenses                                                                      $                  530  
                                                                                                                            =============  
                                                                                                                                                        
                                                                                                                                Q2  FY2018      
                                                                                                                                  Outlook        
                                                                                                                            -------------  
                                                                                                                            (In  millions)  
                                                                                                                                                        
GAAP  other  income  (expense)                                                                      $                    (8)
    Loss  on  early  debt  conversions  and  interest  expense  related                              
      to  amortization  of  debt  discount                                                                              5  
                                                                                                                            -------------  
Non-GAAP  other  income  (expense)                                                              $                    (3)
                                                                                                                            =============  
                                                                                                                                                        
 




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