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NVIDIA Announces Financial Results for First Quarter Fiscal 2018

SANTA CLARA, CA -- (Marketwired) -- May 09, 2017 -- NVIDIA (NASDAQ: NVDA)

NVIDIA (NASDAQ: NVDA) today reported revenue for the first quarter ended April 30, 2017, of $1.94 billion, up 48 percent from $1.30 billion a year earlier, and down 11 percent from $2.17 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.79, up 126 percent from $0.35 a year ago and down 20 percent from $0.99 in the previous quarter. Non-GAAP earnings per diluted share were $0.85, up 85 percent from $0.46 a year earlier and down 25 percent from $1.13 in the previous quarter.

"The AI revolution is moving fast and continuing to accelerate," said Jensen Huang, founder and chief executive officer of NVIDIA. "NVIDIA's GPU deep learning platform is the instrument of choice for researchers, internet giants and startups as they invent the future.

"Our Datacenter GPU computing business nearly tripled from last year, as more of the world's computer scientists engage deep learning. One industry after another is awakening to the power of GPU deep learning and AI, the most important technology force of our time," he said.

Capital Return
For fiscal 2018, NVIDIA intends to return $1.25 billion to shareholders through ongoing quarterly cash dividends and share repurchases. During the first quarter of fiscal 2018, NVIDIA paid $82 million in cash dividends.

NVIDIA will pay its next quarterly cash dividend of $0.14 per share on June 14, 2017, to all shareholders of record on May 23, 2017.

Q1 FY2018 Summary

----------------------------------------------------------------------------
                                    GAAP                                    
----------------------------------------------------------------------------
($ in millions except earnings                                              
 per share)                    Q1 FY18 Q4 FY17 Q1 FY17     Q/Q        Y/Y   
----------------------------------------------------------------------------
Revenue                         $1,937  $2,173  $1,305   down 11%     up 48%
----------------------------------------------------------------------------
Gross margin                     59.4%   60.0%   57.5%    down 60 up 190 bps
                                                              bps           
----------------------------------------------------------------------------
Operating expenses                $596    $570    $506      up 5%     up 18%
----------------------------------------------------------------------------
Operating income                  $554    $733    $245   down 24%    up 126%
----------------------------------------------------------------------------
Net income                        $507    $655    $208   down 23%    up 144%
----------------------------------------------------------------------------
Diluted earnings per share       $0.79   $0.99   $0.35   down 20%    up 126%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                  Non-GAAP                                  
----------------------------------------------------------------------------
($ in millions except earnings                                              
 per share)                    Q1 FY18 Q4 FY17 Q1 FY17     Q/Q        Y/Y   
----------------------------------------------------------------------------
Revenue                         $1,937  $2,173  $1,305   down 11%     up 48%
----------------------------------------------------------------------------
Gross margin                     59.6%   60.2%   58.6%    down 60 up 100 bps
                                                              bps           
----------------------------------------------------------------------------
Operating expenses                $517    $498    $443      up 4%     up 17%
----------------------------------------------------------------------------
Operating income                  $637    $809    $322   down 21%     up 98%
----------------------------------------------------------------------------
Net income                        $533    $704    $263   down 24%    up 103%
----------------------------------------------------------------------------
Diluted earnings per share       $0.85   $1.13   $0.46   down 25%     up 85%
----------------------------------------------------------------------------
                                                                            
                                                                            

NVIDIA's outlook for the second quarter of fiscal 2018 is as follows:

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

Gaming:

Datacenter:

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 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)
                                                              ============= 
                                                                            

About NVIDIA
NVIDIA's (NASDAQ: NVDA) invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined modern computer graphics and revolutionized parallel computing. More recently, GPU deep learning ignited modern AI -- the next era of computing -- with the GPU acting as the brain of computers, robots and self-driving cars that can perceive and understand the world. More information at http://nvidianews.nvidia.com/.

Certain statements in this press release including, but not limited to statements as to: the AI revolution continuing to accelerate; AI being the most important technology force of our time; the company's intended capital return for fiscal 2018; the company's next quarterly cash dividend; the company's financial outlook for the second quarter of fiscal 2018; the company's tax rates for the second quarter of fiscal 2018; and the impact and benefits of NVIDIA Tesla GPUs, NVIDIA's accelerated computing platform, NVIDIA DGX-1 AI systems, NVIDIA Jetson TX2, and partnerships with Bosch and PACCAR; and intended training of 100,000 developers this year through the NVIDIA Deep Learning Institute 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 29, 2017. 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.

© 2017 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Tesla, NVIDIA DGX-1 and Jetson 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:

Shawn Simmons
Investor Relations
NVIDIA Corporation
(408) 566-5784

ssimmons@nvidia.com 

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

rsherbin@nvidia.com