- Revenue up 17 percent quarter-on-quarter to $776.5 million - GAAP net loss of $105.3 million, or $0.19 cents per share - Non-GAAP net income of $37.7 million, or $0.07 cents per share - GAAP gross margin of 20.2 percent; non-GAAP gross margin of 36.3 percent
(Logo: http://www.newscom.com/cgi-bin/prnh/20020613/NVDALOGO)
On a GAAP basis, the company recorded a net loss of $105.3 million, or $0.19 per share, compared with a net loss of $120.9 million, or $0.22 per share a year ago. Reflected in these results is a net charge of $119.1 million related to the weak die/packaging set used in certain previous-generation chips that the company had initially identified and provided for in its prior fiscal year. On a non-GAAP basis excluding this item, and stock-based compensation as well as their associated tax impact net income was $37.7 million, or $0.07 per diluted share, compared with $74.5 million, or $0.13 per diluted share, a year earlier.
Quarterly Results Highlights
($in millions except Q2 2010 Q1 2010 Q2 2009
per share data)
Revenue $776.5 $664.2 $892.7
GAAP:
Gross margin 20.2% 28.6% 16.8%
Net income (loss) ($105.3) ($201.3) ($120.9)
Income (loss) per
share ($0.19) ($0.37) ($0.22)
Non-GAAP: (1)
Gross margin 36.3% 30.6% 39.1%
Net income (loss) $37.7 ($46.7) $74.5
Income (loss) per
share $0.07 ($0.09) $0.13
----------------- ----- ------ -----
(1) See Non-GAAP Measures for an explanation of these figures.
"NVIDIA's business is recovering. Product demand is improving, and our strategic investments are leading to new growth," said Jen-Hsun Huang, president and chief executive officer, NVIDIA. "Our two newest businesses began to ship meaningful amounts of product this past quarter and show significant promise. Tesla, the industry's first GPU for general-purpose high performance computing, achieved its highest-ever quarterly revenue. And Tegra, our ultra low-power computer-on-a-chip, is making exciting progress in the market for mobile and embedded devices. Our new businesses are positioned to benefit from the rise of mobile and cloud computing."
NVIDIA's second quarter results were impacted by an additional net charge of approximately $119.1 million to cover costs related to a weak die/packaging material set that was used in certain versions of its previous-generation chips. Although the number of units impacted by this issue remains consistent with the company's initial estimates a year ago, the cost of remediation and repair of impacted systems has been higher than originally anticipated. In July 2008, a $196.0 million reserve was accrued for the purpose of supporting our affected customers around the world. The weak die/package material combination is not used in any products currently in production.
GAAP net loss for the six months ended July 26, 2009 was $306.6 million, or $0.56 per share, compared to a net income of $55.9 million, or $0.09 per diluted share for the six months ended July 27, 2008. Non-GAAP net loss for the six months ended July 26, 2009, which excludes the net charge related to the weak die/packaging material set that was used in certain versions of our previous generation chips, a non-recurring charge of $140.2 million in connection with a previously announced cash tender offer to purchase employee stock options, stock-based compensation charges, and their associated tax impact, was $8.9 million, or $0.02 per share, compared to a net income of $286.2 million, or $0.49 per diluted share for the six months ended July 27, 2008.
Outlook
NVIDIA expects revenue in the third quarter ending October 25, 2009, to be up 5 to 7 percent over the second quarter.
Second Quarter Fiscal 2010 and Recent Highlights:
-- Free cash flow was a positive $117.5 million during the quarter, with
cash, cash equivalents and marketable securities ending at $1.47
billion.
-- NVIDIA delivered its first 40nm GPUs to customers in the second quarter.
-- The NVIDIA((R)) ION((TM)) platform was awarded "Best Choice" -
and 21 design wins disclosed - at Computex 2009. Nine are already
shipping, with a further 12 to ship in the third quarter. Five more
wins have been disclosed since Computex.
-- NVIDIA started ramping up volume shipments of the Tegra((TM))
computer-on-a-chip. Microsoft's Zune HD was revealed to be based on
Tegra.
-- Quadro((R)) Plex SVS was launched. SVS is a scalable visual computing
platform for professionals who interact with 3D models and analyze large
volumes of data.
-- For Quadro, NVIDIA launched the NVIDIA(R) Optix(TM) ray tracing engine,
part of a suite of application acceleration engines for software
developers. The suite also includes engines for managing 3D data and
scenes, scaling performance across multiple GPUs and real-time modeling
of hyper-realistic physical and environmental affects.
-- Tesla((TM)) computing solution products are now carried by HP and
Supermicro, joining a global list of OEMs including Cray, Dell, HP
Lenovo, SGI and Sun.
-- NVIDIA CUDA((TM)) architecture now accelerates AMBER, one of the most
popular molecular dynamics codes, with more than 60,000 users worldwide.
AMBER is up to 50 times faster when run on a GPU than a CPU.
-- In the financial industry, Numerix and CompatibL announced CUDA support
for new counterparty risk application, and achieved an 18X speedup.
-- NVIDIA and Adobe announced GPU acceleration for the Flash player,
bringing Internet video to a new class of low-power PCs and Internet
devices.
Conference Call and Web Cast Information
NVIDIA will conduct a conference call with analysts and investors to discuss its second quarter fiscal 2010 financial results and current financial prospects today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen to the call, please dial (212) 231-2900. A live Web cast (listen-only mode) of the conference call will be held at the NVIDIA investor relations Web site www.nvidia.com/ir and at www.streetevents.com. The Web cast will be recorded and available for replay until the company's conference call to discuss its financial results for its third quarter fiscal 2010.
Non-GAAP Measures
To supplement NVIDIA's Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow and days sales in inventory. 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 a charge related to the weak die/packaging material set that was used in certain versions of NVIDIA's previous generation chips, net of insurance reimbursements, a non-recurring charge related to a tender offer purchase, recurring stock-based compensation charges, and the associated tax impact of these items, where applicable. Free cash flow is calculated as GAAP net cash provided by operating activities less purchases of property and equipment and intangible assets. Days sales in inventory is computed by the number of days in the period divided by the non-GAAP inventory turnover ratio. 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.
About NVIDIA
NVIDIA (NASDAQ: NVDA) is the world leader in visual computing technologies and the inventor of the GPU, a high-performance processor which generates breathtaking, interactive graphics on workstations, personal computers, game consoles, and mobile devices. NVIDIA serves the entertainment and consumer market with its GeForce(R) products, the professional design and visualization market with its Quadro(R) products, and the high-performance computing market with its Tesla(TM) products. NVIDIA is headquartered in Santa Clara, California and has offices throughout Asia, Europe, and the Americas. For more information, visit www.nvidia.com.
Certain statements in this press release including, but not limited to, statements as to: the recovery of NVIDIA's business; NVIDIA's growth opportunities; mobile and cloud computing; the expectation that NVIDIA will receive reimbursement of most of the new charge during the coming quarters; the number of NVIDIA ION platforms to be shipped in the third quarter of fiscal 2010; NVIDIA's revenue outlook for the third quarter of fiscal 2010; and the impact, benefits, progress and promise of, and the demand for, NVIDIA's products and technologies, 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; development of faster or more efficient technology; the impact of technological development and competition; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission, or SEC, including its Form 10-Q for the fiscal period ended April 26, 2009. Copies of reports filed with the SEC are posted on NVIDIA'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.
Copyright (C) 2009 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Quadro, Tesla, CUDA, ION and Tegra are registered trademarks and/or trademarks of NVIDIA Corporation in the United States and other countries. All other company and/or product names may be trade names, trademarks, and/or registered trademarks of the respective owners with which they are associated. Features, pricing, availability, and specifications are subject to change without notice.
NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Six Months
Ended Ended
------------- -----------
July 26, July 27, July 26, July 27,
2009 2008 2009 2008
---- ---- ---- ----
Revenue $776,520 $892,676 $1,440,751 $2,046,064
Cost of revenue 619,797 742,759 1,094,332 1,381,304
------- ------- --------- ---------
Gross profit 156,723 149,917 346,419 664,760
Operating expenses
Research and development 192,855 212,910 494,652 431,740
Sales, general and
administrative 73,975 92,399 192,839 185,433
------ ------ ------- -------
Total operating
expenses 266,830 305,309 687,491 617,173
------- ------- ------- -------
Operating income (loss) (110,107) (155,392) (341,072) 47,587
Interest and other income,
net 3,006 8,792 9,150 18,831
----- ----- ----- ------
Income (loss) before income
tax expense (107,101) (146,600) (331,922) 66,418
Income tax expense (benefit)(A) (1,799) (25,671) (25,282) 10,542
------ ------- ------- ------
Net income (loss) $(105,302) $(120,929) $(306,640) $55,876
========= ========= ========= =======
Basic net income (loss) per
share $(0.19) $(0.22) $(0.56) $0.10
====== ====== ====== =====
Diluted net income (loss)
per share $(0.19) $(0.22) $(0.56) $0.09
====== ====== ====== =====
Shares used in basic per
share computation 546,639 555,417 544,463 555,531
Shares used in diluted per
share computation 546,639 555,417 544,463 592,181
(A) The income tax (benefit) rate for the three months ended July 26, 2009
and July 27, 2008 was (1.7) % and (17.5)%, respectively. The income
tax expense (benefit) rate for the six months ended July 26, 2009 and
July 27, 2008 was (7.6) % and 15.9%, respectively.
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Six Months
Ended Ended
------------- -----------
July July July July
26, 27, 26, 27,
2009 2008 2009 2008
---- ---- ---- ----
GAAP gross profit $156,723 $149,917 $346,419 $664,760
as a percent of
GAAP revenue 20.2% 16.8% 24.0% 32.5%
Stock-based
compensation
expense included
in cost of revenue(A) 4,828 3,333 7,058 6,469
Net warranty charge
against cost of
revenue arising
from a weak die/
packaging material
set (B) 119,993 195,954 119,993 195,954
Stock option
purchase charge
related to cost of
revenue (C) - - 11,412 -
-- -- ------ --
Non-GAAP gross
profit $281,544 $349,204 $484,882 $867,183
======== ======== ======== ========
as a percent of
GAAP revenue 36.3% 39.1% 33.7% 42.4%
GAAP operating
expenses $266,830 $305,309 $687,491 $617,173
Stock-based
compensation
expense (A) (20,548) (37,032) (52,431) (76,020)
Insurance
Reimbursement (B) 939 - 939 -
Stock option
purchase charge
related to
operating expenses(C) - - (128,829) -
-- -- -------- --
Non-GAAP operating
expenses $247,221 $268,277 $507,170 $541,153
======== ======== ======== ========
GAAP net income
(loss) $(105,302) $(120,929) $(306,640) $55,876
Stock-based
compensation
expense (A) 25,376 40,365 59,489 82,489
Net warranty charge
against cost of
revenue arising
from a weak die/
packaging material
set (B) 119,054 195,954 119,054 195,954
Stock option
purchase charge (C) - - 140,241 -
Income tax impact
of non-GAAP
adjustments (1,398) (40,923) (21,088) (48,084)
------ ------- ------- -------
Non-GAAP net income
(loss) $37,730 $74,467 $(8,944) $286,235
======= ======= ======= ========
Diluted net income
(loss) per share
GAAP $(0.19) $(0.22) $(0.56) $0.09
====== ====== ====== =====
Non-GAAP $0.07 $0.13 $(0.02) $0.49
===== ===== ====== =====
Shares used in GAAP
diluted net income
(loss) per share
computation 546,639 555,417 544,463 592,181
Cumulative impact
of non-GAAP
adjustments (D) 15,996 24,078 - (10,811)
------ ------ -- -------
Shares used in non-
GAAP diluted net
income (loss) per
share computation 562,635 579,495 544,463 581,370
======= ======= ======= =======
Metrics:
GAAP net cash flow
provided by
operating
activities $135,117 $80,957 $277,245 $226,202
Purchase of
property and
equipment and
intangible assets (17,656) (53,514) (38,433) (255,687)
------- ------- ------- --------
Free cash flow $117,461 $27,443 $238,812 $(29,485)
======== ======= ======== ========
GAAP cost of
revenue $619,797 $742,759 $1,094,332 $1,381,304
GAAP inventory $279,216 $432,279 $279,216 $432,279
GAAP inventory
turnover ratio 2.22 1.72 3.92 3.20
---- ---- ---- ----
GAAP days sales in
inventory 41 53 46 57
== == == ==
GAAP revenue $776,520 $892,676 $1,440,751 $2,046,064
Less: Non-GAAP
gross profit (281,544) (349,204) (484,882) (867,183)
-------- -------- -------- --------
Non-GAAP cost of
revenue $494,976 $543,472 $955,869 $1,178,881
-------- -------- -------- ----------
GAAP inventory $279,216 $432,279 $279,216 $432,279
Non-GAAP inventory
turnover ratio 1.77 1.26 3.42 2.73
---- ---- ---- ----
Non-GAAP days sales
in inventory 51 72 53 67
== == == ==
(A) Results include stock-based compensation expense as follows (in
thousands):
Three Months Six Months
Ended Ended
------------- -----------
July July July July
26, 27, 26, 27,
2009 2008 2009 2008
---- ---- ---- ----
Cost of revenue $4,828 $3,333 $7,058 $6,469
Research and development $13,268 $24,226 $34,538 $48,760
Sales, general
and administrative $7,280 $12,806 $17,893 $27,260
(B) Excludes a charge related to the weak die/packaging material set that
was used in certain versions of our previous generation chips, net of
insurance reimbursement.
(C) During the three months ended April 26, 2009, the Company completed a
tender offer to purchase an aggregate of 28.5 million outstanding
stock options for a total cash payment of $78.1 million. As a result
of the tender offer the Company incurred a charge of $140.2 million,
consisting of the remaining unamortized stock-based compensation
expenses associated with the unvested portion of the options tendered
in the offer, stock-based compensation expense resulting from amounts
paid in excess of the fair value of the underlying options, plus
associated payroll taxes and professional fees. The $140.2 million
stock option purchase charge for the three months ended April 26, 2009
relates to personnel associated with cost of revenue (for
manufacturing personnel), research and development, and sales, general
and administrative of $11.4 million, $90.5 million, and $38.3 million,
respectively.
(D) Reflects an adjustment to the diluted outstanding shares calculated
under SFAS 123R to conform to diluted outstanding shares calculated
under prior accounting standards (APB 25).
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 26, January 25,
2009 2009
---- ----
ASSETS
Current assets:
Cash, cash equivalents and marketable
securities $1,466,105 $1,255,390
Accounts receivable, net 351,960 318,435
Inventories 279,216 537,834
Prepaid expenses and other current assets 70,624 56,299
------ ------
Total current assets 2,167,905 2,167,958
Property and equipment, net 582,914 625,798
Goodwill 369,844 369,844
Intangible assets, net 135,678 147,101
Deposits and other assets 42,068 40,026
------ ------
Total assets $3,298,409 $3,350,727
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $275,978 $218,864
Accrued liabilities and other current
liabilities 615,343 559,727
------- -------
Total current liabilities 891,321 778,591
Other long-term liabilities 134,619 151,850
Capital lease obligations, long term 25,060 25,634
Stockholders' equity 2,247,409 2,394,652
--------- ---------
Total liabilities and stockholders' equity $3,298,409 $3,350,727
========== ==========
SOURCE NVIDIA Corporation
Web site: http://www.nvidia.com/