- Revenue is expected to be $1.20 billion, plus or minus two percent.
- GAAP and non-GAAP gross margins are expected to be 55.2 percent and 55.5 percent, respectively, plus or minus 50 basis points.
- GAAP operating expenses are expected to be approximately $463 million; non-GAAP operating expenses are expected to be approximately $416 million.
- GAAP and non-GAAP tax rates for the third quarter and annual fiscal 2015 are both expected to be 19 percent, plus or minus one percentage point. This estimate excludes any discrete tax events that may occur during a quarter which, if realized, may increase or decrease NVIDIA's actual effective tax rates in such quarter.
- Capital expenditures are expected to be approximately $40 million to $50 million.
Second Quarter Fiscal 2015 Highlights
During the second quarter, NVIDIA:
- Extended its leading position in datacenter accelerated computing, with the world's 15 most efficient supercomputers all running NVIDIA® Tesla® GPUs, according to the latest Green500 list.
- Surpassed 40 million installations in under two years of its GeForce Experience™ client, which provides game-ready drivers and optimal playable settings, and allows gameplay to be streamed and shared.
- Invented the first-ever GPU acceleration technology for Adobe Illustrator CC, with performance up to 10x faster than previously possible. Adobe Illustrator CC is used by more than six million artists and designers worldwide.
- Featured prominently at the Google I/O conference, where Google's new Android L was previewed. NVIDIA Tegra® K1 is the first processor to support Android L's advanced gaming capabilities; the first to bring GPU computing to mobile, evident in Google's Project Tango tablet, which features computer vision capabilities; and among the first to support Android TV.
- Expanded the SHIELD™ family of gaming devices with the launch of the world's most advanced tablet built for gamers, the SHIELD tablet, along with the SHIELD wireless controller.
- Accelerated the growth of its auto business, as BMW shipped new models, including the i8 and i3 with infotainment systems powered by Tegra. Volkswagen announced that, in addition to the Golf, Tegra will be included in the Passat launching later this year in Europe.
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 second quarter fiscal 2015 financial results and current financial prospects today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen to the conference call, dial (303) 223-2680; no password is required. A live webcast (listen-only mode) of the conference call will be accessible at the NVIDIA investor relations web site
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 third quarter fiscal 2015.
Non-GAAP Measures
To supplement NVIDIA's Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other income and expense, non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, and free cash flow. In order for NVIDIA's investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude stock-based compensation, legal settlements, acquisition-related costs, gains and losses from non-affiliated investments, interest expense related to the amortization of debt discount, and the associated tax impact of these items, where applicable. Free cash flow is calculated as GAAP net cash provided by operating activities less purchases of property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user's overall understanding of the company's historical financial performance. The presentation of the company's non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company's financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.
To Keep Current on NVIDIA:
- Keep up with the
NVIDIA Blog.
- Like NVIDIA on
Facebook.
- Connect with NVIDIA on
LinkedIn.
- Follow @NVIDIA on
Twitter.
- View NVIDIA videos on
YouTube.
- Use the Pulse news reader to subscribe to the NVIDIA Daily News feed.
NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
------------------------- -------------------------
July 27, July 28, July 27, July 28,
2014 2013 2014 2013
----------- ------------ ------------ ------------
Revenue $ 1,102,824 $ 977,238 $ 2,205,611 $ 1,931,977
Cost of revenue 483,850 431,700 982,435 867,871
----------- ------------ ------------ ------------
Gross profit 618,974 545,538 1,223,176 1,064,106
Operating expenses
Research and
development 337,124 331,738 671,387 658,899
Sales, general and
administrative 118,671 108,266 237,251 216,892
----------- ------------ ------------ ------------
Total operating
expenses 455,795 440,004 908,638 875,791
----------- ------------ ------------ ------------
Operating income 163,179 105,534 314,538 188,315
Interest income 6,829 3,865 12,539 8,941
Interest expense 11,526 836 22,997 1,689
Other income (expense),
net (3,857) 3,257 13,827 4,315
----------- ------------ ------------ ------------
Income before income tax
expense 154,625 111,820 317,907 199,882
Income tax expense 26,649 15,372 53,415 25,543
----------- ------------ ------------ ------------
Net income $ 127,976 $ 96,448 $ 264,492 $ 174,339
=========== ============ ============ ============
Net income per share:
Basic $ 0.23 $ 0.16 $ 0.47 $ 0.29
=========== ============ ============ ============
Diluted $ 0.22 $ 0.16 $ 0.46 $ 0.29
=========== ============ ============ ============
Weighted average shares
used in per share
computation:
Basic 558,223 585,345 558,657 601,109
Diluted 570,572 592,006 570,599 606,051
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 27, January 26,
2014 2014
-------------- --------------
ASSETS
Current assets:
Cash, cash equivalents and marketable
securities $ 4,386,054 $ 4,671,810
Accounts receivable, net 469,625 426,357
Inventories 387,434 387,765
Prepaid expenses and other current assets 134,473 138,779
-------------- --------------
Total current assets 5,377,586 5,624,711
Property and equipment, net 556,911 582,740
Goodwill 643,179 643,179
Intangible assets, net 260,613 296,012
Other assets 95,430 104,252
-------------- --------------
Total assets $ 6,933,719 $ 7,250,894
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 261,627 $ 324,391
Accrued liabilities and other current
liabilities 607,102 621,105
-------------- --------------
Total current liabilities 868,729 945,496
Long-term debt 1,370,249 1,356,375
Other long-term liabilities 374,113 475,125
Capital lease obligations, long-term 15,842 17,500
Stockholders' equity 4,304,786 4,456,398
-------------- --------------
Total liabilities and stockholders' equity $ 6,933,719 $ 7,250,894
============== ==============
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
------------------------------- ----------------------
July 27, April 27, July 28, July 27, July 28,
2014 2014 2013 2014 2013
--------- --------- --------- ---------- ----------
GAAP gross profit $ 618,974 $ 604,202 $ 545,538 $1,223,176 $1,064,106
GAAP gross margin 56.1% 54.8% 55.8% 55.5% 55.1%
Stock-based
compensation
expense
included in
cost of revenue
(A) 2,656 2,919 2,168 5,575 4,821
Legal settlement - - 2,290 - 2,290
--------- --------- --------- ---------- ----------
Non-GAAP gross
profit $ 621,630 $ 607,121 $ 549,996 $1,228,751 $1,071,217
========= ========= ========= ========== ==========
Non-GAAP gross
margin 56.4% 55.1% 56.3% 55.7% 55.4%
GAAP operating
expenses $ 455,795 $ 452,843 $ 440,004 $ 908,638 $ 875,791
Stock-based
compensation
expense included
in operating
expense (A) (35,759) (32,602) (30,227) (68,361) (60,971)
Acquisition-
related costs (B) (9,173) (9,441) (8,964) (18,614) (17,825)
--------- --------- --------- ---------- ----------
Non-GAAP operating
expenses $ 410,863 $ 410,800 $ 400,813 $ 821,663 $ 796,995
========= ========= ========= ========== ==========
GAAP other income
(expense), net $ (8,554) $ 11,923 $ 6,286 $ 3,369 $ 11,567
Gains and losses
from non-
affiliated
investments 2,500 (16,982) - (14,482) -
Interest expense
related to
amortization of
debt discount 6,973 6,901 - 13,874 -
--------- --------- --------- ---------- ----------
Non-GAAP other
income (expense),
net $ 919 $ 1,842 $ 6,286 $ 2,761 $ 11,567
========= ========= ========= ========== ==========
GAAP net income $ 127,976 $ 136,516 $ 96,448 $ 264,492 $ 174,339
Total pre-tax
impact of non-
GAAP adjustments 57,061 34,881 43,649 91,942 85,907
Income tax impact
of non-GAAP
adjustments (11,606) (5,342) (6,767) (16,948) (13,115)
--------- --------- --------- ---------- ----------
Non-GAAP net income $ 173,431 $ 166,055 $ 133,330 $ 339,486 $ 247,131
========= ========= ========= ========== ==========
Diluted net income
per share
GAAP $ 0.22 $ 0.24 $ 0.16 $ 0.46 $ 0.29
========= ========= ========= ========== ==========
Non-GAAP $ 0.30 $ 0.29 $ 0.23 $ 0.59 $ 0.41
========= ========= ========= ========== ==========
Shares used in
diluted net income
per share
computation 570,572 570,422 592,006 570,599 606,051
Metrics:
GAAP net cash flow
provided by
operating
activities $ 96,282 $ 151,022 $ 96,469 $ 247,304 $ 272,119
Purchase of
property and
equipment and
intangible assets (22,527) (29,068) (84,986) (51,595) (150,653)
--------- --------- --------- ---------- ----------
Free cash flow $ 73,755 $ 121,954 $ 11,483 $ 195,709 $ 121,466
========= ========= ========= ========== ==========
----------------------------------------------------------------------------
(A) Excludes stock-
based compensation
as follows: Three Months Ended Six Months Ended
------------------------------- ----------------------
April
July 27, 27, July 28, July 27, July 28,
2014 2014 2013 2014 2013
--------- --------- --------- ---------- ----------
Cost of revenue $ 2,656 $ 2,919 $ 2,168 $ 5,575 $ 4,821
Research and
development $ 21,462 $ 20,494 $ 18,555 $ 41,956 $ 40,490
Sales, general and
administrative $ 14,297 $ 12,108 $ 11,672 $ 26,405 $ 20,481
(B) Consists of amortization of acquisition-related intangible assets,
transaction costs, compensation charges, and other credits related to
acquisitions.
----------------------------------------------------------------------------
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q3 FY2015 Outlook
-------------------
GAAP gross margin 55.2%
Impact of stock-based compensation 0.3%
-------------------
Non-GAAP gross margin 55.5%
===================
Q3 FY2015 Outlook
-------------------
(In millions)
GAAP operating expenses $ 463
Stock-based compensation expense and acquisition-
related costs (47)
-------------------
Non-GAAP operating expenses $ 416
===================
