- Revenue is expected to be $1.90 billion, plus or minus two percent.
- GAAP and non-GAAP gross margins are expected to be 59.5 percent and 59.7 percent, respectively, plus or minus 50 basis points.
- GAAP operating expenses are expected to be approximately $603 million. Non-GAAP operating expenses are expected to be approximately $520 million.
- GAAP other income and expense, net, is expected to be an expense of approximately $20 million, inclusive of additional charges from early conversions of convertible notes. Non-GAAP other income and expense, net, is expected to be an expense of approximately $4 million.
- GAAP and non-GAAP tax rates for the first quarter of fiscal 2018 are both expected to be 17 percent, plus or minus one percent, excluding any discrete items.
- Weighted average shares used in the GAAP and non-GAAP diluted EPS calculations are dependent on the weighted average stock price during the quarter.
- Capital expenditures are expected to be approximately $50 million to $60 million.
Fourth Quarter Fiscal 2017 Highlights
During the fourth quarter, NVIDIA achieved progress in each of its four major platforms.
Gaming:
- Introduced GeForce® GTX 1050 and 1050 Ti mobile GPUs, which debuted in more than 30 gaming laptops at CES 2017.
- Launched the new SHIELD™ TV, integrating Google Assistant for TV, SmartThings Hub technology and the NVIDIA SPOT™ AI mic.
- Unveiled the
GeForce NOW™ service, delivering an NVIDIA Pascal™ gaming PC, on demand, from the cloud to all computers.
Professional Visualization:
- Launched NVIDIA's new workstation-product lineup with Quadro® GP100, enabling a new class of supercomputing workstations.
- Introduced
Quadro P5000, powering the first VR-ready mobile workstations from Dell and MSI.
Datacenter:
- Collaborated with Microsoft to accelerate AI with a GPU-accelerated Microsoft Cognitive Toolkit available on the Microsoft Azure cloud and NVIDIA DGX-1™.
- Partnered with the National Cancer Institute and the U.S. Department of Energy to build CANDLE, an AI framework that will advance cancer research.
- Unveiled the NVIDIA
DGX SATURNV AI supercomputer, powered by 124 Pascal-powered DGX-1 server nodes, which is the
world's most efficient supercomputer.
Automotive:
- Partnered with Audi, to put advanced AI cars on the road by 2020.
- Partnered with Mercedes-Benz, to bring an NVIDIA AI-powered car to the market.
- Partnered with Bosch, the world's largest automotive supplier, to bring self-driving systems to production vehicles
- Partnered with Germany's ZF, to create a self-driving system for cars, trucks and commercial vehicles based on the NVIDIA DRIVE™ PX 2 AI car computer.
- Partnered with Europe's HERE, to develop HERE HD Live Map into a real-time, high-definition mapping solution for autonomous vehicles.
- Partnered with Japan's
ZENRIN, to develop a cloud-to-car HD map solution for self-driving cars.
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 fourth quarter and fiscal 2017 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: 52907909. 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 first 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), net, non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, non-GAAP diluted shares, and free cash flow. In order for NVIDIA's investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude stock-based compensation expense, legal settlement costs, product warranty charge, 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 Twelve Months Ended
-------------------------- --------------------------
January 29, January 31, January 29, January 31,
2017 2016 2017 2016
------------ ------------ ------------ ------------
Revenue $ 2,173 $ 1,401 $ 6,910 $ 5,010
Cost of revenue 870 610 2,847 2,199
------------ ------------ ------------ ------------
Gross profit 1,303 791 4,063 2,811
Operating expenses
Research and
development 394 344 1,463 1,331
Sales, general and
administrative 176 161 663 602
Restructuring and
other charges - 34 3 131
------------ ------------ ------------ ------------
Total operating
expenses 570 539 2,129 2,064
------------ ------------ ------------ ------------
Income from
operations 733 252 1,934 747
Interest income 17 11 54 39
Interest expense (18) (12) (58) (47)
Other income
(expense), net (6) 2 (25) 4
------------ ------------ ------------ ------------
Income before income
tax expense 726 253 1,905 743
Income tax expense 71 46 239 129
------------ ------------ ------------ ------------
Net income $ 655 $ 207 $ 1,666 $ 614
============ ============ ============ ============
Net income per share:
Basic $ 1.18 $ 0.38 $ 3.08 $ 1.13
============ ============ ============ ============
Diluted $ 0.99 $ 0.35 $ 2.57 $ 1.08
============ ============ ============ ============
Weighted average
shares used in per
share computation:
Basic 553 539 541 543
Diluted 660 593 649 569
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
January 29, January 31,
2017 2016
------------ ------------
ASSETS
Current assets:
Cash, cash equivalents and marketable securities $ 6,798 $ 5,037
Accounts receivable, net 826 505
Inventories 794 418
Prepaid expenses and other current assets 118 93
------------ ------------
Total current assets 8,536 6,053
Property and equipment, net 521 466
Goodwill 618 618
Intangible assets, net 104 166
Other assets 62 67
------------ ------------
Total assets $ 9,841 $ 7,370
============ ============
LIABILITIES, CONVERTIBLE DEBT CONVERSION OBLIGATION AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 485 $ 296
Accrued and other current liabilities 507 642
Convertible short-term debt 796 1,413
------------ ------------
Total current liabilities 1,788 2,351
Long-term debt 1,983 -
Other long-term liabilities 271 453
Capital lease obligations, long-term 6 10
------------ ------------
Total liabilities 4,048 2,814
Convertible debt conversion obligation 31 87
Shareholders' equity 5,762 4,469
------------ ------------
Total liabilities, convertible debt conversion
obligation and shareholders' equity $ 9,841 $ 7,370
============ ============
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
---------------------------------- ----------------------
January 29, October 30, January 31, January 29, January 31,
2017 2016 2016 2017 2016
---------- ---------- ---------- ---------- ----------
GAAP gross
profit $ 1,303 $ 1,183 $ 791 $ 4,063 $ 2,811
GAAP gross
margin 60.0% 59.0% 56.5% 58.8% 56.1%
Stock-based
compensation
expense (A) 4 3 5 15 15
Legal
settlement
costs (B) - - - 10 -
Product
warranty
charge (C) - - 5 - 20
---------- ---------- ---------- ---------- ----------
Non-GAAP gross
profit $ 1,307 $ 1,186 $ 801 $ 4,088 $ 2,846
========== ========== ========== ========== ==========
Non-GAAP gross
margin 60.2% 59.2% 57.2% 59.2% 56.8%
GAAP operating
expenses $ 570 $ 544 $ 539 $ 2,129 $ 2,064
Stock-based
compensation
expense (A) (68) (62) (56) (233) (190)
Legal
settlement
costs (B) - - - (6) -
Acquisition-
related costs
(D) (4) (4) (4) (16) (22)
Contributions - - - (4) -
Restructuring
and other
charges - - (34) (3) (131)
---------- ---------- ---------- ---------- ----------
Non-GAAP
operating
expenses $ 498 $ 478 $ 445 $ 1,867 $ 1,721
========== ========== ========== ========== ==========
GAAP income from
operations $ 733 $ 639 $ 252 $ 1,934 $ 747
Total impact
of non-GAAP
adjustments
to income
from
operations 76 69 104 287 378
---------- ---------- ---------- ---------- ----------
Non-GAAP income
from operations $ 809 $ 708 $ 356 $ 2,221 $ 1,125
========== ========== ========== ========== ==========
GAAP other
income
(expense), net $ (7) $ (18) $ 1 $ (29) $ (4)
Gains from
non-
affiliated
investments (1) - - (4) (5)
Interest
expense
related to
amortization
of debt
discount 4 6 7 25 29
Loss on early
debt
conversions 6 15 - 21 -
---------- ---------- ---------- ---------- ----------
Non-GAAP other
income, net $ 2 $ 3 $ 8 $ 13 $ 20
========== ========== ========== ========== ==========
GAAP net income* $ 655 $ 542 $ 207 $ 1,666 $ 614
Total pre-tax
impact of
non-GAAP
adjustments 85 90 111 329 402
Income tax
impact of
non-GAAP
adjustments (36) (62) (21) (144) (87)
---------- ---------- ---------- ---------- ----------
Non-GAAP net
income $ 704 $ 570 $ 297 $ 1,851 $ 929
========== ========== ========== ========== ==========
Diluted net
income per
share
GAAP* $ 0.99 $ 0.83 $ 0.35 $ 2.57 $ 1.08
========== ========== ========== ========== ==========
Non-GAAP $ 1.13 $ 0.94 $ 0.52 $ 3.06 $ 1.67
========== ========== ========== ========== ==========
Weighted average
shares used in
diluted net
income per
share
computation
GAAP* 660 653 593 649 569
Anti-dilution
impact from
note hedge
(E) (36) (45) (26) (44) (13)
---------- ---------- ---------- ---------- ----------
Non-GAAP 624 608 567 605 556
========== ========== ========== ========== ==========
GAAP net cash
provided by
operating
activities* $ 721 $ 432 $ 510 $ 1,672 $ 1,175
Purchase of
property and
equipment and
intangible
assets (52) (38) (15) (176) (86)
---------- ---------- ---------- ---------- ----------
Free cash flow $ 669 $ 394 $ 495 $ 1,496 $ 1,089
========== ========== ========== ========== ==========
* In third quarter of fiscal 2017, NVIDIA adopted an accounting standard
(ASU 2016-09), which requires adjustments to be reflected beginning in
fiscal 2017, including all fiscal quarters within the year.
----------------------------------------------------------------------------
(A) Excludes stock-based compensation as follows:
Three Months Ended Twelve Months Ended
----------------------------------- -----------------------
January 29, October 30, January 31, January 29, January 31,
2017 2016 2016 2017 2016
----------- ----------- ----------- ----------- -----------
Cost of revenue $ 4 $ 3 $ 5 $ 15 $ 15
Research and
development $ 40 $ 35 $ 33 $ 135 $ 115
Sales, general
and
administrative $ 27 $ 27 $ 22 $ 98 $ 74
(B) Legal settlement with Advanced Silicon Technologies LLC and other
settlement related costs.
(C) Represents warranty charge associated with a product recall.
(D) Consists of amortization of acquisition-related intangible assets and
compensation charges.
(E) 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
Q1 FY2018
Outlook
--------------
GAAP gross margin 59.5%
Impact of stock-based compensation expense 0.2%
--------------
Non-GAAP gross margin 59.7%
==============
Q1 FY2018
Outlook
--------------
(In millions)
GAAP operating expenses $ 603
Stock-based compensation expense, acquisition-related
costs, and other costs (83)
--------------
Non-GAAP operating expenses $ 520
==============
