Commentary on the quarter by Colette Kress, NVIDIA 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 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) 223-2684; 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 second 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 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, a credit related to a weak die/packaging material set, acquisition-related costs, other expenses, a gain on sale of a non-affiliated investment, 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.
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NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------------
April 27, April 28,
2014 2013
----------- -----------
Revenue $ 1,102,787 $ 954,739
Cost of revenue 498,585 436,171
----------- -----------
Gross profit 604,202 518,568
Operating expenses
Research and development 334,263 327,161
Sales, general and administrative 118,580 108,626
----------- -----------
Total operating expenses 452,843 435,787
----------- -----------
Operating income 151,359 82,781
Interest income 5,710 5,076
Interest expense 11,471 853
Other income, net 17,684 1,058
----------- -----------
Income before income tax expense 163,282 88,062
Income tax expense 26,766 10,171
----------- -----------
Net income $ 136,516 $ 77,891
=========== ===========
Net income per share:
Basic $ 0.24 $ 0.13
=========== ===========
Diluted $ 0.24 $ 0.13
=========== ===========
Weighted average shares used in per share
computation:
Basic 559,092 616,872
Diluted 570,422 619,302
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
April 27, January 26,
2014 2014
------------- -------------
ASSETS
Current assets:
Cash, cash equivalents and marketable
securities $ 4,347,817 $ 4,671,810
Accounts receivable, net 396,438 426,357
Inventories 393,280 387,765
Prepaid expenses and other current assets 136,263 138,779
------------- -------------
Total current assets 5,273,798 5,624,711
Property and equipment, net 570,802 582,740
Goodwill 643,179 643,179
Intangible assets, net 277,530 296,012
Other assets 99,354 104,252
------------- -------------
Total assets $ 6,864,663 $ 7,250,894
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 309,008 $ 324,391
Accrued liabilities and other current
liabilities 588,937 621,105
------------- -------------
Total current liabilities 897,945 945,496
Long-term debt 1,363,276 1,356,375
Other long-term liabilities 419,774 475,125
Capital lease obligations, long-term 16,683 17,500
Stockholders' equity 4,166,985 4,456,398
------------- -------------
Total liabilities and stockholders' equity $ 6,864,663 $ 7,250,894
============= =============
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended
-------------------------------------------
April 27, January 26, April 28,
2014 2014 2013
------------- ------------- -------------
GAAP gross profit $ 604,202 $ 619,242 $ 518,568
GAAP gross margin 54.8% 54.1% 54.3%
Stock-based compensation
expense included in cost
of revenue (A) 2,919 2,777 2,653
Legal settlement - 1,450 -
Credit from a weak
die/packaging material set
(B) - (7,782) -
------------- ------------- -------------
Non-GAAP gross profit $ 607,121 $ 615,687 $ 521,221
============= ============= =============
Non-GAAP gross margin 55.1% 53.8% 54.6%
GAAP operating expenses $ 452,843 $ 452,318 $ 435,787
Stock-based compensation
expense included in
operating expense (A) (32,602) (33,427) (30,744)
Acquisition-related costs
(C) (9,441) (9,250) (8,861)
Other expense (D) - (1,845) -
------------- ------------- -------------
Non-GAAP operating expenses $ 410,800 $ 407,796 $ 396,182
============= ============= =============
GAAP other income and expense $ 11,923 $ 1,964 $ 5,281
Gain on sale of non-
affiliated investments (16,982) (3,074) -
Interest expense related to
amortization of debt
discount 6,901 4,600 -
------------- ------------- -------------
Non-GAAP other income and
expense $ 1,842 $ 3,490 $ 5,281
============= ============= =============
GAAP net income $ 136,516 $ 146,917 $ 77,891
Total pre-tax impact of
non-GAAP adjustments 34,881 42,493 42,258
Income tax impact of non-
GAAP adjustments (5,342) (1,924) (6,348)
------------- ------------- -------------
Non-GAAP net income $ 166,055 $ 187,486 $ 113,801
============= ============= =============
Diluted net income per share
GAAP $ 0.24 $ 0.25 $ 0.13
============= ============= =============
Non-GAAP $ 0.29 $ 0.32 $ 0.18
============= ============= =============
Shares used in diluted net
income per share computation 570,422 577,356 619,302
Metrics:
GAAP net cash flow provided
by operating activities $ 151,022 $ 400,712 $ 175,650
Purchase of property and
equipment and intangible
assets (29,068) (66,374) (65,667)
------------- ------------- -------------
Free cash flow $ 121,954 $ 334,338 $ 109,983
============= ============= =============
----------------------------------------------------------------------------
(A) Excludes stock-based
compensation as follows: Three Months Ended
-------------------------------------------
April 27, January 26, April 28,
2014 2014 2013
------------- ------------- -------------
Cost of revenue $ 2,919 $ 2,777 $ 2,653
Research and development $ 20,494 $ 21,548 $ 21,935
Sales, general and
administrative $ 12,108 $ 11,879 $ 8,809
(B) Release of the remaining warranty reserve related to a weak
die/packaging material set, as of January 26, 2014.
(C) Consists of amortization of acquisition-related intangible assets,
transaction costs, compensation charges, and other credits related to
acquisitions.
(D) Includes intangible asset write-off and legal settlement costs, net of
credits.
----------------------------------------------------------------------------
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q2 FY2015 Outlook
-----------------
GAAP gross margin 53.7%
Impact of stock-based compensation 0.3%
-----------------
Non-GAAP gross margin 54.0%
=================
Q2 FY2015 Outlook
-----------------
(In millions)
GAAP operating expenses $ 457
Stock-based compensation expense and acquisition-
related costs (43)
-----------------
Non-GAAP operating expenses $ 414
=================
