NVIDIA Announces Financial Results for First Quarter Fiscal 2020

NVIDIA today repor­ted reve­nue for the first quar­ter ended April 28, 2019, of $2.22 bil­li­on com­pared with $3.21 bil­li­on a year ear­lier and $2.21 bil­li­on in the pre­vious quarter.

GAAP ear­nings per diluted share for the quar­ter were $0.64, com­pared with $1.98 a year ago and $0.92 in the pre­vious quar­ter. Non-GAAP ear­nings per diluted share were $0.88 com­pared with $2.05 a year ear­lier and $0.80 in the pre­vious quarter.

NVIDIA is back on an upward tra­jec­to­ry,” said Jen­sen Huang, foun­der and CEO of NVIDIA. “We’ve retur­ned to growth in gam­ing, with near­ly 100 new GeForce Max‑Q lap­tops ship­ping. And NVIDIA RTX has gai­ned broad indus­try sup­port, making ray tra­cing the stan­dard for next-gene­ra­ti­on gaming.

Despi­te the near-term pau­se in demand from hypers­ca­le cus­to­mers, the appli­ca­ti­on of AI con­ti­nues to acce­le­ra­te. AI adop­ti­on is acce­le­ra­ting in the world’s lar­gest indus­tries, moving bey­ond the cloud to the edge whe­re AI pro­ces­sing has to be instanta­neous.  We’re exci­ted about our pen­ding acqui­si­ti­on of Mel­lan­ox, which will help us dri­ve data cen­ter archi­tec­tu­re for high per­for­mance com­pu­ting and AI from the cloud to the edge,” he said.

Capi­tal Return

As pre­vious­ly com­mu­ni­ca­ted, NVIDIA intends to return $3.00 bil­li­on to share­hol­ders by the end of fis­cal 2020, inclu­ding $700 mil­li­on in share repurcha­ses made during the fourth quar­ter of fis­cal 2019. In the first quar­ter of fis­cal 2020, the com­pa­ny retur­ned $97 mil­li­on in quar­ter­ly cash dividends.

NVIDIA will pay its next quar­ter­ly cash divi­dend of $0.16 per share on June 21, 2019, to all share­hol­ders of record on May 31, 2019.

Q1 Fis­cal 2020 Summary

GAAP
($ in mil­li­ons, except ear­nings per share) Q1 FY20 Q4 FY19 Q1 FY19 Q/Q Y/Y
Reve­nue $2,220 $2,205 $3,207 Up 1% Down 31%
Gross mar­gin  58.4%  54.7%  64.5% Up 370 bps Down 610 bps
Ope­ra­ting expenses $938 $913 $773 Up 3% Up 21%
Ope­ra­ting income $358 $294 $1,295 Up 22% Down 72%
Net inco­me $394 $567 $1,244 Down 31% Down 68%
Diluted ear­nings per share $0.64 $0.92 $1.98 Down 30% Down 68%
Non-GAAP
($ in mil­li­ons, except ear­nings per share) Q1 FY20 Q4 FY19 Q1 FY19 Q/Q Y/Y
Reve­nue $2,220 $2,205 $3,207 Up 1% Down 31%
Gross mar­gin 59.0% 56.0% 64.7% Up 300 bps Down 570 bps
Ope­ra­ting expenses $753 $755 $648 Up 16%
Ope­ra­ting income $557 $479 $1,428 Up 16% Down 61%
Net inco­me $543 $496 $1,285 Up 9% Down 58%
Diluted ear­nings per share $0.88 $0.80 $2.05 Up 10% Down 57%

NVIDIA’s out­look for the second quar­ter of fis­cal 2020 is as follows:

  • Reve­nue is expec­ted to be $2.55 bil­li­on, plus or minus 2 percent.
     
  • GAAP and non-GAAP gross mar­gins are expec­ted to be 59.2 per­cent and 59.5 per­cent, respec­tively, plus or minus 50 basis points.
     
  • GAAP and non-GAAP ope­ra­ting expen­ses are expec­ted to be appro­xi­m­ate­ly $985 mil­li­on and $765 mil­li­on, respectively.
     
  • GAAP and non-GAAP other inco­me and expen­se are both expec­ted to be inco­me of appro­xi­m­ate­ly $27 million.
     
  • GAAP and non-GAAP tax rates are both expec­ted to be 10 per­cent, plus or minus 1 per­cent, exclu­ding any dis­crete items. GAAP dis­crete items include excess tax bene­fits or defi­ci­en­ci­es rela­ted to stock-based com­pen­sa­ti­on, which are expec­ted to gene­ra­te varia­bi­li­ty on a quar­ter by quar­ter basis.

High­lights

During the quar­ter, NVIDIA announ­ced that it rea­ched a defi­ni­ti­ve agree­ment to acqui­re Mel­lan­ox Tech­no­lo­gies, Ltd. for $125 per share in cash, repre­sen­ting a total enter­pri­se value of appro­xi­m­ate­ly $6.9 bil­li­on. Once com­ple­te, the com­bi­na­ti­on is expec­ted to be imme­dia­te­ly accre­ti­ve to NVIDIA’s non-GAAP gross mar­gin, non-GAAP ear­nings per share, and free cash flow. The tran­sac­tion is expec­ted to clo­se by the end of the calen­dar year.

Sin­ce the end of the fourth quar­ter of fis­cal 2019, NVIDIA has achie­ved pro­gress in the­se areas:

Data Cen­ter

Gam­ing

Pro­fes­sio­nal Visualization

Auto­mo­ti­ve

Edge Com­pu­ting

CFO Com­men­ta­ry

Com­men­ta­ry on the quar­ter by Colet­te Kress, NVIDIA’s exe­cu­ti­ve vice pre­si­dent and chief finan­cial offi­cer, is available at https://investor.nvidia.com/home/default.aspx.

Con­fe­rence Call and Web­cast Information

NVIDIA will con­duct a con­fe­rence call with ana­lysts and inves­tors to dis­cuss its first quar­ter fis­cal 2020 finan­cial results and cur­rent finan­cial pro­s­pects today at 2:30 p.m. Paci­fic time (5:30 p.m. Eas­tern time). A live web­cast (lis­ten-only mode) of the con­fe­rence call will be acces­si­ble at NVIDIA’s inves­tor rela­ti­ons web­site, https://investor.nvidia.com/home/default.aspx. The web­cast will be recor­ded and available for replay until NVIDIA’s con­fe­rence call to dis­cuss its finan­cial results for its second quar­ter of fis­cal 2020.

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, 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 and other cos­ts, gains from non-affi­lia­ted invest­ments, inte­rest expen­se rela­ted to amor­tiza­ti­on of debt dis­count, the asso­cia­ted tax impact of the­se items, whe­re appli­ca­ble, and the tax bene­fit from inco­me tax reform. Weigh­ted avera­ge shares used in the non-GAAP diluted net inco­me per share com­pu­ta­ti­on includes the anti-dilu­ti­on impact of our Note Hedge. Free cash flow is cal­cu­la­ted as GAAP net cash pro­vi­ded by ope­ra­ting acti­vi­ties less purcha­se 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 the company’s non-GAAP mea­su­res may be dif­fe­rent from non-GAAP mea­su­res used by other companies.

 NVIDIA CORPORATION 
  CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(In mil­li­ons, except per share data)
(Unau­di­ted)
           
           
       Three Months Ended 
      April 28,   April 29,
      2019   2018
           
Reve­nue $ 2,220     $ 3,207  
Cost of revenue   924       1,139  
Gross pro­fit   1,296       2,068  
Ope­ra­ting expenses      
  Rese­arch and development   674       542  
  Sales, gene­ral and administrative   264       231  
    Total ope­ra­ting expenses   938       773  
Inco­me from operations   358       1,295  
  Inte­rest income   44       25  
  Inte­rest expense   (13)       (15)  
  Other, net   -       6  
    Total other inco­me (expen­se)   31       16  
Inco­me befo­re inco­me tax   389       1,311  
Inco­me tax expen­se (bene­fit)   (5)       67  
Net inco­me $ 394     $ 1,244  
           
Net inco­me per share:      
  Basic $ 0.65     $ 2.05  
  Diluted $ 0.64     $ 1.98  
           
Weigh­ted avera­ge shares used in per share computation:      
  Basic   607       606  
  Diluted   616       627  
           

 

 
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In mil­li­ons)
(Unau­di­ted)
           
           
      April 28,   Janu­ary 27,
      2019   2019
ASSETS      
           
Cur­rent assets:      
  Cash, cash equi­va­lents and mar­ke­ta­ble securities $ 7,802   $ 7,422
  Accounts receiva­ble, net   1,242     1,424
  Invent­ories   1,426     1,575
  Pre­paid expen­ses and other cur­rent assets   159     136
    Total cur­rent assets   10,629     10,557
           
Pro­per­ty and equip­ment, net   1,473     1,404
Ope­ra­ting lea­se assets   536     -
Good­will   618     618
Intan­gi­ble assets, net   54     45
Defer­red inco­me tax assets   601     560
Other assets   110     108
    Total assets $ 14,021   $ 13,292
           
LIABILITIES AND SHAREHOLDERSEQUITY
           
Cur­rent liabilities:      
  Accounts paya­ble $ 368   $ 511
  Accrued and other cur­rent liabilities   815     818
    Total cur­rent liabilities   1,183     1,329
           
Long-term debt   1,988     1,988
Long-term ope­ra­ting lea­se liabilities   486     -
Other long-term liabilities   660     633
    Total lia­bi­li­ties   4,317     3,950
           
Share­hol­ders’ equity   9,704     9,342
    Total lia­bi­li­ties and share­hol­ders’ equity $ 14,021   $ 13,292
           

 

   
   NVIDIA CORPORATION 
   RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES 
  (In mil­li­ons, except per share data)
  (Unau­di­ted)
               
       Three Months Ended 
      April 28,   Janu­ary 27,   April 29,
      2019   2019   2018
               
  GAAP gross profit $ 1,296     $ 1,207     $ 2,068  
    GAAP gross margin   58.4%       54.7%       64.5%  
    Stock-based com­pen­sa­ti­on expen­se (A)   4       6       8  
    Legal sett­le­ment costs   10       21       -  
  Non-GAAP gross profit $ 1,310     $ 1,234     $ 2,076  
    Non-GAAP gross margin   59.0%       56.0%       64.7%  
               
  GAAP ope­ra­ting expenses $ 938     $ 913     $ 773  
    Stock-based com­pen­sa­ti­on expen­se (A)   (174)       (150)       (121)  
    Acqui­si­ti­on-rela­ted and other costs   (10)       (1)       (2)  
    Legal sett­le­ment costs   (1)       (7)       (2)  
  Non-GAAP ope­ra­ting expenses $ 753     $ 755     $ 648  
               
  GAAP inco­me from operations $ 358     $ 294     $ 1,295  
    Total impact of non-GAAP adjus­t­ments to inco­me from operations   199       185       133  
  Non-GAAP inco­me from operations $ 557     $ 479     $ 1,428  
               
  GAAP other inco­me (expen­se) $ 31     $ 30     $ 16  
    Gains from non-affi­lia­ted investments   -       (1)       (6)  
    Inte­rest expen­se rela­ted to amor­tiza­ti­on of debt discount   -       -       1  
  Non-GAAP other inco­me (expen­se) $ 31     $ 29     $ 11  
               
  GAAP net income $ 394     $ 567     $ 1,244  
    Total pre-tax impact of non-GAAP adjustments   199       184       128  
    Inco­me tax impact of non-GAAP adjus­t­ments (B)   (50)       (25)       (87)  
    Tax bene­fit from inco­me tax reform   -       (230)       -  
  Non-GAAP net income $ 543     $ 496     $ 1,285  
               
  Diluted net inco­me per share          
    GAAP $ 0.64     $ 0.92     $ 1.98  
    Non-GAAP $ 0.88     $ 0.80     $ 2.05  
               
  Weigh­ted avera­ge shares used in diluted net inco­me per share computation          
    GAAP   616       619       627  
    Anti-dilu­ti­on impact from note hedge   -       -       (1)  
    Non-GAAP   616       619       626  
               
  GAAP net cash pro­vi­ded by ope­ra­ting activities $ 720     $ 898     $ 1,445  
    Purcha­se of pro­per­ty and equip­ment and intan­gi­ble assets   (128)       (203)       (118)  
  Free cash flow $ 592     $ 695     $ 1,327  
               
   
               
  (A) Stock-based com­pen­sa­ti­on con­sists of the following: Three Months Ended
      April 28,   Janu­ary 27,   April 29,
        2019       2019       2018  
    Cost of revenue $ 4     $ 6     $ 8  
    Rese­arch and development $ 114     $ 99     $ 74  
    Sales, gene­ral and administrative $ 60     $ 51     $ 47  
  (B) Inco­me tax impact of non-GAAP adjus­t­ments, inclu­ding the reco­gni­ti­on of excess tax bene­fits or defi­ci­en­ci­es rela­ted to stock-based com­pen­sa­ti­on under GAAP accoun­ting stan­dard (ASU 2016-09).
 

 

 
 NVIDIA CORPORATION 
 RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK 
     
 
     Q2 FY2020
Out­look
 
     
GAAP gross margin   59.2 %
  Impact of stock-based com­pen­sa­ti­on expense   0.3 %
Non-GAAP gross margin   59.5 %
     
     Q2 FY2020
Out­look
 
    (In mil­li­ons)
     
GAAP ope­ra­ting expenses $ 985  
  Stock-based com­pen­sa­ti­on expen­se, acqui­si­ti­on-rela­ted cos­ts, and other costs   (220)  
Non-GAAP ope­ra­ting expenses $ 765  
       

 

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 https://nvidianews.nvidia.com/.

Cer­tain state­ments in this press release inclu­ding, but not limi­t­ed to, state­ments as to: NVIDIA being back on an upward tra­jec­to­ry; NVIDIA retur­ning to growth in gam­ing with near­ly 100 new GeForce Max‑Q lap­tops ship­ping; NVIDIA RTX gra­phics gai­ning broad indus­try sup­port, making ray tra­cing the stan­dard for next-gene­ra­ti­on gam­ing; the near term pau­se in demand from hypers­ca­le cus­to­mers; AI con­ti­nuing to acce­le­ra­te AI adop­ti­on acce­le­ra­ting in the world’s lar­gest indus­tries moving bey­ond the cloud to edge and it nee­ding to be instanta­neous; NVIDIA’s exci­te­ment about the acqui­si­ti­on of Mel­lan­ox and it hel­ping to dri­ve the data cen­ter archi­tec­tu­re for high-per­for­mance com­pu­ting and AI from the cloud to the edge; NVIDIA’s inten­ded capi­tal return through the end of fis­cal 2020; NVIDIA’s next quar­ter­ly cash divi­dend; NVIDIA’s finan­cial out­look for the second quar­ter of fis­cal 2020; NVIDIA’s expec­ted tax rates for the second quar­ter of fis­cal 2020; our expec­ta­ti­on to gene­ra­te varia­bi­li­ty from excess tax bene­fits or defi­ci­en­ci­es; the expec­ted accre­ti­ve finan­cial impact of the Mel­lan­ox tran­sac­tion; the expec­ted clo­sing date of the Mel­lan­ox acqui­si­ti­on; the per­for­mance, bene­fits and abili­ties of our pro­ducts; the avai­la­bi­li­ty of NVIDIA T4 Ten­sor Core GPUs, NVIDIA Dri­ve Con­stel­la­ti­on and NVIDIA Isaac SDK; our part­ner­ship with top glo­bal sys­tem buil­ders to crea­te powerful data-sci­ence work­sta­tions; our part­ner­ship with the Ame­ri­can Col­lege of Radio­lo­gy enab­ling its mem­bers to crea­te and use AI for dia­gno­stic radio­lo­gy;  the intro­duc­tion of GeForce GTX 1660 Ti, GTX 1660 and GTX 1650 and its per­for­mance and impact; the num­ber of gam­ing lap­top models using Turing GPUs;  the expan­ded adop­ti­on of NVIDIA RTX ray-tra­cing tech­no­lo­gy by the world’s top 3D pro­vi­ders; NVIDIA Omni­ver­se plat­form sim­pli­fy­ing crea­ti­ve work­flows for con­tent crea­ti­on; our part­ner­ship with Toyo­ta Rese­arch Insti­tu­te-Advan­ced Deve­lo­p­ment to deve­lop, train and vali­da­te self-dri­ving vehic­les; NVIDIA DRIVE AV Safe­ty Force Field enab­ling safe, com­for­ta­ble dri­ving expe­ri­en­ces; Jet­son Nano making it pos­si­ble to crea­te mil­li­ons of small, low-cost, low-power devices; our part­ner­ship with AWS IoT Gre­en­grass to enable cus­to­mers to deploy AI and deep lear­ning to mil­li­ons of con­nec­ted devices; NVIDIA Jet­son AI sup­port­ing Ama­zon Web Ser­vices Robo­Ma­ker; and our col­la­bo­ra­ti­on with Micro­soft to make cities smar­ter 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 most recent reports NVIDIA files with the Secu­ri­ties and Exch­an­ge Com­mis­si­on, or SEC, inclu­ding, but not limi­t­ed to, its annu­al report on Form 10‑K and quar­ter­ly reports on Form 10‑Q. 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.

© 2019 NVIDIA Cor­po­ra­ti­on. All rights reser­ved. NVIDIA, the NVIDIA logo, CUDA‑X AI, GeForce, GeForce GTX, Jet­son, Jet­son Nano, NVIDIA AGX, NVIDIA Cla­ra, NVIDIA DRIVE, NVIDIA DRIVE Con­stel­la­ti­on, NVIDIA Isaac SDK, NVIDIA Omni­ver­se, NVIDIA RTX, Qua­dro and Qua­dro RTX 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.