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NVIDIA Announces Financial Results for Third Quarter Fiscal 2018
[November 09, 2017]

NVIDIA Announces Financial Results for Third Quarter Fiscal 2018


  • Record revenue of $2.64 billion, up 32 percent from a year ago
  • Record GAAP EPS of $1.33, up 60 percent from a year ago 
  • Growth across all platforms
  • Quarterly cash dividend raised 7 percent to $0.15 per share. Company intends to return $1.25 billion to shareholders in fiscal 2019

SANTA CLARA, Calif., Nov. 09, 2017 (GLOBE NEWSWIRE) -- NVIDIA (NASDAQ:NVDA) today reported record revenue for the third quarter ended October 29, 2017, of $2.64 billion, up 32 percent from $2.00 billion a year earlier, and up 18 percent from $2.23 billion in the previous quarter, with growth across all its platforms.

GAAP earnings per diluted share for the quarter were a record $1.33, up 60 percent from $0.83 a year ago and up 45 percent from $0.92 in the previous quarter. Non-GAAP earnings per diluted share were $1.33, also a record, up 41 percent from $0.94 a year earlier and up 32 percent from $1.01 in the previous quarter. 

“We had a great quarter across all of our growth drivers,” said Jensen Huang, founder and chief executive officer of NVIDIA. “Industries across the world are accelerating their adoption of AI.

“Our Volta GPU has been embraced by every major internet and cloud service provider and computer maker. Our new TensorRT inference acceleration platform opens us to growth in hyperscale datacenters. GeForce and Nintendo Switch are tapped into the strongest growth dynamics of gaming. And our new DRIVE PX Pegasus for robotaxis has been adopted by companies around the world. We are well positioned for continued growth,” he said.

Capital Return

During the first nine months of fiscal 2018, NVIDIA returned to shareholders $909 million in share repurchases and $250 million in cash dividends. As a result, the company returned an aggregate of $1.16 billion to shareholders in the first nine months of the fiscal year. The company intends to return $1.25 billion to shareholders in fiscal 2018.

For fiscal 2019, NVIDIA intends to return $1.25 billion to shareholders through ongoing quarterly cash dividends and share repurchases. The company announced a 7 percent increase in its quarterly cash dividend to $0.15 per share from $0.14 per share, to be paid with its next quarterly cash dividend on December 15, 2017, to all shareholders of record on November 24, 2017. 

Q3 FY2018 Summary

GAAP
($ in millions except earnings per share)Q3 FY18Q2 FY18Q3 FY17Q/QY/Y
Revenue$2,636 $2,230 $2,004 Up 18%Up 32%
Gross margin 59.5% 58.4% 59.0%Up 110 bpsUp 50 bps
Operating expenses$674 $614 $544 Up 10%Up 24%
Operating income$895 $688 $639 Up 30%Up 40%
Net income$838 $583 $542 Up 44%Up 55%
Diluted earnings per share$1.33 $0.92 $0.83 Up 45%Up 60%


Non-GAAP
($ in millions except earnings per share)Q3 FY18Q2 FY18Q3 FY17Q/QY/Y
Revenue$2,636 $2,230 $2,004 Up 18%Up 32%
Gross margin 59.7% 58.6% 59.2%Up 110 bpsUp 50 bps
Operating expenses$570 $533 $478 Up 7%Up 19%
Operating income$1,005 $773 $708 Up 30%Up 42%
Net income$833 $638 $570 Up 31%Up 46%
Diluted earnings per share$1.33 $1.01 $0.94 Up 32%Up 41%
            

NVIDIA’s outlook for the fourth quarter of fiscal 2018 is as follows:

  • Revenue is expected to be $2.65 billion, plus or minus two percent.
     
  • GAAP and non-GAAP gross margins are expected to be 59.7 percent and 60.0 percent, respectively, plus or minus 50 basis points.
     
  • GAAP and non-GAAP operating expenses are expected to be approximately $722 million and $600 million, respectively.
     
  • GAAP and non-GAAP other income and expense are both expected to be nominal.
     
  • GAAP and non-GAAP tax rates are both expected to be 17.5 percent, plus or minus one percent, excluding any discrete items. GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which the company expects to generate variability on a quarter by quarter basis.

Third Quarter Fiscal 2018 Highlights
During the third quarter, NVIDIA achieved progress in these areas:  

Datacenter

Gaming

Professional Visualization

Automotive

  • Announced NVIDIA DRIVE™ PX Pegasus, the world's first auto-grade AI computer designed to enable a new class of driverless robotaxis without steering wheels, pedals or mirrors.

Autonomous Machines/AI Edge Computing

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 third quarter fiscal 2018 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: 96232617. 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 NVIDIA’s conference call to discuss its financial results for its fourth quarter and 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), 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 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.

Keep Current on NVIDIA
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 NVIDIA CORPORATION 
  CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(In millions, except per share data)
(Unaudited)
          
          
    Three Months Ended   Nine Months Ended 
   October 29, October 30, October 29, October 30,
    2017   2016   2017   2016 
          
Revenue$2,636  $2,004  $6,803  $4,737 
Cost of revenue 1,067   821   2,782   1,977 
Gross profit 1,569   1,183   4,021   2,760 
Operating expenses       
 Research and development 462   373   1,290   1,069 
 Sales, general and administrative 212   171   594   487 
 Restructuring and other charges -   -   -   3 
  Total operating expenses 674   544   1,884   1,559 
Income from operations 895   639   2,137   1,201 
 Interest income 17   14   48   37 
 Interest expense (15)  (16)  (46)  (39)
 Other, net (1)  (16)  (22)  (19)
  Total other income (expense) 1   (18)  (20)  (21)
Income before income tax expense 896   621   2,117   1,180 
Income tax expense 58   79   189   168 
Net income$838  $542  $1,928  $1,012 
          
Net income per share:       
 Basic$1.39  $1.01  $3.23  $1.89 
 Diluted$1.33  $0.83  $3.05  $1.59 
          
Weighted average shares used in per share computation:       
 Basic 603   538   597   536 
 Diluted 628   653   633   636 
          

 

NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
       
       
    October 29, January 29,
    2017 2017
ASSETS    
       
Current assets:    
 Cash, cash equivalents and marketable securities $6,320 $6,798
 Accounts receivable, net  1,167  826
 Inventories  857  794
 Prepaid expenses and other current assets  135  118
  Total current assets  8,479  8,536
       
Property and equipment, net  600  521
Goodwill  618  618
Intangible assets, net  63  104
Other assets  70  62
  Total assets $9,830 $9,841
       
LIABILITIES, CONVERTIBLE DEBT CONVERSION OBLIGATION AND SHAREHOLDERS' EQUITY
       
Current liabilities:    
 Accounts payable $511 $485
 Accrued and other current liabilities  493  507
 Convertible short-term debt  23  796
  Total current liabilities  1,027  1,788
       
Long-term debt  1,985  1,983
Other long-term liabilities  464  271
Capital lease obligations, long-term  1  6
  Total liabilities  3,477  4,048
       
Convertible debt conversion obligation  1  31
       
Shareholders' equity  6,352  5,762
  Total liabilities, convertible debt conversion obligation and shareholders' equity $9,830 $9,841
       

 

  NVIDIA CORPORATION  
  RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES  
 (In millions, except per share data) 
 (Unaudited) 
            
     Three Months Ended   Nine Months Ended  
    October 29, July 30, October 30, October 29, October 30, 
     2017   2017   2016   2017   2016  
              
 GAAP gross profit $1,569  $1,302  $1,183  $4,021  $2,760  
 GAAP gross margin 59.5%  58.4%  59.0%  59.1%  58.3% 
  Stock-based compensation expense (A) 6   4   3   14   11  
  Legal settlement costs -   -   -   -   10  
 Non-GAAP gross profit$1,575  $1,306  $1,186  $4,035  $2,781  
 Non-GAAP gross margin 59.7%  58.6%  59.2%  59.3%  58.7% 
              
 GAAP operating expenses$674  $614  $544  $1,884  $1,559  
  Stock-based compensation expense (A) (101)  (77)  (62)  (251)  (166) 
  Legal settlement costs -   -   -   -   (6) 
  Acquisition-related costs (B) (3)  (4)  (4)  (11)  (12) 
  Contributions  -   -   -   (2)  (4) 
  Restructuring and other charges -   -   -   -   (3) 
 Non-GAAP operating expenses$570  $533  $478  $1,620  $1,368  
              
 GAAP income from operations$895  $688  $639  $2,137  $1,201  
  Total impact of non-GAAP adjustments to income from operations 110   85   69   278   211  
 Non-GAAP income from operations$1,005  $773  $708  $2,415  $1,412  
              
 GAAP other income (expense)$1  $(4) $(18) $(20) $(21) 
  Gains from non-affiliated investments -   -   -   -   (3) 
  Interest expense related to amortization of debt discount -   1   6   3   20  
  Loss on early debt conversions 1   3   15   19   15  
 Non-GAAP other income (expense)$2  $-  $3  $2  $11  
              
 GAAP net income $838  $583  $542  $1,928  $1,012  
  Total pre-tax impact of non-GAAP adjustments 111   89   90   300   243  
  Income tax impact of non-GAAP adjustments (C) (116)  (34)  (62)  (224)  (108) 
 Non-GAAP net income$833  $638  $570  $2,004  $1,147  
              
 Diluted net income per share          
  GAAP $1.33  $0.92  $0.83  $3.05  $1.59  
  Non-GAAP $1.33  $1.01  $0.94  $3.20  $1.93  
              
 Weighted average shares used in diluted net income per share computation          
  GAAP  628   633   653   633   636  
  Anti-dilution impact from note hedge (D)  (2)  (4)  (45)  (7)  (42) 
  Non-GAAP  626   629   608   626   594  
              
 GAAP net cash provided by operating activities$1,157  $705  $432  $2,144  $951  
  Purchase of property and equipment and intangible assets (69)  (55)  (38)  (178)  (125) 
 Free cash flow $1,088  $650  $394  $1,966  $826  
              
   
              
 (A) Stock-based compensation consists of the following:Three Months Ended Nine Months Ended 
    October 29, July 30, October 30, October 29, October 30, 
     2017   2017   2016   2017   2016  
  Cost of revenue $6  $4  $3  $14  $11  
  Research and development $61  $44  $35  $146  $95  
  Sales, general and administrative $40  $33  $27  $105  $71  
              
 (B) Consists of amortization of acquisition-related intangible assets and compensation charges. 
              
 (C) 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). 
              
 (D) 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  
    
  
   Q4 FY2018
Outlook
 
 
    
GAAP gross margin 59.7% 
 Impact of stock-based compensation expense 0.3% 
Non-GAAP gross margin 60.0% 
    
    
   Q4 FY2018
Outlook
 
 
  (In millions) 
    
GAAP operating expenses$722  
 Stock-based compensation expense, acquisition-related costs, and other costs (122) 
Non-GAAP operating expenses$600  
    

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 http://nvidianews.nvidia.com/.   

For further information, contact:

Simona Jankowski                                                                                          
Investor Relations                                                                                          
NVIDIA Corporation                                                                                        
(408) 566-6474                                                                                                  
sjankowski@nvidia.com                                                                               

Robert Sherbin
Corporate Communications
NVIDIA Corporation
(408) 566-5150
rsherbin@nvidia.com 

Certain statements in this press release including, but not limited to statements as to:  industries across the world accelerating their adoption of AI; the use of Volta GPUs; the benefits of the TensorRT inference acceleration platform; tapping into strong growth dynamics in gaming through GeForce and Nintendo Switch; DRIVE PX Pegasus being adopted; the company’s intended capital return for fiscal 2018 and fiscal 2019; the company’s next quarterly cash dividend; the company’s financial outlook for the fourth quarter of fiscal 2018; the company’s tax rates for the fourth quarter of fiscal year 2018; the impact and benefits of the adoption of Volta GPUs, TensorRT 3 AI inference software, the GPU cloud container registry, GeForce GTX 1070 Ti GPU, VRWorks 360 Video SDK, Holodeck, Quadro Virtual Data Center Workstation, DRIVE PX Pegasus, and collaboration with JD.com’s X lab and use of Jetson; use of Volta HGX architecture; and collaborations to bring NVIDIA GameWorks technology to top fall games 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 reports NVIDIA files with the Securities and Exchange Commission, or SEC, including its Form 10-Q for the fiscal period ended July 30, 2017. 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.

© 2017 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Quadro, Tesla, Jetson, NVIDIA DRIVE, NVIDIA GameWorks, NVIDIA Holodeck, NVIDIA VRWorks and TensorRT 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.


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