NVDA
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Nvidia
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Earnings Details
2nd Quarter July 2019
Thursday, August 15, 2019 4:20:00 PM
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Summary

Nvidia Beats

Nvidia (NVDA) reported 2nd Quarter July 2019 earnings of $1.18 per share on revenue of $2.6 billion. The consensus earnings estimate was $1.14 per share on revenue of $2.6 billion. The Earnings Whisper number was $1.18 per share. Revenue fell 17.4% compared to the same quarter a year ago.

The company said it expects third quarter revenue of $2.84 billion to $2.96 billion, with non-GAAP gross margins of 62.0% to 63.%, which calculates to earnings of $1.48 to $1.66 per share. The current consensus earnings estimate is $1.52 per share on revenue of $2.97 billion for the quarter ending October 31, 2019.

NVIDIA Corp is a visual computing company, connecting people through the powerful medium of computer graphics. The Company’s reporting segments include GPU and Tegra Processor.

Results
Reported Earnings
$1.18
Earnings Whisper
$1.18
Consensus Estimate
$1.14
Reported Revenue
$2.58 Bil
Revenue Estimate
$2.55 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

NVIDIA Announces Financial Results for Second Quarter Fiscal 2020

SANTA CLARA, Calif., Aug. 15, 2019 (GLOBE NEWSWIRE) -- NVIDIA (NASDAQ: NVDA) today reported revenue for the second quarter ended July 28, 2019, of $2.58 billion compared with $3.12 billion a year earlier and $2.22 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.90, compared with $1.76 a year ago and $0.64 in the previous quarter. Non-GAAP earnings per diluted share were $1.24 compared with $1.94 a year earlier and $0.88 in the previous quarter.

“We achieved sequential growth across our platforms,” said Jensen Huang, founder and CEO of NVIDIA. “Real-time ray tracing is the most important graphics innovation in a decade. Adoption has reached a tipping point, with NVIDIA RTX leading the way.

“NVIDIA accelerated computing momentum continues to build as the industry races to enable the next frontier in artificial intelligence, conversational AI, as well as autonomous systems like self-driving vehicles and delivery robots,” he said.

NVIDIA will pay its next quarterly cash dividend of $0.16 per share on September 20, 2019, to all shareholders of record on August 29, 2019.  The first priority of the company’s cash balance is the purchase of Mellanox Technologies, Ltd.  The company will return to repurchasing its stock after the close of the Mellanox acquisition.  The regulatory approval process for this acquisition is progressing as expected, and NVIDIA continues to work toward closing the deal by the end of this calendar year.

Q2 Fiscal 2020 Summary

GAAP
($ in millions, except earnings per share)Q2 FY20Q1 FY20Q2 FY19Q/QY/Y
Revenue$2,579$2,220$3,123Up 16%Down 17%
Gross margin59.8%58.4%63.3%Up 140 bpsDown 350 bps
Operating expenses$970$938$818Up 3%Up 19%
Operating income$571$358$1,157Up 59%Down 51%
Net income$552$394$1,101Up 40%Down 50%
Diluted earnings per share$0.90$0.64$1.76Up 41%Down 49%


Non-GAAP
($ in millions, except earnings per share)Q2 FY20Q1 FY20Q2 FY19Q/QY/Y
Revenue$2,579$2,220$3,123Up 16%Down 17%
Gross margin60.1%59.0%63.5%Up 110 bpsDown 340 bps
Operating expenses$749$753$692Down 1%Up 8%
Operating income$802$557$1,290Up 44%Down 38%
Net income$762$543$1,210Up 40%Down 37%
Diluted earnings per share$1.24$0.88$1.94Up 41%Down 36%
      

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

  • Revenue is expected to be $2.90 billion, plus or minus 2 percent.

  • GAAP and non-GAAP gross margins are expected to be 62.0 percent and 62.5 percent, respectively, plus or minus 50 basis points.

  • GAAP and non-GAAP operating expenses are expected to be approximately $980 million and $765 million, respectively.

  • GAAP and non-GAAP other income and expense are both expected to be income of approximately $25 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

Since the end of the first quarter of fiscal 2020, NVIDIA has achieved progress in these areas:

Data Center

  • Announced breakthroughs in language understanding that allow organizations to enable real-time conversational AI, with record-setting performance in running training and inference on the BERT AI language model.
  • Announced that NVIDIA’s DGX SuperPOD™  – which provides the AI infrastructure for the company’s autonomous-vehicle development program – was ranked the world’s 22nd fastest supercomputer and that its reference architecture is available commercially through partners.
  • Set eight records in AI training performance in the latest MLPerf benchmarking tests.
  • Announced support for Arm CPUs, providing a new path to build highly energy-efficient, AI-enabled exascale supercomputers.

Gaming

Professional Visualization

Automotive

  • Volvo Group announced that it is using the NVIDIA DRIVE™ end-to-end autonomous driving platform to train networks in the data center, test them in simulation and deploy them in self-driving vehicles, targeting freight transport, refuse and recycling collection, public transport, construction, mining, forestry and more.

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 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, http://investor.nvidia.com. The webcast will be recorded and available for replay until NVIDIA’s conference call to discuss its financial results for its third 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 and losses from non-affiliated investments, interest expense related to amortization of debt discount, 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 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   Six Months Ended 
   July 28, July 29, July 28, July 29,
    2019   2018   2019   2018 
          
Revenue$  2,579  $  3,123  $  4,799  $  6,330 
Cost of revenue    1,038     1,148     1,962     2,287 
Gross profit   1,541     1,975     2,837     4,043 
Operating expenses       
 Research and development    704     581     1,379     1,124 
 Sales, general and administrative   266     237     529     467 
  Total operating expenses   970     818     1,908     1,591 
Income from operations   571     1,157     929     2,452 
 Interest income   47     32     92     57 
 Interest expense   (13)    (14)    (27)    (29)
 Other, net   1     5     1     11 
  Total other income (expense)   35     23     66     39 
Income before income tax   606     1,180     995     2,491 
Income tax expense   54     79     48     146 
Net income$  552  $  1,101  $  947  $  2,345 
          
Net income per share:       
 Basic$  0.91  $  1.81  $  1.56  $  3.86 
 Diluted$  0.90  $  1.76  $  1.54  $  3.74 
          
Weighted average shares used in per share computation:       
 Basic   609     607     608     607 
 Diluted   616     626     616     627 
          

 

 
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
       
       
    July 28, January 27,
     2019   2019 
ASSETS    
       
Current assets:    
 Cash, cash equivalents and marketable securities $  8,475  $  7,422 
 Accounts receivable, net    1,561     1,424 
 Inventories    1,204     1,575 
 Prepaid expenses and other current assets    151     136 
  Total current assets    11,391     10,557 
       
Property and equipment, net    1,484     1,404 
Operating lease assets    535     -  
Goodwill    618     618 
Intangible assets, net    49     45 
Deferred income tax assets    588     560 
Other assets     110     108 
  Total assets $  14,775  $  13,292 
       
LIABILITIES AND SHAREHOLDERS' EQUITY
       
Current liabilities:    
 Accounts payable $  437  $  511 
 Accrued and other current liabilities    880     818 
  Total current liabilities    1,317     1,329 
       
Long-term debt    1,989     1,988 
Long-term operating lease liabilities    483     -  
Other long-term liabilities    650     633 
  Total liabilities    4,439     3,950 
       
Shareholders' equity    10,336     9,342 
  Total liabilities and shareholders' equity $  14,775  $  13,292 
       

 

                       
 NVIDIA CORPORATION 
 RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES 
 (In millions, except per share data) 
 (Unaudited) 
                       
     Three Months Ended   Six Months Ended 
    July 28, April 28, July 29, July 28, July 29,
     2019   2019   2018   2019   2018 
             
GAAP gross profit $  1,541  $  1,296  $  1,975  $  2,837  $  4,043 
 GAAP gross margin
  59.8%  58.4%  63.3%  59.1%  63.9%
  Stock-based compensation expense (A)   8     4     8     12     16 
  Legal settlement costs   2     10     -      11     -  
Non-GAAP gross profit$  1,551  $  1,310  $  1,983  $  2,860  $  4,059 
 Non-GAAP gross margin
  60.1%  59.0%  63.5%  59.6%  64.1%
             
GAAP operating expenses$  970  $  938  $  818  $  1,908  $  1,591 
  Stock-based compensation expense (A)    (216)    (174)    (124)    (389)    (246)
  Acquisition-related and other costs   (5)    (10)    (2)    (15)    (4)
  Legal settlement costs   -      (1)    -      (2)    -  
Non-GAAP operating expenses$  749  $  753  $  692  $  1,502  $  1,341 
             
GAAP income from operations$  571  $  358  $  1,157  $  929  $  2,452 
  Total impact of non-GAAP adjustments to income from operations   231     199     133     429     266 
Non-GAAP income from operations$  802  $  557  $  1,290  $  1,358  $  2,718 
             
GAAP other income (expense)$  35  $  31  $  23  $  66  $  39 
  Gains from non-affiliated investments   -      -      (2)    -      (8)
  Interest expense related to amortization of debt discount   -      -      -      1     1 
Non-GAAP other income (expense) $  35  $  31  $  21  $  67  $  32 
             
GAAP net income $  552  $  394  $  1,101  $  947  $  2,345 
  Total pre-tax impact of non-GAAP adjustments   231     199     131     430     259 
  Income tax impact of non-GAAP adjustments (B)   (21)    (50)    (22)    (72)    (109)
Non-GAAP net income $  762  $  543  $  1,210  $  1,305  $  2,495 
             
Diluted net income per share         
  GAAP $  0.90  $  0.64  $  1.76  $  1.54  $  3.74 
  Non-GAAP  $  1.24  $  0.88  $  1.94  $  2.12  $  3.99 
             
Weighted average shares used in diluted net income per share computation         
  GAAP    616     616     626     616     627 
  Anti-dilution impact from note hedge    -      -      (1)    -      (1)
  Non-GAAP     616     616     625     616     626 
             
GAAP net cash provided by operating activities$  936  $  720  $  913  $  1,656  $  2,358 
  Purchase of property and equipment and intangible assets   (113)    (128)    (128)    (241)    (247)
Free cash flow $  823  $  592  $  785  $  1,415  $  2,111 
             
             
(A) Stock-based compensation consists of the following:Three Months Ended Six Months Ended
    July 28, April 28, July 29, July 28, July 29,
     2019   2019   2018   2019   2018 
  Cost of revenue $  8  $  4  $  8  $  12  $  16 
  Research and development $  145  $  114  $  76  $  259  $  150 
  Sales, general and administrative $  71  $  60  $  48  $  130  $  96 
                       
(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 
   
 
  Q3 FY2020
Outlook
 
   
GAAP gross margin 62.0%
 Impact of stock-based compensation expense 0.5%
Non-GAAP gross margin 62.5%
   
  Q3 FY2020
Outlook
 
  (In millions)
   
GAAP operating expenses$  980 
 Stock-based compensation expense, acquisition-related costs, and other costs   (215)
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 http://nvidianews.nvidia.com/.

For further information, contact:

Simona Jankowski Robert Sherbin
Investor Relations Corporate Communications
NVIDIA Corporation NVIDIA Corporation
sjankowski@nvidia.com rsherbin@nvidia.com

Certain statements in this press release including, but not limited to, statements as to: real-time ray tracing being the most important graphics innovation in a decade; adoption of ray tracing reaching a tipping point with RTX leading the way; NVIDIA accelerated computing momentum continuing to build as the industry races to enable the next frontier of artificial intelligence and autonomous systems; NVIDIA’s intended capital return; NVIDIA’s next quarterly cash dividend; the priority of NVIDIA’s cash balance being the purchase of Mellanox; NVIDIA returning to repurchasing its stock after the close of the Mellanox acquisition; the regulatory approval process for the Mellanox acquisition progressing and NVIDIA continuing to work toward closing the deal by the end of this calendar year; NVIDIA’s financial outlook for the third quarter of fiscal 2020; NVIDIA’s expected tax rates for the third quarter of fiscal 2020; NVIDIA’s expectation to generate variability from excess tax benefits or deficiencies; NVIDIA’s support for Arm CPUs providing a path to build exascale supercomputers; breakthroughs in language understanding enabling real-time conversational AI and its performance; NVIDIA DGX SuperPOD’s availability; new games featuring ray tracing and it propelling the momentum of RTX technology; the launch of laptops by major makers; the benefits, impact and performance of our technologies, including the RTX SUPER GPU lines, NVIDIA Studio platform and NVIDIA RTX ray tracing; NVIDIA RTX ray tracing emerging as the new industry standard and supporting more than 40 key applications; and Volvo Group’s uses of NVIDIA DRIVE 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, GeForce, GeForce RTX, GeForce RTX SUPER, NVIDIA DGX SuperPOD, NVIDIA DRIVE, NVIDIA RTX, NVIDIA Turing, 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. 

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Source: NVIDI