- Revenue is expected to be $1.05 billion, plus or minus two percent.
- GAAP and non-GAAP margins are expected to be approximately 54.2 percent and 54.5 percent, respectively.
- GAAP operating expenses are expected to be approximately $450 million; non-GAAP operating expenses are expected to be approximately $410 million.
- GAAP and non-GAAP tax rates are expected to be 16 percent, plus or minus one percent. This estimate excludes any discrete tax events that may occur during the quarter, which, if realized, may increase or decrease our actual effective tax rates in the quarter.
Diluted shares for the fourth quarter are expected to be approximately 578.5 million.
CFO Commentary and Earnings Presentation
Commentary on the quarter by Colette Kress, NVIDIA chief financial officer, and a presentation, are available at
www.nvidia.com/ir.
Conference Call and Webcast Information
NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter fiscal 2014 financial results and current financial prospects today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen to the call, please dial (212) 231-2922. A live webcast (listen-only mode) of the conference call will be accessible at the NVIDIA investor relations web site
www.nvidia.com/ir 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 fourth quarter fiscal 2014.
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 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, amortization of acquisition-related intangible assets, other acquisition-related costs or credits, a restructuring charge, a legal settlement, a contribution expense, 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 Nine Months Ended
------------------------- -------------------------
October 27, October 28, October 27, October 28,
2013 2012 2013 2012
------------ ------------ ------------ ------------
Revenue $ 1,053,967 $ 1,204,110 $ 2,985,944 $ 3,173,257
Cost of revenue 469,552 567,452 1,337,423 1,532,516
------------ ------------ ------------ ------------
Gross profit 584,415 636,658 1,648,521 1,640,741
Operating expenses
Research and
development 340,294 284,180 999,193 849,275
Sales, general and
administrative 103,133 100,261 320,025 326,800
------------ ------------ ------------ ------------
Total operating
expenses 443,427 384,441 1,319,218 1,176,075
------------ ------------ ------------ ------------
Operating income 140,988 252,217 329,303 464,666
Interest and other
income, net 496 1,411 12,063 11,265
------------ ------------ ------------ ------------
Income before income tax
expense 141,484 253,628 341,366 475,931
Income tax expense 22,750 44,548 48,293 87,368
------------ ------------ ------------ ------------
Net income $ 118,734 $ 209,080 $ 293,073 $ 388,563
============ ============ ============ ============
Basic net income per
share $ 0.20 $ 0.34 $ 0.49 $ 0.63
============ ============ ============ ============
Diluted net income per
share $ 0.20 $ 0.33 $ 0.49 $ 0.62
============ ============ ============ ============
Shares used in basic per
share computation 580,870 622,352 594,363 619,043
Shares used in diluted
per share computation 588,752 628,845 600,108 625,973
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
October 27, January 27,
2013 2013
------------ ------------
ASSETS
Current assets:
Cash, cash equivalents and marketable securities $ 3,032,954 $ 3,727,883
Accounts receivable, net 447,631 454,252
Inventories 380,319 412,467
Prepaid expenses and other current assets 188,937 180,656
------------ ------------
Total current assets 4,049,841 4,775,258
Property and equipment, net 595,418 576,144
Goodwill 643,179 641,030
Intangible assets, net 320,589 312,332
Other assets 102,346 107,481
------------ ------------
Total assets $ 5,711,373 $ 6,412,245
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 333,283 $ 356,428
Accrued liabilities and other current
liabilities 652,644 619,795
------------ ------------
Total current liabilities 985,927 976,223
Other long-term liabilities 387,784 589,321
Capital lease obligations, long term 17,015 18,998
Stockholders' equity 4,320,647 4,827,703
------------ ------------
Total liabilities and stockholders' equity $ 5,711,373 $ 6,412,245
============ ============
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
--------------------------------- ----------------------
October July 28, October October October
27, 2013 2013 28, 2012 27, 2013 28, 2012
---------- --------- ---------- ---------- ----------
GAAP gross profit $ 584,415 $ 545,538 $ 636,658 $1,648,521 $1,640,741
GAAP gross
margin 55.4% 55.8% 52.9% 55.2% 51.7%
Stock-based
compensation
expense
included in
cost of
revenue (A) 3,090 2,168 2,489 7,911 7,664
Legal
settlement - 2,290 - 2,290 -
---------- --------- ---------- ---------- ----------
Non-GAAP gross
profit $ 587,505 $ 549,996 $ 639,147 $1,658,722 $1,648,405
========== ========= ========== ========== ==========
Non-GAAP gross
margin 55.7% 56.3% 53.1% 55.6% 51.9%
GAAP operating
expenses $ 443,427 $ 440,004 $ 384,441 $1,319,218 $1,176,075
Stock-based
compensation
expense
included in
operating
expense (A) (31,209) (30,227) (30,580) (92,180) (93,229)
Amortization of
acquisition-
related
intangible
assets (4,906) (3,980) (4,402) (12,801) (12,809)
Other
acquisition-
related costs
or credits (B) 329 (4,984) (4,666) (9,601) (14,631)
Contribution
expense (C) - - - - (20,127)
Restructuring
charge (2,235) - - (2,235) -
---------- --------- ---------- ---------- ----------
Non-GAAP
operating
expenses $ 405,406 $ 400,813 $ 344,793 $1,202,401 $1,035,279
========== ========= ========== ========== ==========
GAAP net income $ 118,734 $ 96,448 $ 209,080 $ 293,073 $ 388,563
Total pre-tax
impact of non-
GAAP
adjustments 41,111 43,649 42,137 127,018 148,460
Income tax
impact of non-
GAAP
adjustments (6,055) (6,767) (5,755) (19,170) (23,583)
---------- --------- ---------- ---------- ----------
Non-GAAP net
income $ 153,790 $ 133,330 $ 245,462 $ 400,921 $ 513,440
========== ========= ========== ========== ==========
Diluted net
income per share
GAAP $ 0.20 $ 0.16 $ 0.33 $ 0.49 $ 0.62
========== ========= ========== ========== ==========
Non-GAAP $ 0.26 $ 0.23 $ 0.39 $ 0.67 $ 0.82
========== ========= ========== ========== ==========
Shares used in
diluted net
income per share
computation 588,752 592,006 628,845 600,108 625,973
Metrics:
GAAP net cash
flow provided
by operating
activities $ 162,315 $ 96,469 $ 181,485 $ 434,434 $ 373,163
Purchase of
property and
equipment and
intangible
assets (38,159) (84,986) (44,684) (188,812) (135,551)
---------- --------- ---------- ---------- ----------
Free cash flow $ 124,156 $ 11,483 $ 136,801 $ 245,622 $ 237,612
========== ========= ========== ========== ==========
----------------------------------------------------------------------------
(A) Excludes
stock-based
compensation as
follows: Three Months Ended Nine Months Ended
--------------------------------- ----------------------
October July 28, October October October
27, 2013 2013 28, 2012 27, 2013 28, 2012
---------- --------- ---------- ---------- ----------
Cost of revenue $ 3,090 $ 2,168 $ 2,489 $ 7,911 $ 7,664
Research and
development $ 20,902 $ 18,555 $ 20,056 $ 61,392 $ 60,148
Sales, general
and
administrative $ 10,307 $ 11,672 $ 10,524 $ 30,788 $ 33,081
(B) Consists of transaction costs, compensation charges, and other credits
related to acquisitions.
(C) Net present value of a $25 million charitable contribution pledged on
June 12, 2012 to Stanford Hospital and Clinic, payable over ten years.
----------------------------------------------------------------------------
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q4 FY2014 Outlook
-----------------
GAAP gross margin 54.2%
Impact of stock-based compensation (A) 0.3%
-----------------
Non-GAAP gross margin 54.5%
=================
Q4 FY2014 Outlook
-----------------
(In millions)
GAAP operating expenses $ 450.0
Stock-based compensation expense included in operating
expense (30.8)
Amortization of acquisition-related intangible assets (4.9)
Other acquisition-related costs (B) (4.3)
-----------------
Non-GAAP operating expenses $ 410.0
=================
----------------------------------------------------------------------------
(A) Represents $2.7 million of stock-based compensation expense included in
cost of revenue.
(B) Consists of transaction costs and compensation charges related to
acquisitions.
----------------------------------------------------------------------------
