During the first quarter, NVIDIA achieved broad progress.
Gaming:
- Announced GeForce® GTX 1080 Ti, the world's fastest gaming GPU.
- Announced
TITAN Xp for enthusiasts and researchers requiring extreme performance.
Datacenter:
- Announced with Microsoft that it is bringing NVIDIA® Tesla® P100 and P40 GPUs to the Azure cloud.
- Announced that NVIDIA Tesla accelerators designed for datacenter AI capabilities were added to Google Cloud, Tencent Cloud, IBM Cloud, and Baidu Cloud.
- Announced that Tokyo Institute of Technology will use NVIDIA's accelerated computing platform to create Japan's fastest AI supercomputer, TSUBAME3.0.
- Announced that Fujitsu is using 24 NVIDIA DGX-1™ AI systems to build a new AI supercomputer for RIKEN, Japan's largest research center.
- Announced together with Facebook the Caffe2 deep learning framework and Big Basin servers with Tesla P100 GPUs.
- Announced plans to train 100,000 developers this year, a 10x increase over 2016, through the NVIDIA Deep Learning Institute.
- Announced
NVIDIA Jetson™ TX2, a high-performance, low-power computer platform for delivering AI at the edge, with deep learning and computer vision capabilities for robots, drones and smart cameras.
Automotive:
- Announced with Bosch, the world's largest auto supplier, plans to create a new Bosch-branded AI self-driving car computer.
- Announced a collaboration
with PACCAR, one of the world's largest truck makers with brands including Peterbilt, Kenworth and DAF, to develop solutions for autonomous trucks.
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 first 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: 4018413. 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 the company's conference call to discuss its financial results for its second quarter of 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, revenue excluding Intel license, 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.
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NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
Three Months Ended
------------------------
April 30, May 1,
2017 2016
----------- -----------
Revenue $ 1,937 $ 1,305
Cost of revenue 787 554
----------- -----------
Gross profit 1,150 751
Operating expenses
Research and development 411 346
Sales, general and administrative 185 159
Restructuring and other charges - 1
----------- -----------
Total operating expenses 596 506
----------- -----------
Income from operations 554 245
Interest income 16 12
Interest expense (16) (12)
Other, net (18) (4)
----------- -----------
Total other income (expense) (18) (4)
----------- -----------
Income before income tax expense 536 241
Income tax expense 29 33
----------- -----------
Net income $ 507 $ 208
=========== ===========
Net income per share:
Basic $ 0.86 $ 0.39
=========== ===========
Diluted $ 0.79 $ 0.35
=========== ===========
Weighted average shares used in per share
computation:
Basic 592 537
Diluted 641 599
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
April 30, January 29,
2017 2017
----------- -----------
ASSETS
Current assets:
Cash, cash equivalents and marketable securities $ 6,206 $ 6,798
Accounts receivable, net 976 826
Inventories 821 794
Prepaid expenses and other current assets 113 118
----------- -----------
Total current assets 8,116 8,536
Property and equipment, net 539 521
Goodwill 618 618
Intangible assets, net 90 104
Other assets 47 62
----------- -----------
Total assets $ 9,410 $ 9,841
=========== ===========
LIABILITIES, CONVERTIBLE DEBT CONVERSION OBLIGATION AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 348 $ 485
Accrued and other current liabilities 420 507
Convertible short-term debt 215 796
----------- -----------
Total current liabilities 983 1,788
Long-term debt 1,984 1,983
Other long-term liabilities 300 271
Capital lease obligations, long-term 4 6
----------- -----------
Total liabilities 3,271 4,048
Convertible debt conversion obligation 7 31
Shareholders' equity 6,132 5,762
----------- -----------
Total liabilities, convertible debt conversion
obligation and shareholders' equity $ 9,410 $ 9,841
=========== ===========
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)
Three Months Ended
-------------------------------------
April 30, January 29, May 1,
2017 2017 2016
----------- ----------- -----------
GAAP gross profit $ 1,150 $ 1,303 $ 751
GAAP gross margin 59.4% 60.0% 57.5%
Stock-based compensation expense (A) 4 4 4
Legal settlement costs - - 10
----------- ----------- -----------
Non-GAAP gross profit $ 1,154 $ 1,307 $ 765
=========== =========== ===========
Non-GAAP gross margin 59.6% 60.2% 58.6%
GAAP operating expenses $ 596 $ 570 $ 506
Stock-based compensation expense (A) (73) (68) (49)
Legal settlement costs - - (6)
Acquisition-related costs (B) (4) (4) (4)
Contributions (2) - (3)
Restructuring and other charges - - (1)
----------- ----------- -----------
Non-GAAP operating expenses $ 517 $ 498 $ 443
=========== =========== ===========
GAAP income from operations $ 554 $ 733 $ 245
Total impact of non-GAAP adjustments
to income from operations 83 76 77
----------- ----------- -----------
Non-GAAP income from operations $ 637 $ 809 $ 322
=========== =========== ===========
GAAP other income (expense) $ (18) $ (7) $ (4)
Gains from non-affiliated
investments - (1) (3)
Interest expense related to
amortization of debt discount 2 4 7
Loss on early debt conversions 14 6 -
----------- ----------- -----------
Non-GAAP other income (expense) $ (2) $ 2 $ -
=========== =========== ===========
GAAP net income $ 507 $ 655 $ 208
Total pre-tax impact of non-GAAP
adjustments 99 85 81
Income tax impact of non-GAAP
adjustments (73) (36) (26)
----------- ----------- -----------
Non-GAAP net income $ 533 $ 704 $ 263
=========== =========== ===========
Diluted net income per share
GAAP $ 0.79 $ 0.99 $ 0.35
=========== =========== ===========
Non-GAAP $ 0.85 $ 1.13 $ 0.46
=========== =========== ===========
Weighted average shares used in
diluted net income per share
computation
GAAP 641 660 599
Anti-dilution impact from note hedge
(C) (14) (36) (29)
----------- ----------- -----------
Non-GAAP 627 624 570
=========== =========== ===========
GAAP revenue $ 1,937 $ 2,173 $ 1,305
Revenue from Intel license (43) (66) (66)
----------- ----------- -----------
Revenue excluding Intel license $ 1,894 $ 2,107 $ 1,239
=========== =========== ===========
GAAP net cash provided by operating
activities $ 282 $ 721 $ 318
Purchase of property and equipment
and intangible assets (53) (52) (55)
----------- ----------- -----------
Free cash flow $ 229 $ 669 $ 263
=========== =========== ===========
----------------------------------------------------------------------------
(A) Excludes stock-based compensation
as follows: Three Months Ended
-------------------------------------
April 30, January 29, May 1,
2017 2017 2016
----------- ----------- -----------
Cost of revenue $ 4 $ 4 $ 4
Research and development $ 41 $ 40 $ 29
Sales, general and administrative $ 31 $ 27 $ 20
(B) Consists of amortization of acquisition-related intangible assets and
compensation charges.
(C) 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
Q2 FY2018
Outlook
-------------
GAAP gross margin 58.4%
Impact of stock-based compensation expense 0.2%
-------------
Non-GAAP gross margin 58.6%
=============
Q2 FY2018
Outlook
-------------
(In millions)
GAAP operating expenses $ 605
Stock-based compensation expense, acquisition-related costs,
and other costs (75)
-------------
Non-GAAP operating expenses $ 530
=============
Q2 FY2018
Outlook
-------------
(In millions)
GAAP other income (expense) $ (8)
Loss on early debt conversions and interest expense related
to amortization of debt discount 5
-------------
Non-GAAP other income (expense) $ (3)
=============
