FOR IMMEDIATE RELEASE:

NVIDIA Announces Financial Results for Second Quarter Fiscal 2016
•
Revenue rose 5 percent to $1.153 billion from $1.103 billion a year earlier
•
Gaming and automotive revenue continued to grow strongly from a year earlier
•
Working with more than 50 companies to use NVIDIA DRIVE PX in their autonomous driving efforts

SANTA CLARA, Calif.-Aug. 6, 2015-NVIDIA (NASDAQ: NVDA) today reported revenue for the second quarter ended July 26, 2015, of $1.153 billion, up 5 percent from $1.103 billion a year earlier, and up marginally from $1.151 billion the previous quarter.
 
GAAP earnings per diluted share for the quarter were $0.05. This includes a charge of $0.19 per diluted share in connection with the company’s decision to wind down its Icera® modem operations, after a viable buyer failed to emerge. It also includes a charge of $0.02 per diluted share related to the NVIDIA SHIELD™ tablet recall.

Non-GAAP earnings per diluted share were $0.34, up 13 percent from $0.30 a year earlier, and up 3 percent from $0.33 in the previous quarter.

“Our strong performance in a challenging environment reflects NVIDIA’s success in creating specialized visual computing platforms targeted at important growth markets,” said Jen-Hsun Huang, president and chief executive officer of NVIDIA.

“Our gaming platforms continue to be fueled by growth in multiple vectors - new technologies like 4K and VR, blockbuster games with amazing production values, and increasing worldwide fan engagement in e-sports. We’re working with more than 50 companies that are exploring NVIDIA DRIVE to enable self-driving cars. And our GPU-accelerated data center platform continues to make great strides in some of today’s most important computing initiatives - cloud-based virtualization and high performance computing applications like deep learning.

“Visual computing continues to grow in importance, making our growth opportunities more exciting than ever,” he said.

Capital Return

During the second quarter, NVIDIA paid $52 million in cash dividends and $400 million in share repurchases - returning an aggregate of $452 million to shareholders. In the year’s first half, the company returned an aggregate of $551 million to shareholders.

NVIDIA will pay its next quarterly cash dividend of $0.0975 per share on September 11, 2015, to all shareholders of record on August 20, 2015. 
GAAP Quarterly Financial Comparison
($ in millions except earnings per share)
Q2 FY16
Q1 FY16
Q2 FY15
Q/Q
Y/Y
Revenue
$1,153
$1,151
$1,103
--
up 5%
Gross margin
55.0%
56.7%
56.1%
down 170 bps
down 110 bps
Operating expenses
$558
$477
$456
up 17%
up 22%
Net income
$26
$134
$128
down 81%
down 80%
Diluted earnings per share
$0.05
$0.24
$0.22
down 79%
  down 77%





Non-GAAP Quarterly Financial Comparison
($ in millions except earnings per share)
Q2 FY16
Q1 FY16
Q2 FY15
Q/Q
Y/Y
Revenue
$1,153
$1,151
$1,103
--
up 5%
Gross margin
56.6%
56.9%
56.4%
down 30 bps
up 20 bps
Operating expenses
$421
$425
$412
down 1%
up 2%
Net income
$190
$187
$173
up 2%
up 10%
Diluted earnings per share
$0.34
$0.33
$0.30
up 3%
up 13%

NVIDIA’s outlook for the third quarter of fiscal 2016 is as follows:
•
Revenue is expected to be $1.18 billion, plus or minus two percent.
•
GAAP and non-GAAP gross margins are expected to be 56.2 percent and 56.5 percent, respectively, plus or minus 50 basis points.
•
GAAP operating expenses are expected to be approximately $484 million. Non-GAAP operating expenses are expected to be approximately $435 million.
•
GAAP and non-GAAP tax rates for the third quarter of fiscal 2016 are expected to be 22 percent and 20 percent, respectively, plus or minus one percent.
•
The above GAAP outlook amounts exclude additional restructuring charges, which are expected to be in the range of $15 million to $25 million, in the second half of fiscal 2016.
•
Capital expenditures are expected to be approximately $25 million to $35 million.
Second Quarter Fiscal 2016 Highlights
During the second quarter, NVIDIA achieved progress in each of its platforms.
Gaming:
•
Continued strong demand for GeForce® GTX™ GPUs, driven by advanced new games and growth in competitive e-sports, which now have an estimated 130 million viewers.
•
Unveiled the flagship GeForce GTX 980 Ti GPU, with the power to drive 4K and VR gaming.
•
Increased users of the GeForce Experience™ PC gaming platform to 65 million, from 38 million a year earlier.
•
Launched the NVIDIA SHIELD Android TV device, the most advanced smart TV platform, which connects TVs to a world of entertainment apps and services.

Enterprise Graphics & Virtualization:
•
Continued strong momentum for NVIDIA GRID™ graphics virtualization, which more than tripled its customer base to over 300 enterprises from a year earlier.

HPC & Cloud:
•
Engaged with more than 3,300 companies exploring the use of deep learning in areas such as speech recognition, image analysis and translation capabilities.
•
Shipped cuDNN 3.0, which doubles the performance of deep learning training on GPUs and enables the training of more sophisticated neural networks. cuDNN has been downloaded by more than 9,000 researchers worldwide.




Auto:
•
Working with more than 50 companies to use the NVIDIA DRIVE™ PX platform in their autonomous driving  efforts.

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 2016 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 (303) 223-4372; no password is required. 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 third quarter fiscal 2016.

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 other income (expense), net, 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, product warranty charge, acquisition-related costs, restructuring and other charges, 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 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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•
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•
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•
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About NVIDIA
Since 1993, NVIDIA (NASDAQ: NVDA) has pioneered the art and science of visual computing. The company’s technologies are transforming a world of displays into a world of interactive discovery - for everyone from gamers to scientists, and consumers to enterprise customers. More information at http://nvidianews.nvidia.com and http://blogs.nvidia.com.

###





For further information, contact:
Arnab Chanda
 
Robert Sherbin
Investor Relations
 
Corporate Communications
NVIDIA Corporation
 
NVIDIA Corporation
(408) 566-6616
 
(408) 566-5150
achanda@nvidia.com
 
rsherbin@nvidia.com

Certain statements in this press release including, but not limited to statements as to: the company’s success in creating specialized visual computing platforms targeted at important growth markets; the company’s gaming platforms being fueled by growth in multiple vectors; increasing worldwide fan engagement in e-sports; the company’s GPU-accelerated datacenter platform making great strides in important computing initiatives; visual computing continuing to grow in importance; the company’s next quarterly cash dividend; the company’s financial outlook for the third quarter of fiscal 2016; the company’s tax rates for the third quarter of fiscal 2016; strong demand for GeForce GTX GPUs; the benefits of GeForce GTX 980Ti; strong momentum for GRID graphics virtualization; and the performance of cuDNN 3.0 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 April 26, 2015. 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.

© 2015 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, GeForce Experience, GTX, Icera, NVIDIA DRIVE, NVIDIA GRID, and SHIELD 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.













NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
 
 Three Months Ended
 
 Six Months Ended
 
July 26,
 
July 27,
 
July 26,
 
July 27,
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
Revenue
$
1,153

 
$
1,103

 
$
2,304

 
$
2,206

Cost of revenue
519

 
484

 
1,018

 
983

Gross profit
634

 
619

 
1,286

 
1,223

Operating expenses
 
 
 
 
 
 
 
Research and development
320

 
337

 
658

 
672

Sales, general and administrative
149

 
119

 
289

 
237

Restructuring and other charges
89

 
—

 
89

 
—

Total operating expenses
558

 
456

 
1,036

 
909

Operating income
76

 
163

 
250

 
314

Interest income
9

 
7

 
18

 
13

Interest expense
(12
)
 
(12
)
 
(22
)
 
(23
)
Other income (expense), net
(1
)
 
(3
)
 
(2
)
 
14

Income before income tax expense
72

 
155

 
244

 
318

Income tax expense
46

 
27

 
84

 
53

Net income
$
26

 
$
128

 
$
160

 
$
265

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
Basic
$
0.05

 
$
0.23

 
$
0.29

 
$
0.47

Diluted
$
0.05

 
$
0.22

 
$
0.28

 
$
0.46

 
 
 
 
 
 
 
 
Weighted average shares used in per share computation:
 
 
 
 
 
 
 
Basic
541

 
558

 
545

 
559

Diluted
556

 
571

 
563

 
571






NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
July 26,
 
January 25,
 
 
 
2015
 
2015
ASSETS
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash, cash equivalents and marketable securities
 
$
4,505

 
$
4,623

 
Accounts receivable, net
 
514

 
474

 
Inventories
 
441

 
483

 
Prepaid expenses and other current assets
 
148

 
133

 
  Total current assets
 
5,608

 
5,713

 
 
 
 
 
 
Property and equipment, net
 
497

 
557

Goodwill
 
618

 
618

Intangible assets, net
 
190

 
222

Other assets
 
66

 
91

 
  Total assets
 
$
6,979

 
$
7,201

 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
 
$
277

 
$
293

 
Accrued and other current liabilities
 
659

 
603

 
  Total current liabilities
 
936

 
896

 
 
 
 
 
 
Long-term debt
 
1,399

 
1,384

Other long-term liabilities
 
447

 
489

Capital lease obligations, long-term
 
12

 
14

Shareholders' equity
 
4,185

 
4,418

 
  Total liabilities and shareholders' equity
 
$
6,979

 
$
7,201






NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 Three Months Ended
 
 Six Months Ended
 
 
July 26,
 
April 26,
 
July 27,
 
July 26,
 
July 27,
 
 
2015
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP gross profit
 
$
634

 
$
653

 
$
619

 
$
1,286

 
$
1,223

GAAP gross margin
 
55.0
%
 
56.7
%
 
56.1
%
 
55.8
%
 
55.5
%
Stock-based compensation expense included in cost of revenue (A)
 
3

 
2

 
3

 
6

 
6

Product warranty charge (B)
 
15

 
—

 
—

 
15

 
—

Non-GAAP gross profit
 
$
652

 
$
655

 
$
622

 
$
1,307

 
$
1,229

Non-GAAP gross margin
 
56.6
%
 
56.9
%
 
56.4
%
 
56.7
%
 
55.7
%
 
 
 
 
 
 
 
 
 
 
 
GAAP operating expenses
 
$
558

 
$
477

 
$
456

 
$
1,036

 
$
909

Stock-based compensation expense included in operating expense (A)
 
(44
)
 
(43
)
 
(35
)
 
(87
)
 
(68
)
     Acquisition-related costs (C)
 
(4
)
 
(9
)
 
(9
)
 
(13
)
 
(19
)
Restructuring and other charges
 
(89
)
 
—

 
—

 
(89
)
 
—

Non-GAAP operating expenses
 
$
421

 
$
425

 
$
412

 
$
847

 
$
822

 
 
 
 
 
 
 
 
 
 
 
GAAP other income (expense), net
$
(4
)
 
$
(4
)
 
$
(8
)
 
$
(6
)
 
$
4

Gains and losses from non-affiliated investments
 
—

 
—

 
3

 
—

 
(14
)
Interest expense related to amortization of debt discount
 
7

 
7

 
7

 
14

 
14

Non-GAAP other income, net
$
3

 
$
3

 
$
2

 
$
8

 
$
4

 
 
 
 
 
 
 
 
 
 
 
GAAP net income
 
$
26

 
$
134

 
$
128

 
$
160

 
$
265

Total pre-tax impact of non-GAAP adjustments
 
162

 
63

 
57

 
225

 
91

Income tax impact of non-GAAP adjustments
 
2

 
(10
)
 
(12
)
 
(8
)
 
(17
)
Non-GAAP net income
 
$
190

 
$
187

 
$
173

 
$
377

 
$
339

 
 
 
 
 
 
 
 
 
 
 
Diluted net income per share
 
 
 
 
 
 
 
 
 
 
GAAP
 
$
0.05

 
$
0.24

 
$
0.22

 
$
0.28

 
$
0.46

Non-GAAP
 
$
0.34

 
$
0.33

 
$
0.30

 
$
0.68

 
$
0.59

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares used in diluted net income per share computation
 
 
 
 
 
 
 
 
 
 
GAAP
 
556

 
568

 
571

 
563

 
571

Anti-dilution impact from note hedge (D)
 
(4
)
 
(6
)
 
—

 
(5
)
 
—

Non-GAAP
 
552

 
562

 
571

 
558

 
571

 
 
 
 
 
 
 
 
 
 
 




Metrics:
 
 
 
 
 
 
 
 
 
 
GAAP net cash provided by operating activities
 
$
163

 
$
246

 
$
96

 
$
409

 
$
247

Purchase of property and equipment and intangible assets
 
(24
)
 
(30
)
 
(22
)
 
(54
)
 
(51
)
Free cash flow
 
$
139

 
$
216

 
$
74

 
$
355

 
$
196


  
(A) Excludes stock-based compensation as follows:
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
July 26,
 
April 26,
 
July 27,
 
July 26,
 
July 27,
 
 
2015
 
2015
 
2014
 
2015
 
2014
Cost of revenue
 
$
3

 
$
2

 
$
3

 
$
6

 
$
6

Research and development
 
$
27

 
$
27

 
$
21

 
$
54

 
$
42

Sales, general and administrative
 
$
17

 
$
16

 
$
14

 
$
33

 
$
26

 
 
 
 
 
 
 
 
 
 
 
(B) Represents warranty charge associated with product recall.
 
 
 
 
 
 
 
 
 
 
 
(C) Consists of amortization of acquisition-related intangible assets, transaction costs, compensation charges, and other credits related to acquisitions.
 
 
 
 
 
 
 
 
 
 
 
(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
 
 
 
 
 Q3 FY2016 Outlook
  GAAP gross margin
 
56.2
%
 
Impact of stock-based compensation
 
0.3
%
  Non-GAAP gross margin
 
56.5
%
 
 
 
 
 
 
 
 Q3 FY2016 Outlook
 
 
 
(In millions)
 
 
 
 
GAAP operating expenses
 
$
484

 
Stock-based compensation expense and acquisition-related costs
 
(49
)
Non-GAAP operating expenses
 
$
435