NVIDIA Reports Financial Results for Third Quarter Fiscal 2014

By Nathan Kirsch

NVIDIA Reports Financial Results for Third Quarter Fiscal 2014

Increases Dividend; Intends to Return to Shareholders $1 Billion of Capital in Fiscal 2015

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SANTA CLARA, CA – NVIDIA (NASDAQ: NVDA) NVIDIA (NASDAQ: NVDA) today reported revenue for the third quarter of fiscal 2014, ended Oct. 27, 2013, of $1.054 billion, up 7.9 percent from $977.2 million in the previous quarter.

  • Revenue of $1.054 billion.
  • GAAP net income of $118.7 million, or $0.20 per diluted share. Non-GAAP net income of $153.8 million, or $0.26 per diluted share.
  • GAAP and non-GAAP gross margins of 55.4 percent and 55.7 percent, respectively.

NVIDIA (NASDAQ: NVDA) today reported revenue for the third quarter of fiscal 2014, ended Oct. 27, 2013, of $1.054 billion, up 7.9 percent from $977.2 million in the previous quarter.

GAAP earnings per diluted share were $0.20, up 25.0 percent from $0.16 in the previous quarter. Non-GAAP earnings per diluted share were $0.26, up 13.0 percent from $0.23 in the previous quarter.

NVIDIA also announced a 13 percent increase in the quarterly cash dividend to $0.085 per share ($0.34 per share on an annual basis) from $0.075 per share ($0.30 per share on an annual basis). NVIDIA will pay its next quarterly cash dividend of $0.085 per share on Dec. 13, 2013, to all stockholders of record on Nov. 21, 2013.

NVIDIA intends to return $1 billion in fiscal 2015 through stock repurchases and quarterly dividend payments. The company’s board of directors has authorized an additional $1 billion under the company’s stock repurchase program for a total of $1.286 billion available through the end of January 2016.

“Visual computing is increasingly important to more and more markets,” said Jen-Hsun Huang, president and chief executive officer of NVIDIA. “It’s creating demand for GPUs and opening up large opportunities. The proof can be seen in the proliferation of Tegra into new verticals like automotive and set-top boxes, in our all-time high Quadro and Tesla revenues, and in the record number of customer trials for our GRID datacenter initiative. At a time when many are struggling with the decline in the mainstream PC market, our visual computing leadership has positioned us well to grow with the accelerating adoption of GPUs in the cloud and the world of connected devices.”

GAAP Quarterly Financial Comparison
(in millions except per share data) Q3 FY14 Q2 FY14 Q3 FY13 Q/Q Y/Y
Revenue $1,054.0 $977.2 $1,204.1 up 7.9% down 12.5%
Gross margin 55.4% 55.8% 52.9% down 40 bps up 250 bps
Operating expenses $443.4 $440.0 $384.4 up 0.8% up 15.3%
Net income $118.7 $96.4 $209.1 up 23.1% down 43.2%
Earnings per share $0.20 $0.16 $0.33 up 25.0% down 39.4%
Non-GAAP* Quarterly Financial Comparison
(in millions except per share data) Q3 FY14 Q2 FY14 Q3 FY13 Q/Q Y/Y
Revenue $1,054.0 $977.2 $1,204.1 up 7.9% down 12.5%
Gross margin 55.7% 56.3% 53.1% down 60 bps up 260 bps
Operating expenses $405.4 $400.8 $344.8 up 1.1% up 17.6%
Net income $153.8 $133.3 $245.5 up 15.3% down 37.3%
Earnings per share $0.26 $0.23 $0.39 up 13.0% down 33.3%

*Non-GAAP earnings excluded stock-based compensation, amortization of acquisition-related intangible assets, other acquisition-related costs or credits, a restructuring charge in the third quarter of fiscal 2014, a legal settlement charge in the second quarter of fiscal 2014, and the tax impact associated with such items.

The company’s previously announced $750 million accelerated stock repurchase was completed on Oct. 22 with the delivery of an additional 14.6 million shares. In aggregate, we received 51.5 million shares at an average price of $14.56 per share. The common stock delivered to NVIDIA was placed into treasury stock.

Among highlights of the third quarter of fiscal 2014, NVIDIA:

  • Strengthened its mobile business, with the first shipments of Tegra 4 devices — including China’s Mi3 smartphone from Xiaomi and Tegra Note, a complete tablet platform.
  • Improved gaming for NVIDIA SHIELD users, with the introduction of Gamepad Mapper, which expands support for thousands more Android gaming titles.
  • Launched its new flagship gaming GPU, GeForce GTX 780 Ti, and the world’s most powerful workstation graphics card, Quadro K6000.
  • Introduced revolutionary G-SYNC technology, which eliminates onscreen tearing, stuttering and lag by synchronizing the GPU and the display.
  • Announced that VMware Horizon View, a leading virtual desktop management product, now supports NVIDIA GRID technology.

NVIDIA’s outlook for the fourth quarter of fiscal 2014 is as follows:

  • 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.

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.