01—Abstract
Summary
Summary of the 10-Q filed May 27, 2011. Cited figures are marked; the original filing is the authoritative source.
NVIDIA Corporation (NVDA) reported its financial results for the first quarter ended May 1, 2011.
Revenue for the quarter was $962.0 milliona, a decrease of approximately 4% compared to $1.00 billion in the prior year's first quarter. This decline was primarily driven by an 18% decrease in the GPU business segment, largely due to the winding down of MCP chipset products and a shift in notebook platform adoption. Despite the revenue dip, NVIDIA demonstrated improved profitability with a gross margin of 50.4% compared to 45.6% in the prior year, attributed to a richer product mix, improved manufacturing yields, and cost reductions.
Net income for the quarter was $135.2 millionb, or $0.22 per diluted share, a slight decrease from $137.6 million, or $0.23 per diluted share, in the prior year. The company also reported a strong balance sheet with $2.73 billion in cash, cash equivalents, and marketable securities, and a significant increase in operating cash flow to $172.2 million from a negative $5.4 million in the prior year, indicating improved working capital management. NVIDIA also announced its intention to acquire Icera Inc. for $367 million, signaling strategic investment in the mobile market.
02—Key points
Key Highlights
- Revenue for the quarter declined 4% year-over-year to $962.0 million, primarily due to a significant drop in the GPU business segment.
- Gross margin improved substantially to 50.4% from 45.6% year-over-year, driven by a better product mix, manufacturing efficiencies, and cost reductions.
- Net income was $135.2 million, or $0.22 per diluted share, a slight decrease from $137.6 million, or $0.23 per diluted share, in the prior year.
- Operating cash flow saw a significant turnaround, increasing to $172.2 million from a negative $5.4 million in the prior year.
- The company's cash, cash equivalents, and marketable securities stood at $2.73 billion, providing strong liquidity.
- NVIDIA announced its intention to acquire Icera Inc. for $367 million, a strategic move to bolster its presence in the mobile market.
- The Consumer Products Business (CPB), driven by Tegra products, experienced a dramatic revenue increase of 293% year-over-year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2012, NVIDIA Corp kept $0.14.
- Revenue$962.0M100.0%
- Cost of revenue−$477.5M49.6%
- Gross profit$484.5M50.4%
- Operating costs−$310.5M32.3%
- Operating income$174.0M18.1%
- Interest, other & tax−$38.8M4.0%
- Net income$135.2M14.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2012filed May 27, 2011Financial Statements
Q2 FY2012 against Q2 FY2011
| Line item | Q2 FY2012Q2 FY2011 | Change |
|---|---|---|
| Revenue | $962.04M$1.00B | −4.0% |
| Cost of Revenue | $477.54M$545.44M | −12.4% |
| Gross Profit | $484.50M$456.38M | +6.2% |
| R&D Expenses | $247.72M$218.10M | +13.6% |
| SG&A Expenses | $103.53M$90.88M | +13.9% |
| Operating Expenses | $351.25M$308.98M | +13.7% |
| Operating Income | $174.03M$147.39M | +18.1% |
| Net Income | $135.22M$137.59M | −1.7% |
| EPS (Basic) | $0.01$0.01 | −4.2% |
| EPS (Diluted) | $0.01$0.01 | −4.3% |
| Shares Outstanding (Basic) | 24.05B22.69M | +105922.2% |
| Shares Outstanding (Diluted) | 24.56B23.64M | +103781.1% |
05—Questions
Frequently Asked Questions
What was NVIDIA's revenue performance in this quarter, and what drove the change?
NVIDIA's revenue for the first quarter ended May 1, 2011, was $962.0 million, a 4% decrease compared to $1.00 billion in the prior year's first quarter. This decline was primarily attributed to an 18% decrease in the GPU business segment, influenced by the phasing out of MCP chipset products and a shift in notebook platform adoption. However, the Consumer Products Business (CPB) segment, driven by Tegra products, saw a significant 293% revenue increase.
How did NVIDIA's profitability fare, and what factors contributed to it?
NVIDIA demonstrated improved profitability, with gross margin increasing to 50.4% from 45.6% in the prior year. This improvement was driven by a richer product mix, enhanced manufacturing yields (particularly for 40nm products), and overall cost reductions. Net income was $135.2 million, slightly down from $137.6 million in the prior year, but earnings per diluted share remained strong at $0.22.
What is the significance of the Icera acquisition announcement?
NVIDIA announced its intention to acquire Icera Inc. for $367 million in cash. This acquisition is a strategic move aimed at enhancing NVIDIA's position in the growing mobile market, particularly by integrating Icera's baseband processors for 3G and 4G cellular phones and tablets with NVIDIA's Tegra processor. The deal is expected to close approximately 30 days after the announcement.
How is NVIDIA's cash position and operating cash flow looking?
NVIDIA maintains a strong liquidity position, with $2.73 billion in cash, cash equivalents, and marketable securities as of May 1, 2011. The company also showed a significant improvement in operating cash flow, which increased to $172.2 million for the quarter, a substantial turnaround from a negative $5.4 million in the same period last year, indicating effective working capital management.
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