10-QPeriod: Q2 FY2012

NVIDIA CORP Quarterly Report for Q2 Ended May 1, 2011

Filed May 27, 2011For Securities:NVDA

Summary

NVIDIA Corporation (NVDA) reported its financial results for the first quarter ended May 1, 2011. Revenue for the quarter was $962.0 million, 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 million, 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.

Financial Highlights

50 data points
Beta

Revenue

$962.04M

50.4% Gross Margin

Net Income

$135.22M

14.1% Net Margin

EPS (Diluted)

$0.01

Total Assets

$4.86B

Cash & Equivalents

$532.61M

Free Cash Flow

$141.00M

Financial Statements
Beta
Revenue$962.04M
Cost of Revenue$477.54M
Gross Profit$484.50M
R&D Expenses$247.72M
SG&A Expenses$103.53M
Operating Expenses$351.25M
Operating Income$174.03M
Net Income$135.22M
EPS (Basic)$0.01
EPS (Diluted)$0.01
Shares Outstanding (Basic)24.05B
Shares Outstanding (Diluted)24.56B

Key Highlights

  • 1Revenue for the quarter declined 4% year-over-year to $962.0 million, primarily due to a significant drop in the GPU business segment.
  • 2Gross margin improved substantially to 50.4% from 45.6% year-over-year, driven by a better product mix, manufacturing efficiencies, and cost reductions.
  • 3Net 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.
  • 4Operating cash flow saw a significant turnaround, increasing to $172.2 million from a negative $5.4 million in the prior year.
  • 5The company's cash, cash equivalents, and marketable securities stood at $2.73 billion, providing strong liquidity.
  • 6NVIDIA announced its intention to acquire Icera Inc. for $367 million, a strategic move to bolster its presence in the mobile market.
  • 7The Consumer Products Business (CPB), driven by Tegra products, experienced a dramatic revenue increase of 293% year-over-year.

Frequently Asked Questions

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.

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.

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.

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.