10-QPeriod: Q1 FY2013

NVIDIA CORP Quarterly Report for Q1 Ended Apr 29, 2012

Filed May 23, 2012For Securities:NVDA

Summary

NVIDIA Corporation reported revenue of $924.9 million for the first quarter of fiscal year 2013, a decrease of 3.9% compared to $962.0 million in the prior year. This decline was primarily driven by a 9.1% decrease in the GPU business, attributed to supply shortages of their new Kepler architecture and a shift to lower-margin mainstream products, along with a decrease in media and communications processor sales. Despite the overall revenue dip, the Professional Solutions Business (PSB) saw a 5.4% increase, and the Consumer Products Business (CPB) grew by 8.1%, driven by embedded entertainment products and anticipated growth in Tegra 3 products. Operating expenses increased significantly due to higher R&D spending, up 22.6%, driven by headcount growth and development for new technologies like Kepler. Net income decreased to $60.4 million from $135.2 million in the prior year, resulting in a diluted EPS of $0.10 compared to $0.22. The company maintained a strong liquidity position with $3.13 billion in cash, cash equivalents, and marketable securities. NVIDIA's strategic focus remains on new product development, including the Kepler architecture and Tegra processors, alongside managing supply chain constraints and competitive pressures.

Financial Highlights

54 data points
Beta

Revenue

$924.88M

50.1% Gross Margin

Net Income

$60.44M

6.5% Net Margin

EPS (Diluted)

$0.00

Total Assets

$5.71B

Cash & Equivalents

$369.13M

Free Cash Flow

-$38.13M

Financial Statements
Beta
Revenue$924.88M
Cost of Revenue$461.51M
Gross Profit$463.36M
R&D Expenses$283.90M
SG&A Expenses$106.64M
Operating Expenses$390.54M
Operating Income$72.83M
Net Income$60.44M
EPS (Basic)$0.00
EPS (Diluted)$0.00
Shares Outstanding (Basic)24.63B
Shares Outstanding (Diluted)24.95B

Key Highlights

  • 1Revenue decreased by 3.9% year-over-year to $924.9 million, primarily due to softness in the GPU segment.
  • 2Research and Development (R&D) expenses increased by 22.6% to $283.9 million, reflecting investments in new technologies like the Kepler architecture.
  • 3Net income declined significantly to $60.4 million, from $135.2 million in the prior year, resulting in a diluted EPS of $0.10.
  • 4The Professional Solutions Business (PSB) and Consumer Products Business (CPB) showed revenue growth of 5.4% and 8.1% respectively.
  • 5The company maintained a robust cash position, with $3.13 billion in cash, cash equivalents, and marketable securities.
  • 6The company launched its new Kepler GPU architecture and saw initial shipments of Tegra 3 phones.
  • 7Gross margin slightly decreased to 50.1% from 50.4% due to a less favorable product mix in the desktop GPU business.

Frequently Asked Questions

The primary reason for the year-over-year revenue decline was a 9.1% decrease in the GPU business revenue. This was attributed to a supply shortage of NVIDIA's new 28nm Kepler products, which impacted high-end desktop GPU sales, and a decrease in media and communications processor sales as these chipsets approach end-of-life.

R&D expenses increased by 22.6% primarily due to growth in headcount and associated compensation and benefits, as well as increased development costs related to the ramp-up for the launch of the new Kepler 28nm technology. Amortization of new hardware and licenses, along with acquisition-related costs for Icera, also contributed to the increase.

NVIDIA maintained a strong liquidity position, with $3.13 billion in cash, cash equivalents, and marketable securities as of April 29, 2012. This reflects a slight increase from the previous quarter and provides ample resources for operations and strategic investments.

The report highlights the launch of NVIDIA's new Kepler GPU architecture with products like the GeForce GTX 670 and GTX 680. It also notes the refresh of notebook GPUs with the GeForce 600M series and the launch of the first Tegra 3 phones, such as the HTC One X, indicating continued focus on innovation in both PC graphics and mobile processors.