10-QPeriod: Q2 FY2013

NVIDIA CORP Quarterly Report for Q2 Ended Jul 29, 2012

Filed August 22, 2012For Securities:NVDA

Summary

NVIDIA Corporation (NVDA) reported its financial results for the second quarter of fiscal year 2013, ending July 29, 2012. Total revenue for the quarter was $1.04 billion, a slight increase of 2.7% year-over-year, indicating stable demand for its core GPU business, driven by new Kepler architecture products. The company saw growth in its GPU business, particularly in high-end desktop and notebook segments, while the Consumer Products Business (CPB) also experienced an increase primarily due to strong Tegra 3 sales for tablets and smartphones. However, the Professional Solutions Business (PSB) saw a slight revenue decline, attributed to softening demand in European markets. Net income for the quarter was $119 million, a decrease from the prior year's $151.6 million, reflecting increased operating expenses, notably in Research and Development, which rose by 13.5% as the company continues to invest in new technologies. Despite the dip in net income, NVIDIA maintained a healthy gross margin of 51.8%, demonstrating its ability to manage product mix and costs effectively.

Financial Highlights

54 data points
Beta

Revenue

$1.04B

51.8% Gross Margin

Net Income

$119.05M

11.4% Net Margin

EPS (Diluted)

$0.00

Total Assets

$5.89B

Cash & Equivalents

$499.62M

Free Cash Flow

$138.94M

Financial Statements
Beta
Revenue$1.04B
Cost of Revenue$503.55M
Gross Profit$540.72M
R&D Expenses$281.19M
SG&A Expenses$119.90M
Operating Expenses$401.10M
Operating Income$139.62M
Net Income$119.05M
EPS (Basic)$0.00
EPS (Diluted)$0.00
Shares Outstanding (Basic)24.76B
Shares Outstanding (Diluted)24.93B

Key Highlights

  • 1Total revenue for Q2 FY13 increased to $1.04 billion, up 2.7% from $1.02 billion in Q2 FY12.
  • 2GPU business revenue grew 4.7% to $668.3 million, driven by strong sales of new Kepler-based products.
  • 3Consumer Products Business (CPB) revenue increased 7.1% to $179.6 million, boosted by Tegra 3 sales in smartphones and tablets.
  • 4Net income decreased to $119 million from $151.6 million in the prior year's quarter.
  • 5Operating expenses increased significantly, with R&D up 13.5% to $281.2 million and SG&A up 15.8% to $119.9 million.
  • 6Gross margin remained strong at 51.8%, consistent with the previous year's quarter.
  • 7The company held $3.28 billion in cash, cash equivalents, and marketable securities as of July 29, 2012.

Frequently Asked Questions

Revenue growth was primarily driven by the GPU business, which saw increased sales of high-end 28nm Kepler products for desktops and notebooks. The Consumer Products Business also contributed positively due to strong sales of Tegra 3 devices like smartphones and tablets.

Net income decreased year-over-year primarily due to a significant increase in operating expenses. Research and Development expenses rose by 13.5% and Sales, General & Administrative expenses increased by 15.8%, reflecting continued investment in new technologies and a charitable contribution.

NVIDIA maintains a strong liquidity position, with $3.28 billion in cash, cash equivalents, and marketable securities as of July 29, 2012. Operating activities generated positive cash flow, and the company has a substantial repurchase program in place, indicating financial stability.

NVIDIA is involved in ongoing litigation, notably related to the 3dfx acquisition and product defect claims from previous generations of GPUs. While the company believes these claims are without merit, they represent potential financial and operational risks. The company also mentions ongoing securities litigation, which could impact management's time and resources.