01—Abstract
Summary
Summary of the 10-Q filed August 22, 2012. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 millionb, 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.
02—Key points
Key Highlights
- Total revenue for Q2 FY13 increased to $1.04 billion, up 2.7% from $1.02 billion in Q2 FY12.
- GPU business revenue grew 4.7% to $668.3 million, driven by strong sales of new Kepler-based products.
- Consumer Products Business (CPB) revenue increased 7.1% to $179.6 million, boosted by Tegra 3 sales in smartphones and tablets.
- Net income decreased to $119 million from $151.6 million in the prior year's quarter.
- Operating expenses increased significantly, with R&D up 13.5% to $281.2 million and SG&A up 15.8% to $119.9 million.
- Gross margin remained strong at 51.8%, consistent with the previous year's quarter.
- The company held $3.28 billion in cash, cash equivalents, and marketable securities as of July 29, 2012.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2013, NVIDIA Corp kept $0.11.
- Revenue$1.04B100.0%
- Cost of revenue−$503.6M48.2%
- Gross profit$540.7M51.8%
- Operating costs−$401.1M38.4%
- Operating income$139.6M13.4%
- Interest, other & tax−$20.6M2.0%
- Net income$119.0M11.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed August 22, 2012Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $1.04B$962.04M | +8.5% |
| Cost of Revenue | $503.55M$477.54M | +5.4% |
| Gross Profit | $540.72M$484.50M | +11.6% |
| R&D Expenses | $281.19M$247.72M | +13.5% |
| SG&A Expenses | $119.90M$103.53M | +15.8% |
| Operating Expenses | $401.10M$351.25M | +14.2% |
| Operating Income | $139.62M$174.03M | −19.8% |
| Net Income | $119.05M$135.22M | −12.0% |
| EPS (Basic) | $0.00$0.01 | −17.4% |
| EPS (Diluted) | $0.00$0.01 | −13.6% |
| Shares Outstanding (Basic) | 24.76B24.05B | +2.9% |
| Shares Outstanding (Diluted) | 24.93B24.56B | +1.5% |
05—Questions
Frequently Asked Questions
What were the key drivers of revenue growth in the second quarter?
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.
Why did net income decrease despite revenue growth?
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.
What is the company's financial health and liquidity position?
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.
Are there any significant legal proceedings or contingencies that investors should be aware of?
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.
06—Continue