10-QPeriod: Q1 FY2016

NVIDIA CORP Quarterly Report for Q1 Ended Apr 26, 2015

Filed May 20, 2015For Securities:NVDA

Summary

NVIDIA Corporation's Form 10-Q for the quarter ending April 26, 2015, shows a modest revenue increase of 4% year-over-year to $1.151 billion. Net income saw a slight decrease to $134 million from $137 million in the prior year, resulting in diluted EPS remaining stable at $0.24. The company demonstrated solid operational cash flow generation, and its liquidity position remained strong with $4.79 billion in cash, cash equivalents, and marketable securities. Key financial developments include a strengthening gross margin to 56.7%, primarily driven by a richer product mix in the GPU segment. The company is actively returning capital to shareholders through dividends and share repurchases, with a significant expansion of its share repurchase authorization. However, NVIDIA is also navigating strategic challenges, including the announced wind-down of its Icera modem operations, which is expected to incur significant restructuring charges.

Financial Highlights

54 data points
Beta

Revenue

$1.15B

56.7% Gross Margin

Net Income

$134.00M

11.6% Net Margin

EPS (Diluted)

$0.01

Total Assets

$7.29B

Cash & Equivalents

$464.00M

Free Cash Flow

$216.00M

Financial Statements
Beta
Revenue$1.15B
Cost of Revenue$498.00M
Gross Profit$653.00M
R&D Expenses$339.00M
SG&A Expenses$138.00M
Operating Expenses$477.00M
Operating Income$176.00M
Interest Expense$12.00M
Net Income$134.00M
EPS (Basic)$0.01
EPS (Diluted)$0.01
Shares Outstanding (Basic)21.96B
Shares Outstanding (Diluted)22.72B

Key Highlights

  • 1Revenue increased by 4% to $1.151 billion, driven by a 5% rise in the GPU business, mainly from GeForce GTX products and Tesla GPUs for high-performance computing.
  • 2Net income slightly decreased to $134 million, resulting in diluted Earnings Per Share (EPS) remaining stable at $0.24 compared to the prior year.
  • 3Gross margin improved to 56.7% from 54.8% in the prior year, attributed to a more favorable product mix, particularly within the GPU segment.
  • 4Operating expenses saw a 5% increase, driven by a 16% rise in Sales, General, and Administrative (SG&A) expenses, largely due to legal fees related to ongoing litigation.
  • 5The company generated $246 million in cash from operating activities, a significant increase from $151 million in the prior year, reflecting improvements in working capital.
  • 6NVIDIA's liquidity position remains robust, with $4.79 billion in cash, cash equivalents, and marketable securities as of April 26, 2015.
  • 7The company announced the wind-down of its Icera modem operations, anticipating restructuring charges of $100 million to $125 million.

Frequently Asked Questions

For the quarter ending April 26, 2015, NVIDIA reported total revenue of $1.151 billion, a 4% increase year-over-year. Net income was $134 million, and diluted Earnings Per Share (EPS) was $0.24, remaining consistent with the prior year. The company's gross margin improved to 56.7%.

NVIDIA is returning capital to shareholders through quarterly cash dividends, which were increased to $0.0975 per share in May 2015. Additionally, the company has a significant share repurchase program, having repurchased $53 million of stock in the quarter and authorized an additional $1.62 billion for future repurchases, bringing the total available for repurchase to $2.00 billion.

The GPU business showed strong growth, increasing revenue by 5% driven by GeForce GTX products for gaming and Tesla GPUs for high-performance computing. The Tegra Processor business also saw a modest 4% revenue increase, fueled by automotive infotainment systems and custom development, despite declines in OEM smartphone and tablet sales. The company also announced the wind-down of its Icera modem operations, anticipating substantial restructuring charges.

NVIDIA is involved in several ongoing legal proceedings, including patent infringement lawsuits against Qualcomm and Samsung, and challenges to patent validity. The company also faced securities class action lawsuits, which have progressed through appeals. While the company believes these claims are without merit and intends to defend vigorously, it has not recorded any accrual for contingent liabilities as they are not deemed probable, and the range of loss cannot be reasonably estimated at this time.