10-QPeriod: Q2 FY2017

NVIDIA CORP Quarterly Report for Q2 Ended May 1, 2016

Filed May 25, 2016For Securities:NVDA

Summary

NVIDIA Corporation's fiscal first quarter 2017 results, ending April 30, 2016, demonstrated robust growth, with revenue increasing 13% year-over-year to $1.305 billion and net income up 46% to $196 million. This strong performance was driven by a 15% increase in the GPU business, fueled by strong demand in gaming and datacenter segments, particularly for deep learning applications. The Tegra Processor business also saw a 10% increase, primarily from the automotive sector. Key financial highlights include a significant increase in operating income and diluted EPS, reflecting effective cost management and growing revenue streams. The company also continues to prioritize shareholder returns, returning $562 million to shareholders through share repurchases and dividends in the quarter, and intends to return approximately $1 billion in fiscal year 2017. NVIDIA's strategic focus on key markets like gaming, professional visualization, datacenter, and automotive appears to be yielding positive financial results.

Financial Highlights

53 data points
Beta

Revenue

$1.30B

57.5% Gross Margin

Net Income

$208.00M

15.9% Net Margin

EPS (Diluted)

$0.01

Total Assets

$7.46B

Cash & Equivalents

$426.00M

Free Cash Flow

$264.00M

Financial Statements
Beta
Revenue$1.30B
Cost of Revenue$554.00M
Gross Profit$751.00M
R&D Expenses$350.00M
SG&A Expenses$157.00M
Operating Expenses$509.00M
Operating Income$317.00M
Interest Expense$12.00M
Net Income$208.00M
EPS (Basic)$0.01
EPS (Diluted)$0.01
Shares Outstanding (Basic)21.36B
Shares Outstanding (Diluted)25.36B

Key Highlights

  • 1Revenue grew 13% to $1.305 billion compared to the prior year's quarter.
  • 2Net income increased by 46% to $196 million.
  • 3Diluted earnings per share rose by 38% to $0.33.
  • 4The GPU business, a key segment, saw revenue grow 15%, with notable strength in gaming and datacenter (deep learning).
  • 5Datacenter revenue, including Tesla and NVIDIA GRID, surged 63% year-over-year.
  • 6The company returned $562 million to shareholders through share repurchases ($500M ASR) and dividends in the quarter.
  • 7Gross margin improved to 57.5% from 56.7% in the prior year, driven by product mix and platform approach.

Frequently Asked Questions

NVIDIA's revenue growth was primarily driven by a 15% increase in its GPU business, with strong performance in GeForce gaming GPUs and significant growth in the Datacenter segment, particularly for deep learning applications. The Tegra Processor business also contributed positively with a 10% increase, mainly due to growth in automotive applications.

NVIDIA is actively returning capital through share repurchases and cash dividends. In this quarter, they returned $562 million, including a $500 million accelerated share repurchase (ASR) agreement and $62 million in dividends. The company intends to return approximately $1 billion to shareholders in fiscal year 2017.

The GPU business revenue increased by 15%, led by gaming and datacenter demand. The Tegra Processor business revenue grew by 10%, primarily from automotive applications. The 'All Other' category, which includes patent licensing, remained stable.

NVIDIA resolved its intellectual property disputes with Samsung and Qualcomm through a memorandum of understanding. They also settled litigation with Advanced Silicon Technologies LLC, involving a patent license agreement. These resolutions appear to have been managed without significant negative financial impact reported for this quarter, with a $16 million payment to Advanced Silicon Technologies being expensed or capitalized.