10-QPeriod: Q2 FY2018

NVIDIA CORP Quarterly Report for Q2 Ended Jul 30, 2017

Filed August 23, 2017For Securities:NVDA

Summary

NVIDIA Corporation reported strong financial performance for the second quarter and first half of fiscal year 2018, reflecting significant year-over-year growth across its key business segments. Total revenue surged by 56% year-over-year to $2.23 billion in Q2 FY18, driven by a remarkable 59% increase in the GPU business and a 101% increase in the Tegra Processor business. This growth was fueled by robust demand in gaming, datacenter (especially for AI and deep learning), professional visualization, and automotive markets. Net income saw substantial growth, increasing by 123% year-over-year to $583 million in Q2 FY18, with diluted earnings per share rising to $0.92. The company demonstrated improved operational efficiency, with income from operations increasing by 117% year-over-year. NVIDIA continues to return capital to shareholders through dividends and share repurchases, demonstrating a commitment to shareholder value while investing in growth initiatives in AI and autonomous driving.

Financial Highlights

54 data points
Beta

Revenue

$2.23B

58.4% Gross Margin

Net Income

$583.00M

26.1% Net Margin

EPS (Diluted)

$0.02

Total Assets

$9.40B

Cash & Equivalents

$1.99B

Free Cash Flow

$651.00M

Financial Statements
Beta
Revenue$2.23B
Cost of Revenue$928.00M
Gross Profit$1.30B
R&D Expenses$416.00M
SG&A Expenses$198.00M
Operating Expenses$614.00M
Operating Income$688.00M
Interest Expense$15.00M
Net Income$583.00M
EPS (Basic)$0.02
EPS (Diluted)$0.02
Shares Outstanding (Basic)23.88B
Shares Outstanding (Diluted)25.32B

Key Highlights

  • 1Revenue increased by 56% year-over-year to $2.23 billion in Q2 FY18.
  • 2Net income grew by 123% year-over-year to $583 million in Q2 FY18.
  • 3Diluted EPS increased to $0.92 in Q2 FY18, up 124% year-over-year.
  • 4GPU business revenue increased by 59% year-over-year, driven by strong performance in gaming and datacenter segments.
  • 5Tegra Processor business revenue more than doubled, increasing by 101% year-over-year, with significant contributions from automotive and gaming development platforms.
  • 6Datacenter revenue, a key growth driver, increased by 175% year-over-year.
  • 7The company generated strong operating cash flow, with $987 million for the first half of FY18.

Frequently Asked Questions

NVIDIA's revenue growth was primarily driven by strong demand in its GPU business, particularly in the gaming segment due to continued adoption of Pascal-based GeForce GTX platforms and significant demand for cryptocurrency mining. The datacenter segment also saw substantial growth, fueled by hyperscale and cloud customers for deep learning training and accelerated GPU computing. The Tegra Processor business also experienced significant growth, benefiting from automotive infotainment modules and gaming development platforms like the Nintendo Switch.

NVIDIA demonstrated significant improvements in profitability. Net income for Q2 FY18 more than doubled, increasing by 123% year-over-year to $583 million. This growth was supported by a 117% increase in income from operations, reflecting strong revenue growth and improved gross and operating margins. Diluted earnings per share also saw substantial growth, rising by 124% to $0.92.

NVIDIA is committed to returning capital to shareholders through a combination of cash dividends and share repurchases. For fiscal year 2018, the company intended to return $1.25 billion to shareholders through these programs. As of July 30, 2017, NVIDIA had repurchased approximately $1.97 billion worth of its common stock under its authorized repurchase program.

NVIDIA is involved in ongoing patent infringement litigation with Polaris Innovations Limited, alleging infringement of six U.S. patents. NVIDIA is vigorously defending itself and challenging the validity of these patents through inter partes review proceedings with the USPTO and nullity actions in Germany. While NVIDIA believes the claims are without merit and does not expect a material adverse effect, the outcome of such litigation is inherently uncertain and could potentially impact financial results or operations.