01—Abstract
Summary
Summary of the 10-Q filed November 15, 2018. Cited figures are marked; the original filing is the authoritative source.
NVIDIA Corporation reported strong financial performance for the third quarter and nine months ended October 28, 2018.
Revenue saw a significant year-over-year increase of 21%a in the third quarter and 40% for the nine-month period, driven primarily by robust growth in the GPU business, particularly in gaming and datacenter segments. Net income also showed substantial improvement, increasing by 47% year-over-year for the quarter. The company continued to invest heavily in research and development to fuel future growth, while also returning significant capital to shareholders through share repurchases and dividends.
Management expressed confidence in continued growth, supported by strong demand across key markets like AI and gaming. The company's financial health remains solid, with ample cash, cash equivalents, and marketable securities. NVIDIA is actively managing its capital resources, including an expanded share repurchase program and an increased quarterly dividend.
While the company faces ongoing legal proceedings and market risks, its operational performance and strategic investments position it favorably for future expansion. Investors should note the strong top-line and bottom-line growth, sustained R&D investment, and commitment to shareholder returns as key takeaways from this filing.
02—Key points
Key Highlights
- Revenue for the third quarter of fiscal year 2019 increased by 21% year-over-year to $3.181 billion, with nine-month revenue up 40% to $9.511 billion.
- Net income for the third quarter rose by 47% year-over-year to $1.230 billion, and net income per diluted share increased by 48% to $1.97.
- The GPU business was a primary growth driver, with revenue up 25% year-over-year in Q3, fueled by gaming and datacenter segments.
- Datacenter revenue saw significant growth, increasing by 58% year-over-year in Q3, driven by Volta and Turing architecture products.
- The company repurchased $855 million in stock and paid $273 million in dividends during the first nine months of fiscal year 2019, demonstrating a strong commitment to returning capital to shareholders.
- Research and Development expenses increased by 31% year-over-year in Q3, reflecting continued investment in innovation and future growth initiatives.
- NVIDIA maintained a strong liquidity position with $7.59 billion in cash, cash equivalents, and marketable securities as of October 28, 2018.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2019, NVIDIA Corp kept $0.39.
- Revenue$3.18B100.0%
- Cost of revenue−$1.26B39.6%
- Gross profit$1.92B60.4%
- Operating costs−$863.0M27.1%
- Operating income$1.06B33.3%
- Interest, other & tax$172.0M5.4%
- Net income$1.23B38.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2019filed November 15, 2018Financial Statements
Q3 FY2019 against Q3 FY2018
| Line item | Q3 FY2019Q3 FY2018 | Change |
|---|---|---|
| Revenue | $3.18B$2.64B | +20.7% |
| Cost of Revenue | $1.26B$1.07B | +18.1% |
| Gross Profit | $1.92B$1.57B | +22.4% |
| R&D Expenses | $605.00M$462.00M | +31.0% |
| SG&A Expenses | $258.00M$212.00M | +21.7% |
| Operating Expenses | $863.00M$674.00M | +28.0% |
| Operating Income | $1.06B$895.00M | +18.2% |
| Interest Expense | $15.00M$15.00M | 0.0% |
| Net Income | $1.23B$838.00M | +46.8% |
| EPS (Basic) | $0.05$0.03 | +45.3% |
| EPS (Diluted) | $0.05$0.03 | +48.1% |
| Shares Outstanding (Basic) | 24.36B24.12B | +1.0% |
| Shares Outstanding (Diluted) | 25.00B25.12B | −0.5% |
05—Questions
Frequently Asked Questions
What were the main drivers of NVIDIA's revenue growth in this quarter?
NVIDIA's revenue growth was primarily driven by its GPU business, which saw a 25% year-over-year increase in the third quarter. Key contributors included strong sales in the gaming segment, initial sales of Turing-based GPUs, and significant growth in the datacenter segment fueled by Volta architecture products. The professional visualization segment also showed healthy growth.
How is NVIDIA returning capital to shareholders?
NVIDIA is actively returning capital to shareholders through share repurchases and dividends. In the first nine months of fiscal year 2019, the company repurchased $855 million of its stock and paid $273 million in cash dividends. Furthermore, the company announced an increase in its quarterly cash dividend and authorized an additional $7.00 billion for share repurchases.
What is the impact of the Tax Cuts and Jobs Act (TCJA) on NVIDIA's financial results?
The TCJA led to a decrease in the U.S. statutory tax rate from 35% to 21%, which positively impacted NVIDIA's effective tax rate in fiscal year 2019. The company also recorded a $138 million reduction in its provisional U.S. tax reform transition tax amount in the third quarter of fiscal year 2019. NVIDIA is still evaluating the full impact of GILTI provisions.
Are there any significant legal proceedings that could impact NVIDIA's financial performance?
NVIDIA is involved in several ongoing legal proceedings, including patent infringement lawsuits from Polaris Innovations Limited and ZiiLabs Inc. The company believes these claims are without merit and intends to defend them vigorously. As of the filing date, NVIDIA had not recorded any accrual for contingent liabilities related to these proceedings, as liabilities were considered not probable and a range of loss could not be reasonably estimated.
06—Continue