NVIDIA CORP ORATIONd18rn0p25nwr6d.cloudfront.net/CIK-0001045810/2683... · “NVIDIA RTX ray...
Transcript of NVIDIA CORP ORATIONd18rn0p25nwr6d.cloudfront.net/CIK-0001045810/2683... · “NVIDIA RTX ray...
UNITED STATESSECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549______________
FORM 8-K
CURRENT REPORTPURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 13, 2020
NVIDIA CORPORATION(Exact name of registrant as specified in its charter)
Delaware 0-23985 94-3177549(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2788 San Tomas Expressway, Santa Clara, CA 95051
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (408) 486-2000Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of thefollowing provisions:☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registeredCommon Stock, $0.001 par value per share NVDA The Nasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of thischapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with anynew or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 13, 2020, NVIDIA Corporation, or the Company, issued a press release announcing its results for the quarter and fiscal year endedJanuary 26, 2020. The press release is attached as Exhibit 99.1 and is incorporated herein by reference.
Attached hereto as Exhibit 99.2 and incorporated by reference herein is financial information and commentary by Colette M. Kress, Executive VicePresident and Chief Financial Officer of the Company, regarding results of the quarter and fiscal year ended January 26, 2020, or the CFOCommentary. The CFO Commentary will be posted to http://investor.nvidia.com immediately after the filing of this Current Report.
The press release and CFO Commentary are furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of1934, as amended, or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The informationin this Current Report shall not be incorporated by reference in any filing with the U.S. Securities and Exchange Commission made by the Company,whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description99.1 Press Release, dated February 13, 2020, entitled "NVIDIA Announces Financial Results for Fourth Quarter and Fiscal 2020"99.2 CFO Commentary on Fourth Quarter and Fiscal 2020 Results
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned hereunto duly authorized.
NVIDIA CorporationDate: February 13, 2020 By: /s/ Colette M. Kress Colette M. Kress Executive Vice President and Chief Financial Officer
FOR IMMEDIATE RELEASE:
NVIDIA Announces Financial Results for Fourth Quarter and Fiscal 2020
SANTA CLARA, Calif.-Feb. 13, 2020- NVIDIA (NASDAQ: NVDA) today reported revenue for the fourth quarter ended Jan. 26,2020, of $3.11 billion, up 41 percent from $2.21 billion a year earlier, and up 3 percent from $3.01 billion in the previous quarter.
GAAP earnings per diluted share for the quarter were $1.53, up 66 percent from $0.92 a year ago, and up 6 percent from $1.45in the previous quarter. Non-GAAP earnings per diluted share were $1.89, up 136 percent from $0.80 a year earlier, and up 6percent from $1.78 in the previous quarter.
For fiscal 2020, revenue was $10.92 billion, down 7 percent from $11.72 billion a year earlier. GAAP earnings per diluted sharewere $4.52, down 32 percent from $6.63 a year earlier. Non-GAAP earnings per diluted share were $5.79, down 13 percent from$6.64 a year earlier.
“Adoption of NVIDIA accelerated computing drove excellent results, with record data center revenue,” said Jensen Huang,founder and CEO of NVIDIA. “Our initiatives are achieving great success.
“NVIDIA RTX ray tracing is reinventing computer graphics, driving powerful adoption across gaming, VR and design markets,while opening new opportunities in rendering and cloud gaming. NVIDIA AI is enabling breakthroughs in languageunderstanding, conversational AI and recommendation engines - the core algorithms that power the internet today. And newNVIDIA computing applications in 5G, genomics, robotics and autonomous vehicles enable us to continue important work thathas great impact.
“We are well positioned for the greatest technology trends of our time,” he said.
NVIDIA will pay its next quarterly cash dividend of $0.16 per share on March 20, 2020, to all shareholders of record on Feb. 28,2020.
Q4 Fiscal 2020 Summary
GAAP($ in millions, except earnings pershare) Q4 FY20 Q3 FY20 Q4 FY19 Q/Q Y/Y
Revenue $3,105 $3,014 $2,205 Up 3% Up 41%Gross margin 64.9% 63.6% 54.7% Up 130 bps Up 1,020 bpsOperating expenses $1,025 $989 $913 Up 4% Up 12%Operating income $990 $927 $294 Up 7% Up 237%Net income $950 $899 $567 Up 6% Up 68%Diluted earnings per share $1.53 $1.45 $0.92 Up 6% Up 66%
Non-GAAP($ in millions, except earnings pershare) Q4 FY20 Q3 FY20 Q4 FY19 Q/Q Y/Y
Revenue $3,105 $3,014 $2,205 Up 3% Up 41%Gross margin 65.4% 64.1% 56.0% Up 130 bps Up 940 bpsOperating expenses $810 $774 $755 Up 5% Up 7%Operating income $1,220 $1,156 $479 Up 6% Up 155%Net income $1,172 $1,103 $496 Up 6% Up 136%Diluted earnings per share $1.89 $1.78 $0.80 Up 6% Up 136%
Fiscal 2020 Summary
GAAP($ in millions except earnings per share) FY20 FY19 Y/YRevenue $10,918 $11,716 Down 7%Gross margin 62.0% 61.2% Up 80 bpsOperating expenses $3,922 $3,367 Up 16%Operating income $2,846 $3,804 Down 25%Net income $2,796 $4,141 Down 32%Diluted earnings per share $4.52 $6.63 Down 32%
Non-GAAP($ in millions except earnings per share) FY20 FY19 Y/YRevenue $10,918 $11,716 Down 7%Gross margin 62.5% 61.7% Up 80 bpsOperating expenses $3,086 $2,826 Up 9%Operating income $3,735 $4,407 Down 15%Net income $3,580 $4,143 Down 14%Diluted earnings per share $5.79 $6.64 Down 13%
NVIDIA’s outlook for the first quarter of fiscal 2021 does not include any contribution from the pending acquisition of MellanoxTechnologies, Ltd. Discussions with China’s regulatory agency, the State Administration for Market Regulation, are progressing,and NVIDIA believes the acquisition will likely close in the early part of calendar 2020.
While the ultimate effect of the coronavirus is difficult to estimate, the company has reduced its revenue outlook for the firstquarter of fiscal 2021 by $100 million to account for its potential impact.
• Revenue is expected to be $3.00 billion, plus or minus 2 percent.
• GAAP and non-GAAP gross margins are expected to be 65.0 percent and 65.4 percent, respectively, plus or minus 50basis points.
• GAAP and non-GAAP operating expenses are expected to be approximately $1.05 billion and $835 million, respectively.
• GAAP and non-GAAP other income and expense are both expected to be income of approximately $25 million.
• GAAP and non-GAAP tax rates are both expected to be 9 percent, plus or minus 1 percent, excluding any discrete items.GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which areexpected to generate variability on a quarter by quarter basis.
HighlightsSince the end of the third quarter of fiscal 2020, NVIDIA has achieved progress in these areas:
Gaming• Grew momentum for ray tracing with the launch of such RTX-enabled games as Deliver Us The Moon, Wolfenstein:
Youngblood and Bright Memory.
• Brought its GeForce NOW™ cloud gaming service out of beta, opening up PC gaming to hundreds of millions ofconsumers who can now add a virtual GeForce® graphics card to their device and play games they own, as well as free-to-play games.
• Brought its number of gaming laptops to a record 125 models, including the world’s first 14-inch GeForce RTX™ laptop,the ASUS ROG Zephyrus G14.
• Continued to build G-SYNC® momentum at CES, with the launch of the ASUS ROG Swift 360, the world’s fastestmonitor, with a 360Hz refresh rate; and with LG adopting G-SYNC in its new lineup of OLED TVs.
Data Center and Edge Computing• Unveiled the first scalable GPU-accelerated supercomputer in the cloud with Microsoft Azure, with access to up to 800
NVIDIA® V100 Tensor Core GPUs.
• Announced that it is powering the world’s most powerful industrial supercomputer, HPC5, which has 7,280 NVIDIA V100GPUs and is operated by Italian energy company Eni.
• Announced that Alibaba’s and Baidu’s recommendation engines run on NVIDIA AI, boosting inference by orders ofmagnitude beyond CPUs.
• Joined forces with AWS, using NVIDIA T4 Tensor Core GPUs to power AWS Outposts, bringing Amazon EC2 G4instances to customers’ data centers.
• Collaborated with Arm, Ampere Computing, Fujitsu and Marvell on a new reference design platform for GPU-acceleratedArm-based servers, and with Red Hat to bring GPU acceleration to Arm for HPC applications.
• Introduced NVIDIA TensorRT™ 7, an inference software development kit, paving the way to smarter and fasterconversational AI.
• Unveiled NVIDIA Clara™ Federated Learning, a reference application that preserves patient privacy while improvingglobal model accuracy, already in use by the American College of Radiology and UCLA Health.
• Introduced Magnum IO, a software suite for data scientists and high performance computing researchers that isoptimized to eliminate storage and input/output bottlenecks.
• Released a new version of the NVIDIA Isaac™ software development kit, a unified robotic development platform toaccelerate the development and testing of robots.
Professional Visualization• Brought RTX technology to new desktops and laptops from Acer and joined forces with Adobe to provide a
complimentary three-month Adobe Creative Cloud membership with new RTX Studio purchases.
• Introduced RTX capabilities to Autodesk’s Maya 2020, Dassault’s Catia 2020 and Siemens Ray-Trace Studio with therelease of a new NVIDIA Quadro® Driver and NVIDIA Studio Driver.
• Expanded the reach of RTX technology into Chaos Group’s V-Ray, Autodesk’s Arnold and Blender’s Cycles, enablingdesigners to create complex 3D visuals, accurate reflections and more.
Automotive• Announced DRIVE AGX Orin™, an advanced software-defined platform for autonomous vehicles capable of achieving
200 TOPS, nearly 7x that of the previous generation SoC.
CFO CommentaryCommentary on the quarter by Colette Kress, NVIDIA’s executive vice president and chief financial officer, is available athttp://investor.nvidia.com/.
Conference Call and Webcast InformationNVIDIA will conduct a conference call with analysts and investors to discuss its fourth quarter and fiscal 2020 financial resultsand current financial prospects today at 2:30 p.m. Pacific time (5:30 p.m. Eastern time). A live webcast (listen-only mode) of theconference call will be accessible at NVIDIA’s investor relations website, http://investor.nvidia.com. The webcast will be recordedand available for replay until NVIDIA’s conference call to discuss its financial results for its first quarter of fiscal 2021.
Non-GAAP MeasuresTo supplement NVIDIA’s condensed consolidated financial statements presented in accordance with GAAP, the company usesnon-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP grossprofit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP other income,non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, non-GAAPdiluted shares, and free cash flow. In order for NVIDIA’s investors to be better able to compare its current results with those ofprevious periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliationsadjust the related GAAP financial measures to exclude stock-based compensation expense, legal settlement costs, acquisition-related and other costs, gains and losses from non-affiliated investments, interest expense related to amortization of debtdiscount, and the associated tax impact of these items, where applicable. Free cash flow is calculated as GAAP net cashprovided by operating activities less purchase of property and equipment and intangible assets. NVIDIA believes thepresentation of its non-GAAP financial measures enhances the user’s overall understanding of the company’s historical financialperformance. The presentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as asubstitute for the company’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures maybe different from non-GAAP measures used by other companies.
About NVIDIANVIDIA’s (NASDAQ: NVDA) invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined moderncomputer graphics and revolutionized parallel computing. More recently, GPU deep learning ignited modern AI - the next era ofcomputing - with the GPU acting as the brain of computers, robots and self-driving cars that can perceive and understand theworld. More information at http://nvidianews.nvidia.com/.
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For further information, contact:
Simona Jankowski Robert SherbinInvestor Relations Corporate CommunicationsNVIDIA Corporation NVIDIA [email protected] [email protected]
Certain statements in this press release including, but not limited to, statements as to: our initiatives achieving great success; the impacts of NVIDIA RTX raytracing, NVIDIA AI and new NVIDIA computing applications in 5G, genomics, robotics, and autonomous vehicles; NVIDIA’s positioning for the greatesttechnology trends of our time; NVIDIA’s next quarterly cash dividend; the status of the China regulatory approval process and the expected timing of closing ofthe Mellanox acquisition; the ultimate effect of the coronavirus; NVIDIA’s financial outlook for the first quarter of fiscal 2021; NVIDIA’s expected tax rates for thefirst quarter of fiscal 2021; NVIDIA’s expectation to generate variability from excess tax benefits or deficiencies; and the benefits and impact of: GeForce NOW,Alibaba’s and Baidu’s recommendation engines running on NVIDIA AI, NVIDIA TensorRT7, NVIDIA Clara Federated Learning, Magnum IO, the new version ofthe NVIDIA Isaac software development kit, expanding the reach of RTX technology into Chaos Group’s V-Ray, Autodesk’s Arnold and Blender’s Cycles, andDRIVE AGX Orin are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations.Important factors that could cause actual results to differ materially include: global economic conditions; our reliance on third parties to manufacture, assemble,package and test our products; the impact of technological development and competition; development of new products and technologies or enhancements toour existing product and technologies; market acceptance of our products or our partners’ products; design, manufacturing or software defects; changes inconsumer preferences or demands; changes in industry standards and interfaces; unexpected loss of performance of our products or technologies whenintegrated into systems; as well as other factors detailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange Commission,or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on thecompany’s website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak onlyas of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events orcircumstances.
© 2020 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Quadro, DRIVE AGX Orin, GeForce NOW, GeForce RTX, G-SYNC,NVIDIA Clara, NVIDIA Isaac, NVIDIA RTX, and TensorRT are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and/or othercountries. Other company and product names may be trademarks of the respective companies with which they are associated. Features, pricing, availability,and specifications are subject to change without notice.
NVIDIA CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)(Unaudited)
Three Months Ended Twelve Months Ended January 26, January 27, January 26, January 27, 2020 2019 2020 2019
Revenue $ 3,105 $ 2,205 $ 10,918 $ 11,716Cost of revenue 1,090 998 4,150 4,545Gross profit 2,015 1,207 6,768 7,171Operating expenses
Research and development 738 647 2,829 2,376 Sales, general and administrative 287 266 1,093 991 Total operating expenses 1,025 913 3,922 3,367Income from operations 990 294 2,846 3,804 Interest income 41 42 178 136 Interest expense (12) (14) (52) (58) Other, net (3) 2 (2) 14 Total other income 26 30 124 92Income before income tax 1,016 324 2,970 3,896Income tax expense (benefit) 66 (243) 174 (245)Net income $ 950 $ 567 $ 2,796 $ 4,141
Net income per share:
Basic $ 1.55 $ 0.93 $ 4.59 $ 6.81
Diluted $ 1.53 $ 0.92 $ 4.52 $ 6.63
Weighted average shares used in per sharecomputation:
Basic 612 609 609 608 Diluted 621 619 618 625
NVIDIA CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)(Unaudited)
January 26, January 27, 2020 2019ASSETS
Current assets:
Cash, cash equivalents and marketable securities $ 10,897 $ 7,422 Accounts receivable, net 1,657 1,424 Inventories 979 1,575 Prepaid expenses and other current assets 157 136 Total current assets 13,690 10,557
Property and equipment, net 1,674 1,404Operating lease assets 618 —Goodwill 618 618Intangible assets, net 49 45Deferred income tax assets 548 560Other assets 118 108 Total assets $ 17,315 $ 13,292
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 687 $ 511 Accrued and other current liabilities 1,097 818 Total current liabilities 1,784 1,329
Long-term debt 1,991 1,988Long-term operating lease liabilities 561 —Other long-term liabilities 775 633 Total liabilities 5,111 3,950
Shareholders' equity 12,204 9,342 Total liabilities and shareholders' equity $ 17,315 $ 13,292
NVIDIA CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)(Unaudited)
Three Months Ended Twelve Months Ended January 26, January 27, January 26, January 27, 2020 2019 2020 2019Cash flows from operating activities: Net income $ 950 $ 567 $ 2,796 $ 4,141Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense 220 156 844 557Depreciation and amortization 106 78 381 262Deferred income taxes 23 (345) 18 (315)Other — (10) 5 (45)
Changes in operating assets and liabilities: Accounts receivable (202) 794 (233) (149)Inventories 66 (156) 597 (776)Prepaid expenses and other assets 22 13 77 (55)Accounts payable 104 (359) 194 (135)Accrued and other current liabilities 157 109 54 256Other long-term liabilities 19 51 28 2
Net cash provided by operating activities 1,465 898 4,761 3,743
Cash flows from investing activities: Proceeds from maturities of marketable securities — 964 4,744 7,232Proceeds from sales of marketable securities 2 314 3,365 428Purchases of marketable securities — (1,036) (1,461) (11,148)Purchases of property and equipment and intangible assets (144) (203) (489) (600)Investments and other, net (9) — (14) (9)
Net cash provided by (used in) investing activities (151) 39 6,145 (4,097)
Cash flows from financing activities:
Payments related to repurchases of common stock — (724) — (1,579)Repayment of Convertible Notes — (3) — (16)Dividends paid (98) (98) (390) (371)Proceeds related to employee stock plans 2 3 149 137Payments related to tax on restricted stock units (87) (50) (551) (1,032)Other — (4) — (5)
Net cash used in financing activities (183) (876) (792) (2,866)Change in cash and cash equivalents 1,131 61 10,114 (3,220)Cash and cash equivalents at beginning of period 9,765 721 782 4,002
Cash and cash equivalents at end of period $ 10,896 $ 782 $ 10,896 $ 782
NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In millions, except per share data) (Unaudited)
Three Months Ended Twelve Months Ended January 26, October 27, January 27, January 26, January 27, 2020 2019 2019 2020 2019
GAAP gross profit $ 2,015 $ 1,916 $ 1,207 $ 6,768 $ 7,171 GAAP gross margin 64.9% 63.6% 54.7% 62.0% 61.2%
Stock-based compensation expense (A) 12 15 6 39 27 Legal settlement costs 3 — 21 14 35Non-GAAP gross profit $ 2,030 $ 1,931 $ 1,234 $ 6,821 $ 7,233
Non-GAAP gross margin 65.4% 64.1% 56.0% 62.5% 61.7%
GAAP operating expenses $ 1,025 $ 989 $ 913 $ 3,922 $ 3,367 Stock-based compensation expense (A) (208) (208) (150) (805) (530) Acquisition-related and other costs (7) (7) (1) (30) (2) Legal settlement costs — — (7) (1) (9)Non-GAAP operating expenses $ 810 $ 774 $ 755 $ 3,086 $ 2,826
GAAP income from operations $ 990 $ 927 $ 294 $ 2,846 $ 3,804
Total impact of non-GAAP adjustments toincome from operations 230 229 185 889 603
Non-GAAP income from operations $ 1,220 $ 1,156 $ 479 $ 3,735 $ 4,407
GAAP other income $ 26 $ 32 $ 30 $ 124 $ 92
Losses (Gains) from non-affiliatedinvestments — — (1) 1 (12)
Interest expense related to amortization ofdebt discount — 1 — 2 2
Non-GAAP other income $ 26 $ 33 $ 29 $ 127 $ 82
GAAP net income $ 950 $ 899 $ 567 $ 2,796 $ 4,141
Total pre-tax impact of non-GAAPadjustments 230 230 184 890 593
Income tax impact of non-GAAP adjustments(B) (8) (26) (25) (106) (223)
Tax benefit from income tax reform — — (230) — (368)Non-GAAP net income $ 1,172 $ 1,103 $ 496 $ 3,580 $ 4,143
Three Months Ended Twelve Months Ended January 26, October 27, January 27, January 26, January 27, 2020 2019 2019 2020 2019Diluted net income per share GAAP $ 1.53 $ 1.45 $ 0.92 $ 4.52 $ 6.63
Non-GAAP $ 1.89 $ 1.78 $ 0.80 $ 5.79 $ 6.64
Weighted average shares used in diluted netincome per share computation GAAP 621 618 619 618 625 Anti-dilution impact from note hedge — — — — (1) Non-GAAP 621 618 619 618 624
GAAP net cash provided by operating activities $ 1,465 $ 1,640 $ 898 $ 4,761 $ 3,743
Purchase of property and equipment andintangible assets (144) (104) (203) (489) (600)
Free cash flow $ 1,321 $ 1,536 $ 695 $ 4,272 $ 3,143
(A) Stock-based compensation consists of the following:
Three Months Ended Twelve Months Ended January 26, October 27, January 27, January 26, January 27, 2020 2019 2019 2020 2019 Cost of revenue $ 12 $ 15 $ 6 $ 39 $ 27 Research and development $ 140 $ 141 $ 99 $ 540 $ 336 Sales, general and administrative $ 68 $ 67 $ 51 $ 265 $ 194 (B) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or deficiencies related to stock-basedcompensation under GAAP accounting standard (ASU 2016-09).
NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q1 FY2021 Outlook GAAP gross margin 65.0% Impact of stock-based compensation expense 0.4% Non-GAAP gross margin 65.4%
Q1 FY2021 Outlook (In millions)GAAP operating expenses $ 1,045 Stock-based compensation expense, acquisition-related costs, and other costs (210)Non-GAAP operating expenses $ 835
CFO Commentary on Fourth Quarter and Fiscal 2020 Results
Q4 Fiscal 2020 Summary
GAAP($ in millions, except earnings pershare) Q4 FY20 Q3 FY20 Q4 FY19 Q/Q Y/Y
Revenue $3,105 $3,014 $2,205 Up 3% Up 41%Gross margin 64.9% 63.6% 54.7% Up 130 bps Up 1,020 bpsOperating expenses $1,025 $989 $913 Up 4% Up 12%Operating income $990 $927 $294 Up 7% Up 237%Net income $950 $899 $567 Up 6% Up 68%Diluted earnings per share $1.53 $1.45 $0.92 Up 6% Up 66%
Non-GAAP($ in millions, except earnings pershare) Q4 FY20 Q3 FY20 Q4 FY19 Q/Q Y/Y
Revenue $3,105 $3,014 $2,205 Up 3% Up 41%Gross margin 65.4% 64.1% 56.0% Up 130 bps Up 940 bpsOperating expenses $810 $774 $755 Up 5% Up 7%Operating income $1,220 $1,156 $479 Up 6% Up 155%Net income $1,172 $1,103 $496 Up 6% Up 136%Diluted earnings per share $1.89 $1.78 $0.80 Up 6% Up 136%
Revenue by Reportable Segments($ in millions) Q4 FY20 Q3 FY20 Q4 FY19 Q/Q Y/YGPU Business $2,774 $2,565 $1,980 Up 8% Up 40%Tegra Processor Business 331 449 225 Down 26% Up 47%Total $3,105 $3,014 $2,205 Up 3% Up 41%
Revenue by Market Platform($ in millions) Q4 FY20 Q3 FY20 Q4 FY19 Q/Q Y/YGaming $1,491 $1,659 $954 Down 10% Up 56%Professional Visualization 331 324 293 Up 2% Up 13%Data Center 968 726 679 Up 33% Up 43%Automotive 163 162 163 Up 1% --OEM and Other 152 143 116 Up 6% Up 31%Total $3,105 $3,014 $2,205 Up 3% Up 41%
Fiscal 2020 Summary
GAAP($ in millions except earnings per share) FY20 FY19 Y/YRevenue $10,918 $11,716 Down 7%Gross margin 62.0% 61.2% Up 80 bpsOperating expenses $3,922 $3,367 Up 16%Operating income $2,846 $3,804 Down 25%Net income $2,796 $4,141 Down 32%Diluted earnings per share $4.52 $6.63 Down 32%
Non-GAAP($ in millions except earnings per share) FY20 FY19 Y/YRevenue $10,918 $11,716 Down 7%Gross margin 62.5% 61.7% Up 80 bpsOperating expenses $3,086 $2,826 Up 9%Operating income $3,735 $4,407 Down 15%Net income $3,580 $4,143 Down 14%Diluted earnings per share $5.79 $6.64 Down 13%
Revenue by Reportable Segments($ in millions) FY20 FY19 Y/YGPU $9,465 $10,175 Down 7%Tegra Processor 1,453 1,541 Down 6%Total $10,918 $11,716 Down 7%
Revenue by Market Platform($ in millions) FY20 FY19 Y/YGaming $5,518 $6,246 Down 12%Professional Visualization 1,212 1,130 Up 7%Data Center 2,983 2,932 Up 2%Automotive 700 641 Up 9%OEM and Other 505 767 Down 34%Total $10,918 $11,716 Down 7%
RevenueRevenue for the fourth quarter was $3.11 billion, up 41 percent from a year earlier and up 3 percent sequentially. Full-yearrevenue was $10.92 billion, down 7 percent.
GPU business revenue for the fourth quarter was $2.77 billion, up 40 percent from a year earlier and up 8 percent sequentially.Full-year revenue was $9.47 billion, down 7 percent.
Tegra™ Processor business revenue for the fourth quarter - which includes Automotive, SoCs for gaming platforms, andembedded edge AI platforms - was $331 million, up 47 percent from a year ago and down 26 percent sequentially. Full-yearrevenue was $1.45 billion, down 6 percent.
From a market-platform perspective, Gaming revenue for the fourth quarter was $1.49 billion, up 56 percent from a year ago anddown 10 percent sequentially. The year-on-year increase reflects higher sales of GeForce® GPUs and SoCs for gamingplatforms. The sequential decrease reflects seasonally lower sales of GeForce notebook GPUs and SoCs for gaming platforms,partially offset by growth in GeForce desktop GPUs. Full-year revenue was $5.52 billion, down 12 percent, reflecting lower salesof GeForce desktop GPUs and SoCs for gaming platforms, partially offset by growth in GeForce notebook GPUs.
Professional Visualization revenue for the fourth quarter was a record $331 million, up 13 percent from a year earlier and up 2percent sequentially. The year-on-year growth reflects strength in desktop and notebook workstations, while the sequentialgrowth was driven by desktop workstations partially offset by notebook workstations. Full-year revenue was $1.21 billion, up 7percent, reflecting strength in desktop and notebook workstations.
Data Center revenue for the fourth quarter was a record $968 million, up 43 percent from a year ago and up 33 percentsequentially. The year-on-year increase was driven by hyperscale and vertical industry end customers. Sequential growthreflects stronger vertical industry and hyperscale sales. Full-year revenue was $2.98 billion, up 2 percent, driven by verticalindustry growth partially offset by lower hyperscale sales.
Automotive revenue was $163 million, flat from a year earlier and up 1 percent sequentially. Full-year revenue was $700 million,up 9 percent, reflecting growth in AI cockpit solutions and development services agreements.
OEM and Other revenue for the fourth quarter was $152 million, up 31 percent from a year ago and up 6 percent sequentially.The year-on-year and sequential increases were primarily due to growth in entry level GPUs for PC OEMs. Full-year revenuewas $505 million, down 34 percent, primarily due to the absence of cryptocurrency-specific product sales.
Gross MarginGAAP gross margin for the fourth quarter was 64.9 percent, up 1,020 basis points from a year earlier and up 130 basis pointssequentially. The year-on-year increase was primarily driven by reduced inventory charges in Gaming and a more favorable mixwithin Data Center. The sequential increase reflects a higher revenue contribution of Data Center products, partially offset bylower sales of previously written-off components.
Full-year GAAP gross margin was 62.0 percent, up 80 basis points from a year ago, primarily driven by reduced inventorycharges and the sale of previously written-off components.
Non-GAAP gross margin for the fourth quarter was 65.4 percent, up 940 basis points from a year earlier and up 130 basis pointssequentially. Full-year non-GAAP gross margin was 62.5 percent, up 80 basis points from a year ago.
ExpensesGAAP operating expenses for the fourth quarter were $1.02 billion, including $215 million in stock-based compensation andother charges, up 12 percent from a year earlier and up 4 percent sequentially. Full-year operating expenses were $3.92 billion,including $836 million in stock-based compensation and other charges, up 16 percent from a year ago. The year-on-year,sequential and full-year growth primarily reflects employee additions and increases in employee compensation and other relatedcosts, including stock-based compensation and infrastructure costs.
Non-GAAP operating expenses for the fourth quarter were $810 million, up 7 percent from a year earlier and up 5 percentsequentially. Full-year non-GAAP operating expenses were $3.09 billion, up 9 percent from fiscal 2019.
Operating IncomeGAAP operating income for the fourth quarter was $990 million, up 237 percent from a year earlier and up 7 percentsequentially. Non-GAAP operating income for the fourth quarter was $1.22 billion, up 155 percent from a year earlier and up 6percent sequentially. For fiscal 2020, GAAP operating income was $2.85 billion and non-GAAP operating income was $3.73billion.
Other Income & Expense and Income Tax
GAAP($ in millions) Q4 FY20 Q3 FY20 Q4 FY19 FY20 FY19Interest income $41 $45 $42 $178 $136Interest expense (12) (13) (14) (52) (58)Other, net (3) -- 2 (2) 14Total $26 $32 $30 $124 $92
Non-GAAP($ in millions) Q4 FY20 Q3 FY20 Q4 FY19 FY20 FY19Interest income $41 $45 $42 $178 $136Interest expense (12) (12) (14) (50) (56)Other, net (3) -- 1 (1) 2Total $26 $33 $29 $127 $82
GAAP other income and expense, or OI&E, includes interest earned on cash and investments, interest expense associated withcorporate bonds, and other gains and losses. Non-GAAP OI&E excludes the portion of interest expense from the amortization ofthe debt discount and the gains or losses from certain investments.
GAAP effective tax rate for the fourth quarter was 6.4 percent and for the full year was 5.9 percent, inclusive of excess taxbenefits related to stock-based compensation. Non-GAAP effective tax rate for the fourth quarter was 6.0 percent and for the fullyear was 7.3 percent.
Net Income and EPSGAAP net income for the fourth quarter was $950 million and for the full year was $2.80 billion. GAAP earnings per diluted sharefor the fourth quarter were $1.53, up 66 percent from a year earlier and up 6 percent sequentially. Full-year GAAP earnings perdiluted share were $4.52, down 32 percent.
Non-GAAP net income for the fourth quarter was $1.17 billion and for the full year was $3.58 billion. Non-GAAP earnings perdiluted share for the fourth quarter were $1.89, up 136 percent from a year earlier and up 6 percent sequentially. Full-year non-GAAP earnings per diluted share were $5.79, down 13 percent.
Capital Return
Capital Return(in millions) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Dividends $47 $181 $186 $213 $261 $341 $371 $390Share repurchases:
$ $100 $887 $814 $587 $739 $909 $1,578 $-- Shares 8 62 44 25 15 6 9 --
We will return to repurchasing our stock after closing the acquisition of Mellanox Technologies, Ltd.
Balance Sheet and Cash FlowCash, cash equivalents and marketable securities at the end of the fourth quarter were $10.90 billion, up from $9.77 billion in theprior quarter and $7.42 billion a year earlier. The increases primarily reflect growth in operating cash flow.
Accounts receivable at the end of the quarter was $1.68 billion compared with $1.46 billion in the prior quarter and $1.42 billion ayear earlier. DSO at quarter-end was 49 days, up from 44 days in the prior quarter and down from 59 days a year earlier.
Inventory at the end of the quarter was $979 million, down from $1.05 billion in the prior quarter and down from $1.57 billion ayear earlier. Outstanding inventory purchase obligations at the end of the quarter were $1.16 billion, up from $980 million in theprior quarter and up from $912 million a year earlier. DSI at quarter-end was 82 days, down from 87 days in the prior quarter anddown from 143 days a year earlier.
Cash flow from operating activities was $1.46 billion in the fourth quarter, down from $1.64 billion in the prior quarter, and upfrom $898 million a year earlier. The sequential decrease reflects changes in working capital primarily driven by an increase inDSO. The year-on-year increase primarily reflects growth in operating income. Full-year cash flow from operating activities was$4.76 billion, up from $3.74 billion a year earlier, reflecting changes in working capital driven by a reduction in inventory partiallyoffset by a decrease in operating income.
Free cash flow was $1.32 billion in the fourth quarter, compared with $1.54 billion in the previous quarter and $695 million a yearearlier.
Depreciation and amortization expense amounted to $106 million for the fourth quarter and $381 million for fiscal 2020. Capitalexpenditures were $144 million for the fourth quarter and $489 million for fiscal 2020.
First Quarter of Fiscal 2021 OutlookOur outlook for the first quarter of fiscal 2021 does not include any contribution from the pending acquisition of Mellanox.Discussions with China’s regulatory agency, the State Administration for Market Regulation, are progressing, and we believe theacquisition will likely close in the early part of calendar 2020.
While the ultimate effect of the coronavirus is difficult to estimate, we have reduced our revenue outlook for the first quarter offiscal 2021 by $100 million to account for the potential impact.
• Revenue is expected to be $3.00 billion, plus or minus 2 percent.
• GAAP and non-GAAP gross margins are expected to be 65.0 percent and 65.4 percent, respectively, plus or minus 50basis points.
• GAAP and non-GAAP operating expenses are expected to be approximately $1.05 billion and $835 million, respectively.
• GAAP and non-GAAP other income and expense are both expected to be income of approximately $25 million.
• GAAP and non-GAAP tax rates are both expected to be 9 percent, plus or minus 1 percent, excluding any discrete items.GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which areexpected to generate variability on a quarter by quarter basis.
• Capital expenditures are expected to be approximately $150 million to $170 million.
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For further information, contact:
Simona Jankowski Robert SherbinInvestor Relations Corporate CommunicationsNVIDIA Corporation NVIDIA [email protected] [email protected]
Non-GAAP MeasuresTo supplement NVIDIA’s condensed consolidated financial statements presented in accordance with GAAP, the company usesnon-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP grossprofit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP other income,non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, non-GAAPdiluted shares, and free cash flow. In order for NVIDIA’s investors to be better able to compare its current results with those ofprevious periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliationsadjust the related GAAP financial measures to exclude stock-based compensation expense, legal settlement costs, acquisition-related and other costs, gains and losses from non-affiliated investments, interest expense related to amortization of debtdiscount, and the associated tax impact of these items, where applicable. Free cash flow is calculated as GAAP net cashprovided by operating activities less purchases of property and equipment and intangible assets. NVIDIA believes thepresentation of its non-GAAP financial measures enhances the user's overall understanding of the company’s historical financialperformance. The presentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as asubstitute for the company’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures maybe different from non-GAAP measures used by other companies.
Certain statements in this CFO Commentary including, but not limited to, statements as to: NVIDIA returning to repurchasing our stock after closing theacquisition of Mellanox; the status of the China regulatory approval process and the expected timing of closing of the Mellanox acquisition; the ultimate effect ofthe coronavirus; our financial outlook for the first quarter of fiscal 2021; our expected tax rates for the first quarter of fiscal 2021; our expectation to generatevariability from excess tax benefits or deficiencies; and our expected capital expenditures for the first quarter of fiscal 2021 are forward-looking statements thatare subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results todiffer materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact oftechnological development and competition; development of new products and technologies or enhancements to our existing product and technologies; marketacceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes inindustry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factorsdetailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annualreport on Form 10-K and quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on the company’s website and are available fromNVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except asrequired by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
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© 2020 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce and Tegra are trademarks and/or registered trademarks of NVIDIACorporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respective companies with which they areassociated. Features, pricing, availability, and specifications are subject to change without notice.
NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In millions, except per share data) (Unaudited)
Three Months Ended Twelve Months Ended January 26, October 27, January 27, January 26, January 27, 2020 2019 2019 2020 2019
GAAP gross profit $ 2,015 $ 1,916 $ 1,207 $ 6,768 $ 7,171 GAAP gross margin 64.9% 63.6% 54.7% 62.0% 61.2%
Stock-based compensation expense (A) 12 15 6 39 27 Legal settlement costs 3 — 21 14 35Non-GAAP gross profit $ 2,030 $ 1,931 $ 1,234 $ 6,821 $ 7,233
Non-GAAP gross margin 65.4% 64.1% 56.0% 62.5% 61.7%
GAAP operating expenses $ 1,025 $ 989 $ 913 $ 3,922 $ 3,367 Stock-based compensation expense (A) (208) (208) (150) (805) (530) Acquisition-related and other costs (7) (7) (1) (30) (2) Legal settlement costs — — (7) (1) (9)Non-GAAP operating expenses $ 810 $ 774 $ 755 $ 3,086 $ 2,826
GAAP income from operations $ 990 $ 927 $ 294 $ 2,846 $ 3,804
Total impact of non-GAAP adjustments toincome from operations 230 229 185 889 603
Non-GAAP income from operations $ 1,220 $ 1,156 $ 479 $ 3,735 $ 4,407
GAAP other income $ 26 $ 32 $ 30 $ 124 $ 92
Losses (Gains) from non-affiliatedinvestments — — (1) 1 (12)
Interest expense related to amortization ofdebt discount — 1 — 2 2
Non-GAAP other income $ 26 $ 33 $ 29 $ 127 $ 82
GAAP net income $ 950 $ 899 $ 567 $ 2,796 $ 4,141
Total pre-tax impact of non-GAAPadjustments 230 230 184 890 593
Income tax impact of non-GAAP adjustments(B) (8) (26) (25) (106) (223)
Tax benefit from income tax reform — — (230) — (368)Non-GAAP net income $ 1,172 $ 1,103 $ 496 $ 3,580 $ 4,143
Three Months Ended Twelve Months Ended January 26, October 27, January 27, January 26, January 27, 2020 2019 2019 2020 2019Diluted net income per share GAAP $ 1.53 $ 1.45 $ 0.92 $ 4.52 $ 6.63
Non-GAAP $ 1.89 $ 1.78 $ 0.80 $ 5.79 $ 6.64
Weighted average shares used in diluted net income pershare computation GAAP 621 618 619 618 625 Anti-dilution impact from note hedge — — — — (1) Non-GAAP 621 618 619 618 624
GAAP net cash provided by operating activities $ 1,465 $ 1,640 $ 898 $ 4,761 $ 3,743
Purchase of property and equipment and intangibleassets (144) (104) (203) (489) (600)
Free cash flow $ 1,321 $ 1,536 $ 695 $ 4,272 $ 3,143
(A) Stock-based compensation consists of the following:
Three Months Ended Twelve Months Ended January 26, October 27, January 27, January 26, January 27, 2020 2019 2019 2020 2019 Cost of revenue $ 12 $ 15 $ 6 $ 39 $ 27 Research and development $ 140 $ 141 $ 99 $ 540 $ 336 Sales, general and administrative $ 68 $ 67 $ 51 $ 265 $ 194 (B) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or deficiencies related to stock-basedcompensation under GAAP accounting standard (ASU 2016-09).
NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q1 FY2021 Outlook GAAP gross margin 65.0% Impact of stock-based compensation expense 0.4% Non-GAAP gross margin 65.4%
Q1 FY2021 Outlook (In millions)GAAP operating expenses $ 1,045 Stock-based compensation expense, acquisition-related costs, and other costs (210)Non-GAAP operating expenses $ 835