NVIDIA Announces Financial Results for Second Quarter Fiscal 2020

NVIDIA’s outlook for the third quarter of fiscal 2020 is as follows:

  • Revenue is expected to be $2.90 billion, plus or minus 2 percent.

  • GAAP and non-GAAP gross margins are expected to be 62.0 percent and 62.5 percent, respectively, plus or minus 50 basis points.

  • GAAP and non-GAAP operating expenses are expected to be approximately $980 million and $765 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 10 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 are expected to generate variability on a quarter by quarter basis.

Highlights

Since the end of the first quarter of fiscal 2020, NVIDIA has achieved progress in these areas:

Data Center

  • Announced breakthroughs in language understanding that allow organizations to enable real-time conversational AI, with record-setting performance in running training and inference on the BERT AI language model.
  • Announced that NVIDIA’s DGX SuperPOD™  – which provides the AI infrastructure for the company’s autonomous-vehicle development program – was ranked the world’s 22nd fastest supercomputer and that its reference architecture is available commercially through partners.
  • Set  eight records in AI training performance in the latest MLPerf benchmarking tests.
  • Announced support for Arm CPUs, providing a new path to build highly energy-efficient, AI-enabled exascale supercomputers.

Gaming

Professional Visualization

Automotive

  • Volvo Group announced that it is using the  NVIDIA DRIVE™ end-to-end autonomous driving platform to train networks in the data center, test them in simulation and deploy them in self-driving vehicles, targeting freight transport, refuse and recycling collection, public transport, construction, mining, forestry and more.

CFO Commentary

Commentary on the quarter by Colette Kress, NVIDIA’s executive vice president and chief financial officer, is available at http://investor.nvidia.com/.

Conference Call and Webcast Information

NVIDIA will conduct a conference call with analysts and investors to discuss its second quarter fiscal 2020 financial results and current financial prospects today at 2:30 p.m. Pacific time (5:30 p.m. Eastern time). A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, http://investor.nvidia.com. The webcast will be recorded and available for replay until NVIDIA’s conference call to discuss its financial results for its third quarter of fiscal 2020.

Non-GAAP Measures

To supplement NVIDIA’s Condensed Consolidated Statements of Income and Condensed Consolidated Balance Sheets presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP other income (expense), non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, non-GAAP diluted shares, and free cash flow. In order for NVIDIA’s investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust 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 debt discount, and the associated tax impact of these items, where applicable. Weighted average shares used in the non-GAAP diluted net income per share computation includes the anti-dilution impact of our Note Hedge. Free cash flow is calculated as GAAP net cash provided by operating activities less purchase of property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user’s overall understanding of the company’s historical financial performance. The presentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures may be different from non-GAAP measures used by other companies.

 

 
  NVIDIA CORPORATION  
  CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
 (In millions, except per share data) 
 (Unaudited) 
          
          
       Three Months Ended       Six Months Ended  
      July 28,   July 29,   July 28,   July 29,
        2019       2018       2019       2018  
                   
Revenue $   2,579     $   3,123     $   4,799     $   6,330  
Cost of revenue      1,038         1,148         1,962         2,287  
Gross profit     1,541         1,975         2,837         4,043  
Operating expenses              
  Research and development      704         581         1,379         1,124  
  Sales, general and administrative     266         237         529         467  
    Total operating expenses     970         818         1,908         1,591  
Income from operations     571         1,157         929         2,452  
  Interest income     47         32         92         57  
  Interest expense     (13 )       (14 )       (27 )       (29 )
  Other, net     1         5         1         11  
    Total other income (expense)     35         23         66         39  
Income before income tax     606         1,180         995         2,491  
Income tax expense     54         79         48         146  
Net income $   552     $   1,101     $   947     $   2,345  
                   
Net income per share:              
  Basic $   0.91     $   1.81     $   1.56     $   3.86  
  Diluted $   0.90     $   1.76     $   1.54     $   3.74  
                   
Weighted average shares used in per share computation:              
  Basic     609         607         608         607  
  Diluted     616         626         616         627  
                   

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