NVIDIA Announces Financial Results for Third Quarter Fiscal 2020

NVIDIA’s outlook for the fourth quarter of fiscal 2020 does not include any contribution from the pending acquisition of Mellanox and is as follows:

  • Revenue is expected to be $2.95 billion, plus or minus 2 percent. Strong sequential growth is expected in Data Center, offset by a seasonal decline in GeForce® notebook GPUs and SoC modules for gaming platforms.
  • GAAP and non-GAAP gross margins are expected to be 64.1 percent and 64.5 percent, respectively, plus or minus 50 basis points.
  • GAAP and non-GAAP operating expenses are expected to be approximately $1.02 billion and $805 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 are expected to generate variability on a quarter by quarter basis.

Highlights

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

Gaming

  • Announced with Microsoft that Minecraft, the world’s most popular computer game, will feature ray tracing.
  • Announced SUPER versions of GeForce GTX TM GPUs with GeForce GTX 1650 SUPER, and GeForce GTX 1660 SUPER, successor to GeForce GTX 1060, the world’s best-selling GPU.
  • Introduced the RTX Broadcast Engine, which uses the AI capabilities of GeForce RTX GPUs to enable virtual greenscreens, filters and AR effects in livestreaming.
  • Announced two new models of the SHIELD TV streaming media player, which bring unmatched levels of home entertainment, gaming and AI capabilities to the living room.
  • Expanded the reach of GeForce NOW TM game streaming, with the service announced by Taiwan Mobile and Russia’s Rostelcom with GFN.ru, which joined Korea’s LG U+ and Japan’s SoftBank.

Data Center

  • Launched the NVIDIA® EGX Intelligent Edge Computing Platform to bring accelerated AI to retail, manufacturing, telecommunications, logistics and other industries, with Walmart, BMW, NTT East, Procter & Gamble and Samsung Electronics among early adopters.
  • Collaborated with Microsoft to provide an optimized hybrid-cloud platform combining Microsoft Azure software with NVIDIA EGX powered by NVIDIA T4 GPUs to address edge-computing demand.
  • Entered the 5G telecom market, enabling telcos to build high-performing, efficient, virtualized 5G radio access networks using GPUs, in collaboration with Ericsson.
  • Announced a collaboration with Red Hat to deliver software-defined 5G RAN using Red Hat OpenShift and GPU-accelerated servers.  
  • Won the first inference benchmark, MLPerf Inference 0.5, measuring AI workload performance in data centers and at the edge.
  • Partnered with VMware to accelerate VMware Cloud on AWS using NVIDIA T4 GPUs and introduced the new NVIDIA vComputeServer software for enterprises to run AI workloads on GPU servers in virtualized environments.
  • Announced that the United States Postal Service will use NVIDIA AI technology to improve its package data-processing efficiency.

Professional Visualization

  • Announced that more than 40 creative and design applications, including three from Adobe -- Adobe Dimension, Substance Alchemist and Premiere Pro -- are now accelerated by RTX ray tracing.

Edge Computing

  • Introduced Jetson Xavier™ NX, the world’s smallest, most powerful AI supercomputer for robotic and embedded computing devices at the edge.          

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 third 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 fourth 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, restructuring and other, 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. 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   Nine Months Ended
      October 27,   October 28,   October 27,   October 28,
      2019   2018   2019   2018
                   
Revenue $ 3,014     $ 3,181     $ 7,813     $ 9,511  
Cost of revenue   1,098       1,260       3,060       3,547  
Gross profit   1,916       1,921       4,753       5,964  
Operating expenses              
  Research and development   712       605       2,091       1,729  
  Sales, general and administrative   277       258       806       725  
    Total operating expenses   989       863       2,897       2,454  
Income from operations   927       1,058       1,856       3,510  
  Interest income   45       37       137       94  
  Interest expense   (13 )     (15 )     (39 )     (44 )
  Other, net   -       1       -       12  
    Total other income (expense)   32       23       98       62  
Income before income tax   959       1,081       1,954       3,572  
Income tax expense (benefit)   60       (149 )     109       (3 )
Net income $ 899     $ 1,230     $ 1,845     $ 3,575  
                   
Net income per share:              
  Basic $ 1.47     $ 2.02     $ 3.03     $ 5.88  
  Diluted $ 1.45     $ 1.97     $ 2.99     $ 5.71  
                   
Weighted average shares used in per share computation:            
  Basic   610       609       609       608  
  Diluted   618       625       617       626  
                   

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