NVIDIA Reports Record Q3 Earnings – Revenue of $1.305 Billion

By Nathan Kirsch

NVIDIA Announces Financial Results for Third Quarter Fiscal 2016

  • Record revenue of $1.305 billion, up 7 percent from a year ago, up 13 percent sequentially
  • GAAP operating income of $245 million, up 15 percent from a year ago
  • Quarterly cash dividend raised 18 percent to $0.115 per share. Company to return $1 billion to shareholders in fiscal 2017

NVIDIA Website 2015

SANTA CLARA, CA – NVIDIA (NASDAQ: NVDA)

NVIDIA (NASDAQ: NVDA) today reported record revenue for the third quarter ended October 25, 2015, of $1.305 billion, up 7 percent from $1.225 billion a year earlier, and up 13 percent from $1.153 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.44, up 42 percent from $0.31 a year earlier and up from $0.05 in the previous quarter. Non-GAAP earnings per diluted share were $0.46, up 18 percent from $0.39 a year earlier, and up 35 percent from $0.34 in the previous quarter.

“Our record revenue highlights NVIDIA’s position at the center of forces that are reshaping our industry,” said Jen-Hsun Huang, co-founder and chief executive officer, NVIDIA. “Virtual reality, deep learning, cloud computing and autonomous driving are developing with incredible speed, and we are playing an important role in all of them.

“We continue to make great headway in our strategy of creating specialized visual computing platforms targeted at important growth markets. The opportunities ahead of us have never been more promising,” he said.

Capital Return
During the third quarter, NVIDIA paid $53 million in cash dividends and received an additional 4.6 million shares at the close of the accelerated share repurchase agreement that it had entered into in the previous quarter. As a result, the company has returned an aggregate of $604 million to shareholders in the first nine months of the fiscal year. The company intends to return $800 million to shareholders in fiscal 2016.

For fiscal 2017, NVIDIA intends to return approximately $1.0 billion to shareholders through ongoing quarterly cash dividends and share repurchases.

The company announced an 18 percent increase in its quarterly cash dividend to $0.115 per share from $0.0975 per share. NVIDIA will pay this next quarterly cash dividend on December 14, 2015, to all shareholders of record on November 20, 2015.

GAAP Quarterly Financial Comparison
($ in millions except
earnings per share)		 Q3 FY16 Q2 FY16 Q3 FY15 Q/Q Y/Y
Revenue $1,305 $1,153 $1,225 up 13% up 7%
Gross margin 56.3% 55.0% 55.2% up 130 bps up 110 bps
Operating expenses $489 $558 $463 down 12% up 6%
Operating income $245 $76 $213 up 222% up 15%
Net income $246 $26 $173 up 846% up 42%
Diluted earnings per share $0.44 $0.05 $0.31 up 780% up 42%
Non-GAAP Quarterly Financial Comparison
($ in millions except
earnings per share)		 Q3 FY16 Q2 FY16 Q3 FY15 Q/Q Y/Y
Revenue $1,305 $1,153 $1,225 up 13% up 7%
Gross margin 56.5% 56.6% 55.5% down 10 bps up 100 bps
Operating expenses $430 $421 $415 up 2% up 4%
Operating income $308 $231 $264 up 33% up 17%
Net income $255 $190 $220 up 34% up 16%
Diluted earnings per share $0.46 $0.34 $0.39 up 35% up 18%

NVIDIA’s outlook for the fourth quarter of fiscal 2016 is as follows:

  • Revenue is expected to be $1.30 billion, plus or minus two percent.
  • GAAP and non-GAAP gross margins are expected to be 56.7 percent and 57.0 percent, respectively, plus or minus 50 basis points.
  • GAAP operating expenses are expected to be approximately $503 million. Non-GAAP operating expenses are expected to be approximately $445 million.
  • GAAP and non-GAAP tax rates for the fourth quarter of fiscal 2016 are expected to be 20 percent, plus or minus one percent.
  • The above GAAP outlook amounts exclude restructuring charges, which are expected to be in the range of $25 million to $35 million, in the fourth quarter of fiscal 2016.
  • Capital expenditures are expected to be approximately $20 million to $30 million.

Third Quarter Fiscal 2016 Highlights

During the third quarter, NVIDIA achieved progress in each of its platforms.

Gaming:

  • Introduced the GeForce GTX 950 GPU, designed to play the latest games with processing power that rivals any console.
  • Introduced NVIDIA GameWorks VR, a software development kit for creating gaming experiences on virtual reality-ready desktops and notebooks.
  • Launched GeForce NOW, allowing players to instantly stream titles from the cloud to their SHIELD device.
  • Extended SHIELD Android TV into key European markets.

Professional Visualization:

  • Enabled professional designers to bring virtual reality to applications, with the launch of NVIDIA DesignWorks VR.

Datacenter:

  • Unveiled the next generation of its virtualized graphics platform, NVIDIA GRID 2.0, which delivers even the most graphics-intensive applications to any connected device.
  • Announced that Microsoft Azure will be the first cloud-services provider to offer GRID 2.0 capabilities, as well as accelerated computing.
  • Revealed that the Swiss Federal Office of Meteorology and Climatology is the first major national weather service to use a GPU-accelerated supercomputer to improve daily forecasts.

Auto:

  • Featured in new production vehicles and concept cars with NVIDIA-powered digital cockpits from Mercedes-Benz, Audi, Porsche, Bentley and Honda at the International Auto Show in Frankfurt.
  • Furthered its partnership with Tesla Motors, which introduced the Model X, equipped with an NVIDIA-powered infotainment system and digital instrument cluster.

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/.

About NVIDIA Since 1993, NVIDIA (NASDAQ: NVDA) has pioneered the art and science of visual computing. The company’s technologies are transforming a world of displays into a world of interactive discovery — for everyone from gamers to scientists, and consumers to enterprise customers. More information at http://nvidianews.nvidia.com and http://blogs.nvidia.com.