NVIDIA Financial Results 1st Quarter Fiscal 2016 - Sells 14% more GPUs

NVIDIAreported revenue for the first quarter ended April 26, 2015, of $1.15 billion, up 4 percent from $1.10 billion a year earlier and down 8 percent from $1.25 billion the previous quarter. GAAP earnings per diluted share for the quarter were $0.24, unchanged from $0.24 a year earlier and down 31 percent from $0.35 in the previous quarter. 

Non-GAAP earnings per diluted share were $0.33, up 14 percent from $0.29 a year earlier and down 23 percent from $0.43 in the previous quarter."The importance of visual computing is evident all around us," said Jen-Hsun Huang, president and chief executive officer of NVIDIA. "Our expertise in this field enables us to take a leading position to advance deep learning, virtual reality and self-driving cars. "Our singular focus on visual computing is aligned with some of the most exciting growth opportunities in computing today," he said.

--  Revenue of $1.15 billion, up 4 percent from $1.10 billion a year
    earlier
--  Record GAAP gross margin of 56.7 percent, up from 54.8 percent a year
    earlier
--  Decision to wind down or sell Icera modem operations
--  Company to return $800 million to shareholders in fiscal 2016, raises
    quarterly cash dividend 15 percent to $0.0975 per share

The company is looking forward to its case against Samsung and Qualcomm, set to be heard in June at the U.S. International Trade Commission. Last month, NVIDIA received a favorable pretrial claim construction ruling in the case.

Icera Modem Operations
NVIDIA announced on May 5, 2015, that it will wind-down its Icera modem operations in the second quarter of fiscal 2016. It is open to a sale of the technology or operations.

The company estimates that it will recognize restructuring charges in the range of $100 million to $125 million, primarily during fiscal 2016. These charges will consist of severance and other employee termination benefits, tax expense items and other costs associated with the wind-down, if the company is unable to sell the modem operations.

The Icera wind-down or sale is expected to benefit non-GAAP operating expenses in the second half of the year and the company will carefully invest in its growth initiatives of deep learning, self-driving cars and gaming. Non-GAAP operating expenses in fiscal 2016 are expected to be approximately flat with the previous year, excluding litigation costs, which are anticipated to be in the range of $70 million to $90 million as the company defends its intellectual property.

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                     GAAP Quarterly Financial Comparison
----------------------------------------------------------------------------
   ($ in millions except
    earnings per share)   Q1 FY16  Q4 FY15  Q1 FY15      Q/Q         Y/Y
----------------------------------------------------------------------------
Revenue                    $1,151    $1,251   $1,103     down 8%       up 4%
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Gross margin                56.7%     55.9%    54.8%   up 80 bps  up 190 bps
----------------------------------------------------------------------------
Operating expenses           $477      $468     $453       up 2%       up 5%
----------------------------------------------------------------------------
Net income                   $134      $193     $137    down 31%     down 2%
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Diluted earnings per
 share                      $0.24     $0.35    $0.24    down 31%          --
----------------------------------------------------------------------------

----------------------------------------------------------------------------
                   Non-GAAP Quarterly Financial Comparison
----------------------------------------------------------------------------
   ($ in millions except
    earnings per share)   Q1 FY16  Q4 FY15  Q1 FY15      Q/Q         Y/Y
----------------------------------------------------------------------------
Revenue                    $1,151    $1,251   $1,103     down 8%       up 4%
----------------------------------------------------------------------------
Gross margin                56.9%     56.2%    55.1%   up 70 bps  up 180 bps
----------------------------------------------------------------------------
Operating expenses           $425      $420     $411       up 1%       up 3%
----------------------------------------------------------------------------
Net income                   $187      $241     $166    down 22%      up 13%
----------------------------------------------------------------------------
Diluted earnings per
 share                      $0.33     $0.43    $0.29    down 23%      up 14%
----------------------------------------------------------------------------

Capital Return
During the first quarter, NVIDIA paid $46 million in cash dividends and repurchased 2.4 million shares. As a result, it returned an aggregate of $99 million to shareholders.
It has announced a 15 percent increase in its quarterly cash dividend to $0.0975 per share, from $0.085 per share. NVIDIA will pay its next quarterly cash dividend of $0.0975 per share on June 12, 2015, to all stockholders of record on May 21, 2015.

It also has announced an increase in its intended return to shareholders in fiscal 2016 to $800 million from the previously stated $600 million, through quarterly cash dividends and share repurchases.

Further, the company's board of directors has extended the previously authorized repurchase program through December 2018 and authorized an additional $1.62 billion, for an aggregate of $2.00 billion available for repurchase.

NVIDIA's outlook for the second quarter of fiscal 2016 is as follows:

• Revenue is expected to be $1.01 billion, plus or minus two percent.
• GAAP and non-GAAP gross margins are expected to be 55.7 percent and 56.0 percent, respectively, plus or minus 50 basis points.
• GAAP operating expenses are expected to be approximately $474 million; non-GAAP operating expenses are expected to be approximately $425 million.
• GAAP and non-GAAP tax rates for the second quarter of fiscal 2016 are expected to be 23 percent and 21 percent, respectively, plus or minus one percent.
• The above GAAP outlook amounts exclude restructuring charges, which are expected to be in the range of $100 million to $125 million, primarily during fiscal 2016. These charges will consist of severance and other employee termination benefits, tax expense items and other costs associated with the wind-down, if the company is unable to sell the modem operations.
• Capital expenditures are expected to be approximately $35 million to $45 million.

First Quarter Fiscal 2016 Highlights
During the first quarter, NVIDIA achieved progress in each of its platforms.

Gaming:

• Launched NVIDIA GeForce GTX TITAN X GPU, the world's fastest GPU.
• Introduced its first living-room entertainment device, NVIDIA SHIELD, the world's first 4K smart TV platform that uses the Internet to connect you to a world of media, games, and apps.

Enterprise Graphics:

• Introduced its roadmap for physically based rendering -- including Iray 2015 rendering software; Quadro M6000, the world's most powerful professional GPU; and the Quadro Visual Computing Appliance, with eight M6000 GPUs.

HPC & Cloud:

• Drew more than 4,000 guests to the sixth annual GPU Technology Conference, which focused on deep learning and self-driving cars, and featured talks by leaders in these industries.
• Major consumer web and cloud companies -- including Baidu, Facebook, Flickr/Yahoo, Microsoft and Twitter -- are using NVIDIA GPUs for deep learning.
• Announced that its next-generation Pascal GPU architecture will accelerate deep learning applications 10X beyond the speed of current-generation Maxwell processors.

Automotive:

• Announced availability of NVIDIA DRIVE PX, a powerful car computer that utilizes deep learning to enable self-driving capabilities.