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NVIDIA Reports Financial Results For Second Quarter Fiscal Year 2010
Revenue up 17 percent quarter-on-quarter to $776.5 million / GAAP net loss of $105.3 million, or $0.19 cents per share / Non-GAAP net income of $37.7 million, or $0.07 cents per share / GAAP gross margin of 20.2 percent; non-GAAP gross margin of 36.3 perc
On a GAAP basis, the company recorded a net loss of $105.3 million, or $0.19 per share, compared with a net loss of $120.9 million, or $0.22 per share a year ago. Reflected in these results is a net charge of $119.1 million related to the weak die/packaging set used in certain previous-generation chips that the company had initially identified and provided for in its prior fiscal year. On a non-GAAP basis - excluding this item, and stock-based compensation as well as their associated tax impact - net income was $37.7 million, or $0.07 per diluted share, compared with $74.5 million, or $0.13 per diluted share, a year earlier.
Please find attached a chart with the highlights of the quarterly results.
"NVIDIA's business is recovering. Product demand is improving, and our strategic investments are leading to new growth," said Jen-Hsun Huang, president and chief executive officer, NVIDIA. "Our two newest businesses began to ship meaningful amounts of product this past quarter and show significant promise. Tesla, the industry's first GPU for general-purpose high performance computing, achieved its highest-ever quarterly revenue. And Tegra, our ultra low-power computer-on-a-chip, is making exciting progress in the market for mobile and embedded devices. Our new businesses are positioned to benefit from the rise of mobile and cloud computing."
NVIDIA's second quarter results were impacted by an additional net charge of approximately $119.1 million to cover costs related to a weak die/packaging material set that was used in certain versions of its previous-generation chips. Although the number of units impacted by this issue remains consistent with the company's initial estimates a year ago, the cost of remediation and repair of impacted systems has been higher than originally anticipated. In July 2008, a $196.0 million reserve was accrued for the purpose of supporting our affected customers around the world. The weak die/package material combination is not used in any products currently in production.
GAAP net loss for the six months ended July 26, 2009 was $306.6 million, or $0.56 per share, compared to a net income of $55.9 million, or $0.09 per diluted share for the six months ended July 27, 2008. Non-GAAP net loss for the six months ended July 26, 2009, which excludes the net charge related to the weak die/packaging material set that was used in certain versions of our previous generation chips, a non-recurring charge of $140.2 million in connection with a previously announced cash tender offer to purchase employee stock options, stock-based compensation charges, and their associated tax impact, was $8.9 million, or $0.02 per share, compared to a net income of $286.2 million, or $0.49 per diluted share for the six months ended July 27, 2008.
NVIDIA expects revenue in the third quarter ending October 25, 2009, to be up 5 to 7 percent over the second quarter.
Second Quarter Fiscal 2010 and Recent Highlights:
* Free cash flow was a positive $117.5 million during the quarter, with cash, cash equivalents and marketable securities ending at $1.47 billion.
* NVIDIA delivered its first 40nm GPUs to customers in the second quarter.
* The NVIDIA ION platform was awarded "Best Choice" - and 21 design wins disclosed - at Computex 2009. Nine are already shipping, with a further 12 to ship in the third quarter. Five more wins have been disclosed since Computex.
* NVIDIA started ramping up volume shipments of the Tegra(tm) computer-on-a-chip. Microsoft's Zune HD was revealed to be based on Tegra.
* Quadro Plex SVS was launched. SVS is a scalable visual computing platform for professionals who interact with 3D models and analyze large volumes of data.
* For Quadro, NVIDIA launched the NVIDIA Optix ray tracing engine, part of a suite of application acceleration engines for software developers. The suite also includes engines for managing 3D data and scenes, scaling performance across multiple GPUs and real-time modeling of hyper-realistic physical and environmental affects.
* Tesla computing solution products are now carried by HP and Supermicro, joining a global list of OEMs including Cray, Dell, HP Lenovo, SGI and Sun.
* NVIDIA CUDA architecture now accelerates AMBER, one of the most popular molecular dynamics codes, with more than 60,000 users worldwide. AMBER is up to 50 times faster when run on a GPU than a CPU.
* In the financial industry, Numerix and CompatibL announced CUDA support for new counterparty risk application, and achieved an 18X speedup.
* NVIDIA and Adobe announced GPU acceleration for the Flash player, bringing Internet video to a new class of low-power PCs and Internet devices.
To supplement NVIDIA's Condensed Consolidated Statements of Operations 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 operating expenses, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow and days sales in inventory. 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 a charge related to the weak die/packaging material set that was used in certain versions of NVIDIA's previous generation chips, net of insurance reimbursements, a non-recurring charge related to a tender offer purchase, recurring stock-based compensation charges, and the associated tax impact of these items, where applicable. Free cash flow is calculated as GAAP net cash provided by operating activities less purchases of property and equipment and intangible assets. Days sales in inventory is computed by the number of days in the period divided by the non-GAAP inventory turnover ratio. 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 our non-GAAP measures may be different from non-GAAP measures used by other companies.
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