Home Artificial Intelligence (AI) NVIDIA Announces Financial Results for Second Quarter Fiscal 2018

NVIDIA Announces Financial Results for Second Quarter Fiscal 2018

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NVIDIA Announces Financial Results for Second Quarter Fiscal 2018
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NVIDIA today reported record revenue for the second quarter ended July 30, 2017, of $2.23 billion, up 56 percent from $1.43 billion a year earlier, and up 15 percent from $1.94 billion in the previous quarter.

  • Record revenue of $2.23 billion, up 56 percent from a year ago
  • GAAP EPS of $0.92, up 124 percent from a year ago
  • Non-GAAP EPS of $1.01, up 91 percent from a year ago
  • Broad growth across all platforms

GAAP earnings per diluted share for the quarter were $0.92, up 124 percent from $0.41 a year ago and up 16 percent from $0.79 in the previous quarter. Non-GAAP earnings per diluted share were $1.01, up 91 percent from $0.53 a year earlier and up 19 percent from $0.85 in the previous quarter.

“Adoption of NVIDIA GPU computing is accelerating, driving growth across our businesses,” said Jensen Huang, founder and chief executive officer of NVIDIA. “Datacenter revenue increased more than two and a half times. A growing number of car and robot-taxi companies are choosing our DRIVE PX self-driving computing platform. And in Gaming, increasingly the world’s most popular form of entertainment, we power the fastest growing platforms – GeForce and Nintendo Switch.

“Nearly every industry and company is awakening to the power of AI. Our new Volta GPU, the most complex processor ever built, delivers a 100-fold speedup for deep learning beyond our best GPU of four years ago. This quarter, we shipped Volta in volume to leading AI customers. This is the era of AI, and the NVIDIA GPU has become its brain. We have incredible opportunities ahead of us,” he said.

Capital Return

During the first half of fiscal 2018, NVIDIA paid $758 million in share repurchases and $166 million in cash dividends. For fiscal 2018, NVIDIA intends to return $1.25 billion to shareholders through ongoing quarterly cash dividends and share repurchases.

NVIDIA will pay its next quarterly cash dividend of $0.14 per share on September 18, 2017, to all shareholders of record on August 24, 2017.

Q2 FY2018 Summary

GAAP
($ in millions except earnings per share)Q2 FY18Q1 FY18Q2 FY17Q/QY/Y
Revenue$2,230$1,937$1,428Up 15%Up 56%
Gross margin58.4%59.4%57.9%Down 100 bpsUp 50 bps
Operating expenses$614$596$509Up 3%Up 21%
Operating income$688$554$317Up 24%Up 117%
Net income$583$507$261Up 15%Up 123%
Diluted earnings per share$0.92$0.79$0.41Up 16%Up 124%
Non-GAAP
($ in millions except earnings per share)Q2 FY18Q1 FY18Q2 FY17Q/QY/Y
Revenue$2,230$1,937$1,428Up 15%Up 56%
Gross margin58.6%59.6%58.1%Down 100 bpsUp 50 bps
Operating expenses$533$517$448Up 3%Up 19%
Operating income$773$637$382Up 21%Up 102%
Net income$638$533$313Up 20%Up 104%
Diluted earnings per share$1.01$0.85$0.53Up 19%Up 91%

NVIDIA’s outlook for the third quarter of fiscal 2018 is as follows:

  • Revenue is expected to be $2.35 billion, plus or minus two percent.
  • GAAP and non-GAAP gross margins are expected to be 58.6 percent and 58.8 percent, respectively, plus or minus 50 basis points.
  • GAAP operating expenses are expected to be approximately $672 million. Non-GAAP operating expenses are expected to be approximately $570 million.
  • GAAP other income and expense is expected to be an expense of approximately $2 million, inclusive of additional charges from early conversions of convertible notes. Non-GAAP other income and expense is expected to be nominal.
  • GAAP and non-GAAP tax rates are both expected to be 17 percent, plus or minus one percent, excluding any discrete items. GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which we expect to generate variability on a quarter by quarter basis.
  • Capital expenditures are expected to be approximately $65 million to $75 million.

Second Quarter Fiscal 2018 Highlights

During the second quarter, NVIDIA achieved progress in these areas:

Datacenter:

Gaming:

  • Introduced Max-Q, a design approach to make gaming laptops thinner, quieter and faster.
  • Collaborated with Activision and Bungie to bring Destiny 2 to the PC for the first time.
  • Expanded GeForce® Experience™ to China, at the ChinaJoy gaming conference.

Professional Visualization:

Automotive:

  • Toyota selected NVIDIA DRIVE™ PX for its next-generation autonomous cars.
  • Volvo and Autoliv selected DRIVE PX for self-driving cars targeted to hit the market by 2021.
  • ZF and HELLA, two leading automotive suppliers, announced a system based on DRIVE PX to deliver the highest NCAP safety ratings for cars.
  • Baidu announced that its Project Apollo open-source self-driving platform for the China market will use DRIVE PX.

Edge Computing:

  • Introduced the NVIDIA Isaac robot simulator for training intelligent machines in simulated real-world conditions before deployment.
  • Announced the NVIDIA Metropolis platform, used by more than 50 partners to make cities safer and smarter by applying deep learning to video streams.

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 2018 financial results and current financial prospects today at 2 p.m. Pacific time (5 p.m. Eastern time). To listen to the conference call, dial (877) 223-3864 in the United States or (574) 990-1377 internationally, and provide the following conference ID: 56356419. A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, http://investor.nvidia.com, and at www.streetevents.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 2018.

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 costs, contributions, restructuring and other charges, gains from non-affiliated investments, interest expense related to amortization of debt discount, loss on early debt conversions, 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 the company’s Note Hedge. Free cash flow is calculated as GAAP net cash provided by operating activities less purchases 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 its non-GAAP measures may be different from non-GAAP measures used by other companies.

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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.

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