8-K
NVIDIA CORP (NVDA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 17, 2021
NVIDIA CORPORATION
| (Exact name of registrant as specified in its charter) | ||
|---|---|---|
| Delaware | 0-23985 | 94-3177549 |
| --- | --- | --- |
| (State or other jurisdiction | (Commission | (IRS Employer |
| of incorporation) | File Number) | Identification No.) |
2788 San Tomas Expressway, Santa Clara, CA 95051
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (408) 486-2000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock, $0.001 par value per shareNVDAThe Nasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 17, 2021, NVIDIA Corporation, or the Company, issued a press release announcing its results for the quarter ended October 31, 2021. The press release is attached as Exhibit 99.1 and is incorporated herein by reference.
Attached hereto as Exhibit 99.2 and incorporated by reference herein is financial information and commentary by Colette M. Kress, Executive Vice President and Chief Financial Officer of the Company, regarding results of the quarter ended October 31, 2021, or the CFO Commentary. The CFO Commentary will be posted to http://investor.nvidia.com immediately after the filing of this Current Report.
The press release and CFO Commentary are furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information in this Current Report shall not be incorporated by reference in any filing with the U.S. Securities and Exchange Commission made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit | Description |
|---|---|
| 99.1 | Press Release, datedNovember 17, 2021, entitled "NVIDIA Announces Financial Results forThirdQuarter Fiscal 2022" |
| 99.2 | CFO Commentary onThirdQuarter Fiscal 2022 Results |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NVIDIA Corporation | |
|---|---|
| Date: November 17, 2021 | By: /s/ Colette M. Kress |
| Colette M. Kress | |
| Executive Vice President and Chief Financial Officer |
Document
FOR IMMEDIATE RELEASE:
NVIDIA Announces Financial Results for Third Quarter Fiscal 2022
•Record revenue of $7.10 billion, up 50 percent from a year earlier
•Record Data Center revenue of $2.94 billion, up 55 percent from a year earlier
•Record Gaming revenue of $3.22 billion, up 42 percent from a year earlier
SANTA CLARA, Calif.-Nov. 17, 2021- NVIDIA (NASDAQ: NVDA) today reported record revenue for the third quarter ended October 31, 2021, of $7.10 billion, up 50 percent from a year earlier and up 9 percent from the previous quarter, with record revenue from the company’s Gaming, Data Center and Professional Visualization market platforms.
GAAP earnings per diluted share for the quarter were $0.97, up 83 percent from a year ago and up 3 percent from the previous quarter. Non-GAAP earnings per diluted share were $1.17, up 60 percent from a year ago and up 13 percent from the previous quarter.
“The third quarter was outstanding, with record revenue,” said Jensen Huang, founder and CEO of NVIDIA. “Demand for NVIDIA AI is surging, driven by hyperscale and cloud scale-out, and broadening adoption by more than 25,000 companies. NVIDIA RTX has reinvented computer graphics with ray tracing and AI, and is the ideal upgrade for the large, growing market of gamers and creators, as well as designers and professionals building home workstations.
“Our GTC event series showcases the expanding universe of NVIDIA accelerated computing. Last week’s event was our most successful yet, highlighting diverse applications, including supply-chain logistics, cybersecurity, natural language processing, quantum computing research, robotics, self-driving cars, climate science and digital biology.
“Omniverse was a major theme at GTC. We showed what is possible when we can jump into virtual worlds. Omniverse will be used from collaborative design, customer service avatars and video conferencing, to digital twins of factories, processing plants, even entire cities. Omniverse brings together NVIDIA’s expertise in AI, simulation, graphics and computing infrastructure. This is the tip of the iceberg of what’s to come,” he said.
NVIDIA paid quarterly cash dividends of $100 million in the third quarter. It will pay its next quarterly cash dividend of $0.04 per share on December 23, 2021, to all shareholders of record on December 2, 2021.
Q3 Fiscal 2022 Summary
| GAAP | |||||
|---|---|---|---|---|---|
| ($ in millions, except earnings per share) | Q3 FY22 | Q2 FY22 | Q3 FY21 | Q/Q | Y/Y |
| Revenue | 7,103 | 6,507 | 4,726 | Up 9% | Up 50% |
| Gross margin | 65.2 | 64.8 | 62.6 | Up 40 bps | Up 260 bps |
| Operating expenses | 1,960 | 1,771 | 1,562 | Up 11% | Up 25% |
| Operating income | 2,671 | 2,444 | 1,398 | Up 9% | Up 91% |
| Net income | 2,464 | 2,374 | 1,336 | Up 4% | Up 84% |
| Diluted earnings per share* | 0.97 | 0.94 | 0.53 | Up 3% | Up 83% |
All values are in US Dollars.
| Non-GAAP | |||||
|---|---|---|---|---|---|
| ($ in millions, except earnings per share) | Q3 FY22 | Q2 FY22 | Q3 FY21 | Q/Q | Y/Y |
| Revenue | 7,103 | 6,507 | 4,726 | Up 9% | Up 50% |
| Gross margin | 67.0 | 66.7 | 65.5 | Up 30 bps | Up 150 bps |
| Operating expenses | 1,375 | 1,266 | 1,101 | Up 9% | Up 25% |
| Operating income | 3,386 | 3,071 | 1,993 | Up 10% | Up 70% |
| Net income | 2,973 | 2,623 | 1,834 | Up 13% | Up 62% |
| Diluted earnings per share* | 1.17 | 1.04 | 0.73 | Up 13% | Up 60% |
All values are in US Dollars.
*All per share amounts presented herein have been retroactively adjusted to reflect the four-for-one stock split which was effective July 19, 2021.
NVIDIA’s outlook for the fourth quarter of fiscal 2022 is as follows:
•Revenue is expected to be $7.40 billion, plus or minus 2 percent.
•GAAP and non-GAAP gross margins are expected to be 65.3 percent and 67.0 percent, respectively, plus or minus 50 basis points.
•GAAP and non-GAAP operating expenses are expected to be approximately $2.02 billion and $1.43 billion, respectively.
•GAAP and non-GAAP other income and expense are both expected to be an expense of approximately $60 million, excluding gains and losses from non-affiliated investments.
•GAAP and non-GAAP tax rates are both expected to be 11 percent, plus or minus 1 percent, excluding any discrete items such as excess tax benefits or deficiencies related to stock-based compensation.
Highlights
At last week’s GTC, NVIDIA announced the following:
AI Software
•65 new and updated software development kits -- bringing improved features and capabilities to data scientists, researchers and developers -- including NVIDIA Modulus, a framework for developing physics-ML models, NVIDIA ReOpt, an accelerated solver that optimizes vehicle route planning and logistics, and NVIDIA cuNumeric, which brings accelerated computing to the large and growing Python NumPy ecosystem.
•Tools for developing and deploying large language models: NVIDIA NeMo Megatron, for training models with trillions of parameters; the Megatron 530B customizable LLM that can be trained for new domains and languages; and NVIDIA Triton Inference Server™ with multi-GPU, multinode distributed inference functionality.
•New capabilities in the open source NVIDIA Triton Inference Server software, which provides cross-platform inference on all AI models and frameworks, and NVIDIA TensorRT™, which optimizes AI models.
•Zero-trust cybersecurity platform – comprising NVIDIA BlueField DPUs, NVIDIA DOCA and NVIDIA Morpheus cybersecurity platform – allowing the cybersecurity industry to build solutions that defend customer data centers in real time.
•NVIDIA Riva Custom Voice, a feature in NVIDIA Riva AI software that makes custom text-to-speech practical for companies; NVIDIA Riva Enterprise will be commercially available for enterprises early next year, with applicability to a wide range of applications such as virtual assistants and video conferencing.
Omniverse
•NVIDIA Omniverse Avatar, a platform for generating interactive AI avatars, which connects the company’s technologies in speech AI, computer vision, natural language understanding, recommendation engines and simulation technologies.
•NVIDIA Omniverse Replicator, a synthetic-data-generation engine that produces physically simulated synthetic data for training deep neural networks.
Networking
•NVIDIA Quantum-2, a 400Gbps InfiniBand end-to-end networking platform, with the extreme performance, broad accessibility and strong security needed by cloud computing providers and supercomputing centers.
Automotive/Robotics/Healthcare
•NVIDIA DRIVE Concierge and DRIVE Chauffeur, AI platforms built with NVIDIA DRIVE Orin, which are intelligent technologies that transform the digital experience inside the car with Omniverse Avatar, enabling safe autonomous driving on highways and urban streets.
•NVIDIA DRIVE Hyperion 8, a computer architecture and sensor set for self-driving systems.
•NVIDIA Jetson AGX Orin™, the world’s smallest, most powerful and energy-efficient AI supercomputer for robotics, autonomous machines, medical devices and more.
•NVIDIA Clara Holoscan, an AI computing platform for medical-device makers to adopt software-as-a-service offerings with upgradable, scalable and end-to-end processing of streamed data.
Additionally, the company achieved progress since its previous earnings announcement in these areas:
Gaming
•Third-quarter revenue was a record $3.22 billion, up 42 percent from a year earlier and up 5 percent from the previous quarter.
•Announced RTX capabilities coming to blockbuster titles like Marvel’s Guardians of the Galaxy, Battlefield 2042 and Dying Light 2, as well as Sony Interactive and Santa Monica Studio’s God of War.
•Announced new RTX-accelerated AI features in Adobe applications at the Adobe MAX creativity conference, supported by the latest Studio Driver, and new Studio systems from partners, including Microsoft, HP and Asus.
•Enhanced GeForce NOW™ with a new high-performance membership tier providing access to GeForce RTX™ 3080-class gaming, and with the introduction of more Electronic Arts hit games, including Battlefield 1 Revolution, Mirror’s Edge Catalyst, Unravel Two and Dragon Age: Inquisition.
Data Center
•Third-quarter revenue was a record $2.94 billion, up 55 percent from a year earlier and up 24 percent from the previous quarter.
•Announced plans to build Earth-2, an AI supercomputer dedicated to addressing the global climate change crisis.
•Announced the general availability of NVIDIA AI Enterprise, a comprehensive software suite of AI tools and frameworks that enables the hundreds of thousands of companies running VMware vSphere to virtualize AI workloads on NVIDIA-Certified Systems™.
•Expanded NVIDIA LaunchPad, which provides immediate access to optimized software running on accelerated infrastructure, from North America to nine global locations.
•Described a collaboration involving NVIDIA Megatron-LM and Microsoft DeepSpeed to create an efficient, scalable, 3D parallel system capable of combining data, pipeline and tensor-slicing-based parallelism.
•Announced further collaboration with VMware, supporting trials of VMware vSphere with Tanzu on the NVIDIA AI Enterprise platform.
•Shared news that the largest GPU-based supercomputer at the U.S. Department of Energy’s Argonne National Laboratory, Polaris, will run on NVIDIA’s accelerated computing platform, and be able to achieve almost 1.4 exaflops of AI performance.
Professional Visualization
•Third-quarter revenue was a record $577 million, up 144 percent from a year earlier and up 11 percent from the previous quarter.
•Announced NVIDIA Omniverse Enterprise is in general availability, with the addition of AR, VR and multi-GPU rendering, as well as announced adoption by Bentley Systems and Esri for digital-twin applications.
Automotive
•Third-quarter revenue was $135 million, up 8 percent from a year earlier and down 11 percent from the previous quarter.
•Announced that NVIDIA DRIVE Orin is being used by autonomous truck company Kodiak Robotics, automaker Lotus, autonomous driving-solutions provider QCraft and EV startup WM Motor.
CFO Commentary
Commentary on the quarter by Colette Kress, NVIDIA’s executive vice president and chief financial officer, is available at https://investor.nvidia.com/.
Conference Call and Webcast Information
NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter financial results and current financial prospects today at 2 p.m. Pacific time (5 p.m. Eastern time). A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, https://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 and fiscal year 2022.
Non-GAAP Measures
To supplement NVIDIA’s condensed consolidated financial statements 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), net, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, and free cash flow. 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, acquisition-related and other costs, IP-related costs, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, the associated tax impact of these items where applicable, and domestication tax benefit. Free cash flow is calculated as GAAP net cash provided by operating activities less both purchases of property and equipment and intangible assets and principal payments on 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.
About NVIDIA
NVIDIA’s (NASDAQ: NVDA) invention of the GPU in 1999 sparked the growth of the PC gaming market and has redefined modern computer graphics, high performance computing and artificial intelligence. The company’s pioneering work in accelerated computing and AI is reshaping trillion-dollar industries, such as transportation, healthcare and manufacturing, and fueling the growth of many others. More information at https://nvidianews.nvidia.com/.
For further information, contact:
| Simona Jankowski | Robert Sherbin |
|---|---|
| Investor Relations | Corporate Communications |
| NVIDIA Corporation | NVIDIA Corporation |
| sjankowski@nvidia.com | rsherbin@nvidia.com |
Certain statements in this press release including, but not limited to, statements as to: demand for AI surging and its broadening adoption; the growing market of gamers and creators, as well as designers and professionals building home workstations; the expanding universe of NVIDIA accelerated computing; the uses of Omniverse and it bringing together NVIDIA’s expertise in AI, simulation, graphics, and computing infrastructure; the benefits, performance and abilities of our products and technologies, including NVIDIA Modulus, NVIDIA ReOpt, NVIDIA cuNumeric, NVIDIA NeMo Megatron, NVIDIA Triton Inference Server, NVIDIA TensorRT, NVIDIA’s zero-trust cybersecurity platform, NVIDIA Riva, NVIDIA Riva Enterprise, NVIDIA Omniverse Avatar, NVIDIA Omniverse Replicator, NVIDIA Quantum-2, NVIDIA DRIVE Concierge and DRIVE Chauffeur, NVIDIA DRIVE Hyperion 8, NVIDIA Jetson AGX Orin, Clara Holoscan, NVIDIA AI Enterprise, NVIDIA LaunchPad, the collaboration between NVIDIA Megatron-LM and Microsoft DeepSpeed, the collaboration with VMware, and NVIDIA Omniverse Enterprise; plans to run Polaris on NVIDIA’s accelerated computing platform; NVIDIA’s next quarterly cash dividend; NVIDIA’s financial outlook for the fourth quarter of fiscal 2022; and NVIDIA’s expected tax rates for the fourth quarter of fiscal 2022 are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact of technological development and competition; development of new products and technologies or enhancements to our existing product and technologies; market acceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
© 2021 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, BlueField, GeForce NOW, GeForce RTX, NVIDIA Clara, NVIDIA DOCA, NVIDIA DRIVE, NVIDIA Jetson AGX Orin, NVIDIA Omniverse, NVIDIA ReOpt, NVIDIA RTX, NVIDIA Triton Interface Server, NVIDIA-Certified Systems, GeForce NOW, GeForce RTX and TensorRT are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respective companies with which they are associated. Features, pricing, availability, and specifications are subject to change without notice.
NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| October 31, | October 25, | October 31, | October 25, | |||||||
| 2021 | 2020 | 2021 | 2020 | |||||||
| Revenue | $ | 7,103 | $ | 4,726 | $ | 19,271 | $ | 11,672 | ||
| Cost of revenue | 2,472 | 1,766 | 6,795 | 4,432 | ||||||
| Gross profit | 4,631 | 2,960 | 12,476 | 7,240 | ||||||
| Operating expenses | ||||||||||
| Research and development | 1,403 | 1,047 | 3,802 | 2,778 | ||||||
| Sales, general and administrative | 557 | 515 | 1,603 | 1,437 | ||||||
| Total operating expenses | 1,960 | 1,562 | 5,405 | 4,215 | ||||||
| Income from operations | 2,671 | 1,398 | 7,071 | 3,025 | ||||||
| Interest income | 7 | 7 | 20 | 50 | ||||||
| Interest expense | (62) | (53) | (175) | (131) | ||||||
| Other, net | 22 | (4) | 160 | (5) | ||||||
| Other income (expense), net | (33) | (50) | 5 | (86) | ||||||
| Income before income tax | 2,638 | 1,348 | 7,076 | 2,939 | ||||||
| Income tax expense | 174 | 12 | 327 | 64 | ||||||
| Net income | $ | 2,464 | $ | 1,336 | $ | 6,749 | $ | 2,875 | ||
| Net income per share (A): | ||||||||||
| Basic | $ | 0.99 | $ | 0.54 | $ | 2.71 | $ | 1.17 | ||
| Diluted | $ | 0.97 | $ | 0.53 | $ | 2.67 | $ | 1.15 | ||
| Weighted average shares used in per share computation (A): | ||||||||||
| Basic | 2,499 | 2,472 | 2,493 | 2,464 | ||||||
| Diluted | 2,538 | 2,520 | 2,532 | 2,504 |
(A) Reflects a four-for-one stock split on July 19, 2021.
| NVIDIA CORPORATION | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||||
| (In millions) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| October 31, | January 31, | |||||||||||||||
| 2021 | 2021 | |||||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash, cash equivalents and marketable securities | $ | 19,298 | $ | 11,561 | ||||||||||||
| Accounts receivable, net | 3,954 | 2,429 | ||||||||||||||
| Inventories | 2,233 | 1,826 | ||||||||||||||
| Prepaid expenses and other current assets | 321 | 239 | ||||||||||||||
| Total current assets | 25,806 | 16,055 | ||||||||||||||
| Property and equipment, net | 2,509 | 2,149 | ||||||||||||||
| Operating lease assets | 830 | 707 | ||||||||||||||
| Goodwill | 4,302 | 4,193 | ||||||||||||||
| Intangible assets, net | 2,454 | 2,737 | ||||||||||||||
| Deferred income tax assets | 970 | 806 | ||||||||||||||
| Other assets | 3,761 | 2,144 | ||||||||||||||
| Total assets | $ | 40,632 | $ | 28,791 | ||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable | $ | 1,664 | $ | 1,201 | ||||||||||||
| Accrued and other current liabilities | 1,948 | 1,725 | ||||||||||||||
| Short-term debt | — | 999 | ||||||||||||||
| Total current liabilities | 3,612 | 3,925 | ||||||||||||||
| Long-term debt | 10,944 | 5,964 | ||||||||||||||
| Long-term operating lease liabilities | 743 | 634 | ||||||||||||||
| Other long-term liabilities | 1,535 | 1,375 | ||||||||||||||
| Total liabilities | 16,834 | 11,898 | ||||||||||||||
| Shareholders' equity | 23,798 | 16,893 | ||||||||||||||
| Total liabilities and shareholders' equity | $ | 40,632 | $ | 28,791 | ||||||||||||
| NVIDIA CORPORATION | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
| (In millions) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, | October 25, | October 31, | October 25, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income | $ | 2,464 | $ | 1,336 | $ | 6,749 | $ | 2,875 | ||||||||
| Adjustments to reconcile net income to net cash | ||||||||||||||||
| provided by operating activities: | ||||||||||||||||
| Stock-based compensation expense | 559 | 383 | 1,453 | 981 | ||||||||||||
| Depreciation and amortization | 298 | 299 | 865 | 810 | ||||||||||||
| Deferred income taxes | (21) | (53) | (182) | (117) | ||||||||||||
| (Gains) losses on investments in non affiliates, net | (20) | — | (152) | — | ||||||||||||
| Other | 10 | 2 | 25 | (2) | ||||||||||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||||||
| Accounts receivable | (366) | (463) | (1,523) | (667) | ||||||||||||
| Inventories | (118) | (93) | (400) | (190) | ||||||||||||
| Prepaid expenses and other assets | (1,575) | (443) | (1,557) | (409) | ||||||||||||
| Accounts payable | 195 | 225 | 474 | 289 | ||||||||||||
| Accrued and other current liabilities | (62) | 31 | 70 | 111 | ||||||||||||
| Other long-term liabilities | 155 | 55 | 253 | 74 | ||||||||||||
| Net cash provided by operating activities | 1,519 | 1,279 | 6,075 | 3,755 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Proceeds from maturities of marketable securities | 2,545 | 4,133 | 7,780 | 5,165 | ||||||||||||
| Proceeds from sales of marketable securities | 211 | 243 | 916 | 502 | ||||||||||||
| Purchases of marketable securities | (6,752) | (4,554) | (16,020) | (12,840) | ||||||||||||
| Purchases related to property and equipment and intangible assets | (221) | (473) | (703) | (845) | ||||||||||||
| Acquisitions, net of cash acquired | (203) | (1,353) | (203) | (8,524) | ||||||||||||
| Investments and other, net | (18) | 3 | (14) | (4) | ||||||||||||
| Net cash used in investing activities | (4,438) | (2,001) | (8,244) | (16,546) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Issuance of debt, net of issuance costs | (8) | — | 4,977 | 4,971 | ||||||||||||
| Proceeds related to employee stock plans | 149 | 96 | 277 | 190 | ||||||||||||
| Repayment of debt | (1,000) | — | (1,000) | — | ||||||||||||
| Payments related to tax on restricted stock units | (440) | (298) | (1,282) | (716) | ||||||||||||
| Dividends paid | (100) | (99) | (298) | (296) | ||||||||||||
| Principal payments on property and equipment | (22) | — | (62) | — | ||||||||||||
| Other | — | — | (2) | (3) | ||||||||||||
| Net cash provided by (used in) financing activities | (1,421) | (301) | 2,610 | 4,146 | ||||||||||||
| Change in cash and cash equivalents | (4,340) | (1,023) | 441 | (8,645) | ||||||||||||
| Cash and cash equivalents at beginning of period | 5,628 | 3,274 | 847 | 10,896 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 1,288 | $ | 2,251 | $ | 1,288 | $ | 2,251 | ||||||||
| NVIDIA CORPORATION | ||||||||||||||||
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| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| (In millions, except per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, | August 1, | October 25, | October 31, | October 25, | ||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| GAAP gross profit | $ | 4,631 | $ | 4,215 | $ | 2,960 | $ | 12,476 | $ | 7,240 | ||||||
| GAAP gross margin | 65.2 | % | 64.8 | % | 62.6 | % | 64.7 | % | 62.0 | % | ||||||
| Acquisition-related and other costs (A) | 86 | 86 | 86 | 258 | 331 | |||||||||||
| Stock-based compensation expense (B) | 44 | 32 | 28 | 102 | 62 | |||||||||||
| IP-related costs | — | 4 | 21 | 8 | 38 | |||||||||||
| Non-GAAP gross profit | $ | 4,761 | $ | 4,337 | $ | 3,095 | $ | 12,844 | $ | 7,671 | ||||||
| Non-GAAP gross margin | 67.0 | % | 66.7 | % | 65.5 | % | 66.6 | % | 65.7 | % | ||||||
| GAAP operating expenses | $ | 1,960 | $ | 1,771 | $ | 1,562 | $ | 5,405 | $ | 4,215 | ||||||
| Stock-based compensation expense (B) | (515) | (433) | (355) | (1,351) | (919) | |||||||||||
| Acquisition-related and other costs (A) | (70) | (72) | (106) | (224) | (338) | |||||||||||
| Non-GAAP operating expenses | $ | 1,375 | $ | 1,266 | $ | 1,101 | $ | 3,830 | $ | 2,958 | ||||||
| GAAP income from operations | $ | 2,671 | $ | 2,444 | $ | 1,398 | $ | 7,071 | $ | 3,025 | ||||||
| Total impact of non-GAAP adjustments to income from operations | 715 | 627 | 595 | 1,943 | 1,689 | |||||||||||
| Non-GAAP income from operations | $ | 3,386 | $ | 3,071 | $ | 1,993 | $ | 9,014 | $ | 4,714 | ||||||
| GAAP other income (expense), net | $ | (33) | $ | (50) | $ | (50) | $ | 5 | $ | (86) | ||||||
| (Gains) losses from non-affiliated investments | (20) | — | 4 | (153) | 9 | |||||||||||
| Interest expense related to amortization of debt discount | 1 | 1 | 1 | 3 | 1 | |||||||||||
| Non-GAAP other income (expense), net | $ | (52) | $ | (49) | $ | (45) | $ | (145) | $ | (76) | ||||||
| GAAP net income | $ | 2,464 | $ | 2,374 | $ | 1,336 | $ | 6,749 | $ | 2,875 | ||||||
| Total pre-tax impact of non-GAAP adjustments | 696 | 628 | 600 | 1,793 | 1,699 | |||||||||||
| Income tax impact of non-GAAP adjustments (C) | (187) | (127) | (102) | (381) | (255) | |||||||||||
| Domestication tax benefit | — | (252) | — | (252) | — | |||||||||||
| Non-GAAP net income | $ | 2,973 | $ | 2,623 | $ | 1,834 | $ | 7,909 | $ | 4,319 | ||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| October 31, | August 1, | October 25, | October 31, | October 25, | ||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Diluted net income per share (D) | ||||||||||||||||
| GAAP | $ | 0.97 | $ | 0.94 | $ | 0.53 | $ | 2.67 | $ | 1.15 | ||||||
| Non-GAAP | $ | 1.17 | $ | 1.04 | $ | 0.73 | $ | 3.12 | $ | 1.72 | ||||||
| Weighted average shares used in diluted net income per share computation (D) | 2,538 | 2,532 | 2,520 | 2,532 | 2,504 | |||||||||||
| GAAP net cash provided by operating activities | $ | 1,519 | $ | 2,682 | $ | 1,279 | $ | 6,075 | $ | 3,755 | ||||||
| Purchases related to property and equipment and intangible assets | (221) | (183) | (473) | (703) | (845) | |||||||||||
| Principal payments on property and equipment | (22) | (21) | — | (62) | — | |||||||||||
| Free cash flow | $ | 1,276 | $ | 2,478 | $ | 806 | $ | 5,310 | $ | 2,910 | ||||||
| (A) Acquisition-related and other costs primarily include amortization of intangible assets, inventory step-up, transaction costs, and certain compensation charges presented as follows: | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, | August 1, | October 25, | October 31, | October 25, | ||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Cost of revenue | $ | 86 | $ | 86 | $ | 86 | $ | 258 | $ | 331 | ||||||
| Research and development | $ | 7 | $ | 1 | $ | 2 | $ | 10 | $ | 7 | ||||||
| Sales, general and administrative | $ | 63 | $ | 71 | $ | 104 | $ | 214 | $ | 331 | ||||||
| (B) Stock-based compensation consists of the following: | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, | August 1, | October 25, | October 31, | October 25, | ||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Cost of revenue | $ | 44 | $ | 32 | $ | 28 | $ | 102 | $ | 62 | ||||||
| Research and development | $ | 363 | $ | 297 | $ | 232 | $ | 935 | $ | 594 | ||||||
| Sales, general and administrative | $ | 152 | $ | 136 | $ | 123 | $ | 416 | $ | 325 | ||||||
| (C) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or deficiencies related to stock-based compensation under GAAP accounting standard (ASU 2016-09). | ||||||||||||||||
| (D) Reflects a four-for-one stock split on July 19, 2021. | ||||||||||||||||
| NVIDIA CORPORATION | ||||||||||||||||
| --- | --- | --- | --- | |||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK | ||||||||||||||||
| Q4 FY2022 Outlook | ||||||||||||||||
| ( in millions) | ||||||||||||||||
| GAAP gross margin | 65.3 | % | ||||||||||||||
| Impact of stock-based compensation expense, acquisition-related costs, and other costs | 1.7 | % | ||||||||||||||
| Non-GAAP gross margin | 67.0 | % | ||||||||||||||
| GAAP operating expenses | ||||||||||||||||
| Stock-based compensation expense, acquisition-related costs, and other costs | (585) | |||||||||||||||
| Non-GAAP operating expenses |
All values are in US Dollars.
Document
CFO Commentary on Third Quarter Fiscal 2022 Results
Q3 Fiscal 2022 Summary
| GAAP | |||||
|---|---|---|---|---|---|
| ($ in millions, except earnings per share) | Q3 FY22 | Q2 FY22 | Q3 FY21 | Q/Q | Y/Y |
| Revenue | 7,103 | 6,507 | 4,726 | Up 9% | Up 50% |
| Gross margin | 65.2 | 64.8 | 62.6 | Up 40 bps | Up 260 bps |
| Operating expenses | 1,960 | 1,771 | 1,562 | Up 11% | Up 25% |
| Operating income | 2,671 | 2,444 | 1,398 | Up 9% | Up 91% |
| Net income | 2,464 | 2,374 | 1,336 | Up 4% | Up 84% |
| Diluted earnings per share | 0.97 | 0.94 | 0.53 | Up 3% | Up 83% |
All values are in US Dollars.
| Non-GAAP | |||||
|---|---|---|---|---|---|
| ($ in millions, except earnings per share) | Q3 FY22 | Q2 FY22 | Q3 FY21 | Q/Q | Y/Y |
| Revenue | 7,103 | 6,507 | 4,726 | Up 9% | Up 50% |
| Gross margin | 67.0 | 66.7 | 65.5 | Up 30 bps | Up 150 bps |
| Operating expenses | 1,375 | 1,266 | 1,101 | Up 9% | Up 25% |
| Operating income | 3,386 | 3,071 | 1,993 | Up 10% | Up 70% |
| Net income | 2,973 | 2,623 | 1,834 | Up 13% | Up 62% |
| Diluted earnings per share | 1.17 | 1.04 | 0.73 | Up 13% | Up 60% |
All values are in US Dollars.
| Revenue by Reportable Segments | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in millions) | Q3 FY22 | Q2 FY22 | Q3 FY21 | Q/Q | Y/Y | |||||||
| Graphics | $4,092 | $3,907 | $2,787 | Up 5% | Up 47% | |||||||
| Compute & Networking | 3,011 | 2,600 | 1,939 | Up 16% | Up 55% | |||||||
| Total | $7,103 | $6,507 | $4,726 | Up 9% | Up 50% | Revenue by Market Platform | ||||||
| --- | --- | --- | --- | --- | --- | |||||||
| ($ in millions) | Q3 FY22 | Q2 FY22 | Q3 FY21 | Q/Q | Y/Y | |||||||
| Gaming | $3,221 | $3,061 | $2,271 | Up 5% | Up 42% | |||||||
| Data Center | 2,936 | 2,366 | 1,900 | Up 24% | Up 55% | |||||||
| Professional Visualization | 577 | 519 | 236 | Up 11% | Up 144% | |||||||
| Automotive | 135 | 152 | 125 | Down 11% | Up 8% | |||||||
| OEM and Other | 234 | 409 | 194 | Down 43% | Up 21% | |||||||
| Total | $7,103 | $6,507 | $4,726 | Up 9% | Up 50% |
We specialize in markets where our computing platforms can provide tremendous acceleration for applications. These platforms incorporate processors, interconnects, software, algorithms, systems, and services to deliver unique value. Our platforms address four large markets where our expertise is critical: Gaming, Data Center, Professional Visualization, and Automotive.
All per share amounts presented herein have been retroactively adjusted to reflect our four-for-one stock split which was effective July 19, 2021.
Revenue
Revenue for the third quarter was a record $7.10 billion, up 50 percent from a year earlier. Record quarterly revenue was achieved in Gaming, Data Center, and Professional Visualization.
Gaming revenue was up 42 percent from a year ago and up 5 percent sequentially, reflecting higher sales of GeForce GPUs. We benefited from strong demand for our NVIDIA Ampere architecture products leading into the holiday season. Nearly all our desktop Ampere architecture GeForce GPU shipments are Lite Hash Rate in our effort to direct GeForce to gamers.
Data Center revenue was up 55 percent from a year ago and up 24 percent sequentially, driven by sales of NVIDIA Ampere architecture products to hyperscale customers for cloud computing and workloads such as natural language processing and deep recommender models, as well as to vertical industries.
Professional Visualization revenue was up 144 percent from a year earlier and up 11 percent sequentially, driven by NVIDIA Ampere architecture products, with growth in desktop and notebook workstation GPUs as enterprises deploy systems to support hybrid work environments.
Automotive revenue was up 8 percent from a year earlier and down 11 percent sequentially. The year-on-year growth was due to the ramp of self-driving programs, while the sequential decline was related to automotive makers’ supply constraints.
OEM and Other revenue was up 21 percent from a year ago and down 43 percent sequentially. The year-on-year growth reflects Cryptocurrency Mining Processor (CMP) revenue of $105 million in this quarter. The sequential decline primarily reflects lower CMP revenue.
Our GPUs are capable of digital currency mining, though we do not have visibility into how much this impacts our overall GPU demand. Volatility in the cryptocurrency market, including changes in the prices of cryptocurrencies, can impact demand for our products and our ability to estimate demand for our products.
Gross Margin
| Reconciliation of GAAP to Non-GAAP Gross Margin | |||
|---|---|---|---|
| ($ in millions) | Q3 FY22 | Q2 FY22 | Q3 FY21 |
| GAAP gross profit | 4,631 | 4,215 | 2,960 |
| GAAP gross margin | 65.2 | 64.8 | 62.6 |
| Acquisition-related and other costs | 86 | 86 | 86 |
| Stock-based compensation expense | 44 | 32 | 28 |
| IP-related costs | — | 4 | 21 |
| Non-GAAP gross profit | 4,761 | 4,337 | 3,095 |
| Non-GAAP gross margin | 67.0 | 66.7 | 65.5 |
All values are in US Dollars.
GAAP gross margin for the third quarter was up 260 basis points from a year earlier, primarily due to a higher-end mix within desktop and notebook GeForce GPUs. The year-on-year increase also benefited from a reduced impact of acquisition-related costs. Sequentially, GAAP gross margin was up 40 basis points primarily due to growth in Data Center, partially offset by a mix shift in Gaming.
Non-GAAP gross margin was up 150 basis points from a year earlier and up 30 basis points sequentially.
Expenses
| Reconciliation of GAAP to Non-GAAP Operating Expenses | |||
|---|---|---|---|
| ($ in millions) | Q3 FY22 | Q2 FY22 | Q3 FY21 |
| GAAP operating expenses | $1,960 | $1,771 | $1,562 |
| Stock-based compensation expense | (515) | (433) | (355) |
| Acquisition-related and other costs | (70) | (72) | (106) |
| Non-GAAP operating expenses | $1,375 | $1,266 | $1,101 |
GAAP operating expenses for the third quarter were up 25 percent from a year earlier and up 11 percent sequentially. Non-GAAP operating expenses were up 25 percent from a year earlier and up 9 percent sequentially. The year-on-year increase was primarily driven by compensation-related costs relating to employee growth and higher infrastructure costs. The sequential increase was primarily driven by development materials and employee growth.
Operating Income
GAAP operating income for the third quarter was a record $2.67 billion, up 91 percent from a year earlier and up 9 percent sequentially. Non-GAAP operating income was $3.39 billion, up 70 percent from a year earlier and up 10 percent sequentially.
Other Income & Expense and Income Tax
GAAP other income and expense (OI&E) includes interest income, interest expense, and other items. Non-GAAP OI&E excludes the portion of interest expense from the amortization of the debt discount and the gains or losses from non-affiliated investments.
GAAP OI&E for the third quarter was an expense of $33 million, compared with $50 million both in the year earlier and prior quarter. The sequential decrease primarily reflects an increase of $20 million in net unrealized gains from non-affiliated investments. Non-GAAP OI&E was an expense of $52 million, compared with an expense of $45 million a year earlier and an expense of $49 million in the prior quarter. The year-on-year expense increase primarily reflects higher interest expense from our $5 billion note issuance in June 2021 and lower average yields in interest income.
The GAAP effective tax rate for the third quarter of 6.6 percent reflects tax benefits related to the foreign-derived intangible income deduction, jurisdictional mix of earnings, U.S. research tax credit, and excess tax benefits related to stock-based compensation. The non-GAAP effective tax rate was 10.8 percent.
Net Income and EPS
GAAP net income for the third quarter was a record $2.46 billion. GAAP earnings per diluted share for the third quarter were $0.97, up 83 percent from a year earlier and up 3 percent sequentially.
Non-GAAP net income was $2.97 billion. Non-GAAP earnings per diluted share were $1.17, up 60 percent from a year earlier and up 13 percent sequentially.
Balance Sheet and Cash Flow
Cash, cash equivalents and marketable securities were $19.30 billion, up from $10.14 billion a year earlier and down from $19.65 billion in the prior quarter. The year-on-year increase reflects $5.00 billion of debt issuance proceeds and free cash flow generation. The sequential decrease primarily reflects prepayments for long-term supply, $1.00 billion of debt maturity and business acquisitions.
Accounts receivable was $3.95 billion compared with $2.55 billion a year earlier and $3.59 billion in the prior quarter. DSO was 51 days, up from 49 days a year earlier and up from 50 days in the prior quarter.
Inventory was $2.23 billion compared with $1.49 billion a year earlier and $2.11 billion in the prior quarter. We entered into several long-term supply agreements, under which we made advance payments of $1.64 billion this quarter and will make future payments of $1.79 billion. Outstanding inventory purchase and long-term supply obligations were $6.90 billion, inclusive of the $1.79 billion, up from $2.57 billion a year earlier and up from $4.79 billion in the prior quarter, due to longer lead-times throughout the supply chain and long-term supply obligations. DSI was 82 days, up from 77 days a year earlier and down from 84 days in the prior quarter.
Cash flow from operating activities was $1.52 billion, up from $1.28 billion a year earlier and down from $2.68 billion in the prior quarter. The year-on-year increase primarily reflects higher operating income, partially offset by long-term supply payments. The sequential decrease primarily relates to long-term supply payments, partially offset by higher operating income.
Free cash flow was $1.28 billion, up from $806 million a year earlier and down from $2.48 billion in the previous quarter.
Depreciation and amortization expense was $298 million, including amortization of intangible assets related to the Mellanox acquisition. Capital expenditures including principal payments on property and equipment were $243 million.
We paid quarterly cash dividends of $100 million in the third quarter.
Pending Acquisition of Arm Limited
The acquisition of Arm Limited is subject to customary closing conditions, including receipt of specified governmental and regulatory consents and approvals and the expiration of any related mandatory waiting period, and Arm's implementation of the reorganization and distribution of Arm’s IoT Services Group and certain other assets and liabilities.
We are seeking regulatory approval in the United States (US), the United Kingdom (UK), the European Union (EU), China and other jurisdictions. Regulators at the US Federal Trade Commission (FTC) have expressed concerns regarding the transaction, and we are engaged in discussions with the FTC regarding remedies to address those concerns. The transaction has been under the review of China’s antitrust authority, pending the formal case initiation. Regulators in the UK and the EU declined to approve the transaction in Phase 1 of their review processes, expressed numerous concerns, began a more in-depth Phase 2 review on the transaction’s impact on competition, and, in the UK, a Phase 2 review of the impact on the UK’s national security interests. Although regulators and some Arm licensees have expressed concerns or objected to the transaction, we continue to believe in the merits and benefits of the acquisition to Arm, its licensees, and the industry.
Fourth Quarter of Fiscal 2022 Outlook
Our outlook for the fourth quarter of fiscal 2022 is as follows:
•Revenue is expected to be $7.40 billion, plus or minus 2 percent.
•GAAP and non-GAAP gross margins are expected to be 65.3 percent and 67.0 percent, respectively, plus or minus 50 basis points.
•GAAP and non-GAAP operating expenses are expected to be approximately $2.02 billion and $1.43 billion, respectively.
•GAAP and non-GAAP other income and expense are both expected to be an expense of approximately $60 million, excluding gains and losses from non-affiliated investments.
•GAAP and non-GAAP tax rates are both expected to be 11 percent, plus or minus 1 percent, excluding any discrete items such as excess tax benefits or deficiencies related to stock-based compensation.
•Capital expenditures are expected to be approximately $250 million to $275 million, including principal payments on property and equipment.
___________________________
For further information, contact:
| Simona Jankowski | Robert Sherbin |
|---|---|
| Investor Relations | Corporate Communications |
| NVIDIA Corporation | NVIDIA Corporation |
| sjankowski@nvidia.com | rsherbin@nvidia.com |
Non-GAAP Measures
To supplement NVIDIA’s condensed consolidated financial statements 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), net, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, 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, acquisition-related and other costs, IP-related costs, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, the associated tax impact of these items where applicable, and domestication tax benefit. Free cash flow is calculated as GAAP net cash provided by operating activities less both purchases of property and equipment and intangible assets and principal payments on 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.
Certain statements in this CFO Commentary including, but not limited to, statements as to: our computing platforms providing tremendous acceleration for applications; our efforts to direct GeForce to gamers; lack of visibility into the impact digital currency mining has on overall GPU demand; volatility in the cryptocurrency market impacting demand for our products and our ability to estimate demand for our products; future payments under long-term supply agreements; the status, outcome, and timing of the regulatory process for the pending acquisition of Arm Limited.; our financial outlook for the fourth quarter of fiscal 2022; our expected tax rates for the fourth quarter of 2022; and our expected capital expenditures for the fourth quarter of fiscal 2022 are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact of technological development and competition; development of new products and technologies or enhancements to our existing product and technologies; market acceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
#
© 2021 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, and GeForce are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respective companies with which they are associated. Features, pricing, availability, and specifications are subject to change without notice.
| NVIDIA CORPORATION | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| (In millions, except per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, | August 1, | October 25, | October 31, | October 25, | ||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| GAAP gross profit | $ | 4,631 | $ | 4,215 | $ | 2,960 | $ | 12,476 | $ | 7,240 | ||||||
| GAAP gross margin | 65.2 | % | 64.8 | % | 62.6 | % | 64.7 | % | 62.0 | % | ||||||
| Acquisition-related and other costs (A) | 86 | 86 | 86 | 258 | 331 | |||||||||||
| Stock-based compensation expense (B) | 44 | 32 | 28 | 102 | 62 | |||||||||||
| IP-related costs | — | 4 | 21 | 8 | 38 | |||||||||||
| Non-GAAP gross profit | $ | 4,761 | $ | 4,337 | $ | 3,095 | $ | 12,844 | $ | 7,671 | ||||||
| Non-GAAP gross margin | 67.0 | % | 66.7 | % | 65.5 | % | 66.6 | % | 65.7 | % | ||||||
| GAAP operating expenses | $ | 1,960 | $ | 1,771 | $ | 1,562 | $ | 5,405 | $ | 4,215 | ||||||
| Stock-based compensation expense (B) | (515) | (433) | (355) | (1,351) | (919) | |||||||||||
| Acquisition-related and other costs (A) | (70) | (72) | (106) | (224) | (338) | |||||||||||
| Non-GAAP operating expenses | $ | 1,375 | $ | 1,266 | $ | 1,101 | $ | 3,830 | $ | 2,958 | ||||||
| GAAP income from operations | $ | 2,671 | $ | 2,444 | $ | 1,398 | $ | 7,071 | $ | 3,025 | ||||||
| Total impact of non-GAAP adjustments to income from operations | 715 | 627 | 595 | 1,943 | 1,689 | |||||||||||
| Non-GAAP income from operations | $ | 3,386 | $ | 3,071 | $ | 1,993 | $ | 9,014 | $ | 4,714 | ||||||
| GAAP other income (expense), net | $ | (33) | $ | (50) | $ | (50) | $ | 5 | $ | (86) | ||||||
| (Gains) losses from non-affiliated investments | (20) | — | 4 | (153) | 9 | |||||||||||
| Interest expense related to amortization of debt discount | 1 | 1 | 1 | 3 | 1 | |||||||||||
| Non-GAAP other income (expense), net | $ | (52) | $ | (49) | $ | (45) | $ | (145) | $ | (76) | ||||||
| GAAP net income | $ | 2,464 | $ | 2,374 | $ | 1,336 | $ | 6,749 | $ | 2,875 | ||||||
| Total pre-tax impact of non-GAAP adjustments | 696 | 628 | 600 | 1,793 | 1,699 | |||||||||||
| Income tax impact of non-GAAP adjustments (C) | (187) | (127) | (102) | (381) | (255) | |||||||||||
| Domestication tax benefit | — | (252) | — | (252) | — | |||||||||||
| Non-GAAP net income | $ | 2,973 | $ | 2,623 | $ | 1,834 | $ | 7,909 | $ | 4,319 | ||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| October 31, | August 1, | October 25, | October 31, | October 25, | ||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Diluted net income per share (D) | ||||||||||||||||
| GAAP | $ | 0.97 | $ | 0.94 | $ | 0.53 | $ | 2.67 | $ | 1.15 | ||||||
| Non-GAAP | $ | 1.17 | $ | 1.04 | $ | 0.73 | $ | 3.12 | $ | 1.72 | ||||||
| Weighted average shares used in diluted net income per share computation (D) | 2,538 | 2,532 | 2,520 | 2,532 | 2,504 | |||||||||||
| GAAP net cash provided by operating activities | $ | 1,519 | $ | 2,682 | $ | 1,279 | $ | 6,075 | $ | 3,755 | ||||||
| Purchases related to property and equipment and intangible assets | (221) | (183) | (473) | (703) | (845) | |||||||||||
| Principal payments on property and equipment | (22) | (21) | — | (62) | — | |||||||||||
| Free cash flow | $ | 1,276 | $ | 2,478 | $ | 806 | $ | 5,310 | $ | 2,910 | ||||||
| (A) Acquisition-related and other costs primarily include amortization of intangible assets, inventory step-up, transaction costs, and certain compensation charges presented as follows: | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, | August 1, | October 25, | October 31, | October 25, | ||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Cost of revenue | $ | 86 | $ | 86 | $ | 86 | $ | 258 | $ | 331 | ||||||
| Research and development | $ | 7 | $ | 1 | $ | 2 | $ | 10 | $ | 7 | ||||||
| Sales, general and administrative | $ | 63 | $ | 71 | $ | 104 | $ | 214 | $ | 331 | ||||||
| (B) Stock-based compensation consists of the following: | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, | August 1, | October 25, | October 31, | October 25, | ||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Cost of revenue | $ | 44 | $ | 32 | $ | 28 | $ | 102 | $ | 62 | ||||||
| Research and development | $ | 363 | $ | 297 | $ | 232 | $ | 935 | $ | 594 | ||||||
| Sales, general and administrative | $ | 152 | $ | 136 | $ | 123 | $ | 416 | $ | 325 | ||||||
| (C) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or deficiencies related to stock-based compensation under GAAP accounting standard (ASU 2016-09). | ||||||||||||||||
| (D) Reflects a four-for-one stock split on July 19, 2021. | ||||||||||||||||
| NVIDIA CORPORATION | ||||||||||||||||
| --- | --- | --- | --- | |||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK | ||||||||||||||||
| Q4 FY2022 Outlook | ||||||||||||||||
| ( in millions) | ||||||||||||||||
| GAAP gross margin | 65.3 | % | ||||||||||||||
| Impact of stock-based compensation expense, acquisition-related costs, and other costs | 1.7 | % | ||||||||||||||
| Non-GAAP gross margin | 67.0 | % | ||||||||||||||
| GAAP operating expenses | ||||||||||||||||
| Stock-based compensation expense, acquisition-related costs, and other costs | (585) | |||||||||||||||
| Non-GAAP operating expenses |
All values are in US Dollars.