NVIDIA Announces Financial Results for Q4 and FY 2017
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NVIDIA Announces Financial Results for Q4 and FY 2017

SANTA CLARA, CA -- (Marketwired) -- Feb 09, 2017 -- NVIDIA (NASDAQ: NVDA)

NVIDIA (NASDAQ: NVDA) today reported revenue for the fourth quarter ended January 29, 2017, of $2.17 billion, up 55 percent from $1.40 billion a year earlier, and up 8 percent from $2.00 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.99, up 183 percent from $0.35 a year ago and up 19 percent from $0.83 in the previous quarter. Non-GAAP earnings per diluted share were $1.13, up 117 percent from $0.52 a year earlier and up 20 percent from $0.94 in the previous quarter.

For fiscal 2017, revenue reached a record $6.91 billion, up 38 percent from $5.01 billion a year earlier. GAAP earnings per diluted share were $2.57, up 138 percent from $1.08 a year earlier. Non-GAAP earnings per diluted share were $3.06, up 83 percent from $1.67 a year earlier.

"We had a great finish to a record year, with continued strong growth across all our businesses," said Jen-Hsun Huang, founder and chief executive officer of NVIDIA. "Our GPU computing platform is enjoying rapid adoption in artificial intelligence, cloud computing, gaming, and autonomous vehicles.‎

"Deep learning on NVIDIA GPUs, a breakthrough approach to AI, is helping to tackle challenges such as self-driving cars, early cancer detection and weather prediction. We can now see that ‎GPU-based deep learning will revolutionize major industries, from consumer internet and transportation to health care and manufacturing. The era of AI is upon us," he said.

Capital Return
During fiscal 2017, NVIDIA paid $739 million in share repurchases and $261 million in cash dividends. As a result, the company returned an aggregate of $1.00 billion to shareholders in fiscal 2017.

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 March 17, 2017, to all shareholders of record on February 24, 2017.

Q4 Fiscal 2017 Summary

----------------------------------------------------------------------------
                                    GAAP                                    
----------------------------------------------------------------------------
($ in millions except earnings                                              
per share)                     Q4 FY17 Q3 FY17 Q4 FY16     Q/Q        Y/Y   
----------------------------------------------------------------------------
Revenue                         $2,173  $2,004  $1,401      up 8%     up 55%
----------------------------------------------------------------------------
Gross margin                     60.0%   59.0%   56.5% up 100 bps up 350 bps
----------------------------------------------------------------------------
Operating expenses                $570    $544    $539      up 5%      up 6%
----------------------------------------------------------------------------
Operating income                  $733    $639    $252     up 15%    up 191%
----------------------------------------------------------------------------
Net income                        $655    $542    $207     up 21%    up 216%
----------------------------------------------------------------------------
Diluted earnings per share       $0.99   $0.83   $0.35     up 19%    up 183%
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                                  Non-GAAP                                  
----------------------------------------------------------------------------
($ in millions except earnings                                              
per share)                     Q4 FY17 Q3 FY17 Q4 FY16     Q/Q        Y/Y   
----------------------------------------------------------------------------
Revenue                         $2,173  $2,004  $1,401      up 8%     up 55%
----------------------------------------------------------------------------
Gross margin                     60.2%   59.2%   57.2% up 100 bps up 300 bps
----------------------------------------------------------------------------
Operating expenses                $498    $478    $445      up 4%     up 12%
----------------------------------------------------------------------------
Operating income                  $809    $708    $356     up 14%    up 127%
----------------------------------------------------------------------------
Net income                        $704    $570    $297     up 24%    up 137%
----------------------------------------------------------------------------
Diluted earnings per share       $1.13   $0.94   $0.52     up 20%    up 117%
----------------------------------------------------------------------------
                                                                            

Fiscal 2017 Summary

----------------------------------------------------------------------------
                                    GAAP                                    
----------------------------------------------------------------------------
($ in millions except earnings per share)           FY17    FY16      Y/Y   
----------------------------------------------------------------------------
Revenue                                            $6,910  $5,010     up 38%
----------------------------------------------------------------------------
Gross margin                                        58.8%   56.1% up 270 bps
----------------------------------------------------------------------------
Operating expenses                                 $2,129  $2,064      up 3%
----------------------------------------------------------------------------
Operating income                                   $1,934    $747    up 159%
----------------------------------------------------------------------------
Net income                                         $1,666    $614    up 171%
----------------------------------------------------------------------------
Diluted earnings per share                          $2.57   $1.08    up 138%
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                                  Non-GAAP                                  
----------------------------------------------------------------------------
($ in millions except earnings per share)           FY17    FY16      Y/Y   
----------------------------------------------------------------------------
Revenue                                            $6,910  $5,010     up 38%
----------------------------------------------------------------------------
Gross margin                                        59.2%   56.8% up 240 bps
----------------------------------------------------------------------------
Operating expenses                                 $1,867  $1,721      up 8%
----------------------------------------------------------------------------
Operating income                                   $2,221  $1,125     up 97%
----------------------------------------------------------------------------
Net income                                         $1,851    $929     up 99%
----------------------------------------------------------------------------
Diluted earnings per share                          $3.06   $1.67     up 83%
----------------------------------------------------------------------------
                                                                            

NVIDIA's outlook for the first quarter of fiscal 2018 is as follows:

Fourth Quarter Fiscal 2017 Highlights
During the fourth quarter, NVIDIA achieved progress in each of its four major platforms.

Gaming:

Professional Visualization:

Datacenter:

Automotive:

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 fourth quarter and fiscal 2017 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: 52907909. 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 the company's conference call to discuss its financial results for its first 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), net, 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, product warranty charge, 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 CORPORATION                             
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME                 
                    (In millions, except per share data)                    
                                (Unaudited)                                 
                                                                            
                                                                            
                         Three Months Ended          Twelve Months Ended    
                     --------------------------  -------------------------- 
                      January 29,   January 31,   January 29,   January 31, 
                         2017          2016          2017          2016     
                     ------------  ------------  ------------  ------------ 
                                                                            
Revenue              $      2,173  $      1,401  $      6,910  $      5,010 
Cost of revenue               870           610         2,847         2,199 
                     ------------  ------------  ------------  ------------ 
Gross profit                1,303           791         4,063         2,811 
Operating expenses                                                          
  Research and                                                              
   development                394           344         1,463         1,331 
  Sales, general and                                                        
   administrative             176           161           663           602 
  Restructuring and                                                         
   other charges                -            34             3           131 
                     ------------  ------------  ------------  ------------ 
    Total operating                                                         
     expenses                 570           539         2,129         2,064 
                     ------------  ------------  ------------  ------------ 
Income from                                                                 
 operations                   733           252         1,934           747 
  Interest income              17            11            54            39 
  Interest expense            (18)          (12)          (58)          (47)
  Other income                                                              
   (expense), net              (6)            2           (25)            4 
                     ------------  ------------  ------------  ------------ 
Income before income                                                        
 tax expense                  726           253         1,905           743 
Income tax expense             71            46           239           129 
                     ------------  ------------  ------------  ------------ 
Net income           $        655  $        207  $      1,666  $        614 
                     ============  ============  ============  ============ 
                                                                            
Net income per share:                                                       
  Basic              $       1.18  $       0.38  $       3.08  $       1.13 
                     ============  ============  ============  ============ 
  Diluted            $       0.99  $       0.35  $       2.57  $       1.08 
                     ============  ============  ============  ============ 
                                                                            
Weighted average                                                            
 shares used in per                                                         
 share computation:                                                         
  Basic                       553           539           541           543 
  Diluted                     660           593           649           569 
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                                (In millions)                               
                                 (Unaudited)                                
                                                                            
                                                                            
                                                    January 29,  January 31,
                                                       2017         2016    
                                                   ------------ ------------
ASSETS                                                                      
                                                                            
Current assets:                                                             
  Cash, cash equivalents and marketable securities $      6,798 $      5,037
  Accounts receivable, net                                  826          505
  Inventories                                               794          418
  Prepaid expenses and other current assets                 118           93
                                                   ------------ ------------
    Total current assets                                  8,536        6,053
                                                                            
Property and equipment, net                                 521          466
Goodwill                                                    618          618
Intangible assets, net                                      104          166
Other assets                                                 62           67
                                                   ------------ ------------
    Total assets                                   $      9,841 $      7,370
                                                   ============ ============
                                                                            
LIABILITIES, CONVERTIBLE DEBT CONVERSION OBLIGATION AND SHAREHOLDERS' EQUITY
                                                                            
Current liabilities:                                                        
  Accounts payable                                 $        485 $        296
  Accrued and other current liabilities                     507          642
  Convertible short-term debt                               796        1,413
                                                   ------------ ------------
    Total current liabilities                             1,788        2,351
                                                                            
Long-term debt                                            1,983            -
Other long-term liabilities                                 271          453
Capital lease obligations, long-term                          6           10
                                                   ------------ ------------
    Total liabilities                                     4,048        2,814
                                                                            
Convertible debt conversion obligation                       31           87
                                                                            
Shareholders' equity                                      5,762        4,469
                                                   ------------ ------------
    Total liabilities, convertible debt conversion                          
     obligation and shareholders' equity           $      9,841 $      7,370
                                                   ============ ============
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
            RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES           
                    (In millions, except per share data)                    
                                 (Unaudited)                                
                                                                            
                         Three Months Ended            Twelve Months Ended  
                 ----------------------------------  ---------------------- 
                 January 29, October 30, January 31, January 29, January 31,
                    2017        2016        2016        2017        2016    
                 ----------  ----------  ----------  ----------  ---------- 
                                                                            
GAAP gross                                                                  
 profit          $    1,303  $    1,183  $      791  $    4,063  $    2,811 
 GAAP gross                                                                 
  margin               60.0%       59.0%       56.5%       58.8%       56.1%
  Stock-based                                                               
   compensation                                                             
   expense (A)            4           3           5          15          15 
  Legal                                                                     
   settlement                                                               
   costs (B)              -           -           -          10           - 
  Product                                                                   
   warranty                                                                 
   charge (C)             -           -           5           -          20 
                 ----------  ----------  ----------  ----------  ---------- 
Non-GAAP gross                                                              
 profit          $    1,307  $    1,186  $      801  $    4,088  $    2,846 
                 ==========  ==========  ==========  ==========  ========== 
 Non-GAAP gross                                                             
  margin               60.2%       59.2%       57.2%       59.2%       56.8%
                                                                            
GAAP operating                                                              
 expenses        $      570  $      544  $      539  $    2,129  $    2,064 
  Stock-based                                                               
   compensation                                                             
   expense (A)          (68)        (62)        (56)       (233)       (190)
  Legal                                                                     
   settlement                                                               
   costs (B)              -           -           -          (6)          - 
  Acquisition-                                                              
   related costs                                                            
   (D)                   (4)         (4)         (4)        (16)        (22)
  Contributions           -           -           -          (4)          - 
  Restructuring                                                             
   and other                                                                
   charges                -           -         (34)         (3)       (131)
                 ----------  ----------  ----------  ----------  ---------- 
Non-GAAP                                                                    
 operating                                                                  
 expenses        $      498  $      478  $      445  $    1,867  $    1,721 
                 ==========  ==========  ==========  ==========  ========== 
                                                                            
GAAP income from                                                            
 operations      $      733  $      639  $      252  $    1,934  $      747 
  Total impact                                                              
   of non-GAAP                                                              
   adjustments                                                              
   to income                                                                
   from                                                                     
   operations            76          69         104         287         378 
                 ----------  ----------  ----------  ----------  ---------- 
Non-GAAP income                                                             
 from operations $      809  $      708  $      356  $    2,221  $    1,125 
                 ==========  ==========  ==========  ==========  ========== 
                                                                            
GAAP other                                                                  
 income                                                                     
 (expense), net  $       (7) $      (18) $        1  $      (29) $       (4)
  Gains from                                                                
   non-                                                                     
   affiliated                                                               
   investments           (1)          -           -          (4)         (5)
  Interest                                                                  
   expense                                                                  
   related to                                                               
   amortization                                                             
   of debt                                                                  
   discount               4           6           7          25          29 
  Loss on early                                                             
   debt                                                                     
   conversions            6          15           -          21           - 
                 ----------  ----------  ----------  ----------  ---------- 
Non-GAAP other                                                              
 income, net     $        2  $        3  $        8  $       13  $       20 
                 ==========  ==========  ==========  ==========  ========== 
                                                                            
GAAP net income* $      655  $      542  $      207  $    1,666  $      614 
  Total pre-tax                                                             
   impact of                                                                
   non-GAAP                                                                 
   adjustments           85          90         111         329         402 
  Income tax                                                                
   impact of                                                                
   non-GAAP                                                                 
   adjustments          (36)        (62)        (21)       (144)        (87)
                 ----------  ----------  ----------  ----------  ---------- 
Non-GAAP net                                                                
 income          $      704  $      570  $      297  $    1,851  $      929 
                 ==========  ==========  ==========  ==========  ========== 
                                                                            
Diluted net                                                                 
 income per                                                                 
 share                                                                      
  GAAP*          $     0.99  $     0.83  $     0.35  $     2.57  $     1.08 
                 ==========  ==========  ==========  ==========  ========== 
  Non-GAAP       $     1.13  $     0.94  $     0.52  $     3.06  $     1.67 
                 ==========  ==========  ==========  ==========  ========== 
                                                                            
Weighted average                                                            
 shares used in                                                             
 diluted net                                                                
 income per                                                                 
 share                                                                      
 computation                                                                
  GAAP*                 660         653         593         649         569 
  Anti-dilution                                                             
   impact from                                                              
   note hedge                                                               
   (E)                  (36)        (45)        (26)        (44)        (13)
                 ----------  ----------  ----------  ----------  ---------- 
  Non-GAAP              624         608         567         605         556 
                 ==========  ==========  ==========  ==========  ========== 
                                                                            
GAAP net cash                                                               
 provided by                                                                
 operating                                                                  
 activities*     $      721  $      432  $      510  $    1,672  $    1,175 
 Purchase of                                                                
  property and                                                              
  equipment and                                                             
  intangible                                                                
  assets                (52)        (38)        (15)       (176)        (86)
                 ----------  ----------  ----------  ----------  ---------- 
Free cash flow   $      669  $      394  $      495  $    1,496  $    1,089 
                 ==========  ==========  ==========  ==========  ========== 
                                                                            
* In third quarter of fiscal 2017, NVIDIA adopted an accounting standard    
(ASU 2016-09), which requires adjustments to be reflected beginning in      
fiscal 2017, including all fiscal quarters within the year.                 
                                                                            
----------------------------------------------------------------------------
(A) Excludes stock-based compensation as follows:                           
                                                                            
                          Three Months Ended           Twelve Months Ended  
                 ----------------------------------- -----------------------
                 January 29, October 30, January 31, January 29, January 31,
                     2017        2016        2016        2017        2016   
                 ----------- ----------- ----------- ----------- -----------
 Cost of revenue $         4 $         3 $         5 $        15 $        15
 Research and                                                               
  development    $        40 $        35 $        33 $       135 $       115
 Sales, general                                                             
  and                                                                       
  administrative $        27 $        27 $        22 $        98 $        74
                                                                            
(B) Legal settlement with Advanced Silicon Technologies LLC and other       
 settlement related costs.                                                  
                                                                            
(C) Represents warranty charge associated with a product recall.            
                                                                            
(D) Consists of amortization of acquisition-related intangible assets and   
 compensation charges.                                                      
                                                                            
(E) Represents the number of shares that would be delivered upon conversion 
 of the currently outstanding 1.00% Convertible Senior Notes Due 2018. Under
 GAAP, shares delivered in hedge transactions are not considered offsetting 
 shares in the fully diluted share calculation until actually delivered.    
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
                             NVIDIA CORPORATION                             
                 RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK                 
                                                                            
                                                                            
                                                                Q1 FY2018   
                                                                 Outlook    
                                                             -------------- 
                                                                            
GAAP gross margin                                                      59.5%
  Impact of stock-based compensation expense                            0.2%
                                                             -------------- 
Non-GAAP gross margin                                                  59.7%
                                                             ============== 
                                                                            
                                                                            
                                                                Q1 FY2018   
                                                                 Outlook    
                                                             -------------- 
                                                              (In millions) 
                                                                            
GAAP operating expenses                                      $          603 
  Stock-based compensation expense, acquisition-related                     
   costs, and other costs                                               (83)
                                                             -------------- 
Non-GAAP operating expenses                                  $          520 
                                                             ============== 
                                                                            
                                                                            

About NVIDIA
NVIDIA's (NASDAQ: NVDA) invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined modern computer graphics and revolutionized parallel computing. More recently, GPU deep learning ignited modern AI -- the next era of computing -- with the GPU acting as the brain of computers, robots and self-driving cars that can perceive and understand the world. Today, NVIDIA is increasingly known as "the AI computing company." More information at http://nvidianews.nvidia.com/.

Certain statements in this press release including, but not limited to statements as to: the company's GPU platform continuing to power gains and enjoying rapid adoption; the impact of GPU-based deep learning; the company's intended capital return for fiscal 2018; the company's next quarterly cash dividend; the company's financial outlook for the first quarter of fiscal 2018; the company's tax rates for the first quarter of fiscal 2018; and the impact and benefits of Quadro, CANDLE, and automotive partnerships 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 reports NVIDIA files with the Securities and Exchange Commission, or SEC, including its Form 10-Q for the fiscal period ended October 30, 2016. 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.

© 2017 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Quadro, Tesla, GeForce NOW, NVIDIA DGX-1, NVIDIA DRIVE, NVIDIA SPOT, SHIELD and Pascal 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.

For further information, contact:
Arnab Chanda 
Investor Relations 
NVIDIA Corporation 
(408) 566-6616 

achanda@nvidia.com 

Robert Sherbin
Corporate Communications
NVIDIA Corporation
(408) 566-5150

rsherbin@nvidia.com