NVIDIA Reports Financial Results for 3Q Fiscal Year 2010

NVIDIA Reports Financial Results for Third Quarter Fiscal Year 2010

FOR IMMEDIATE RELEASE:

• Revenue up 16 percent quarter-on-quarter to $903.2 million
• GAAP net income of $107.6 million, or $0.19 cents per diluted share
• GAAP gross margin of 43.4 percent; non-GAAP gross margin of 41.0 percent
• Cash flow from operating activities of $141.3 million; free cash flow of $124.7 million

SANTA CLARA, Calif. - Nov. 5, 2009 - NVIDIA Corp. (Nasdaq: NVDA) today reported revenue of $903.2 million for the third quarter of fiscal 2010 ended Oct. 25, 2009, up 16 percent from the previous quarter and up slightly from $897.7 million reported in the same period a year earlier.

On a GAAP basis, the company recorded net income of $107.6 million, or $0.19 per diluted share, compared with net income of $61.7 million, or $0.11 per diluted share a year ago. Third quarter GAAP results included a benefit to operating income of $25.1 million related to insurance reimbursements received during the quarter. On a non-GAAP basis – excluding the insurance reimbursements and stock-based compensation, as well as their associated tax impact ? net income was $110.3 million, or $0.19 per diluted share, compared with $111.4 million, or $0.20 per diluted share, a year earlier.

"We continued to make progress in the third quarter with healthy market demand across the board," said Jen-Hsun Huang, president and chief executive officer, NVIDIA. "Revenue was up from a year ago, with improvement in each of our PC, professional solutions and consumer businesses. It’s great to see us shipping orders with our Tegra mobile-computing solution, and growing enthusiasm for our Tesla platform for parallel computing in the server and cloud-computing markets."

Gross margin, on a GAAP basis, increased to 43.4 percent from 20.2 percent in the previous quarter and 41.0 percent a year earlier. On a non-GAAP basis, gross margin was 41.0 percent, up 4.7 points from the 36.3 percent reported in the previous quarter but slightly off from 41.9 percent a year earlier.

GAAP net loss for the nine months ended Oct. 25, 2009 was $199.1 million, or $0.36 per share, compared to a net income of $117.6 million, or $0.20 per diluted share for the nine months ended Oct. 26, 2008. Non-GAAP net income for the nine months ended Oct. 25, 2009, which excludes a $93.9 million net charge related to the weak die/packaging material set that was used in certain versions of our previous generation chips, a non-recurring charge of $140.2 million in connection with a cash tender offer to purchase employee stock options, stock-based compensation charges, and their associated tax impact, was $101.4 million, or $0.18 per diluted share, compared to a net income of $397.7 million, or $0.68 per diluted share for the nine months ended Oct. 26, 2008.

Outlook
The outlook for the fourth quarter of fiscal 2010 is as follows:

• Revenue is expected to be up slightly, approximately 2 percent, from the third quarter.
• GAAP gross margin is expected to be in the range of 40 to 42 percent.
• GAAP operating expenses are expected to be approximately $305 million.

Third Quarter Fiscal 2010 and Recent Highlights:

• First major Tegra devices shipped: Microsoft’s Zune HD and the Samsung M1.
• Held first ever GPU Technology Conference, which was 50% oversubscribed, with 1,500 attendees from 40 countries. More than 200 technical sessions were conducted, and presentations were made by 60 emerging companies that utilize the graphics processing unit (GPU).
• Introduced the next generation CUDA GPU architecture, codenamed "Fermi." The Fermi architecture is the foundation for the world’s first computational GPUs, delivering breakthroughs in both graphics and parallel computing.
• Oak Ridge National Laboratory announced plans to use Fermi to build a new supercomputer, which is designed to be the world’s fastest.
• Launched the industry’s first development environment for massively parallel computing. The tool, code-named "Nexus", is integrated into Microsoft Visual Studio, so that developers will be able to use Visual Studio and C++ to write applications that leverage Fermi GPUs.
• Launched NVIDIA RealityServer, a powerful combination of GPUs and software that streams interactive, photorealistic 3D applications to any web connected PC, laptop, netbook or smart phone.
• Adobe’s new Flash Player 10.1 will be accelerated by GeForce®, NVIDIA ION and Tegra products, helping to bring uncompromised browsing of rich Web content to netbooks, smartphones and smartbooks.