NVIDIA Announces Financial Results for Third Quarter Fiscal 2022

NVIDIA Announces Financial Results for Third Quarter Fiscal 2022

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NVIDIA Announces Financial Results for Third Quarter Fiscal 2022

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November 17, 2021 | 

  • 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

NVIDIA 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 $0.53 Up 3% Up 83%
Non-GAAP
($ 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 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

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.

 

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
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
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.

 

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