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

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.

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.

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.
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 $ 2,015    
  Stock-based compensation expense, acquisition-related costs, and other costs   (585 )  
Non-GAAP operating expenses $ 1,430    
       

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