NVIDIA Corp
NVDA10-Q,quarter ended Apr 28, 2024,filed May 29, 2024,Original on SEC.gov (opens in a new tab)
4 of 4 checkable figures match the filing, 4 of 4 risk excerpts located in the filing text
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The Print
NVIDIA reported Q1 FY2025 revenue of $26.04B (up 262% YoY) and net income of $14.88B ($5.98 diluted EPS), with Data Center revenue of $22.56B up 427% YoY.
Revenue rose 262% YoY and 18% sequentially. Management attributes the Data Center increase to higher shipments of the NVIDIA Hopper GPU computing platform used for training and inferencing with large language models, recommendation engines, and generative AI applications. Gross margin rose to 78.4% from 64.6% a year ago, which the filing attributes primarily to Data Center revenue growth of 427%.
- Revenue of $26.04B rose 262% from $7.19B a year ago and 18% sequentially from $22.10B, per the MD&A summary table.
- Net income of $14.88B ($5.98 diluted EPS) compared with $2.04B ($0.82) in the prior-year quarter; operating income was $16.91B.
- Data Center revenue was $22.56B, up 427% YoY and 23% sequentially, which management attributes to higher shipments of the Hopper GPU computing platform used for training and inferencing with large language models, recommendation engines, and generative AI applications.
- Operating cash flow was $15.35B versus $2.91B a year ago; the company repurchased 9.9 million shares for $8.0B in the quarter.
Results That Matter
- Revenue
- Current period
- $26.0B
- Prior period
- $7.2B
- Change
- +262.1%
Revenue rose 262% YoY and 18% sequentially; management attributes the Data Center portion of the increase to higher shipments of the Hopper GPU computing platform. - Gross profit
- Current period
- $20.4B
- Prior period
- $4.6B
- Change
- +339.0%
Gross margin was 78.4% versus 64.6% a year ago; the filing attributes the year-over-year increase primarily to Data Center revenue growth of 427%. - Operating income
- Current period
- $16.9B
- Prior period
- $2.1B
- Change
- +690.1%
Operating expenses rose 39% YoY to $3,497M, which the filing attributes primarily to compensation and benefits reflecting growth in employees and compensation. - Net income
- Current period
- $14.9B
- Prior period
- $2.0B
- Change
- +628.4%
Income tax expense was $2,398M, or 13.9% of income before income tax, versus 7.5% a year ago. - Net income per diluted share
- Current period
- $5.98
- Prior period
- $0.82
- Change
- unavailable
Diluted weighted average shares were 2,489 million versus 2,490 million a year ago.
| Metric | Current Period | Prior Period | Change | Investor Takeaway |
|---|---|---|---|---|
| $26.0B | $7.2B | +262.1% | Revenue rose 262% YoY and 18% sequentially; management attributes the Data Center portion of the increase to higher shipments of the Hopper GPU computing platform. | |
| $20.4B | $4.6B | +339.0% | Gross margin was 78.4% versus 64.6% a year ago; the filing attributes the year-over-year increase primarily to Data Center revenue growth of 427%. | |
| $16.9B | $2.1B | +690.1% | Operating expenses rose 39% YoY to $3,497M, which the filing attributes primarily to compensation and benefits reflecting growth in employees and compensation. | |
| $14.9B | $2.0B | +628.4% | Income tax expense was $2,398M, or 13.9% of income before income tax, versus 7.5% a year ago. | |
| $5.98 | $0.82 | unavailable | Diluted weighted average shares were 2,489 million versus 2,490 million a year ago. |
Earnings Quality & Cash Conversion
Reported operating income of $16,909M includes stock-based compensation expense of $1,011M (versus $735M a year ago), which the filing reports within cost of revenue, R&D and SG&A. Cost of revenue also includes an inventory provision of $210M and an expense of approximately $183M for inventory purchase obligations in excess of current demand projections, supplier charges, and penalties. Provisions for inventory and excess inventory purchase obligations totaled $393M, partly offset by a $114M provision release, for a net unfavorable gross-margin impact of 1.1%. The filing does not define an adjusted or non-GAAP earnings total.
Operating cash flow was 1.0x net income attributable to the parent (cash conversion); free cash flow of $15.0B (derived as operating cash flow minus the absolute selected capex cash-flow amount; not an issuer-defined or discretionary-cash measure).
Red flag
Red flag
Red flag
Value Drivers & Capital Allocation
Capital returned — dividends paid $98.0M (prior $99.0M), share repurchases $7.7B; capital expenditures $369.0M (prior $248.0M) (selected cash-flow amount, not necessarily total capital investment).
Financing cash flow for 2024-01-29 to 2024-04-28 was an outflow of $9,345,000,000, compared with an outflow of $380,000,000 for 2023-01-30 to 2023-04-30. Both periods had net outflows.
“Cash used in financing activities increased in the first quarter of fiscal year 2025 compared to the first quarter of fiscal year 2024, mainly due to higher share repurchases and higher tax payments related to RSUs.”
Filing statement
“On May 22, 2024, we announced a ten-for-one forward stock split, or the Stock Split, of our issued common stock to be effected through the filing of an amendment to our Restated Certificate of Incorporation, or the Amendment, with the Secretary of the State of Delaware.”
Filing statement
“On May 22, 2024, we also announced an increase in our quarterly cash dividend by 150% from $0.04 per share to $0.10 per share of common stock. The increased dividend is equivalent to $0.01 per share on a post-Stock Split basis and will be paid on June 28, 2024, to all shareholders of record on June 11, 2024.”
Filing statement
Period net income attributable to the parent / period-end equity, not annualized: 30.3% (prior at 2023-04-30: 8.3%); period net income attributable to the parent / period-end assets, not annualized: 19.3%.
Forward Signals
For fiscal year 2025, the filing states it expects gross margins to be in the mid-70% range and operating expenses to grow in the low-40% range. It also states Blackwell is in production with customer samples planned for the second quarter and a customer shipment ramp in the second half of the fiscal year.
Known trends
- Our next generation data center architecture, Blackwell, is in production, and we plan on shipping customer samples in the second quarter. We expect to ramp customer shipments of Blackwell in the second half of the fiscal year.
- We believe the initial demand for Blackwell is well ahead of the projected supply for this fiscal year. We expect supply constraints for our Blackwell offerings will continue into next year.
- Our Data Center revenue in China is down significantly from the level prior to the imposition of new export control restrictions in October 2023.
- We did not make any estimated federal or state tax payments in the first quarter and expect our cash taxes to substantially increase in the second quarter as we will make two federal and state estimated tax payments.
Subsequent events
- On May 22, 2024, the company announced a ten-for-one forward stock split, with each record holder as of June 6, 2024 to receive nine additional shares distributed after the close of market on June 7, 2024.
- On May 22, 2024, the company announced a 150% increase in its quarterly cash dividend from $0.04 to $0.10 per share, payable June 28, 2024 to shareholders of record on June 11, 2024.
- From April 29, 2024 through May 24, 2024, the company repurchased 2.3 million shares for $2.1 billion pursuant to a Rule 10b5-1 trading plan.
“We believe the initial demand for Blackwell is well ahead of the projected supply for this fiscal year.”
NVIDIA Management
“For fiscal year 2025, we expect gross margins to be in the mid-70% range.”
NVIDIA Management
Risks
Excerpts are the filing’s own words; each heading is the start of its excerpt. Selected excerpts are not a complete risk inventory.
We have not received licenses to ship these restricted products to China
We have not received licenses to ship these restricted products to China.
Sales to one direct customer, Customer A, represented 13% of total revenue and sales to a second…
Sales to one direct customer, Customer A, represented 13% of total revenue and sales to a second direct customer, Customer B, represented 11% of total revenue for the first quarter of fiscal year 2025, both of which were attributable to the Compute & Networking segment.
As of April 28, 2024, we had outstanding inventory purchases and long-term supply and capacity…
As of April 28, 2024, we had outstanding inventory purchases and long-term supply and capacity obligations totaling $18.8 billion.
As of April 28, 2024, there are no accrued contingent liabilities associated with the legal…
As of April 28, 2024, there are no accrued contingent liabilities associated with the legal proceedings described above based on our belief that liabilities, while possible, are not probable.
4 of 4 excerpts located in the filing text
Segments
| Segment | Revenue | Operating Income | Revenue Change | Commentary |
|---|---|---|---|---|
| Compute & Networking | $22.7B | $17.0B | +408.4% | Management attributes the increase to higher Data Center revenue, with Compute GPU up 497% on Hopper GPU shipments and Networking up 242% on InfiniBand end-to-end solutions. |
| Graphics | $3.4B | $1.2B | +23.3% | The year-on-year increase was led by higher demand for Gaming, per the segment discussion in MD&A. |
Balance Sheet & Liquidity
Leverage: Identified debt as of 2024-04-28 (carrying amount): long-term debt including current maturities of $9.7B; noncurrent long-term debt of $8.5B; current portion of long-term debt of $1.2B. Not separately reported in this filing's standardized data: short-term borrowings. Total debt, net debt and debt-to-equity are therefore not stated.
Liquidity: Cash, cash equivalents and marketable securities totaled $31.4B as of April 28, 2024. Management states it believes liquidity is sufficient to meet operating requirements for at least the next twelve months, including future supply obligations, $1.3B of debt repayment due in Q2 FY2025, and share repurchases. A $575M commercial paper program had no outstanding balance.
Cash flow: Cash flow — operating $15.3B, investing $-5.7B, financing $-9.3B.
Working capital: Current assets $53.7B vs. current liabilities $15.2B (current ratio 3.53x). Prior reported balance sheet as of 2024-01-28: $44.3B vs. $10.6B (4.17x).
Maturities & covenants
- Debt maturities: $1,250M due in one year, $2,250M due in one to five years, $2,750M due in five to ten years, and $3,500M due in greater than ten years.
- As of April 28, 2024, we were in compliance with the required covenants, which are non-financial in nature, under the outstanding notes.
Notable Footnotes
| Item | Impact |
|---|---|
| Purchase obligations and commitments | Total future purchase commitments of $29,373M as of April 28, 2024, including $8.8B of multi-year cloud service agreements; an additional ~$1.2B of commitments to complete business combinations and acquire land and buildings. |
| Inventory provisions | Inventory provision of $210M recorded in cost of revenue in Q1 FY2025 versus $105M a year ago; excess inventory purchase obligation expense of approximately $183M versus $29M. |
| Stock-based compensation | $13.2B of aggregate unearned stock-based compensation expense as of April 28, 2024, expected to be recognized over a weighted average period of 2.6 years for RSUs, PSUs and market-based PSUs. |
| Deferred revenue | Deferred revenue balance rose to $1,549M from $1,337M at the start of the period; remaining performance obligations were $1.3B, with approximately 38% expected to be recognized over the next twelve months. |
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