Company Update (NASDAQ:NVDA): NVIDIA Corporation Announces Financial Results for First Quarter Fiscal 2017

NVIDIA Corporation (NASDAQ:NVDA) reported revenue for the first quarter ended May 1, 2016, of $1.30 billion, up 13 percent from $1.15 billion a year earlier, and down 7 percent from $1.40 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.33, up 38 percent from $0.24 a year ago and down 6 percent from $0.35 in the previous quarter. Non-GAAP earnings per diluted share were $0.46, up 39 percent from $0.33 a year earlier and down 12 percent from $0.52 in the previous quarter.

“We are enjoying growth in all of our platforms — gaming, professional visualization, datacenter and auto,” said Jen-Hsun Huang, co-founder and chief executive officer, NVIDIA. “Accelerating our growth is deep learning, a new computing model that uses the GPU’s massive computing power to learn artificial intelligence algorithms. Its adoption is sweeping one industry after another, driving demand for our GPUs.

“Our new Pascal GPU architecture will give a giant boost to deep learning, gaming and VR. We are excited to bring a new wave of innovations to the markets we serve. Pascal processors are in full production and will be available later this month,” he said.

Capital Return
During the first quarter, NVIDIA entered into a $500 million accelerated share repurchase agreement and paid $62 million in quarterly cash dividends.

For fiscal 2017, NVIDIA intends to return approximately $1.0 billion to shareholders through ongoing quarterly cash dividends and share repurchases.

NVIDIA will pay its next quarterly cash dividend of $0.115 per share on June 20, 2016, to all shareholders of record on May 26, 2016.

Q1 FY2017 Summary

($ in millions except earnings per share)   Q1 FY17   Q4 FY16   Q1 FY16   Q/Q   Y/Y
Revenue   $1,305   $1,401   $1,151   Down 7%   Up 13%
Gross margin   57.5%   56.5%   56.7%   Up 100 bps   Up 80 bps
Operating expenses   $506   $539   $477   Down 6%   Up 6%
Operating income   $245   $252   $176   Down 3%   Up 39%
Net income   $196   $207   $134   Down 5%   Up 46%
Diluted earnings per share   $0.33   $0.35   $0.24   Down 6%   Up 38%
($ in millions except earnings per share)   Q1 FY17   Q4 FY16   Q1 FY16   Q/Q   Y/Y
Revenue   $1,305   $1,401   $1,151   Down 7%   Up 13%
Gross margin   58.6%   57.2%   56.9%   Up 140 bps   Up 170 bps
Operating expenses   $443   $445   $425     Up 4%
Operating income   $322   $356   $231   Down 10%   Up 39%
Net income   $263   $297   $187   Down 11%   Up 41%
Diluted earnings per share   $0.46   $0.52   $0.33   Down 12%   Up 39%

NVIDIA’s outlook for the second quarter of fiscal 2017 is as follows:

  • Revenue is expected to be $1.35 billion, plus or minus two percent.
  • GAAP and non-GAAP gross margins are expected to be 57.7 percent and 58.0 percent, respectively, plus or minus 50 basis points.
  • GAAP operating expenses are expected to be approximately $500 million. Non-GAAP operating expenses are expected to be approximately $445 million.
  • GAAP and non-GAAP tax rates for the second quarter of fiscal 2017 are both expected to be 20 percent, plus or minus one percent.
  • Capital expenditures are expected to be approximately $30 million to $40 million.

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


  • Launched GeForce® GTX 1080 and GTX 1070, based on the new NVIDIA Pascal™ architecture, bringing the biggest performance gains over the previous generation of processors in a decade.
  • Expanded the NVIDIA VRWorks™ software development kit with Simultaneous Multi-Projection, which heightens realism with new display capabilities, and VRWorks Audio, which delivers physically modeled positional audio.
  • Introduced NVIDIA Ansel™, an in-game photography tool that lets gamers compose shots from any angle and share them as single images or 360-degree panoramas for viewing in VR.
  • Expanded the NVIDIA SHIELD™ platform’s gaming content available for streaming from GeForce NOW™ with new titles from Sega, Square Enix and Warner Bros. Interactive Entertainment.

Professional Visualization:

  • Extended NVIDIA Quadro® leadership in pro visualization markets, with the high-end 24GB Quadro M6000, the mid-range Quadro M2000 and new NVIDIA Iray® physically based rendering solutions.
  • Unveiled Iray VR, which creates interactive, photorealistic virtual 3D worlds with unparalleled fidelity, enabling the immersive viewing of buildings and products not yet built.
  • Expanded NVIDIA’s VR Ready program into the professional market.


  • Hosted the seventh annual GPU Technology Conference with 5,500 attendees, 600 technical sessions and 200 exhibitors, focused on artificial intelligence, VR and self-driving cars.
  • Unveiled the NVIDIA Tesla® P100 GPU, the most advanced accelerator ever built, based on the Pascal architecture.
  • Revealed the NVIDIA DGX-1™, the world’s first deep-learning supercomputing in a box, with the computing throughput of more than 250 servers.
  • Joined Massachusetts General Hospital as the founding technology partner of the MGH Clinical Data Science Center to advance healthcare by applying AI to improve the detection, diagnosis, treatment and management of diseases.
  • Received VMware’s Global Technical Partner of the Year and European Regional Technical Partner of the Year awards for partnership with NVIDIA GRID™ and VMware ESX.


  • Made history as NVIDIA-powered WEpods became the first self-driving shuttles to take to public roads.
  • Introduced HD Mapping, an end-to-end mapping platform for self-driving cars.
  • Announced that NVIDIA DRIVE™ PX 2 will power all vehicles in ROBORACE, a new autonomous car-racing circuit to debut later this year. (Original Source)

Shares of Nvidia are up over 7% to $38.20 in after-hours. NVDA has a 1-year high of $37.46 and a 1-year low of $19.09. The stock’s 50-day moving average is $35.88 and its 200-day moving average is $31.90.

On the ratings front, NVDA has been the subject of a number of recent research reports. In a report issued on May 9, Jefferies Co. analyst Mark Lipacis reiterated a Buy rating on NVDA, with a price target of $42, which represents a potential upside of 18.1% from where the stock is currently trading. Separately, on the same day, Merrill Lynch’s Vivek Arya reiterated a Buy rating on the stock and has a price target of $43.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Mark Lipacis and Vivek Arya have a total average return of 13.3% and 10.8% respectively. Lipacis has a success rate of 71.3% and is ranked #47 out of 3845 analysts, while Arya has a success rate of 50.6% and is ranked #333.

The street is mostly Neutral on NVDA stock. Out of 22 analysts who cover the stock, 13 suggest a Hold rating and 9 recommend to Buy the stock. The 12-month average price target assigned to the stock is $35.75, which represents a slight upside potential from current levels.

NVIDIA Corp. is a visual computing company, connecting people through computer graphics. It is engaged in creating graphics chips, which is used in personal computers. The company operates through two segments: Graphics Processing Unit and Tegra Processor. The Graphics Processing Unit segment includes sales of the company’s GeForce discrete and chipset products that supports desktop and notebook PCs plus license fees from Intel and sales of memory products. The Tegra Processors segment provides processors that deliver superior visual and multimedia experience on tablets, smart phones and gaming devices while consuming minimal power. NVIDIA was founded by Jen-Hsun Huang, Chris A. Malachowsky and Curtis R. Priem in January 1993 and is headquartered in Santa Clara, CA.

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