NVDIA Corp. (NVDA) reported first quarter 2011 EPS of 23 cents, exceeding the Zacks Consensus Estimate of 22 cents per share.
Revenues
The company reported first quarter 2011 revenues of $1.0 billion, up 2% from the previous quarter and up 51% from the year-ago quarter. Revenues increased as a result of improvement in the company’s GPU and professional solutions business segment, although decline in the consumer business segment tempered revenue growth. The company shipped a few hundred thousand units of its products, which exceeded management’s prior expectations. This apart, GTX 480 and 470 series of products continue to generate good demand across geographies.
The company’s Core GPU business remained almost flat sequentially. In this segment, the mainstream desktop GPU business was hit by negative seasonality. However, this was reduced to a considerable extent by the newly launched Fermi-based GeForce GTX470/480 effect GPUs and the GeForce GT320M chipset, as well as the strong demand for notebooks.
The Professional business segment saw another quarter of robust growth, jumping 20.2% sequentially. In this segment, the demand for workstation products continues to show strength. The computing business also went up significantly after the launch of the Telsa products operating on the Fermi architecture.
Operating Results
Gross margin on a GAAP basis was 45.6%, up from 44.7% in the previous quarter and 28.6% a year earlier. Gross margin on a non-GAAP basis was 45.6%, up from 44.7% reported in the previous quarter and also up compared to 30.3% reported in the year-ago quarter. Gross margin improved sequentially as a result of the launch of the Fermi-based GPUs and helped by growth in Professional Solutions, where the workstation and computing businesses generated margins that exceeded the overall corporate average.
GAAP operating expense for the quarter was around $309 million, increasing $4.5 million over the prior quarter.
The company reported net income of $137.6 million, or 23 cents per share on a GAAP basis, compared to a net loss of $201.3 million, or 37 cents per share a year ago. There were no non-recurring items in the first quarter. So non-GAAP net income for the quarter was $137.6 million, or 23 cents per share, compared with a net loss of $69.6 million, or 13 cents per share a year earlier.
Balance Sheet & Cash Flow
The company exited the quarter with Cash, cash equivalents and marketable securities balance of $1.76 billion, up approximately $36.7 million sequentially. Cash used in operating activities for the quarter was $5.4 million, while free cash flow used in the first quarter was $22.5 million. DSO at quarter-end was 48 days, up 11 days sequentially, indicating extended collection periods.
Guidance
For the second quarter of fiscal 2011, the company expects revenue to be down approximately 2% to 5% compared to the first quarter. GAAP gross margin is expected to be in the range of 46% to 47%. GAAP operating expenses are expected to be flat. The tax rate is expected to be in the range of 12% to 14%, including the effect of the US. R&D tax credit.
Revival in business fundaments, better product mix and increased operational efficiency makes us optimistic on the counter and we expect better numbers from the company in the upcoming quarters.
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