Analyst Conference Summary

conference date: May 8, 2014 @ 2:00 PM Pacific Time
for quarter ending: April 26, 2014 (Q1, first quarter fiscal 2015)

But I own competitors AMD and Marvell as this is written.
Forward-looking statements

Nvidia accidently released Q1 results early, on Tuesday.

Overview: Strong y/y revenue growth.

Basic data (GAAP) :

Revenues were $1.10 billion, down 4% sequentially from $1.14 billion, and up 16% from $0.955 billion in the year-earlier quarter.

Net income was $136.5 million, down 7% sequentially from $147 million million but up 75% from $77.9 million year-earlier.

EPS (earnings per share) were $0.24, down 4% sequentially from $0.25, but up 85% from $0.13 year-earlier.

Guidance:

Q2 fiscal 2015 revenue is expected within 2% of $1.1 billion. GAAP margin 53.7%, non-GAAP 54.0%. Operating expenses $457 million GAAP, $414 million non-GAAP. Tax rate within 1% of 20%. $40 million in capital expenditures.

In Q2 GeForce is expected down sequentially, offset by datacenter and mobile.

Conference Highlights:

Results were helped by gains in PC gaming as well as GPU sales into datacenters. Revenue was above outlook for the quarter.

GPU business revenue was $898 million down 5% sequentially from $947 million, but up 14% y/y. Notebook GPU lineup was refreshed with Maxwell-based products. Hi-end GeForce GTX revenue grew 57% y/y. Desktop GPU demand was strong, but the notebook market has shrunk except at the high end.

Quadro professional graphics segment revenue increase y/y, and believes at highest market share since 2010.

Tegra revenue was up 6% sequentially and 35% y/y, led by use in automotive growth of 60%, while game console and embedded use declined. Nvidia now has a separate automotive group, with a large potential pipeline. Jetson TK1 development platform for automotive, embedded and robotics was launched.

Tesla growth is now being driven by big data analystics. GRID datacenter initiative doing well with 600 enterprise evaluations and VMware support. IBM, Dell and HP are selling GPUs in their high-volume servers.

License revenue from Intel was $66 million.

Details of the Pascal GPU architecture, successor to Maxwell, were announced.

Luanched the OpenPower foundation with IBM and Google, which uses the IBM Power CPU in mainstream servers.

Non-GAAP numbers: Gross margin 55.1%. Net income $166.1 million, down 12% sequentially from $187 million, but up 46% from $113.8 million year-earlier. EPS $0.29, down 9% sequentially from $0.32, but up 61% from $0.18 year-earlier. Excludes $ million in stock-based compensation expense and other items.

54.8% GAAP gross margin.

Cash and equivalents balance was $4.35 billion. $151 million cash from operations. $29 milllion was used for capital expenditures. $122 million free cash flow. $55 million depreciation and amortization expense. $500 million was used or designated for stock repurchases and $47 million for dividends. Long-term debt $1.36 billion.

GAAP cost of good sold was $499 million, leaving gross profit of $604 million. Operating expenses of $453 million consisted of $334 million for R&D and $119 million for Sales, General and Administrative expense. Leaving operating income of $151 million. Interest and other income $23 million. Income taxes $27 million.

A cash dividend of $0.085 per share will be paid on June 13 to stockholders of record on May 22, but a portion may be considered a return of capital for tax purposes.

Intends to return $1 billion to shareholders in fiscal 2015 through dividends and stock repurchases.

Q&A:

Tegra, size of automotive? Three mobile growth drivers: devices, auto, and gaming. In the quarter devices were largest, but automotive was fastest growing.

Tegra margins in automotive? Gross margins are higher in automotive than devices, "and I hope both are very large over time."

Client GPU business volatility? Consumer business has two components, PCs and gaming. The gaming part of it is lower in volume but much higher in ASP and in margins. We have a strong position in the market. Software intensity is quite high in these products, with differentiating features from the customers. The OEM business has lower ASPs and margins.

Tesla large wins, will they drop off later in the year? We expect the growth to accelerate because enterprise virtualization and GPU computing are addressing large opportunities. We are supported by Citrix and VMware, supporting the vast majority of global enterprises. GRID solves a difficult problem. CUDA lets people take large applications and parallelize them. This has been going on long enough that we are seeing adoptation accelerate.

Tegra growth, is it from diversification away from consumer business? We have had 3 consecutive quarters of growth. The segments are where visual computing matters the most. Automatic driver assistance requires more computing capability and we were prepared for it. We believe Android will be one of the world's largest gaming platforms. We have a deep knowledge of what it takes to make great games.

Gaming share vs. AMD? We will let the marketing numbers speak for themselves. Gaming is complicated from architecture and software. Our stuff works great. We have the best GPUs in the world and the best software stack in the world. We have GeForce experience as a differentiator.

Our tax rate was low this quarter because of one-time items. We are forecasting a 20% rate, but it would be lower in the R&D tax credit is renewed.

28 nm? We are having a pretty good time with availability with TSMC. Supply and demand forecasting and alignment is good.

64-bit ARM competition? We have nothing to announce about TK1, which is the most advanced GPU that has ever been built for mobile devices. You will see later in the year. Our focus is automotive, gaming, and differentiated products. We expect it will do great. It is also the world's first high performance 64-bit processor.

Size of GRID today? On an annualized basis GRID is tens of millions of dollars. Where Tesla ends and GRID begins is a blur, but the processor is exactly the same. Most datacenters include both Tesla and GRID.

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