) released first-quarter 2015 results in advance as the
preliminary draft was unintentionally emailed to approximately
100 individuals within the company. Full results are scheduled to
release on May 8 when the detailed financial commentary and
outlook will also be available.
NVIDIA's first-quarter revenues came in at $1.10 billion which
not only increased 16% on a year-over-year basis but also
surpassed the Zacks Consensus Estimate of $1.05 billion. Adjusted
earnings of 24 cents (includes stock-based compensation but
excludes amortization, gain on sale and other one-time items) on
proportionate tax basis beat the Zacks Consensus Estimate of 17
Stabilization in the rate of PC decline and sale of high-end
graphics cards likely drove the better-than-expected top-line
performance. NVIDIA's GPU segment is dependent on PC sales and
revenues from the segment contribute a significant portion of the
total revenue. The Tegra business is also looking up, with
companies such as Microsoft and LG reportedly selecting NVIDIA's
mobile processor for their tablets and smartphones.
NVIDIA's adjusted gross margins (including stock-based
compensation) expanded 50 basis points to 54.8%. On a
year-over-year basis, the company's adjusted operating margins
expanded from 9.6% to 14.6% while operating expenses, as a
percentage of revenues, contracted from 44.7% to 41.2%. R&D
was the main contributor, declining around 4 percentage points
although SG&A also declined by about 62 basis points.
NVIDIA's adjusted net income came in at $134.2 million or 24
cents per share which increased from $85.4 million or 14 cents
reported in the year-ago quarter.
At the end of the first quarter, NVIDIA had $4.34 billion in
cash and cash equivalents while its long-term debt stood at $1.37
The preliminary results depict NVIDIA to have outperformed the
Zacks Consensus Estimate on both top and bottom lines. Although
the company did not provide the outlook in the release, we expect
it to beat the Zacks Consensus Estimate as demand for NVIDIA's
gaming and high-end notebook GPUs are likely to remain
We believe NVIDIA's innovative product pipeline that consists
of SHIELD 2 and mobile processor Tegra K1 will boost top-line
growth, going forward. The company's partnerships with
) and GE Intelligent Platforms also bode well over the long
Nonetheless, competition from the likes of
) remain the near term headwinds.
NVIDIA has a Zacks Rank #3 (Hold).
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