NVIDIA today reported record revenue for the third quarter ended October 25, 2015, of $1.305 billion, up 7 percent from $1.225 billion a year earlier, and up 13 percent from $1.153 billion in the previous quarter.

Record revenue of $1.305 billion, up 7 percent from a year ago, up 13 percent sequentially

GAAP operating income of $245 million, up 15 percent from a year ago

Quarterly cash dividend raised 18 percent to $0.115 per share. Company to return $1 billion to shareholders in fiscal 2017

GAAP earnings per diluted share for the quarter were $0.44, up 42 percent from $0.31 a year earlier and up from $0.05 in the previous quarter. Non-GAAP earnings per diluted share were $0.46, up 18 percent from $0.39 a year earlier, and up 35 percent from $0.34 in the previous quarter.

"Our record revenue highlights NVIDIA's position at the center of forces that are reshaping our industry," said Jen-Hsun Huang, co-founder and chief executive officer, NVIDIA. "Virtual reality, deep learning, cloud computing and autonomous driving are developing with incredible speed, and we are playing an important role in all of them.

"We continue to make great headway in our strategy of creating specialized visual computing platforms targeted at important growth markets. The opportunities ahead of us have never been more promising," he said.

Capital Return

During the third quarter, NVIDIA paid $53 million in cash dividends and received an additional 4.6 million shares at the close of the accelerated share repurchase agreement that it had entered into in the previous quarter. As a result, the company has returned an aggregate of $604 million to shareholders in the first nine months of the fiscal year. The company intends to return $800 million to shareholders in fiscal 2016.

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

The company announced an 18 percent increase in its quarterly cash dividend to $0.115 per share from $0.0975 per share. NVIDIA will pay this next quarterly cash dividend on December 14, 2015, to all shareholders of record on November 20, 2015.

GAAP Quarterly Financial Comparison ($ in millions except

earnings per share) Q3 FY16 Q2 FY16 Q3 FY15 Q/Q Y/Y Revenue $1,305 $1,153 $1,225 up 13% up 7% Gross margin 56.3% 55.0% 55.2% up 130 bps up 110 bps Operating expenses $489 $558 $463 down 12% up 6% Operating income $245 $76 $213 up 222% up 15% Net income $246 $26 $173 up 846% up 42% Diluted earnings per share $0.44 $0.05 $0.31 up 780% up 42%

Non-GAAP Quarterly Financial Comparison ($ in millions except

earnings per share) Q3 FY16 Q2 FY16 Q3 FY15 Q/Q Y/Y Revenue $1,305 $1,153 $1,225 up 13% up 7% Gross margin 56.5% 56.6% 55.5% down 10 bps up 100 bps Operating expenses $430 $421 $415 up 2% up 4% Operating income $308 $231 $264 up 33% up 17% Net income $255 $190 $220 up 34% up 16% Diluted earnings per share $0.46 $0.34 $0.39 up 35% up 18%

NVIDIA's outlook for the fourth quarter of fiscal 2016 is as follows:

Revenue is expected to be $1.30 billion, plus or minus two percent.



GAAP and non-GAAP gross margins are expected to be 56.7 percent and 57.0 percent, respectively, plus or minus 50 basis points.



GAAP operating expenses are expected to be approximately $503 million. Non-GAAP operating expenses are expected to be approximately $445 million.



GAAP and non-GAAP tax rates for the fourth quarter of fiscal 2016 are expected to be 20 percent, plus or minus one percent.



The above GAAP outlook amounts exclude restructuring charges, which are expected to be in the range of $25 million to $35 million, in the fourth quarter of fiscal 2016.



Capital expenditures are expected to be approximately $20 million to $30 million.



Third Quarter Fiscal 2016 Highlights

During the third quarter, NVIDIA achieved progress in each of its platforms.

Gaming:

Introduced the GeForce ® GTX 950 GPU, designed to play the latest games with processing power that rivals any console.

GTX 950 GPU, designed to play the latest games with processing power that rivals any console. Introduced NVIDIA GameWorks™ VR, a software development kit for creating gaming experiences on virtual reality-ready desktops and notebooks.

Launched GeForce NOW™, allowing players to instantly stream titles from the cloud to their SHIELD device.

Extended SHIELD™ Android TV into key European markets.



Professional Visualization:

Enabled professional designers to bring virtual reality to applications, with the launch of NVIDIA DesignWorks™ VR.



Datacenter:

Unveiled the next generation of its virtualized graphics platform, NVIDIA GRID™ 2.0, which delivers even the most graphics-intensive applications to any connected device.

Announced that Microsoft Azure will be the first cloud-services provider to offer GRID 2.0 capabilities, as well as accelerated computing.

Revealed that the Swiss Federal Office of Meteorology and Climatology is the first major national weather service to use a GPU-accelerated supercomputer to improve daily forecasts.



Auto:

Featured in new production vehicles and concept cars with NVIDIA-powered digital cockpits from Mercedes-Benz, Audi, Porsche, Bentley and Honda at the International Auto Show in Frankfurt.

Furthered its partnership with Tesla Motors, which introduced the Model X, equipped with an NVIDIA-powered infotainment system and digital instrument cluster.



CFO Commentary

Commentary on the quarter by Colette Kress, NVIDIA's executive vice president and chief financial officer, is available at http://investor.nvidia.com/.

Conference Call and Webcast Information

NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter fiscal 2016 financial results and current financial prospects today at 2 p.m. Pacific Time (5 p.m. Eastern Time). To listen to the conference call, dial (303) 223-2699; no password is required. A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA's investor relations website, http://investor.nvidia.com, and at www.streetevents.com. The webcast will be recorded and available for replay until the company's conference call to discuss its financial results for its fourth quarter and fiscal 2016.

Non-GAAP Measures

To supplement NVIDIA's Condensed Consolidated Statements of Income and Condensed Consolidated Balance Sheets presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP other income (expense), net, non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, non-GAAP diluted shares, and free cash flow. In order for NVIDIA's investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude stock-based compensation, product warranty charge, acquisition-related costs, restructuring and other charges, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, and the associated tax impact of these items, where applicable. Weighted average shares used in the non-GAAP diluted net income per share computation includes the anti-dilution impact of the company's Note Hedge. Free cash flow is calculated as GAAP net cash provided by operating activities less purchases of property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user's overall understanding of the company's historical financial performance. The presentation of the company's non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company's financial results prepared in accordance with GAAP, and its non-GAAP measures may be different from non-GAAP measures used by other companies.

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NVIDIA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data) (Unaudited) Three Months Ended Nine Months Ended October 25, October 26, October 25, October 26, 2015 2014 2015 2014 Revenue $ 1,305 $ 1,225 $ 3,609 $ 3,431 Cost of revenue 571 549 1,589 1,531 Gross profit 734 676 2,020 1,900 Operating expenses Research and development 329 340 987 1,011 Sales, general and administrative 152 123 441 361 Restructuring and other charges 8 - 97 - Total operating expenses 489 463 1,525 1,372 Operating income 245 213 495 528 Interest income 9 7 28 20 Interest expense (12 ) (11 ) (35 ) (35 ) Other income, net 3 - 1 14 Income before income tax expense 245 209 489 527 Income tax expense (benefit) (1 ) 36 83 90 Net income $ 246 $ 173 $ 406 $ 437 Net income per share: Basic $ 0.45 $ 0.32 $ 0.75 $ 0.79 Diluted $ 0.44 $ 0.31 $ 0.72 $ 0.77 Weighted average shares used in per share computation: Basic 542 548 544 555 Diluted 565 558 563 566

NVIDIA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) (Unaudited) October 25, January 25, 2015 2015 ASSETS Current assets: Cash, cash equivalents and marketable securities $ 4,728 $ 4,623 Accounts receivable, net 536 474 Inventories 425 483 Prepaid expenses and other current assets 145 133 Total current assets 5,834 5,713 Property and equipment, net 477 557 Goodwill 618 618 Intangible assets, net 172 222 Other assets 73 91 Total assets $ 7,174 $ 7,201 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 295 $ 293 Accrued and other current liabilities 560 603 Total current liabilities 855 896 Long-term debt 1,406 1,384 Other long-term liabilities 437 489 Capital lease obligations, long-term 11 14 Shareholders' equity 4,465 4,418 Total liabilities and shareholders' equity $ 7,174 $ 7,201

NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In millions, except per share data) (Unaudited) Three Months Ended Nine Months Ended Oct. 25, July 26, Oct. 26, Oct. 25, Oct. 26, 2015 2015 2014 2015 2014 GAAP gross profit $ 734 $ 634 $ 676 $ 2,020 $ 1,900 GAAP gross margin 56.3 % 55.0 % 55.2 % 56.0 % 55.4 % Stock-based compensation expense included in cost of revenue (A) 4 3 4 10 8 Product warranty charge (B) - 15 - 15 - Non-GAAP gross profit $ 738 $ 652 $ 680 $ 2,045 $ 1,908 Non-GAAP gross margin 56.5 % 56.6 % 55.5 % 56.7 % 55.6 % GAAP operating expenses $ 489 $ 558 $ 463 $ 1,525 $ 1,372 Stock-based compensation expense included in operating expense (A) (47 ) (44 ) (38 ) (134 ) (107 ) Acquisition-related costs (C) (4 ) (4 ) (10 ) (18 ) (28 ) Restructuring and other charges (8 ) (89 ) - (97 ) - Non-GAAP operating expenses $ 430 $ 421 $ 415 $ 1,276 $ 1,237 GAAP operating income $ 245 $ 76 $ 213 $ 495 $ 528 Total impact of non-GAAP adjustments to operating income 63 155 51 274 143 Non-GAAP operating income $ 308 $ 231 $ 264 $ 769 $ 671 GAAP other income (expense), net $ - $ (4 ) $ (4 ) $ (6 ) $ (1 ) Gains from non-affiliated investments (4 ) - - (4 ) (14 ) Interest expense related to amortization of debt discount 7 7 7 21 21 Non-GAAP other income, net $ 3 $ 3 $ 3 $ 11 $ 6 GAAP net income $ 246 $ 26 $ 173 $ 406 $ 437 Total pre-tax impact of non-GAAP adjustments 66 163 58 291 150 Income tax impact of non-GAAP adjustments (57 ) 1 (11 ) (65 ) (27 ) Non-GAAP net income $ 255 $ 190 $ 220 $ 632 $ 560 Diluted net income per share GAAP $ 0.44 $ 0.05 $ 0.31 $ 0.72 $ 0.77 Non-GAAP $ 0.46 $ 0.34 $ 0.39 $ 1.13 $ 0.99 Weighted average shares used in diluted net income per share computation GAAP 565 556 558 563 566 Anti-dilution impact from note hedge (D) (10 ) (4 ) - (6 ) - Non-GAAP 555 552 558 557 566 Metrics: GAAP net cash provided by operating activities $ 255 $ 163 $ 216 $ 664 $ 463 Purchase of property and equipment and intangible assets (16 ) (24 ) (40 ) (71 ) (91 ) Free cash flow $ 239 $ 139 $ 176 $ 593 $ 372

(A) Excludes stock-based compensation as follows: Three Months Ended Nine Months Ended Oct. 25, July 26, Oct. 26, Oct. 25, Oct. 26, 2015 2015 2014 2015 2014 Cost of revenue $ 4 $ 3 $ 4 $ 10 $ 8 Research and development $ 28 $ 27 $ 22 $ 82 $ 65 Sales, general and administrative $ 19 $ 17 $ 16 $ 53 $ 42 (B) Represents warranty charge associated with product recall. (C) Consists of amortization of acquisition-related intangible assets, transaction costs, compensation charges, and other credits related to acquisitions. (D) Represents the number of shares that would be delivered upon conversion of the currently outstanding 1.00% Convertible Senior Notes Due 2018. Under GAAP, shares delivered in hedge transactions are not considered offsetting shares in the fully diluted share calculation until actually delivered.

NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK Q4 FY2016 Outlook GAAP gross margin 56.7 % Impact of stock-based compensation 0.3 % Non-GAAP gross margin 57.0 % Q4 FY2016 Outlook (In millions ) GAAP operating expenses $ 503 Stock-based compensation expense and acquisition-related costs (58 ) Non-GAAP operating expenses $ 445