NVIDIA posts first-quarter profit of $134 million

NVIDIA's fiscal first quarter 2016 results are in. Last quarter the company pulled in revenue of $1.15 billion, up 4 percent year-over-year, while net income is down 2 percent year-over-year to $134 million. Adjusted earnings, which exclude so-called one-time costs, came in at $187 million, an increase of 13 percent versus the year before. Versus the previous quarter, sales are down 8 percent, net income is down 31 percent and adjusted net income is down 22 percent.

Revenue came in slightly under the analyst consensus of $1.16 billion while adjusted earnings per share of 33 cents were significantly higher than the consensus of 25 cents. The outlook for the current quarter on the other hand is disappointing, analysts counted on a revenue forecast of $1.18 billion whereas NVIDIA guided just $1.01 billion, plus or minus 2 percent.

NVIDIA announced it's increasing its dividend from 8.5 cents per share to 9.75 cents per share, a rise of 15 percent. Additionally, the firm pledged to return $800 million to shareholders in the form of dividends and buybacks in fiscal 2016, up from the previously stated $600 million, and has expanded its buyback program.

NVIDIA shares are down 1.07 percent to $22.25 in after-hours trading due to the weaker than expected outlook for the current quarter.

NVIDIA (NASDAQ: NVDA) today reported revenue for the first quarter ended April 26, 2015, of $1.15 billion, up 4 percent from $1.10 billion a year earlier and down 8 percent from $1.25 billion the previous quarter.

GAAP earnings per diluted share for the quarter were $0.24, unchanged from $0.24 a year earlier and down 31 percent from $0.35 in the previous quarter. Non-GAAP earnings per diluted share were $0.33, up 14 percent from $0.29 a year earlier and down 23 percent from $0.43 in the previous quarter.

"The importance of visual computing is evident all around us," said Jen-Hsun Huang, president and chief executive officer of NVIDIA. "Our expertise in this field enables us to take a leading position to advance deep learning, virtual reality and self-driving cars.

"Our singular focus on visual computing is aligned with some of the most exciting growth opportunities in computing today," he said.

IP Litigation
The company is looking forward to its case against Samsung and Qualcomm, set to be heard in June at the U.S. International Trade Commission. Last month, NVIDIA received a favorable pretrial claim construction ruling in the case.

Icera Modem Operations
NVIDIA announced on May 5, 2015, that it will wind-down its Icera modem operations in the second quarter of fiscal 2016. It is open to a sale of the technology or operations.

The company estimates that it will recognize restructuring charges in the range of $100 million to $125 million, primarily during fiscal 2016. These charges will consist of severance and other employee termination benefits, tax expense items and other costs associated with the wind-down, if the company is unable to sell the modem operations.

The Icera wind-down or sale is expected to benefit non-GAAP operating expenses in the second half of the year and the company will carefully invest in its growth initiatives of deep learning, self-driving cars and gaming. Non-GAAP operating expenses in fiscal 2016 are expected to be approximately flat with the previous year, excluding litigation costs, which are anticipated to be in the range of $70 million to $90 million as the company defends its intellectual property.

Capital Return
During the first quarter, NVIDIA paid $46 million in cash dividends and repurchased 2.4 million shares. As a result, it returned an aggregate of $99 million to shareholders.

It has announced a 15 percent increase in its quarterly cash dividend to $0.0975 per share, from $0.085 per share. NVIDIA will pay its next quarterly cash dividend of $0.0975 per share on June 12, 2015, to all stockholders of record on May 21, 2015.

It also has announced an increase in its intended return to shareholders in fiscal 2016 to $800 million from the previously stated $600 million, through quarterly cash dividends and share repurchases.

Further, the company's board of directors has extended the previously authorized repurchase program through December 2018 and authorized an additional $1.62 billion, for an aggregate of $2.00 billion available for repurchase.

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

Revenue is expected to be $1.01 billion, plus or minus two percent.

GAAP and non-GAAP gross margins are expected to be 55.7 percent and 56.0 percent, respectively, plus or minus 50 basis points.

GAAP operating expenses are expected to be approximately $474 million; non-GAAP operating expenses are expected to be approximately $425 million.

GAAP and non-GAAP tax rates for the second quarter of fiscal 2016 are expected to be 23 percent and 21 percent, respectively, plus or minus one percent.

The above GAAP outlook amounts exclude restructuring charges, which are expected to be in the range of $100 million to $125 million, primarily during fiscal 2016. These charges will consist of severance and other employee termination benefits, tax expense items and other costs associated with the wind-down, if the company is unable to sell the modem operations.

Capital expenditures are expected to be approximately $35 million to $45 million.