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NVIDIA Corp. (NVDA - Free Report) reported third quarter fiscal 2013 adjusted earnings per share of 34 cents, beating the Zacks Consensus Estimate of 30 cents. 


The company reported total revenue of $1.20 billion in the quarter, up 12.9% from $1.07 billion in the year-ago quarter.

The revenue for the third quarter was mainly driven by strong demand for the company’s Kepler GPUs, which are mainly used in the desktops and record performances of notebook and Tegra products.

Revenue from GPU business moved up 14.7% on a year-over-year basis. Continuous launch of the company’s new Kepler desktop products and also some new launches by the OEM partners.

However, the company’s Professional business was down 4.2% on a year-over-year basis. Nonetheless, the company witnessed shipments improving sequentially as the company launched its new Kepler-based Tesla products, which are expected to support the new Titan supercomputer. In this particular segment, the company witnessed year-over-year growth in Tesla products, which was partially offset by the weak economic conditions impacting demand for Quadro products.

This apart, the company’s Consumer business moved up by 27.6% year-over-year on the back of Tegra business.

Operating Results

Gross margin on a GAAP basis was 52.9% versus 52.2% in the year-ago quarter. Efficient cost management and change in sales mix of high-margin products led the company to post decent gross margin. On a non-GAAP basis, gross margin was 53.1%, which increased from 52.5% reported in the year-ago quarter.

GAAP operating expense in the quarter stood at $384.4 million, up 6.9% from $359.6 million in the previous quarter.

The company reported a net income of $209.1 million or 33 cents per diluted share on a GAAP basis, compared with $178.3 million or 29 cents a share in the year-ago quarter. Excluding special one-time items but including stock-based compensation expenses, adjusted net income was 34 cents per diluted share.

Balance Sheet & Cash Flow

The company exited the quarter with cash, cash equivalents and marketable securities of $3.4 billion, up from $3.3 billion in the previous quarter. Inventories during the quarter were $428.9 million, up from $387.2 million in the previous quarter.

Share Repurchase & Dividend

During these earnings announcements, the company also declared that it is initiating the payment of a quarterly cash dividend, and will also carry on with the existing $2.7 billion share-repurchase program, till December 2014.


For the fourth quarter of fiscal 2013, the company expects revenue to be in the range of $1.025 billion and $1.175 billion. Whereas, GAAP and non-GAAP gross margins are expected to be remain flat sequentially at 52.9% and 53.1%. Operating expenses are expected to $400 million, while non-GAAP operating expenses are projected at $359 million.


NVIDIA delivered modest third quarter results. The reported EPS beat the Zacks Consensus Estimate and revenue increased on a year-over-year basis. The company witnessed strong demand for the company’s Kepler GPUs products, and also shipments of new Kepler-based Tesla products improving sequentially.

On the other hand, NVIDIA’s performance may be slightly hampered by the economic slowdown in Europe. Moreover, advanced chips developed by Intel Corp. (INTC - Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) may increase competition for the company.

Currently, NVIDIA has a Zacks #3 Rank, implying a short-term Hold rating.

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