NVIDIA

NVIDIA Reports Record Revenue for the First Quarter of Fiscal Year 2007

NVIDIA Corporation:

Adam Foat Product PR Manager, UK and Northern Europe
NVIDIA Ltd
afoat@nvidia.com
+44 (0)118 903 3019

Press Relations:

James Delves
Wildfire PR
Tel: +44 (0)20 8339 4426
nvidia@wildfirepr.co.uk

FOR IMMEDIATE RELEASE

NVIDIA Reports Record Revenue for the First Quarter of Fiscal Year 2007

Company Achieves Record Gross Margin; Net Income Increases 41 Percent Year-Over-Year

SANTA CLARA, CA—May 12, 2006—NVIDIA Corporation (Nasdaq: NVDA) today reported financial results for the first quarter of fiscal 2007 ended April 30, 2006.

For the first quarter of fiscal 2007, revenue increased to a record $681.8 million, compared to $583.8 million for the first quarter of fiscal 2006, an increase of 17 percent. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the first quarter of fiscal 2007 was $90.7 million, or $0.23 per diluted share, compared to GAAP net income of $64.4 million, or $0.18 per diluted share, for the first quarter of fiscal 2006.

GAAP net income for the first quarter of fiscal 2007 includes stock-based compensation expense of $23.0 million as a result of the Company’s adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS 123R), during the quarter.

Non-GAAP net income for the first quarter of 2007, which excludes SFAS 123R stock-based compensation and related tax differences, was $111.1 million, or $0.29 per diluted share.

All share numbers and per share amounts set forth in this release and the accompanying unaudited financial statements have been adjusted to reflect the Company’s two-for-one stock split effected April 6, 2006 through the payment of stock dividends to the holders of record on March 17, 2006.

“We experienced growth in each of our businesses – GPU, MCP, handheld GPU, and consumer electronics – resulting in record revenue for the first quarter,” stated Jen-Hsun Huang, president and CEO of NVIDIA. “We also entered multiple new product cycles during the quarter, continuing our leadership in each of the markets we serve. As we move further into the new fiscal year, the growth drivers we outlined at our Analyst Day in March, which include the adoption of Microsoft Vista, high-definition video, and the launch of the Sony PlayStation 3, will continue to accelerate and give us the opportunity for another strong year of growth.”

First Quarter Fiscal 2007 Highlights:

  • Non-GAAP gross margin reached a Company high of 42.5 percent, an increase of 230 basis points sequentially from the fourth quarter fiscal 2006, and 650 basis points year-over-year. GAAP gross margin was 42.4 percent for the first quarter of fiscal 2007.
  • NVIDIA shipped eight new GeForce® 7 Series GPUs for desktop and notebook PCs, and now offers a complete top-to-bottom family of GeForce 7 GPUs.
  • NVDIA grew share in the Performance DX9 and Combined DX9 desktop GPU segments from 79 percent to 83 percent and from 57 percent to 60 percent, respectively, from the fourth quarter of calendar 2005 to the first quarter of calendar 2006 as reported in Mercury Research’s First Quarter PC Graphics Report 2006.
  • The NVIDIA nForce® MCP product line achieved record revenue for its seventh consecutive quarter. NVIDIA nForce MCPs increased their share of the AMD64 segment from 35 percent to 42 percent from the fourth quarter of calendar 2005 to the first quarter of calendar 2006 as reported in Mercury Research’s First Quarter Worldwide Chipset Report 2006.
  • NVIDIA continued to advance its leadership position in multi-GPU technology. The Company shipped its first Quad SLI™ system for desktop PCs as well as the GeForce Go 7800 GTX notebook GPU featuring SLI technology for notebook PCs.
  • NVIDIA demonstrated the world’s first GPU-powered game physics solution at the Game Developer’s Conference with Havok, the game industry’s leading supplier of cross-platform physics engine middleware.
  • NVIDIA shipped its first integrated graphics processor (IGP) core-logic solution for AMD-based notebook PCs – the GeForce Go 6100 GPU and NVIDIA nForce Go 430 MCP. This core logic solution is the industry’s first high-definition IGP to provide hardware accelerated H.264 high definition video playback.
  • The Professional Solutions Group introduced 11 new desktop and notebook workstation solutions, designed to improve workstation graphics performance and representing the most extensive line of commercial off-the-shelf professional graphics solutions in the industry.
  • NVIDIA and Intel announced a collaboration to bring high-performance 3D gaming and multimedia platform to handheld devices. The collaboration combines the NVIDIA GoForce® family of handheld GPUs with Intel’s newest processor family, codenamed Monahans, which is based on the third-generation Intel XScale architecture, to deliver a powerful development platform to content developers.
  • NVIDIA completed its acquisition of ULi Electronics, Inc., a leading developer of core logic technology.
  • NVIDIA acquired Hybrid Graphics Ltd., a leading developer of embedded 2D and 3D graphics software for handheld devices.

A Web cast of the conference call with analysts and investors to discussing NVIDIA’s first quarter fiscal 2007 financial results and current financial prospects will be held at the NVIDIA investor relations Web site http://nvidia.com/ir and at http://www.streetevents.com. and will be available via telephone by calling 800-642-1687 (or 706-645-9291), passcode 8372204, until May 18, 2006.

Non-GAAP Measures
To supplement the Company’s Consolidated Statements of Income presented in accordance with GAAP, we use non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP net income, non-GAAP basic and diluted net income per share, and other non-GAAP line items from the Consolidated Statements of Income, including cost of revenue information, gross profit, gross margin, operating expenses (including research and development, and sales, general and administrative expenses) and income tax expense. In order for our investors to be better able to compare our current results with those of previous periods that did not include SFAS 123R, we have shown a non-GAAP presentation of our Consolidated Statements of Income as reconciled against the GAAP presentation. Our non-GAAP results adjust our GAAP results to exclude SFAS 123R stockbased compensation and related tax differences. We believe the presentation of our non GAAP results enhances the user's overall understanding of our historical financial performance.

The presentation of our non-GAAP financial results is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non- GAAP measures used by other companies.

About NVIDIA
NVIDIA Corporation is a market leader in visual computing technology dedicated to creating products that enhance the interactive experience on consumer and professional computing platforms. Its graphics and communications processors have broad market reach and are incorporated into a wide variety of computing platforms, including consumer digital-media PCs, enterprise PCs, professional workstations, digital content creation systems, notebook PCs, military navigation systems and video game consoles. NVIDIA is headquartered in Santa Clara, California and employs more than 2,000 people worldwide. For more information, visit the Company’s Web site at www.nvidia.co.uk.

Certain statements in this press release, including any statements relating to the Company's performance expectations for NVIDIA's family of products and expectations of continued revenue growth, are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Such risks and uncertainties include, but are not limited to, manufacturing and other delays relating to new products, difficulties in the fabrication process and dependence of the Company on third-party manufacturers, general industry trends including cyclical trends in the PC and semiconductor industries, the impact of competitive products and pricing alternatives, market acceptance of the Company's new products and the Company's dependence on third-party developers and publishers. Investors are advised to read the Company's Annual Report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, particularly those sections entitled "Certain Business Risks," for a fuller discussion of these and other risks and uncertainties.

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