gtc 2013: nvidia fiscal performance, investments, and opportunities

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Jen-Hsun Huang CEO & Co-Founder, NVIDIA

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CEO Jen-Hsun Huang shares record revenues, business growth, and "light every pixel" strategy for 2014. Here, you'll find details about how NVIDIA expands its visual computing technology for enterprises and progresses portable gaming with SHIELD.

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Page 1: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Jen-Hsun Huang CEO & Co-Founder, NVIDIA

Page 2: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Safe Harbor

Except for the historical information contained herein, certain matters in this presentation including, but not limited to,

statements as to: our investments and opportunities; our financial results; the performance and benefits of our products

and technologies; our strategies; and other predictions and estimates are forward-looking statements within the meaning

of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and any other forward-looking

statements that go beyond historical facts that are made in this presentation are subject to risks and uncertainties that

may cause actual results to differ materially. Important factors that could cause actual results to differ materially include:

global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the

impact of technological development and competition; development of new products and technologies or enhancements to

our existing product and technologies; market acceptance of our products or our partners products; design, manufacturing

or software defects; changes in consumer preferences and demands; changes in industry standards and interfaces;

unexpected loss of performance of our products or technologies when integrated into systems and other factors. For a

complete discussion of factors that could materially affect our financial results and operations, please refer to the reports

we file from time to time with the SEC, including our Form 10-K for the fiscal year ended January 27, 2013. Copies of

reports we file with the SEC are posted on our website and are available from NVIDIA without charge. These forward-

looking statements are not guarantees of future performance and speak only as of March 19, 2013, based on information

currently available to us. Except as required by law, NVIDIA disclaims any obligation to update these forward-looking

statements to reflect future events or circumstances.

Page 3: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Achieved record revenues, margins and cash

Grew GPU and Tegra processor businesses

Reached tipping point for GPU-accelerated computing

Introduced Tegra 4 with integrated 4G/LTE

Invented GRID — A new server GPU platform

FY13

Fighting through the Headwinds

Page 4: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

360

540

100

350

600

FY12 FY13

50.1% 51.8% 52.9% 52.9%

35%

40%

45%

50%

55%

Q1FY13 Q2FY13 Q3FY13 Q4FY13

4.0 4.3

1.0

2.0

3.0

4.0

5.0

FY12 FY13

3.1

3.7

1.0

2.0

3.0

4.0

FY12 FY13

+50%

Record Revenue

Record Gross Margin

Fiscal 2013 Performance

Based on GAAP Results

+7% +19%

Record Cash

Record Tegra (Smartphones & Tablets)

Millions

Billions

Billions

Page 5: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Consistent Financial Performance % o

f Revenue

Billions

GPU Growth

Record Gross Margin (non-GAAP) Cash Generation

Leveraging R&D for Income Growth (non-GAAP)

Based on non-GAAP Results which excluded stock-based compensation, amortization of acquisition-related intangible assets, other acquisition-related costs, a charge related to a tender offer purchase in fiscal 2010, charges related to the weak die/packaging material set, net of insurance reimbursement, in fiscal years 2011 and 2010,

a legal settlement charge in fiscal 2012, and a contribution expense in fiscal 2013

Billions

2.3

2.7 3.0

3.2

0.5

1.5

2.5

3.5

FY10 FY11 FY12 FY13

39.0%

45.1%

51.9% 52.3%

30%

35%

40%

45%

50%

55%

FY10 FY11 FY12 FY13

8% 14% 21% 20% 31%

31% 31% 33%

61% 55% 48% 47%

0%

25%

50%

75%

100%

FY10 FY11 FY12 FY13

OM% OPEX% COGS%

1.7

2.5

3.1

3.7

0

1

2

3

4

FY10 FY11 FY12 FY13

Page 6: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Strong position in GPU

Leverage GPU, launch GRID into new $5B+ TAM

Engage LTE market with Tegra 4 and 4i — projected to triple to 500Mu/yr by 2017

Tegra traction in mobile, tablets, PC, gaming devices, auto, and embedded

Investment quadruples NVIDIA TAM to $20B+

FY14

New Products New Markets

Gearing Up for Growth

Page 9: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

TECHNOLOGY PROCESSORS VISUAL COMPUTING APPLIANCE

NVIDIA The Visual Computing Company

Page 10: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities
Page 11: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

A Computing Revolution

1993 1998 2003 2008 2013

OS M

ark

et

Share

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Source: Gartner, Strategy Analytics

Page 12: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Computing Everywhere

1993 1998 2003 2008 2013 0%

20%

40%

80%

100%

Pro

cess

or

Mark

et

Share

x86 and Cortex Processors Shipped

60%

0

1

2

4

5

3

Pro

cesso

r Ship

ments (B

illions)

Source: Mercury Research, ARM, Internal estimates

Page 13: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Smartphone

Tablets

WinRT PCs

Auto

Gaming Devices

GRID

Tesla

GeForce

Quadro ~$600M

~$1B

~$10B

~$5B

~$1B

~$5B

Investments & Opportunities

INVESTMENT TAM

500M LTE devices (by 2017 – 3X 2013)

200M Android & WinRT tablets

50M cars w/ infotainment & cluster

20M mobile gaming devices

GPU

Tegra

160M enterprise workers @ 8ccu = $20B/4y

50M game subscribers @ 5ccu = $10B/4y

10M designers @ 1ccu = $10B/4y

Page 14: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Smartphones

Tablets

WinRT PCs

Auto

Gaming Devices

GRID

Tesla

GeForce

Quadro ~$600M

~$1B

~$10B

~$5B

~$1B

~$5B

Investments & Opportunities

INVESTMENT TAM

GPU

Tegra

$156M $764M

REVENUES

$2.3B $3.2B

FY10 FY13

Page 15: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

GRID

Leveraging our graphics & GPU expertise,

invent new technologies that can extend our

GPUs into servers, datacenters, and

appliances.

Page 16: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Key Components of GRID

GRID VCA Visual Computing Appliance

GRID GPUs

GRID VGX Software

Page 17: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

SALES & MARKETING DESIGN SIMULATION COLLABORATION

QUADRO Workstations

TEGRA | GEFORCE Devices

GRID Enterprise Server

GRID VGX

Enterprise Computing Strategy Industry’s most trusted graphics partner | Deep optimization with ISVs

End-to-end visual computing solution

GRID VGX

Page 18: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

NVIDIA GRID Enterprise Ecosystem

Page 19: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities
Page 20: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

NVIDIA GRID Visual Computing Appliance

Page 21: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Remote GPU-Accelerated Workspace

GRID available to ALL 16 Concurrent Users

Page 22: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

NVIDIA GRID A Visual Computing Appliance

CISCO ROUTER A Networking Appliance

NVIDIA GRID A Visual Computing Appliance

NETAPP NAS A Storage Appliance

Page 23: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

NVIDIA GRID VCA

Kepler GPUs (4GB FB ea) 8 16

CPU Threads 16 32

System Memory 192 GB 384 GB

BASE

$24,900 + $2,400/yr SW license

(unlimited devices)

MAX

$39,900 + $4,800/yr SW license

(unlimited devices)

Page 24: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Q1 Q2 Q3 Q4

6 Partners

20 Trials

Production

VDI & OEM partners

Production

75 Trials

GRID VCA & ISVs

Announcement

15 Trials

VAR Program Launch

Production

GRID Milestones

GRID Enterprise

GRID VCA

GRID Gaming

Page 25: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

TEGRA

Leveraging our GPU assets & expertise,

invest to be a major player in a world where

“visual computing is everywhere”.

Page 26: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Tegra Firsts

1st Dual Core

1st Honeycomb

1st Game Store — TegraZone

1st Quad Core

1st Battery Saver Core

1st WinRT Tablet

1st Quad Core A15

1st Always-On HDR Camera

1st LTE SDR Modem

2011

2012

2013

Page 27: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

LONGEST BATTERY LIFE

DISPLAY FRAME PRISM 2

INNOVATIVE CAMERA

Chimera Architecture

I G C

ENGINE

MEMORY

S

BEST GAMING

BEST PERFORMANCE

4+1

A15 A15

A15 A15

TEGRAZONE

INTEGRATE INDUSTRY LEADING CPU, GPU, CAMERA, LTE MODEM

Mobile Computing Innovation

Page 28: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Tegra 4 Family

Tegra 4 Tegra 4i 5W TDP 1W TDP

Quad CPU A15 4+1 A9 r4 4+1

NVIDIA GPU 72 Core 60 Core

i500 dedicated integrated

CHIMERA Photo

Architecture

Based on these estimates,

even Qualcomm’s best

processor, which is due to

enter production at about the

same time as Tegra 4, won’t

surpass Nvidia in these tests.

“ “

Page 29: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Tegra 4i | 5” 1080p Display | 8mm Thin | 4G LTE

PRISM 2 | DirectTouch | Chimera Camera

SUPERPHONES FOR THE MAINSTREAM

Phoenix Reference Phone Platform

Page 30: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

2006 2007 2008 2009 2010 2011 2012 2013

Icera Modem Milestones Certified at 95 carriers in 65 countries | 20M modems shipped to date 1st WinRT LTE multi-mode modem certified at AT&T

i150 i300 i400 i500

HSDPA SoftBank Japan

HSUPA AT&T

HSPA Vodafone Global

HSPA+ T-Mobile US

I500 Sampling

CAT3

CAT4, CA, VoLTE

1st LTE Multimode

AT&T

1st HSPA+ Phones

Page 31: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

PROJECT SHIELD

Project SHIELD is a major disruption to

portable game devices, game consoles

and devices like the Apple iPod.

NVIDIA has built what could be the most

compelling portable game system

in some time.

Page 32: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities
Page 33: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

TEGRA Best in Graphics — Best for Gaming

Page 34: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Q1 Q2 Q3 Q4 Q1 (2014)

SHIELD

Production

Phones/Tablets

Production

Carrier

Certifications

Begin

Tablets

Production

Carrier

Certifications

Begin

Mainstream

Smartphones

Production

Tegra Milestones

Tegra 4i

Tegra 4

i500

Page 35: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

~$600M

~$1B

~$10B

~$5B

~$1B

~$5B

Gearing Up for Growth

INVESTMENT TAM

GPU

Tegra

Page 36: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

APPENDIX

Page 37: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Non-GAAP Stock-based

compensation (a)

Acquisition-

related items (b)

Net warranty

charges (c)

Other

(d)

GAAP

FY2010

Revenue $ 3,326 $ - $ - $ - $ - $ 3,326

Cost of goods sold $ 2,030 $ 23 $ - $ 96 $ - $ 2,149

Gross profit $ 1,296 $ (23 ) $ - $ (96 ) $ - $ 1,177

Operating expense $ 1,041 $ 224 $ 13 $ (2 ) $ - $ 1,276

Operating income (loss) $ 255 $ (247 ) $ (13 ) $ (94 ) $ - $ (99 )

FY2011

Revenue $ 3,543 $ - $ - $ - $ - $ 3,543

Cost of goods sold $ 1,945 $ 8 $ - $ 181 $ - $ 2,134

Gross profit $ 1,598 $ (8 ) $ - $ (181 ) $ - $ 1,409

Operating expense $ 1,096 $ 92 $ 9 $ 13 $ (57 ) $ 1,153

Operating income $ 502 $ (100 ) $ (9 ) $ (194 ) $ 57 $ 256

FY2012

Revenue $ 3,998 $ - $ - $ - $ - $ 3,998

Cost of goods sold $ 1,923 $ 11 $ - $ - $ 7 $ 1,941

Gross profit $ 2,075 $ (11 ) $ - $ - $ (7 ) $ 2,057

Operating expense $ 1,246 $ 125 $ 38 $ - $ - $ 1,409

Operating income $ 829 $ (136 ) $ (38 ) $ - $ (7 ) $ 648

RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES

$ in millions

Page 38: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

Non-GAAP Stock-based

compensation (a)

Acquisition-

related items (b)

Net warranty

charges (c)

Other

(d)

GAAP

FY2013

Revenue $ 4,280 $ - $ - $ - $ - $ 4,280

Cost of goods sold $ 2,043 $ 11 $ - $ - $ - $ 2,054

Gross profit $ 2,237 $ (11 ) $ - $ - $ - $ 2,226

Operating expense $ 1,396 $ 126 $ 36 $ - $ 20 $ 1,578

Operating income $ 841 $ (137 ) $ (36 ) $ - $ (20 ) $ 648

RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES

Footnotes

(a) In addition to our historical practice of excluding stock-based compensation, during FY10, the Company completed a tender offer to purchase

outstanding stock options which resulted in a charge of $140.2 million. This charge was allocated to cost of goods sold, research and development

expense, and sales, general and administrative expense, of $11.4 million, $90.5 million and $38.3 million, respectively.

(b) Acquisition-related items are comprised of amortization of acquisition-related intangible assets and other acquisition-related costs such as

transaction costs, compensation charges and restructuring costs relating to the acquisitions.

(c) Net warranty charges are comprised of charges to cost of goods sold related to the weak die/packaging material set that was used in certain

versions of our previous generation chips and a charge to operating expense related to a class action lawsuit settlement, net of insurance

reimbursement.

(d) Other is comprised of legal settlement charges and benefits and the net present value of a charitable contribution.

$ in millions

Page 39: GTC 2013: NVIDIA Fiscal Performance, Investments, and Opportunities

FY2010 FY2011 FY2012 FY2013

Graphics Processing Unit (GPU) Revenue excluding chipset products $ 2,299 $ 2,659 $ 2,990 $ 3,228

Chipset product revenue $ 872 $ 687 $ 197 $ 24

GPU Revenue $ 3,171 $ 3,346 $ 3,187 $ 3,252

RECONCILIATION OF OTHER FINANCIAL MEASURES

$ in millions