NVIDIA Corporation reports 237% CAPEX growth in 2018 and 40.6% Revenue growth
02/08/2018 • About NVIDIA Corporation (
$NVDA) • By InTwits
NVIDIA Corporation reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- NVIDIA Corporation is a fast growth stock: FY2018 revenue growth was 40.6%, 5 year revenue CAGR was 17.8% at FY2018 ROIC 35.3%
- NVIDIA Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $593m in FY2018, $176m in FY2017, $86m in FY2016, $122m in FY2015, $255m in FY2014
- The company has highly profitable business model: ROIC is 35.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
NVIDIA Corporation's Revenue jumped on 40.6%. Revenue growth showed slowdown in FY18Q4 - it was 34.0% YoY. Revenue decline was slowing down on average by 11.3 pp per annum in FY2014-FY2018. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.4 pp from 30.7% to 35.1% in FY2018. EBITDA Margin followed a growing trend at 4.4 pp per annum in the last 5 years.
Gross Margin increased slightly on 1.1 pp from 58.8% to 59.9% in FY2018. Gross Margin stuck to a growing trend at 1.3 pp per annum in FY2014-FY2018. SG&A as a % of Revenue decreased slightly on 1.2 pp from 9.6% to 8.4% in FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. SBC as a % of Revenue grew at 0.33 pp per annum in FY2014-FY2018.
Net Income margin increased on 7.3 pp from 24.1% to 31.4% in FY2018. Net Income margin grew at 5.2 pp per annum in FY2014-FY2018. The efficient tax rate was 4.7% in FY2018 while the average for the last five years was 10.0%.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 6.1%. NVIDIA Corporation's CAPEX/Revenue increased on 3.5 pp from 2.6% in FY2015 to 6.1% in FY2018. It's average CAPEX/Revenue for the last three years was 3.5%. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2016 at 1.7% and was growing since that time.
Accounts receivable as a % of Revenue increased slightly on 1.1 pp from 12.0% to 13.0% in FY2018. Inventories as a % of Revenue decreased on 3.3 pp from 11.5% to 8.2% in FY2018. Accounts payable as a % of Revenue decreased slightly on 1.7 pp from 17.0% to 15.3% in FY2018.
Return on investment
The company operates at high and attractive ROIC (35.3%) and ROE (46.1%). ROIC increased on 7.9 pp from 27.3% to 35.3% in FY2018. ROE jumped on 13.5 pp from 32.6% to 46.1% in FY2018. ROIC grew at 6.6 pp per annum in the last 5 years. ROE stuck to a growing trend at 9.1 pp per annum in FY2014-FY2018.
Leverage (Debt)
Debt level is -0.6x Net Debt / EBITDA and 0.6x Debt / EBITDA. Debt dropped on 29.1% while cash jumped on 127%.
NVIDIA Corporation has good short term financial stability: Interest coverage ratio (ICR) is 52.6x. NVIDIA Corporation has no short term refinancing risk: cash is higher than short term debt (26,680.0%).
Average interest expence paid by the company was 3.1% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 43.2x and P/E 49.0x.
The company paid 11.2% of Net Income as dividends in FY2018. Dividends grew on average at 13.5% per annum in the last 5 years).
Management team
The company's CEO Jensen Huang is a founder and has spent 26 years with the company. CEO total compensation was
$12,993,532 in FY2018 which included
$999,985 salary. NVIDIA Corporation's CFO Colette M Kress has spent 5 years with the company.
At the end of financial year the company had 4.4% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 8,191 employees. The number of employees surged on 12.5%. Average revenue per employee in FY2018 was
$1,185,936 and it surged on 25.0%.
Financial and operational results
FY ended 01/28/2018
NVIDIA Corporation ($NVDA) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 4,130 | 4,682 | 5,010 | 6,910 | 9,714 | 40.6% |
| Gross Profit | 2,268 | 2,599 | 2,811 | 4,063 | 5,822 | 43.3% |
| SG&A | 436 | 480 | 602 | 663 | 815 | 22.9% |
| EBITDA | 735 | 979 | 944 | 2,121 | 3,409 | 60.7% |
| EBIT | 496 | 759 | 747 | 1,934 | 3,210 | 66.0% |
| Interest expence | 10 | 46 | 47 | 58 | 61 | 5.2% |
| Tax | 70 | 124 | 129 | 239 | 149 | -37.7% |
| Net Income | 440 | 631 | 614 | 1,666 | 3,047 | 82.9% |
| Stock Based Compensation | 110 | 140 | 194 | 247 | 391 | 58.3% |
Balance Sheet
|
|---|
| Cash | 1,152 | 497 | 596 | 1,766 | 4,002 | 126.6% |
| Accounts Receivable | 426 | 474 | 505 | 826 | 1,265 | 53.1% |
| Inventory | 388 | 483 | 418 | 794 | 796 | 0.3% |
| Accounts Payable | 324 | 293 | 296 | 485 | 596 | 22.9% |
| Short Term Debt | 3 | 4 | 1,417 | 800 | 15 | -98.1% |
| Long Term Debt | 1,374 | 1,398 | 97 | 2,020 | 1,985 | -1.7% |
Cash flow
|
|---|
| Capex | 255 | 122 | 86 | 176 | 593 | 236.9% |
| Dividends | 181 | 186 | 213 | 261 | 341 | 30.7% |
| Acquisitions | 17 | | | | | |
Ratios
|
|---|
| Revenue growth | -3.5% | 13.4% | 7.0% | 37.9% | 40.6% | |
| EBITDA growth | -15.9% | 33.1% | -3.6% | 124.7% | 60.7% | |
|
|---|
| Gross Margin | 54.9% | 55.5% | 56.1% | 58.8% | 59.9% | 1.1% |
| EBITDA Margin | 17.8% | 20.9% | 18.8% | 30.7% | 35.1% | 4.4% |
| EBIT Margin | 12.0% | 16.2% | 14.9% | 28.0% | 33.0% | 5.1% |
| SG&A, % of revenue | 10.5% | 10.3% | 12.0% | 9.6% | 8.4% | -1.2% |
| SBC, % of revenue | 2.7% | 3.0% | 3.9% | 3.6% | 4.0% | 0.5% |
| Net Income Margin | 10.7% | 13.5% | 12.3% | 24.1% | 31.4% | 7.3% |
| CAPEX, % of revenue | 6.2% | 2.6% | 1.7% | 2.5% | 6.1% | 3.6% |
|
|---|
| ROIC | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% | 7.9% |
| ROE | 9.5% | 14.2% | 13.8% | 32.6% | 46.1% | 13.5% |
| Net Debt/EBITDA | 0.3x | 0.9x | 1.0x | 0.5x | -0.6x | -1.1x |
| Interest expence / Average debt | 0.8% | 3.3% | 3.2% | 2.7% | 3.1% | 0.4% |
People
|
|---|
| Insider ownership | 4.4% | 4.4% | 4.4% | 4.4% | 4.4% | 0.0% |
| Employees | 8,808 | 9,228 | 9,227 | 7,282 | 8,191 | 12.5% |
| Revenue/Employee, th. $ | 469 | 507 | 543 | 949 | 1,186 | 25.0% |
NVIDIA Corporation ($NVDA) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,937 | 2,230 | 2,636 | 2,911 | | 48.4% | 56.2% | 31.5% | 34.0% |
| EBITDA | 601 | 737 | 944 | 1,127 | | 107.2% | 102.5% | 37.4% | 44.5% |
| Net Income | 507 | 583 | 838 | 1,118 | | 143.8% | 123.4% | 54.6% | 70.7% |
Balance Sheet
|
|---|
| Cash | 1,989 | 1,988 | 2,802 | 4,002 | | 263.6% | 366.7% | 44.4% | 126.6% |
| Short Term Debt | 220 | 89 | 28 | 15 | | -84.5% | -93.8% | -97.2% | -98.1% |
| Long Term Debt | 1,995 | 1,989 | 1,987 | 1,985 | | 2,167.0% | 2,386.3% | -2.3% | -1.7% |
Ratios
|
|---|
| Gross Margin | 59.4% | 58.4% | 59.5% | 61.9% | | 1.8% | 0.5% | 0.5% | 1.9% |
| EBITDA Margin | 31.0% | 33.0% | 35.8% | 38.7% | | 8.8% | 7.6% | 1.5% | 2.8% |
| Net Income Margin | 26.2% | 26.1% | 31.8% | 38.4% | | 10.2% | 7.9% | 4.7% | 8.3% |
Peers in Semiconductors
Below we provide NVIDIA Corporation benchmarking against other companies in Semiconductors industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NanoFlex Power Corp ($OPVS) | | | | 72.5% | 354.8% |
| MoSys, Inc. ($MOSY) | | -18.4% | 37.2% | 46.8% | 87.7% |
| SMART Global Holdings, Inc. ($SGH) | | | -16.9% | 42.5% | 69.3% |
| Micron Technology, Inc. ($MU) | | -1.0% | -23.4% | 63.9% | 49.5% |
| Adesto Technologies Corporation ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 8.5% | 4.4% | 10.9% | 4.7% |
|---|
| NVIDIA Corporation ($NVDA) | | 13.4% | 7.0% | 37.9% | 40.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CEVA, Inc. ($CEVA) | 90.2% | 90.9% | 91.6% | 92.1% | 89.8% |
| NVE Corporation ($NVEC) | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% |
| Rambus, Inc. ($RMBS) | 85.9% | 84.7% | 80.1% | 79.9% | 76.8% |
| Universal Display Corporation ($OLED) | 76.0% | 64.2% | 83.9% | 80.8% | 75.5% |
| Intermolecular, Inc. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 45.3% | 47.0% | 47.2% | 48.6% | 50.4% |
|---|
| NVIDIA Corporation ($NVDA) | 54.9% | 55.5% | 56.1% | 58.8% | 59.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
| Micron Technology, Inc. ($MU) | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% |
| NXP Semiconductors N.V. ($NXPI) | 25.7% | 41.5% | 21.6% | 46.2% | 49.9% |
| Texas Instruments Incorporated ($TXN) | 39.7% | 42.0% | 43.5% | 46.7% | 48.6% |
| Intel Corp ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 9.8% |
|---|
| NVIDIA Corporation ($NVDA) | 17.8% | 20.9% | 18.8% | 30.7% | 35.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpha and Omega Semiconductor Limited ($AOSL) | 3.0% | 6.6% | 6.5% | 12.2% | 42.2% |
| Renesola Ltd. ($SOL) | 3.5% | 0.0% | 0.0% | 78.0% | 41.7% |
| First Solar, Inc. ($FSLR) | 7.6% | 4.0% | 7.9% | 17.5% | 33.0% |
| Sigma Designs Inc ($SIGM) | 11.0% | 6.5% | 6.2% | 14.1% | 29.3% |
| Micron Technology, Inc. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.7% | 4.7% | 4.4% |
|---|
| NVIDIA Corporation ($NVDA) | 6.2% | 2.6% | 1.7% | 2.5% | 6.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| SMART Global Holdings, Inc. ($SGH) | | | 2.5% | 21.5% | 51.7% |
| Texas Instruments Incorporated ($TXN) | 25.1% | 29.8% | 34.9% | 43.1% | 47.5% |
| Micron Technology, Inc. ($MU) | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% |
| Applied Materials Inc ($AMAT) | 15.8% | 15.2% | 19.0% | 31.2% | 36.4% |
| Skyworks Solutions, Inc. ($SWKS) | 24.8% | 36.4% | 33.7% | 33.1% | 32.3% |
| |
|---|
| Median (73 companies) | 5.0% | 3.8% | 1.4% | 3.2% | 3.0% |
|---|
| NVIDIA Corporation ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 25.4x | 3.3x | 3.0x | 7.2x | 98.6x |
| Inphi Corporation ($IPHI) | | -6.4x | 4.5x | 33.7x | 32.2x |
| JinkoSolar Holding Company Limited ($JKS) | 4.2x | 3.3x | 4.1x | 11.0x | 8.2x |
| Lattice Semiconductor Corporation ($LSCC) | -1.8x | | 6.5x | 19.0x | 3.9x |
| Renesola Ltd. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.6x | -0.3x | -0.0x | 0.4x | 0.3x |
|---|
| NVIDIA Corporation ($NVDA) | 0.3x | 0.9x | 1.0x | 0.5x | -0.6x |
