This summary is based on the fourth quarter fiscal 2008 earnings call conducted by NVIDIA Corporation (NVDA: chart) on February 13, 2008.

President, Chief Executive Officer and Director: Jen-Hsun Huang
Chief Financial Officer: Marvin D. Burkett
Investor Relations: Michael Hara

Key Investors Issues

- The earnings per share rose to 42 cents as against 27 cents in the prior year.
- Revenue increased 8% sequentially to $1.20 billion.
- The firm ended the year with a headcount of 4,985, up 902 over the prior year.

Fourth Quarter Fiscal 2008 Financial Highlights

For the fourth quarter, revenue increased to a record $1.20 billion, an increase of 37% over prior year and 8% growth sequentially.

The growth quarter to quarter came from desktop GPUs, which grew 19% and workstation, which grew 9%. Notebook and MCP were up slightly at 1% and 2%, respectively. The strength in desktop came from new products such as the GeForce 8800 family.

Comparing with Q4 fiscal 2007, revenue was up 37%, led by notebook and desktop. Notebook was up 124% year to year and desktop was up 69%. Workstation grew by 31%. The consumer business declined 22% for the year. The strength in desktop GPUs for Q2 and Q3 has continued through Q4 and shows signs of continuing in Q1, demonstrating the growing importance of the GPU in the PC system

GAAP net income was $257 million, or 42 cents per share, compared to net income of $163.5 million, or 27 cents per share in prior year, an increase of 57%.

Non-GAAP net income, which excludes stock-based compensation charges, a charge for in-process research and development related to an acquisition closed during the quarter, and the associated tax impact, was $292.6 million, or 49 cents per share.

Gross margin for the quarter was 45.7% GAAP and 45.9% non-GAAP.

This was the first time in 13 quarters that the firm has not had a non-GAAP gross margin increase quarter to quarter. During the quarter, NVIDIA experienced some cost issues with regard to the 8800GT, which it hopes to resolve in the next two quarters.

Operating expenses for the quarter were $287 million GAAP and $251 million non-GAAP.

The GAAP number includes a $4 million write-off of in-process R&D associated with the Mental Images acquisition. It also includes approximately $32 million of stock-based compensation. The non-GAAP operating expenses were up $13 million quarter to quarter, or 5.5%. This includes an additional $3 million of operating expenses associated with Mental Images. The revenue for Mental Images in the quarter was less than $1 million.

The firm continued to aggressively hire during the quarter and ended the year with a headcount of 4,985, which is up 376 from the prior quarter and up 902 over the prior year. Approximately two-thirds of the headcount additions for the quarter and the year were in the R&D sector.

- The cash and marketable securities were $1.8 billion, down $43 million from Q3 and up $692 million year to year.
- In the quarter, the firm repurchased $178 million of stock, purchased Mental Images for cash, and also purchased some EDA equipment and services.
- The operating cash flow in the quarter was a little over $250 million.
- Accounts receivable grew by $114 million, reflecting both the shipment profile in the quarter and the increase in revenue. The accounts receivable is very current and there are no issues with regard to payment.
- DSO in the quarter was 50 days.
- The firm built $52 million in inventory during the quarter, all of which was in new products. Inventory continued to be lean at 50 days, up only slightly from Q3.
- Depreciation was $37 million in the quarter and capital expenditures were $70 million.
- GAAP tax rate for the quarter was 8.2%.

Fiscal 2008 Financial Performance

- Annual revenue was a record $4.10 billion, compared to revenue of $3.07 billion for the fiscal year ended January 28, 2007, an increase of 34%. Desktop GPU revenue grew 38%. Notebook GPU revenue grew 114%. Workstation revenue grew 27% and MCP revenue grew 7%. NVIDIA held the number one segment share in desktop GPU, notebook GPU, all of DX9 and DX10 GPUs and workstation solutions.

- GAAP net income was $797.6 million, or $1.31 per share, compared to GAAP net income of $448.8 million, or 76 cents per share in fiscal 2007, an increase of 78%.
- Non-GAAP net income was $919.3 million, or $1.56 per diluted share.

- Annual gross margin reached a new high of 45.6%, an increase of 320 basis points from a year ago.
- The non-GAAP operating expenses were up 25%, and headcount was up 22%.
- The tax rate for the year was 11.5%, which is slightly lower than anticipated, as the mix of international sales was slightly higher than what the firm had forecast.
- For the year, capital expenditures were $188 million.