Segment Information

6 Months Ended

Jul. 27, 2014

Notes to financial statements [Abstract]

Segment Information

Segment Information

Our Chief Executive Officer, who is considered to be our chief operating decision maker, or CODM, reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance. Our operating segments are equivalent to our reportable segments. We report our business in two primary reporting segments - the GPU business and the Tegra Processor business.

Our GPU business leverages our GPU technology across multiple end markets. It comprises four primary product lines: GeForce for consumer desktop and notebook PCs; Quadro for professional workstations; Tesla for high-performance computing; and NVIDIA GRID to provide the power of NVIDIA graphics through the cloud. It also includes other related products, licenses and revenue supporting the GPU business, such as memory products.

Our Tegra Processor business comprises primarily product lines based on our Tegra SOC and modem processor technologies, including Tegra for tablets, smartphones and gaming devices; Icera baseband processors and RF transceivers; automotive computers, including infotainment and navigation systems; and gaming devices, such as SHIELD. It also includes embedded products and license and other revenue associated with game consoles.

During the fourth quarter of fiscal year 2014, our CODM completed a refinement of the methodology utilized to assign expenses to the GPU and Tegra Processor businesses to align to the Company’s product architecture and roadmap. With the announcement of our Tegra K1 processor, we now have a single unifying architecture for our GPU and Tegra Processors. This architecture unification prompted a methodology change that leverages our visual computing expertise by charging the operating expenses of certain core engineering functions to the GPU business, while charging the Tegra Processor business for the incremental cost of the teams working directly for that business. In instances where the operating expenses of certain functions benefit both reporting segments, our CODM assigns 100% of those expenses to the reporting segment that benefits the most. The revenue and cost of revenue of the reporting segments was not affected, and comparative periods presented below reflect the impact of this change.

The “All Other” category presented below represents the revenue and expenses that our CODM does not assign to either the GPU business or the Tegra Processor business for purposes of making operating decisions or assessing financial performance. The revenue includes patent licensing revenue and the expenses include corporate infrastructure and support costs, stock-based compensation costs, amortization of acquisition-related intangible assets, other acquisition-related costs, and other non-recurring charges and benefits that our CODM deems to be enterprise in nature.

Our CODM does not review any information regarding total assets on a reporting segment basis. We do not have intersegment revenue. The accounting policies for segment reporting are the same as for the Company as a whole.

	GPU		Tegra Processor			All Other			Consolidated
	(In thousands)
Three Months Ended July 27, 2014
Revenue	$	877,980	$	158,844		$	66,000		$	1,102,824
Depreciation and amortization expense	$	29,493	$	14,562		$	11,552		$	55,607
Operating income (loss)	$	240,908	$	(54,542	)	$	(23,187	)	$	163,179
Three Months Ended July 28, 2013
Revenue	$	858,613	$	52,625		$	66,000		$	977,238
Depreciation and amortization expense	$	36,001	$	15,431		$	10,408		$	61,840
Operating income (loss)	$	207,914	$	(83,560	)	$	(18,820	)	$	105,534
Six Months Ended July 27, 2014
Revenue	$	1,775,343	$	298,268		$	132,000		$	2,205,611
Depreciation and amortization expense	$	59,017	$	28,730		$	22,943		$	110,690
Operating income (loss)	$	476,104	$	(115,981	)	$	(45,585	)	$	314,538
Six Months Ended July 28, 2013
Revenue	$	1,644,225	$	155,752		$	132,000		$	1,931,977
Depreciation and amortization expense	$	71,919	$	28,953		$	20,712		$	121,584
Operating income (loss)	$	366,440	$	(138,550	)	$	(39,575	)	$	188,315

	Three Months Ended						Six Months Ended
	July 27, 2014			July 28, 2013			July 27, 2014			July 28, 2013
	(In thousands)
Reconciling items included in "All Other" category :
Revenue not allocated to reporting segments	$	66,000		$	66,000		$	132,000		$	132,000
Unallocated corporate operating expenses	(41,599		)	(41,171		)	(85,035		)	(85,668		)
Stock-based compensation	(38,415		)	(32,395		)	(73,936		)	(65,792		)
Acquisition-related costs	(9,173		)	(8,964		)	(18,614		)	(17,825		)
Other non-recurring expenses	—			(2,290		)	—			(2,290		)
Total	$	(23,187	)	$	(18,820	)	$	(45,585	)	$	(39,575	)

Revenue by geographic region is allocated to individual countries based on the location to which the products are initially billed even if our customers’ revenue is attributable to end customers that are located in a different location. The following tables summarize information pertaining to our revenue from customers based on invoicing address in different geographic regions:

	Three Months Ended				Six Months Ended
	July 27,		July 28,		July 27,		July 28,
	2014		2013		2014		2013
	(In thousands)
Revenue:
Taiwan	$	330,917	$	319,004	$	703,776	$	608,885
China	251,768		184,086		475,230		359,130
United States	206,128		163,796		379,063		349,774
Other Asia Pacific	150,799		165,117		305,649		332,374
Other Americas	83,055		76,531		174,818		141,538
Europe	80,157		68,704		167,075		140,276
Total revenue	$	1,102,824	$	977,238	$	2,205,611	$	1,931,977

Revenue from significant customers, those representing 10% or more of total revenue for the respective dates, is summarized as follows:

	Three Months Ended				Six Months Ended
	July 27,		July 28,		July 27,		July 28,
	2014		2013		2014		2013
Revenue:
Customer A	11	%	11	%	10	%	11	%
Customer B	10	%	12	%	9	%	11	%

Revenue from Customer A was attributable primarily to the GPU business for the three and six months ended July 27, 2014 and to both the GPU and Tegra Processor businesses for the three and six months ended July 28, 2013. Revenue from Customer B was attributable to the GPU business for all comparative periods presented.

Accounts receivable from significant customers, those representing 10% or more of total accounts receivable for the respective periods, is summarized as follows: 

	July 27, 2014		January 26, 2014
Accounts Receivable:
Customer B	21	%	23	%
Customer C	10	%	9	%