Segment Information

9 Months Ended

Oct. 26, 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 October 26, 2014
Revenue	$	991,217	$	168,165		$	66,000		$	1,225,382
Depreciation and amortization expense	$	29,175	$	14,665		$	11,640		$	55,480
Operating income (loss)	$	294,289	$	(53,291	)	$	(27,683	)	$	213,315
Three Months Ended October 27, 2013
Revenue	$	876,833	$	111,134		$	66,000		$	1,053,967
Depreciation and amortization expense	$	38,677	$	13,164		$	10,885		$	62,726
Operating income (loss)	$	220,351	$	(64,219	)	$	(15,144	)	$	140,988
Nine Months Ended October 26, 2014
Revenue	$	2,766,560	$	466,433		$	198,000		$	3,430,993
Depreciation and amortization expense	$	88,193	$	43,395		$	34,582		$	166,170
Operating income (loss)	$	770,393	$	(169,274	)	$	(73,266	)	$	527,853
Nine Months Ended October 27, 2013
Revenue	$	2,521,058	$	266,886		$	198,000		$	2,985,944
Depreciation and amortization expense	$	116,389	$	36,479		$	31,442		$	184,310
Operating income (loss)	$	586,791	$	(202,770	)	$	(54,718	)	$	329,303

	Three Months Ended						Nine Months Ended
	October 26, 2014			October 27, 2013			October 26, 2014			October 27, 2013
	(In thousands)
Reconciling items included in "All Other" category :
Revenue not allocated to reporting segments	$	66,000		$	66,000		$	198,000		$	198,000
Unallocated corporate operating expenses	(42,676		)	(40,033		)	(127,709		)	(125,700		)
Stock-based compensation	(41,435		)	(34,299		)	(115,371		)	(100,091		)
Acquisition-related costs	(9,572		)	(4,577		)	(28,186		)	(22,402		)
Other non-recurring expenses	—			(2,235		)	—			(4,525		)
Total	$	(27,683	)	$	(15,144	)	$	(73,266	)	$	(54,718	)

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 table summarizes information pertaining to our revenue from customers based on invoicing address in different geographic regions:

	Three Months Ended				Nine Months Ended
	October 26,		October 27,		October 26,		October 27,
	2014		2013		2014		2013
	(In thousands)
Revenue:
Taiwan	$	405,612	$	319,018	$	1,109,388	$	927,903
China	238,212		206,374		713,442		565,504
United States	215,484		195,529		594,541		545,303
Other Asia Pacific	169,793		174,691		475,442		507,065
Other Americas	100,531		79,382		275,355		220,920
Europe	95,750		78,973		262,825		219,249
Total revenue	$	1,225,382	$	1,053,967	$	3,430,993	$	2,985,944

The following table summarizes information pertaining to our revenue from significant customers, those representing 10% or more of total revenue for the respective dates:

	Three Months Ended				Nine Months Ended
	October 26,		October 27,		October 26,		October 27,
	2014		2013		2014		2013
Revenue:
Customer A	10	%	9	%	10	%	10	%
Customer B	8	%	11	%	9	%	11	%

Revenue from Customer A was attributable primarily to the GPU business for the three and nine months endedOctober 26, 2014 and to both the GPU and Tegra Processor businesses for the three and nine months endedOctober 27, 2013. Revenue from Customer B was attributable to the GPU business for all comparative periods presented.

The following table summarizes information pertaining to our accounts receivable from significant customers, those representing 10% or more of total accounts receivable for the respective periods: 

	October 26, 2014		January 26, 2014
Accounts Receivable:
Customer B	17	%	23	%