What changed in this filing

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Item 1. Financial Statements

2021-08-20 compared with 2021-05-26 · 215 added, 148 removed, 480 unchanged (43% of the section changed)

3 unchanged sentences

(In millions, except per share data)

Three Months Ended

May 2, April 26,

Three Months Ended Six Months Ended

August 1, July 26, August 1, July 26,

2021 2020 2021 2020

Revenue $ 6,507 $ 3,866 $ 12,168 $ 6,946

10 unchanged sentences

Other income (expense), net

( 50 ) ( 42 ) 38 ( 36 )

Income before income tax 2,394 609 4,438 1,591

Income tax expense 132 64

Income tax expense (benefit) 20 ( 13 ) 153 52

Net income $ 2,374 $ 622 $ 4,285 $ 1,539

9 unchanged sentences

(In millions)

Three Months Ended

May 2, April 26,

Three Months Ended Six Months Ended

August 1, July 26, August 1, July 26,

2021 2020 2021 2020

Net income $ 2,374 $ 622 $ 4,285 $ 1,539

Other comprehensive loss, net of tax

Other comprehensive income (loss), net of tax

Available-for-sale securities:

Net change in unrealized gain (loss) — 3 ( 1 ) 3

Reclassification adjustments for net realized gain (loss) included in net income — ( 2 ) — ( 2 )

Net change in unrealized gain (loss) — 1 ( 1 ) 1

Cash flow hedges:

Net unrealized loss ( 14 ) ( 10 )

Net unrealized gain (loss) ( 14 ) 16 ( 27 ) 6

Reclassification adjustments for net realized gain (loss) included in net income 8 ( 3 ) 17 ( 4 )

Net change in unrealized loss ( 5 ) ( 11 )

Net change in unrealized gain (loss) ( 6 ) 13 ( 10 ) 2

Other comprehensive income (loss), net of tax ( 6 ) 14 ( 11 ) 3

Total comprehensive income $ 2,368 $ 636 $ 4,274 $ 1,542

3 unchanged sentences

(In millions)

May 2, January 31,

August 1, January 31,

Current assets:

35 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MAY 2, 2021 AND APRIL 26, 2020

FOR THE THREE MONTHS ENDED AUGUST 1, 2021 AND JULY 26, 2020

Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Shareholders' Equity

(In millions, except per share data) Shares Amount

Balances, January 31, 2021 620 $ 1 $ 8,721 $ ( 10,756 ) $ 19 $ 18,908 $ 16,893

Balances, May 2, 2021 2,491 $ 3 $ 9,278 $ ( 11,242 ) $ 14 $ 20,721 $ 18,774

Net income — — — — — 2,374 2,374

5 unchanged sentences

Stock-based compensation — — 465 — — — 465

Balances, May 2, 2021 623 $ 1 $ 9,280 $ ( 11,242 ) $ 14 $ 20,721 $ 18,774

Balances, August 1, 2021 2,496 $ 3 $ 9,745 $ ( 11,604 ) $ 8 $ 22,995 $ 21,147

Balances, April 26, 2020 2,461 $ 3 $ 7,352 $ ( 10,036 ) $ ( 10 ) $ 15,790 $ 13,099

Net income — — — — — 622 622

Other comprehensive income — — — — 14 — 14

Issuance of common stock from stock plans 8 — 6 — — — 6

Tax withholding related to vesting of restricted stock units ( 2 ) — — ( 196 ) — — ( 196 )

Cash dividends declared and paid ($ 0.04 per common share)

— — — — — ( 99 ) ( 99 )

Fair value of partially vested equity awards assumed in connection with acquisitions — — 86 — — — 86

Stock-based compensation — — 382 — — — 382

Balances, July 26, 2020 2,467 $ 3 $ 7,826 $ ( 10,232 ) $ 4 $ 16,313 $ 13,914

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED AUGUST 1, 2021 AND JULY 26, 2020

Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Income Retained Earnings Total Shareholders' Equity

(In millions, except per share data) Shares Amount

Balances, January 31, 2021 2,479 $ 3 $ 8,719 $ ( 10,756 ) $ 19 $ 18,908 $ 16,893

6 unchanged sentences

Stock-based compensation — — 898 — — — 898

Balances, April 26, 2020 615 $ 1 $ 7,354 $ ( 10,036 ) $ ( 10 ) $ 15,790 $ 13,099

Balances, August 1, 2021 2,496 $ 3 $ 9,745 $ ( 11,604 ) $ 8 $ 22,995 $ 21,147

Balances, January 26, 2020 2,450 $ 3 $ 7,043 $ ( 9,814 ) $ 1 $ 14,971 $ 12,204

Net income — — — — — 1,539 1,539

Other comprehensive income — — — — 3 — 3

Issuance of common stock from stock plans 24 — 94 — — — 94

Tax withholding related to vesting of restricted stock units ( 7 ) — — ( 418 ) — — ( 418 )

Cash dividends declared and paid ($ 0.08 per common share)

— — — — — ( 197 ) ( 197 )

Fair value of partially vested equity awards assumed in connection with acquisitions — — 86 — — — 86

Stock-based compensation — — 603 — — — 603

Balances, July 26, 2020 2,467 $ 3 $ 7,826 $ ( 10,232 ) $ 4 $ 16,313 $ 13,914

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(In millions)

Three Months Ended

May 2, April 26,

Six Months Ended

August 1, July 26,

Cash flows from operating activities:

23 unchanged sentences

Cash flows from financing activities:

Issuance of debt, net of issuance costs 4,985 4,971

Proceeds related to employee stock plans 128 94

3 unchanged sentences

Other ( 2 ) ( 3 )

Issuance of debt, net of issuance costs — 4,979

Net cash provided by (used in) financing activities ( 471 ) 4,744

Net cash provided by financing activities 4,030 4,447

Change in cash and cash equivalents 4,781 ( 7,622 )

12 unchanged sentences

The following information should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021.

On May 21, 2021, our Board of Directors declared a four -for-one split of our common stock in the form of a stock dividend, or the Stock Split, which was conditioned upon obtaining stockholder approval to increase the number of our authorized shares of common stock from 2 billion to 4 billion.

On June 3, 2021, at the 2021 Annual Meeting of Stockholders, our stockholders approved the amendment to our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock to 4 billion.

As a result, each stockholder of record at the close of business on June 21, 2021 received a dividend of three additional shares of common stock for every share held on the record date, distributed after the close of trading on July 19, 2021.

All share, equity award, and per share amounts and related shareholders' equity balances presented herein have been retroactively adjusted to reflect the Stock Split.

Significant Accounting Policies

2 unchanged sentences

Fiscal year 2022 is a 52-week year and fiscal year 2021 was a 53-week year.

The first quarters of fiscal years 2022 and 2021 were both 13-week quarters.

The second quarters of fiscal years 2022 and 2021 were both 13-week quarters.

Reclassifications

10 unchanged sentences

These estimates are based on historical facts and various other assumptions that we believe are reasonable.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2 - Business Combination

5 unchanged sentences

We will issue up to $ 1.5 billion in restricted stock units to Arm employees after closing.

The $ 2 billion

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

paid upon signing was allocated between advanced consideration for the acquisition of $ 1.36 billion and the prepayment of intellectual property licenses from Arm of $ 0.17 billion and royalties of $ 0.47 billion, both with a 20-year term.

The $ 2 billion paid upon signing was allocated between advanced consideration for the acquisition of $ 1.36 billion and the prepayment of intellectual property licenses from Arm of $ 0.17 billion and royalties of $ 0.47 billion, both with a 20-year term.

The closing of the acquisition is subject to customary closing conditions, including receipt of specified governmental and regulatory consents and approvals and the expiration of any related mandatory waiting period, and Arm's implementation of the reorganization and distribution of Arm’s IoT Services Group and certain other assets and liabilities.

We are engaged with regulators in the United States, the United Kingdom, the European Union, China and other jurisdictions.

We are working through the regulatory process in the United States, the United Kingdom, the European Union, China and other jurisdictions.

Although some Arm licensees have expressed concerns or objected to the transaction, and discussions with regulators are taking longer than initially thought, we are confident in the deal rationale and that regulators should recognize the benefits of the acquisition to Arm, its licensees, and the industry.

If the Purchase Agreement is terminated under certain circumstances, we will be refunded $ 1.25 billion of the Signing Consideration.

The Signing Consideration was allocated on a fair value basis and any refund of the Signing Consideration will use stated values in the Purchase Agreement.

We believe the closing of the acquisition will likely occur in the first quarter of calendar year 2022.

Acquisition of Mellanox Technologies, Ltd.

4 unchanged sentences

The following unaudited pro forma financial information summarizes the combined results of operations for NVIDIA and Mellanox as if the companies were combined as of the beginning of fiscal year 2020:

Three Months Ended

April 26, 2020

Three Months Ended Six Months Ended

July 26, 2020 July 26, 2020

(In millions)

3 unchanged sentences

The unaudited pro forma information presented above is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had the acquisition occurred at the beginning of fiscal year 2020 or of the results of our future operations of the combined businesses.

Note 3 - Leases

Our lease obligations primarily consist of operating leases for our headquarters complex, domestic and international office facilities, and data center space, with lease periods expiring between fiscal years 2022 and 2035.

The pro forma results reflect the inventory step-up expense of $ 161 million in the first half of fiscal year 2020 and was excluded from the pro forma results for the second quarter and first half of fiscal year 2021.

There were no other material nonrecurring adjustments.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Future minimum lease payments under our non-cancelable operating leases as of May 2, 2021, are as follows:

Note 3 - Leases

Future minimum lease payments under our non-cancelable operating leases as of August 1, 2021, are as follows:

Operating Lease Obligations

(In millions)

2022 (excluding first quarter of fiscal year 2022)

2022 (excluding first half of fiscal year 2022)

2027 and thereafter

3 unchanged sentences

Long-term operating lease liabilities $ 716

Operating lease expenses were $ 39 million and $ 31 million for the first quarter of fiscal years 2022 and 2021, respectively.

Short-term and variable lease expenses for the first quarter of fiscal years 2022 and 2021 were not significant.

Operating lease expenses were $ 42 million and $ 35 million for the second quarter of fiscal years 2022 and 2021, respectively, and $ 81 million and $ 67 million for the first half of fiscal years 2022 and 2021, respectively.

Short-term and variable lease expenses for the second quarter and first half of fiscal years 2022 and 2021 were not significant.

Other information related to leases was as follows:

Three Months Ended

May 2, 2021 April 26, 2020

Six Months Ended

August 1, 2021 July 26, 2020

(In millions)

2 unchanged sentences

Operating lease assets obtained in exchange for lease obligations $ 164 $ 138

As of May 2, 2021, our operating leases had a weighted average remaining lease term of 7.5 years and a weighted average discount rate of 2.77 %.

As of August 1, 2021, our operating leases had a weighted average remaining lease term of 7.6 years and a weighted average discount rate of 2.84 %.

As of January 31, 2021, our operating leases had a weighted average remaining lease term of 7.6 years and a weighted average discount rate of 2.87 %.

4 unchanged sentences

Our Condensed Consolidated Statements of Income include stock-based compensation expense, net of amounts allocated to inventory, as follows:

Three Months Ended

2021 April 26,

Three Months Ended Six Months Ended

2021 July 26,

2020 August 1,

2021 July 26,

(In millions)

11 unchanged sentences

Vested restricted stock ( 17 ) $ 62.20

Balances, May 2, 2021 12 $ 279.79

As of May 2, 2021, there was $ 3.32 billion of aggregate unearned stock-based compensation expense, net of forfeitures.

This amount is expected to be recognized over a weighted average period of 2.4 years for RSUs, PSUs, and market-based PSUs, and 1.1 years for ESPP.

Canceled and forfeited ( 1 ) $ 70.78

Balances, August 1, 2021 56 $ 100.01

As of August 1, 2021, there was $ 5.35 billion of aggregate unearned stock-based compensation expense, net of forfeitures.

This amount is expected to be recognized over a weighted average period of 2.7 years for RSUs, PSUs, and market-based PSUs, and 1 year for ESPP.

NVIDIA CORPORATION AND SUBSIDIARIES

2 unchanged sentences

The following is a reconciliation of the denominator of the basic and diluted net income per share computations for the periods presented:

Three Months Ended

May 2, April 26,

Three Months Ended Six Months Ended

August 1, July 26, August 1, July 26,

2021 2020 2021 2020

(In millions, except per share data)

1 unchanged sentence

Basic weighted average shares

2,493 2,464 2,489 2,460

Dilutive impact of outstanding equity awards

Diluted weighted average shares

2,532 2,504 2,529 2,496

Net income per share:

5 unchanged sentences

Note 6 – Income Taxes

We recognized an income tax expense of $ 132 million and $ 64 million for the first quarter of fiscal years 2022 and 2021, respectively.

The income tax expense as a percentage of income before income tax was 6.5 % and 6.6 % for the first quarter of fiscal years 2022 and 2021, respectively.

The slight decrease in our effective tax rate for the first quarter of fiscal year 2022 as compared to the first quarter of fiscal year 2021 was primarily due to a change in the jurisdiction of earnings, partially offset by a decrease in the impact of tax benefits from the U.S.

We recognized an income tax expense of $ 20 million and $ 153 million for the second quarter and first half of fiscal year 2022, respectively, and an income tax benefit of $ 13 million and an income tax expense of $ 52 million for the second quarter and first half of fiscal year 2021, respectively.

The income tax expense as a percentage of income before income tax was 0.9 % and 3.4 % for the second quarter and first half of fiscal year 2022, respectively, and 3.3 % for the first half of fiscal year 2021.

The income tax benefit as a percentage of income before income tax was 2.0 % for the second quarter of fiscal year 2021.

On June 28, 2021, we simplified our corporate structure by repatriating the economic rights of certain non-U.S.

intellectual property to the United States via domestication of a foreign subsidiary, or the Domestication.

The Domestication more closely aligns our corporate structure to our operating structure in accordance with the Organization for Economic Cooperation and Development’s Base Erosion and Profit Shifting conclusions and changes to U.S.

and European tax laws.

The impact of the Domestication, which is regarded as a change in tax status, resulted in a discrete benefit primarily from re-valuing certain deferred tax assets, net of deferred tax liabilities, of $ 252 million in the second quarter of fiscal year 2022.

The increase in our effective tax rate for the second quarter and first half of fiscal year 2022 as compared to the same periods of fiscal year 2021 was primarily due to a decreased impact of tax benefits from stock-based compensation and the U.S.

federal research tax credit, and an increase in the amount of earnings subject to U.S.

tax, partially offset by the discrete benefit of the Domestication.

Our effective tax rate for the first half of fiscal year 2021 was lower than the U.S.

federal statutory rate of 21% due to income earned in jurisdictions that is subject to taxes lower than the U.S.

federal statutory tax rate, tax benefits related to stock-based compensation, and the benefit of the U.S.

federal research tax credit.

Our effective tax rates for the first quarter of fiscal years 2022 and 2021 were lower than the U.S.

federal statutory rate of 21% due to income earned in jurisdictions that are subject to taxes lower than the U.S.

federal statutory tax rate, the benefit of the U.S.

federal research tax credit, and tax benefits related to stock-based compensation.

As of May 2, 2021, we intend to indefinitely reinvest approximately $ 1.3 billion of cumulative undistributed earnings held by Mellanox non-U.S.

subsidiaries.

We have not provided the amount of unrecognized deferred tax liabilities for temporary differences related to investments in Mellanox non-U.S.

subsidiaries as the determination of such amount is not practicable.

For the first quarter of fiscal year 2022, there have been no material changes to our tax years that remain subject to examination by major tax jurisdictions.

Our effective tax rate for the first half of fiscal year 2022 was lower than the U.S.

federal statutory rate of 21% due to the discrete benefit of the Domestication, tax benefits related to the foreign-derived intangible income deduction, income

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

earned in jurisdictions that is subject to taxes lower than the U.S.

federal statutory tax rate, and tax benefits related to the U.S.

federal research tax credit and stock-based compensation.

As of August 1, 2021, we intend to indefinitely reinvest approximately $ 1.6 billion and $ 231 million of cumulative undistributed earnings held by certain subsidiaries in Israel and the United Kingdom, respectively.

We have not provided the amount of unrecognized deferred tax liabilities for temporary differences related to these investments as the determination of such amount is not practicable.

For the first half of fiscal year 2022, there have been no material changes to our tax years that remain subject to examination by major tax jurisdictions.

We are currently under examination by the Internal Revenue Service for our fiscal years 2018 and 2019.

2 unchanged sentences

Accordingly, our provisions on federal, state and foreign tax related matters to be recorded in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved with the respective tax authorities.

As of May 2, 2021, we do not believe that our estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next 12 months.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of August 1, 2021, we do not believe that our estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next 12 months.

Note 7 - Cash Equivalents and Marketable Securities

Our cash equivalents and marketable securities related to debt securities are classified as “available-for-sale” debt securities.

The following is a summary of cash equivalents and marketable securities as of May 2, 2021 and January 31, 2021:

The following is a summary of cash equivalents and marketable securities as of August 1, 2021 and January 31, 2021:

August 1, 2021

Cost Unrealized

5 unchanged sentences

Corporate debt securities $ 8,610 $ 2 $ ( 1 ) $ 8,611 $ 1,825 $ 6,786

Debt securities issued by United States government agencies 3,045 1 — 3,046 — 3,046

Debt securities issued by the United States Treasury 5,079 1 — 5,080 1,311 3,769

Certificates of deposit 884 — — 884 48 836

Debt securities issued by United States government agencies 2,371 1 — 2,372 60 2,312

Money market funds 2,097 — — 2,097 2,097 —

Certificates of deposit 962 — — 962 44 918

Foreign government bonds 241 — — 241 — 241

15 unchanged sentences

Net realized gains and unrealized gains and losses were not significant for all periods presented.

The amortized cost and estimated fair value of cash equivalents and marketable securities as of May 2, 2021 and January 31, 2021 are shown below by contractual maturity.

May 2, 2021 January 31, 2021

The amortized cost and estimated fair value of cash equivalents and marketable securities as of August 1, 2021 and January 31, 2021 are shown below by contractual maturity.

August 1, 2021 January 31, 2021

Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value

3 unchanged sentences

Total $ 19,360 $ 19,363 $ 11,348 $ 11,351

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8 – Fair Value of Financial Assets and Liabilities

1 unchanged sentence

We review fair value hierarchy classification on a quarterly basis.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value at

Pricing Category May 2, 2021 January 31, 2021

Pricing Category August 1, 2021 January 31, 2021

(In millions)

2 unchanged sentences

Corporate debt securities Level 2 $ 8,611 $ 4,444

Debt securities issued by United States government agencies Level 2 $ 3,046 $ 2,976

Debt securities issued by the United States Treasury Level 2 $ 5,080 $ 2,846

Debt securities issued by United States government agencies Level 2 $ 2,372 $ 2,976

Certificates of deposit Level 2 $ 962 $ 705

4 unchanged sentences

Investment in non-affiliated entities (2) Level 3 $ 147 $ 144

Liabilities (3)

2.20 % Notes Due 2021

10 unchanged sentences

Level 2 $ 1,640 $ 1,654

(1) The balance as of May 2, 2021 includes an investment that was reclassified from privately-held equity securities following the commencement of public market trading of the issuer in the first quarter of fiscal year 2022.

As of May 2, 2021, the investment is subject to short-term selling restrictions.

Due to the public market trading of the issuer, an unrealized gain on the investment of $ 124 million was recorded in other income (expense), net in the first quarter of fiscal year 2022.

The net cumulative unrealized gain on the investment was $ 130 million as of May 2, 2021.

2.00 % Notes Due 2031

Level 2 $ 1,271 $ —

3.50 % Notes Due 2040

Level 2 $ 1,152 $ 1,152

3.50 % Notes Due 2050

Level 2 $ 2,320 $ 2,308

3.70 % Notes Due 2060

Level 2 $ 603 $ 602

(1) Investment in a publicly-traded equity security subject to short-term selling restrictions.

An unrealized loss on the investment of $ 6 million was recorded in other income (expense), net in the second quarter of fiscal year 2022 and an unrealized gain of $ 118 million was recorded in other income (expense), net in the first half of fiscal year 2022.

(2) Investment in private non-affiliated entities is recorded at fair value on a non-recurring basis only if an impairment or observable price adjustment occurs in the period with changes in fair value recorded through net income.

The amount recorded as of May 2, 2021 has not been significant.

The amount recorded as of August 1, 2021 has not been significant.

(3) These liabilities are carried on our Consolidated Balance Sheets at their original issuance value, net of unamortized debt discount and issuance costs, and are not marked to fair value each period.

4 unchanged sentences

The components of our amortizable intangible assets are as follows:

May 2, 2021 January 31, 2021

August 1, 2021 January 31, 2021

Amount Accumulated

6 unchanged sentences

Total intangible assets $ 3,986 $ ( 1,508 ) $ 2,478 $ 3,986 $ ( 1,249 ) $ 2,737

(1) As of May 2, 2021, acquisition-related intangible assets include the fair value of a Mellanox in-process research and development, or IPR&D, project of $ 630 million, which has not yet commenced amortization.

Once the project reaches technological feasibility, we will begin to amortize the intangible asset over its estimated useful life.

Amortization expense associated with intangible assets was $ 137 million and $ 7 million for the first quarter of fiscal years 2022 and 2021, respectively.

Future amortization expense related to the net carrying amount of intangible assets, excluding IPR&D, as of May 2, 2021 is estimated to be $ 412 million for the remainder of fiscal year 2022, $ 546 million in fiscal year 2023, $ 424 million in fiscal year 2024, $ 370 million in fiscal year 2025, $ 99 million in fiscal year 2026, and $ 132 million in fiscal year 2027 and thereafter.

There were no changes to the carrying amount of goodwill during the first quarter of fiscal year 2022.

(1) As of August 1, 2021, acquisition-related intangible assets include the fair value of a Mellanox in-process research and development, or IPR&D, project of $ 630 million, which has not yet commenced amortization.

Amortization expense associated with intangible assets was $ 138 million and $ 275 million for the second quarter and first half of fiscal year 2022, respectively, and $ 284 million and $ 291 million for the second quarter and first half of fiscal year 2021, respectively.

Future amortization expense related to the net carrying amount of intangible assets, excluding IPR&D, as of August 1, 2021 is estimated to be $ 275 million for the remainder of fiscal year 2022, $ 547 million in fiscal year 2023, $ 424 million in fiscal year 2024, $ 371 million in fiscal year 2025, $ 99 million in fiscal year 2026, and $ 132 million in fiscal year 2027 and thereafter.

There were no changes to the carrying amount of goodwill during the second quarter and first half of fiscal year 2022.

Note 10 - Balance Sheet Components

Certain balance sheet components are as follows:

May 2, January 31,

August 1, January 31,

(In millions)

3 unchanged sentences

Total inventories $ 2,114 $ 1,826

May 2, January 31,

August 1, January 31,

Prepaid expenses and other current assets:

3 unchanged sentences

Total prepaid expenses and other current assets $ 452 $ 239

As of May 2, 2021, the investment is subject to short-term selling restrictions.

Due to the public market trading of the issuer, an unrealized gain on the investment of $ 124 million was recorded in other income (expense), net in the first quarter of fiscal year 2022.

The net cumulative unrealized gain on the investment was $ 130 million as of May 2, 2021.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

May 2, January 31,

August 1, January 31,

Other assets:

5 unchanged sentences

Total other assets $ 2,050 $ 2,144

May 2, January 31,

August 1, January 31,

Accrued and Other Current Liabilities:

1 unchanged sentence

Customer program accruals $ 745 $ 630

Deferred revenue (1) 333 288

Accrued payroll and related expenses 387 297

Deferred revenue (1) 301 288

Operating leases 132 121

Licenses and royalties 102 128

Coupon interest on debt obligations 81 74

Taxes payable 64 61

1 unchanged sentence

Professional service fees 32 26

Coupon interest on debt obligations 19 74

Total accrued and other current liabilities $ 1,974 $ 1,725

(1) Deferred revenue primarily includes customer advances and deferrals related to license and development arrangements and post-contract customer support, or PCS.

May 2, January 31,

August 1, January 31,

Other Long-Term Liabilities:

3 unchanged sentences

Deferred revenue (2) 189 163

Licenses payable 59 56

Employee benefits 37 33

Licenses payable 33 56

Total other long-term liabilities $ 1,396 $ 1,375

(1) As of May 2, 2021, income tax payable represents the long-term portion of the one-time transition tax payable of $ 284 million, unrecognized tax benefits of $ 374 million, related interest and penalties of $ 48 million, and other foreign long-term tax payable of $ 158 million.

(1) As of August 1, 2021, income tax payable represents the long-term portion of the one-time transition tax payable of $ 251 million, unrecognized tax benefits of $ 435 million, related interest and penalties of $ 52 million, and other foreign long-term tax payable of $ 159 million.

(2) Deferred revenue primarily includes deferrals related to PCS.

2 unchanged sentences

Deferred Revenue

The following table shows the changes in deferred revenue during the first quarter of fiscal years 2022 and 2021:

May 2, April 26,

The following table shows the changes in deferred revenue during the first half of fiscal years 2022 and 2021:

August 1, July 26,

(In millions)

1 unchanged sentence

Deferred revenue added during the period 401 213

Addition due to business combinations — 75

Revenue recognized during the period ( 362 ) ( 147 )

2 unchanged sentences

This includes related deferred revenue currently recorded and amounts that will be invoiced in future periods.

As of May 2, 2021, the amount of our remaining performance obligations that has not been recognized as revenue was $ 680 million, of which we expect to recognize approximately 48 % as revenue over the next 12 months and the remainder thereafter.

As of August 1, 2021, the amount of our remaining performance obligations that has not been recognized as revenue was $ 646 million, of which we expect to recognize approximately 50 % as revenue over the next 12 months and the remainder thereafter.

This amount excludes the value of remaining performance obligations for contracts with an original expected length of one year or less.

3 unchanged sentences

Gains or losses on the contracts are recorded in accumulated other comprehensive income or loss and reclassified to operating expense when the related operating expenses are recognized in earnings or ineffectiveness should occur.

The fair value of the contracts was not significant as of May 2, 2021 and January 31, 2021.

The fair value of the contracts was not significant as of August 1, 2021 and January 31, 2021.

We also enter into foreign currency forward contracts to mitigate the impact of foreign currency movements on monetary assets and liabilities that are denominated in currencies other than the U.S.

1 unchanged sentence

Therefore, the change in fair value of these contracts is recorded in other income or expense and offsets the change in fair value of the hedged foreign currency denominated monetary assets and liabilities, which is also recorded in other income or expense.

The table below presents the notional value of our foreign currency forward contracts outstanding as of May 2, 2021 and January 31, 2021:

The table below presents the notional value of our foreign currency forward contracts outstanding as of August 1, 2021 and January 31, 2021:

2021 January 31,

2 unchanged sentences

Not designated for hedge accounting $ 423 $ 441

As of May 2, 2021, all designated foreign currency forward contracts mature within 18 months.

As of August 1, 2021, all designated foreign currency forward contracts mature within 18 months.

The expected realized gains and losses deferred into accumulated other comprehensive income or loss related to foreign currency forward contracts within the next 12 months was not significant.

During the first quarter of fiscal years 2022 and 2021, the impact of derivative financial instruments designated for hedge accounting treatment on other comprehensive income or loss was not significant and all such instruments were determined to be highly effective.

During the first half of fiscal years 2022 and 2021, the impact of derivative financial instruments designated for hedge accounting treatment on other comprehensive income or loss was not significant and all such instruments were determined to be highly effective.

Therefore, there were no gains or losses associated with ineffectiveness.

3 unchanged sentences

Long-Term Debt

In June 2021, we issued $ 1.25 billion of the 0.309 % Notes Due 2023, $ 1.25 billion of the 0.584 % Notes Due 2024, $ 1.25 billion of the 1.55 % Notes Due 2028, and $ 1.25 billion of the 2.00 % Notes Due 2031, or collectively, the June 2021 Notes.

Interest on the 0.584 % Notes Due 2024 is payable on June 14 and December 14 of each year, beginning on December 14, 2021.

Interest on all other series of the June 2021 Notes is payable on June 15 and December 15 of each year, beginning on December 15, 2021.

We may redeem the June 2021 Notes for cash prior to maturity, upon at least 10 but no more than 60 days prior notice, at redemption prices that include accrued and unpaid interest and a make-whole premium.

However, no make-whole premium will be paid for redemptions of the Notes Due 2023 on or after June 15, 2022, the Notes Due 2024 on or after June 14, 2023, the Notes Due 2028 on or after April 15, 2028, or the Notes Due 2031 on or after March 15, 2031.

The net proceeds from the June 2021 Notes were $ 4.98 billion, after deducting debt discount and issuance costs.

In March 2020, we issued $ 1.50 billion of the 2.85 % Notes Due 2030, $ 1.00 billion of the 3.50 % Notes Due 2040, $ 2.00 billion of the 3.50 % Notes Due 2050, and $ 500 million of the 3.70 % Notes Due 2060, or collectively, the March 2020 Notes.

2 unchanged sentences

Interest on the September 2016 Notes is payable on March 16 and September 16 of each year.

Both the September 2016 Notes and the March 2020 Notes, or collectively, the Notes, are our unsecured senior obligations and rank equally in right of payment with all existing and future unsecured and unsubordinated indebtedness.

On August 16, 2021, we repaid the $ 1.00 billion of 2.20 % Notes Due 2021.

The September 2016 Notes, the March 2020 Notes, and the June 2021 Notes, or collectively, the Notes, are our unsecured senior obligations and rank equally in right of payment with all existing and future unsecured and unsubordinated indebtedness.

The Notes are structurally subordinated to the liabilities of our subsidiaries and are effectively subordinated to any secured indebtedness to the extent of the value of the assets securing such indebtedness.

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Remaining Term (years)

Interest Rate May 2, 2021 January 31, 2021

Interest Rate August 1, 2021 January 31, 2021

(In millions)

11 unchanged sentences

8.7 2.93 % 1,500 1,500

2.00 % Notes Due 2031

9.9 2.09 % 1,250 —

3.50 % Notes Due 2040

18.7 3.54 % 1,000 1,000

3.50 % Notes Due 2050

28.7 3.54 % 2,000 2,000

3.70 % Notes Due 2060

38.7 3.73 % 500 500

Unamortized debt discount and issuance costs ( 57 ) ( 37 )

2 unchanged sentences

Total long-term portion $ 10,943 $ 5,964

As of May 2, 2021, we were in compliance with the required covenants under the Notes.

As of August 1, 2021, we were in compliance with the required covenants under the Notes.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Credit Facilities

We have a Credit Agreement under which we may borrow up to $ 575 million for general corporate purposes and can obtain revolving loan commitments up to $ 425 million.

As of May 2, 2021, we had no t borrowed any amounts and were in compliance with the required covenants under this agreement.

As of August 1, 2021, we had no t borrowed any amounts and were in compliance with the required covenants under this agreement.

The Credit Agreement expires October 2021.

We have a $ 575 million commercial paper program to support general corporate purposes.

As of May 2, 2021, we had no t issued any commercial paper.

As of August 1, 2021, we had no t issued any commercial paper.

Note 13 - Commitments and Contingencies

Purchase Obligations

As of May 2, 2021, we had outstanding inventory purchase obligations totaling $ 3.46 billion which are expected to occur over the next 12 months, and other purchase obligations totaling $ 396 million, which are primarily expected to occur over the next 18 months.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of August 1, 2021, we had outstanding inventory purchase and long-term supply commitment obligations totaling $ 4.79 billion, of which $ 4.59 billion is expected to occur over the next 12 months and the remaining balance over 36 months.

Other purchase obligations totaling $ 565 million are primarily expected to occur over the next 18 months.

Accrual for Product Warranty Liabilities

The estimated amount of product warranty liabilities was $ 30 million and $ 22 million as of May 2, 2021 and January 31, 2021, respectively, and the activities related to the warranty liabilities were not significant.

In connection with certain agreements that we have entered in the past, we have provided indemnities to cover the indemnified party for matters such as tax, product, and employee liabilities.

The estimated amount of product warranty liabilities was $ 31 million and $ 22 million as of August 1, 2021 and January 31, 2021, respectively, and the activities related to the warranty liabilities were not significant.

In connection with certain agreements that we have entered in the past, we have provided indemnities for matters such as tax, product, and employee liabilities.

We have included intellectual property indemnification provisions in our technology related agreements with third parties.

7 unchanged sentences

On March 2, 2021, the district court granted NVIDIA’s motion to dismiss the complaint without leave to amend, entered judgment in favor of NVIDIA and closed the case.

On March 30, 2021, plaintiffs filed a notice of appeal from judgment in the United States Court of Appeals for the Ninth Circuit, case number 21-15604.

On August 11, 2021, plaintiffs filed an appeal from judgment in the United States Court of Appeals for the Ninth Circuit, case number 21-15604.

The putative derivative lawsuit pending in the United States District Court for the Northern District of California, captioned 4:19-cv-00341-HSG, initially filed January 18, 2019 and titled In re NVIDIA Corporation Consolidated Derivative Litigation, remains stayed pending resolution of the plaintiffs’ appeal in the In Re NVIDIA Corporation Securities Litigation action.

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1:19-cv-01798- UNA), remain stayed pending resolution of the plaintiffs’ appeal in the In Re NVIDIA Corporation Securities Litigation action.

The lawsuits assert claims for breach of fiduciary duty, unjust enrichment, insider trading, misappropriation of information, corporate waste and violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act based on the dissemination of allegedly false, and misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

cryptocurrency mining on GPU demand.

The plaintiffs seek unspecified damages and other relief, including disgorgement of profits from the sale of NVIDIA stock and unspecified corporate governance measures.

It is possible that additional suits will be filed, or allegations received from shareholders, with respect to these same or other matters, naming NVIDIA and/or its officers and directors as defendants.

Accounting for Loss Contingencies

As of May 2, 2021, we have not recorded any accrual for contingent liabilities associated with the legal proceedings described above based on our belief that liabilities, while possible, are not probable.

As of August 1, 2021, we have not recorded any accrual for contingent liabilities associated with the legal proceedings described above based on our belief that liabilities, while possible, are not probable.

Further, except as specifically described above, any possible loss or range of loss in these matters cannot be reasonably estimated at this time.

We are engaged in legal actions not described above arising in the ordinary course of business and, while there can be no assurance of favorable outcomes, we believe that the ultimate outcome of these actions will not have a material adverse effect on our operating results, liquidity or financial position.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 14 - Shareholders’ Equity

1 unchanged sentence

Beginning August 2004, our Board of Directors authorized us to repurchase our stock.

Through May 2, 2021, we have repurchased an aggregate of 260 million shares under our share repurchase program for a total cost of $ 7.08 billion.

Through August 1, 2021, we have repurchased an aggregate of 1.04 billion shares under our share repurchase program for a total cost of $ 7.08 billion.

All shares delivered from these repurchases have been placed into treasury stock.

As of May 2, 2021, we were authorized, subject to certain specifications, to repurchase additional shares of our common stock up to $ 7.24 billion through December 2022.

During the first quarter of fiscal year 2022, we paid $ 99 million in cash dividends to our shareholders.

As of August 1, 2021, we were authorized, subject to certain specifications, to repurchase additional shares of our common stock up to $ 7.24 billion through December 2022.

During the second quarter and first half of fiscal year 2022, we paid $ 100 million and $ 198 million in cash dividends to our shareholders, respectively.

Note 15 - Segment Information

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The expenses include stock-based compensation expense, corporate infrastructure and support costs, acquisition-related costs, IP-related costs, and other non-recurring charges and benefits that our CODM deems to be enterprise in nature.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our CODM does not review any information regarding total assets on a reportable segment basis.

6 unchanged sentences

(In millions)

Three Months Ended May 2, 2021

Three Months Ended August 1, 2021

Revenue $ 3,907 $ 2,600 $ — $ 6,507

Operating income (loss) $ 2,127 $ 1,034 $ ( 717 ) $ 2,444

Three Months Ended April 26, 2020

Three Months Ended July 26, 2020

Revenue $ 2,085 $ 1,781 $ — $ 3,866

Operating income (loss) $ 911 $ 691 $ ( 951 ) $ 651

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended

2021 April 26,

Six Months Ended August 1, 2021

Revenue $ 7,358 $ 4,810 $ — $ 12,168

Operating income (loss) $ 3,913 $ 1,895 $ ( 1,408 ) $ 4,400

Six Months Ended July 26, 2020

Revenue $ 3,991 $ 2,955 $ — $ 6,946

Operating income (loss) $ 1,747 $ 1,142 $ ( 1,262 ) $ 1,627

Three Months Ended Six Months Ended

2021 July 26,

2020 August 1,

2021 July 26,

(In millions)

5 unchanged sentences

Total $ ( 717 ) $ ( 951 ) $ ( 1,408 ) $ ( 1,262 )

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 the invoicing address by geographic regions:

Three Months Ended

May 2, April 26,

Three Months Ended Six Months Ended

August 1, July 26, August 1, July 26,

2021 2020 2021 2020

(In millions)

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The following table summarizes information pertaining to our revenue by each of the specialized markets we serve:

Three Months Ended

May 2, April 26,

Three Months Ended Six Months Ended

August 1, July 26, August 1, July 26,

2021 2020 2021 2020

(In millions)

5 unchanged sentences

Total revenue $ 6,507 $ 3,866 $ 12,168 $ 6,946

No customer represented 10% or more of total revenue for the first quarter of fiscal years 2022 or 2021.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

One customer represented 13 % and 16 % of our accounts receivable balance as of May 2, 2021 and January 31, 2021, respectively.

Note 16 – Subsequent Event

On May 21, 2021, our Board of Directors declared a four -for-one split of our common stock in the form of a stock dividend, conditioned on obtaining stockholder approval at our 2021 Annual Meeting of Stockholders to be held on June 3, 2021, of an amendment to our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 2 billion to 4 billion.

The following table reflects basic and diluted weighted average shares and net income per share on an unaudited pro forma basis giving effect to the four-for-one stock split as if it had been effective for all periods presented:

Pro Forma (Unaudited)

Three Months Ended Twelve Months Ended

May 2, April 26, January 31, January 26, January 27,

2021 2020 2021 2020 2019

(In millions, except per share data)

$ 1,912 $ 917 $ 4,332 $ 2,796 $ 4,141

Basic weighted average shares 2,484 2,456 2,468 2,436 2,432

Dilutive impact of outstanding equity awards 44 32 44 36 68

Diluted weighted average shares

2,528 2,488 2,512 2,472 2,500

Net income per share:

$ 0.77 $ 0.37 $ 1.76 $ 1.15 $ 1.70

$ 0.76 $ 0.37 $ 1.72 $ 1.13 $ 1.66

(1) Calculated as net income divided by basic weighted average shares.

(2) Calculated as net income divided by diluted weighted average shares.

No customer represented 10% or more of total revenue for the second quarter and first half of fiscal years 2022 or 2021.

One customer represented 13 % and 16 % of our accounts receivable balance as of August 1, 2021 and January 31, 2021, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements