What changed in this filing

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Item 1. Financial Statements

2021-11-22 compared with 2021-08-20 · 158 added, 157 removed, 538 unchanged (37% of the section changed)

3 unchanged sentences

(In millions, except per share data)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 31, October 25, October 31, October 25,

2021 2020 2021 2020

13 unchanged sentences

Income before income tax 2,638 1,348 7,076 2,939

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

Income tax expense 174 12 327 64

Net income $ 2,464 $ 1,336 $ 6,749 $ 2,875

9 unchanged sentences

(In millions)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 31, October 25, October 31, October 25,

2021 2020 2021 2020

15 unchanged sentences

(In millions)

August 1, January 31,

October 31, January 31,

Current assets:

35 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND OCTOBER 25, 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, May 2, 2021 2,491 $ 3 $ 9,278 $ ( 11,242 ) $ 14 $ 20,721 $ 18,774

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

Net income — — — — — 2,464 2,464

Other comprehensive loss — — — — ( 6 ) — ( 6 )

Other comprehensive income — — — — 1 — 1

Issuance of common stock from stock plans 8 — 150 — — — 150

2 unchanged sentences

— — — — — ( 100 ) ( 100 )

Fair value of partially vested equity awards assumed in connection with acquisitions — — 18 — — — 18

Stock-based compensation — — 552 — — — 552

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

Balances, October 31, 2021 2,502 $ 3 $ 10,465 $ ( 12,038 ) $ 9 $ 25,359 $ 23,798

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

Net income — — — — — 1,336 1,336

4 unchanged sentences

— — — — — ( 99 ) ( 99 )

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

Stock-based compensation — — 377 — — — 377

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

Balances, October 25, 2020 2,475 $ 3 $ 8,299 $ ( 10,530 ) $ 12 $ 17,550 $ 15,334

See accompanying Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

FOR THE NINE MONTHS ENDED OCTOBER 31, 2021 AND OCTOBER 25, 2020

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

7 unchanged sentences

— — — — — ( 298 ) ( 298 )

Fair value of partially vested equity awards assumed in connection with acquisitions — — 18 — — — 18

Stock-based compensation — — 1,451 — — — 1,451

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

Balances, October 31, 2021 2,502 $ 3 $ 10,465 $ ( 12,038 ) $ 9 $ 25,359 $ 23,798

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

7 unchanged sentences

Stock-based compensation — — 980 — — — 980

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

Balances, October 25, 2020 2,475 $ 3 $ 8,299 $ ( 10,530 ) $ 12 $ 17,550 $ 15,334

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(In millions)

Six Months Ended

August 1, July 26,

Nine Months Ended

October 31, October 25,

Cash flows from operating activities:

19 unchanged sentences

Purchases related to property and equipment and intangible assets ( 703 ) ( 845 )

Investments and other, net 3 ( 7 )

Acquisitions, net of cash acquired ( 203 ) ( 8,524 )

Investments and other, net ( 14 ) ( 4 )

Net cash used in investing activities ( 8,244 ) ( 16,546 )

3 unchanged sentences

Payments related to tax on restricted stock units ( 1,282 ) ( 716 )

Repayment of debt ( 1,000 ) —

Dividends paid ( 298 ) ( 296 )

24 unchanged sentences

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

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

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

Reclassifications

12 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Adoption of New and Recently Issued Accounting Pronouncement

Recently Adopted Accounting Pronouncement

In October 2021, the Financial Accounting Standards Board issued a new accounting standard to require that an acquirer recognize and measure contract assets and liabilities acquired in a business combination in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers .

We early adopted this accounting standard in the third quarter of fiscal year 2022 and the impact was immaterial.

Note 2 - Business Combination

Pending Acquisition of Arm Limited

On September 13, 2020, we entered into a Share Purchase Agreement, or the Purchase Agreement, with Arm Limited, or Arm, and SoftBank Group Capital Limited and SVF Holdco (UK) Limited, or together, SoftBank, for us to acquire, from SoftBank, all allotted and issued ordinary shares of Arm in a transaction valued at $ 40 billion.

We paid $ 2 billion in cash at signing, or the Signing Consideration, and will pay upon closing of the acquisition $ 10 billion in cash and issue to SoftBank 177.5 million shares of our common stock, which had an aggregate value of $ 21.5 billion as of the date of the Purchase Agreement.

On September 13, 2020, we entered into a Share Purchase Agreement, or the Purchase Agreement, with Arm Limited, or Arm, and SoftBank Group Capital Limited and SVF Holdco (UK) Limited, or together, SoftBank, to acquire, from SoftBank, all allotted and issued ordinary shares of Arm in a transaction valued at $ 40 billion.

The transaction includes a potential earn out, which is contingent on the achievement of certain financial performance targets by Arm during the fiscal year ending March 31, 2022.

If the financial targets are achieved, SoftBank can elect to receive either up to an additional $ 5 billion in cash or up to an additional 41.3 million shares of our common stock.

If the financial targets are achieved, SoftBank can elect to receive either up to an additional $ 5 billion in cash or up to an additional 41.3 million shares of our common stock, which was valued at $ 13.1 billion as of November 18, 2021.

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

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

The Purchase Agreement can be terminated by either party if the transaction has not closed by September 2022, subject to certain qualifications.

If the transaction does not close due to failure to receive regulatory approval, and all other covenants have been met, we will not be refunded $ 1.25 billion of the advanced consideration for the acquisition we paid at signing.

We are seeking regulatory approval in the United States, the United Kingdom, the European Union, China and other jurisdictions.

Regulators at the United States Federal Trade Commission, or the FTC, have expressed concerns regarding the transaction, and we are engaged in discussions with the FTC regarding remedies to address those concerns.

The transaction has been under the review of China’s antitrust authority, pending the formal case initiation.

Regulators in the United Kingdom and the European Union declined to approve the transaction in Phase 1 of their review processes, expressed numerous concerns, began a more in-depth Phase 2 review on the transaction’s impact on competition, and, in the United Kingdom, a Phase 2 review of the impact on the United Kingdom’s national security interests.

Although regulators and some Arm licensees have expressed concerns or objected to the transaction, we continue to believe in the merits and benefits of the acquisition to Arm, its licensees, and the industry.

Acquisition of Mellanox Technologies, Ltd.

2 unchanged sentences

We acquired Mellanox to optimize data center workloads to scale across the entire computing, networking, and storage stack.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental Unaudited Pro Forma Information

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 Six Months Ended

July 26, 2020 July 26, 2020

Three Months Ended Nine Months Ended

October 25, 2020 October 25, 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.

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.

The pro forma results exclude the inventory step-up expense of $ 161 million for the first nine months of fiscal year 2021.

There were no other material nonrecurring adjustments.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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

Future minimum lease payments under our non-cancelable operating leases as of October 31, 2021, are as follows:

Operating Lease Obligations

(In millions)

2022 (excluding first half of fiscal year 2022)

2022 (excluding first nine months of fiscal year 2022)

2027 and thereafter

3 unchanged sentences

Long-term operating lease liabilities $ 743

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.

In addition to our existing operating lease obligations, we have operating leases that are expected to commence between the fourth quarter of fiscal year 2022 and fiscal year 2023 with lease terms of 7 years for $ 132 million.

Operating lease expenses were $ 44 million and $ 37 million for the third quarter of fiscal years 2022 and 2021, respectively, and $ 125 million and $ 104 million for the first nine months of fiscal years 2022 and 2021, respectively.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Other information related to leases was as follows:

Six Months Ended

August 1, 2021 July 26, 2020

Nine Months Ended

October 31, 2021 October 25, 2020

(In millions)

2 unchanged sentences

Operating lease assets obtained in exchange for lease obligations $ 230 $ 147

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 October 31, 2021, our operating leases had a weighted average remaining lease term of 7.3 years and a weighted average discount rate of 2.54 %.

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 %.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4 - Stock-Based Compensation

1 unchanged sentence

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

Three Months Ended Six Months Ended

2021 July 26,

2020 August 1,

2021 July 26,

Three Months Ended Nine Months Ended

2021 October 25,

2020 October 31,

2021 October 25,

(In millions)

12 unchanged sentences

Canceled and forfeited ( 1 ) $ 80.50

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.

Balances, October 31, 2021 52 $ 107.42

As of October 31, 2021, there was $ 5.16 billion of aggregate unearned stock-based compensation expense, net of forfeitures.

This amount is expected to be recognized over a weighted average period of 2.6 years for RSUs, PSUs, and market-based PSUs, and 1 year for ESPP.

3 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 Six Months Ended

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

Three Months Ended Nine Months Ended

October 31, October 25, October 31, October 25,

2021 2020 2021 2020

13 unchanged sentences

Note 6 – Income Taxes

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.

We recognized an income tax expense of $ 174 million and $ 327 million for the third quarter and first nine months of fiscal year 2022, respectively, and an income tax expense of $ 12 million and $ 64 million for the third quarter and first nine months of fiscal year 2021, respectively.

The income tax expense as a percentage of income before income tax was 6.6 % and 4.6 % for the third quarter and first nine months of fiscal year 2022, respectively, and 0.9 % and 2.2 % for the third quarter and first nine months of fiscal year 2021, respectively.

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

3 unchanged sentences

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.

The increase in our effective tax rate for the third quarter and first nine months of fiscal year 2022 as compared to the same periods of fiscal year 2021 was primarily due to an increase in the amount of earnings subject to U.S.

tax, and a decreased impact of tax benefits from stock-based compensation and the U.S.

federal research tax credit, partially offset, for the first nine months, by the discrete benefit of the Domestication.

Our effective tax rate for the first nine months of fiscal year 2021 was 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.

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

federal statutory rate of 21% due to tax benefits from the foreign-derived intangible income deduction, income earned in jurisdictions that are subject to taxes lower than the U.S.

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

federal research tax credit.

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.

As of October 31, 2021, we intend to indefinitely reinvest approximately $ 1.7 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.

For the first nine months 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 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.

As of October 31, 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 August 1, 2021 and January 31, 2021:

August 1, 2021

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

October 31, 2021

Cost Unrealized

7 unchanged sentences

Debt securities issued by United States government agencies 2,861 — — 2,861 307 2,554

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

Certificates of deposit 1,512 — — 1,512 32 1,480

Money market funds 360 — — 360 360 —

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 August 1, 2021 and January 31, 2021 are shown below by contractual maturity.

August 1, 2021 January 31, 2021

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

October 31, 2021 January 31, 2021

Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value

9 unchanged sentences

Fair Value at

Pricing Category August 1, 2021 January 31, 2021

Pricing Category October 31, 2021 January 31, 2021

(In millions)

6 unchanged sentences

Foreign government bonds Level 2 $ 241 $ 67

Prepaid expenses and other current assets:

Other assets (Investment in non-affiliated entities):

Publicly-held equity security (1) Level 1 $ 136 $ —

Other assets:

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

Privately-held equity securities Level 3 $ 172 $ 144

Liabilities (2)

19 unchanged sentences

Level 2 $ 594 $ 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 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.

Refer to Note 12 of the Notes to Condensed Consolidated Financial Statements for additional information .

(1) Unrealized gains of $ 8 million and $ 126 million from an investment in a publicly-traded equity security were recorded in other income (expense), net, in the third quarter and first nine months of fiscal year 2022, respectively.

(2) These liabilities are carried on our Consolidated Balance Sheets at their original issuance value, net of unamortized debt discount and issuance costs.

NVIDIA CORPORATION AND SUBSIDIARIES

2 unchanged sentences

The components of our amortizable intangible assets are as follows:

August 1, 2021 January 31, 2021

October 31, 2021 January 31, 2021

Amount Accumulated

6 unchanged sentences

Total intangible assets $ 4,105 $ ( 1,651 ) $ 2,454 $ 3,986 $ ( 1,249 ) $ 2,737

(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.

(1) As of October 31, 2021, acquisition-related intangible assets include the fair value of a Mellanox in-process research and development project of $ 630 million, which has not yet commenced amortization.

Amortization expense associated with intangible assets was $ 143 million and $ 418 million for the third quarter and first nine months of fiscal year 2022, respectively, and $ 174 million and $ 465 million for the third quarter and first nine months of fiscal year 2021, respectively.

Future amortization expense related to the net carrying amount of intangible assets, excluding in-process research and development, as of October 31, 2021 is estimated to be $ 145 million for the remainder of fiscal year 2022, $ 576 million in fiscal year 2023, $ 453 million in fiscal year 2024, $ 400 million in fiscal year 2025, $ 117 million in fiscal year 2026, and $ 133 million in fiscal year 2027 and thereafter.

In both the third quarter and first nine months of fiscal year 2022, goodwill increased by $ 109 million and intangible assets increased by $ 119 million from acquisitions.

We assigned $ 96 million of the increase in goodwill to our Compute & Networking segment and assigned $ 13 million of the increase to our Graphics segment.

Note 10 - Balance Sheet Components

Certain balance sheet components are as follows:

August 1, January 31,

October 31, January 31,

(In millions)

3 unchanged sentences

Total inventories $ 2,233 $ 1,826

August 1, January 31,

Prepaid expenses and other current assets:

(In millions)

Prepaid expenses $ 195 $ 142

Publicly-held equity security 128 —

Total prepaid expenses and other current assets $ 452 $ 239

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

August 1, January 31,

October 31, January 31,

Other assets:

(In millions)

Prepaid supply agreements $ 1,606 $ —

Advanced consideration for acquisition 1,357 1,357

3 unchanged sentences

Total other assets $ 3,761 $ 2,144

August 1, January 31,

October 31, January 31,

Accrued and Other Current Liabilities:

1 unchanged sentence

Customer program accruals $ 857 $ 630

Accrued payroll and related expenses 387 297

Deferred revenue (1) 298 288

Accrued payroll and related expenses 295 297

Operating leases 140 121

Licenses and royalties 108 128

Product warranty and return provisions 45 39

Coupon interest on debt obligations 37 74

Taxes payable 36 61

Product warranty and return provisions 45 39

Professional service fees 30 26

1 unchanged sentence

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

August 1, January 31,

October 31, January 31,

Other Long-Term Liabilities:

6 unchanged sentences

Total other long-term liabilities $ 1,535 $ 1,375

(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.

(1) As of October 31, 2021, income tax payable represents the long-term portion of the one-time transition tax payable of $ 251 million, unrecognized tax benefits of $ 578 million, related interest and penalties of $ 60 million, and other foreign long-term tax payable of $ 162 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 half of fiscal years 2022 and 2021:

August 1, July 26,

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

October 31, October 25,

(In millions)

4 unchanged sentences

Balance at end of period $ 489 $ 382

Revenue related to remaining performance obligations represents the remaining contracted license, development arrangements and PCS that has not been recognized.

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

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.

Revenue related to remaining performance obligations represents the contracted license, development arrangements and PCS that has not been recognized.

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

As of October 31, 2021, $ 620 million of revenue related to performance obligations had not been recognized, of which we expect to recognize approximately 49 % over the next 12 months and the remainder thereafter.

This excludes revenue related to performance obligations for contracts with a length of one year or less.

Note 11 - Derivative Financial Instruments

2 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 August 1, 2021 and January 31, 2021.

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

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

2021 January 31,

2 unchanged sentences

Not designated for hedge accounting $ 430 $ 441

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

As of October 31, 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 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.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the first nine months 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.

Note 12 - Debt

1 unchanged sentence

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

We may redeem the June 2021 Notes for cash prior to maturity.

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.

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Interest on the March 2020 Notes is payable on April 1 and October 1 of each year.

In September 2016, we issued $ 1.00 billion of the 2.20 % Notes Due 2021 and $ 1.00 billion of the 3.20 % Notes Due 2026, or collectively, the September 2016 Notes.

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

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.

Interest on the $ 1.00 billion of the 3.20 % Notes Due 2026, or September 2016 Notes, is payable on March 16 and September 16 of each year.

The September 2016 Notes, the March 2020 Notes, and the June 2021 Notes, or collectively, the Notes, are our unsecured senior obligations.

All existing and future liabilities of our subsidiaries will be effectively senior to the Notes.

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Remaining Term (years)

Interest Rate August 1, 2021 January 31, 2021

Interest Rate October 31, 2021 January 31, 2021

(In millions)

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Total long-term portion $ 10,944 $ 5,964

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 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.

As of October 31, 2021, we were in compliance with the required covenants under the Notes.

Commercial Paper

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

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

As of October 31, 2021, we had no t issued any commercial paper.

Note 13 - Commitments and Contingencies

Purchase Obligations

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.

Our purchase obligations primarily include our commitments to purchase components used to manufacture our products, including long-term supply agreements, certain software and technology licenses, other goods and services and long-lived assets.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We recently entered into several long-term supply agreements, under which we have made advance payments and have $ 1.79 billion remaining unpaid.

As of October 31, 2021, we had outstanding inventory purchase and long-term supply obligations totaling $ 6.90 billion, inclusive of the $ 1.79 billion, and other purchase obligations totaling $ 935 million.

Total future unconditional purchase commitments as of October 31, 2021, are as follows:

(In millions)

2022 (excluding first nine months of fiscal year 2022)

Total $ 7,833

Accrual for Product Warranty 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.

The estimated amount of product warranty liabilities was $ 32 million and $ 22 million as of October 31, 2021 and January 31, 2021, respectively, and the activities 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.

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1:19-cv-01795-UNA) and Nelson v.

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

cryptocurrency mining on GPU demand.

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

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

Accounting for Loss Contingencies

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.

As of October 31, 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.

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

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.

Through October 31, 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 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.

As of October 31, 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 third quarter and first nine months of fiscal year 2022, we paid $ 100 million and $ 298 million in cash dividends to our shareholders, respectively.

During the third quarter and first nine months of fiscal year 2021, we paid $ 99 million and $ 296 million in cash dividends to our shareholders, respectively.

Note 15 - Segment Information

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Our Compute & Networking segment includes Data Center platforms and systems for artificial intelligence, or AI, high performance computing, or HPC, and accelerated computing;

Mellanox networking and interconnect solutions;

networking and interconnect solutions;

automotive AI Cockpit, autonomous driving development agreements, and autonomous vehicle solutions;

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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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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There is no intersegment revenue.

The accounting policies for segment reporting are the same as for our consolidated financial statements.

The accounting policies for segment reporting are the

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

same as for our consolidated financial statements.

The table below presents details of our reportable segments and the “All Other” category.

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(In millions)

Three Months Ended August 1, 2021

Three Months Ended October 31, 2021

Revenue $ 4,092 $ 3,011 $ — $ 7,103

Operating income (loss) $ 2,160 $ 1,332 $ ( 821 ) $ 2,671

Three Months Ended July 26, 2020

Three Months Ended October 25, 2020

Revenue $ 2,787 $ 1,939 $ — $ 4,726

Operating income (loss) $ 1,345 $ 738 $ ( 685 ) $ 1,398

Six Months Ended August 1, 2021

Nine Months Ended October 31, 2021

Revenue $ 11,450 $ 7,821 $ — $ 19,271

Operating income (loss) $ 6,073 $ 3,227 $ ( 2,229 ) $ 7,071

Six Months Ended July 26, 2020

Nine Months Ended October 25, 2020

Revenue $ 6,778 $ 4,894 $ — $ 11,672

Operating income (loss) $ 3,092 $ 1,880 $ ( 1,947 ) $ 3,025

Three Months Ended Six Months Ended

2021 July 26,

2020 August 1,

2021 July 26,

Three Months Ended Nine Months Ended

2021 October 25,

2020 October 31,

2021 October 25,

(In millions)

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The following table summarizes information pertaining to our revenue from customers based on the invoicing address by geographic regions:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 31, October 25, October 31, October 25,

2021 2020 2021 2020

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 31, October 25, October 31, October 25,

2021 2020 2021 2020

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Total revenue $ 7,103 $ 4,726 $ 19,271 $ 11,672

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.

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

One customer represented 14 % and 16 % of our accounts receivable balance as of October 31, 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