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Item 1. Financial Statements

2022-08-31 compared with 2022-05-27 · 185 added, 113 removed, 483 unchanged (38% of the section changed)

3 unchanged sentences

(In millions, except per share data)

Three Months Ended

May 1, May 2,

Three Months Ended Six Months Ended

July 31, August 1, July 31, August 1,

2022 2021 2022 2021

Revenue $ 6,704 $ 6,507 $ 14,992 $ 12,168

11 unchanged sentences

Other income (expense), net

( 24 ) ( 50 ) ( 87 ) 38

Income before income tax 475 2,394 2,280 4,438

Income tax expense 187 132

Income tax expense (benefit) ( 181 ) 20 6 153

Net income $ 656 $ 2,374 $ 2,274 $ 4,285

9 unchanged sentences

(In millions)

Three Months Ended

May 1, May 2,

Three Months Ended Six Months Ended

July 31, August 1, July 31, August 1,

2022 2021 2022 2021

Net income $ 656 $ 2,374 $ 2,274 $ 4,285

2 unchanged sentences

Net change in unrealized loss ( 12 ) — ( 35 ) ( 1 )

Reclassification adjustments for net realized gain included in net income 1 — 1 —

Net change in unrealized loss ( 11 ) — ( 34 ) ( 1 )

Cash flow hedges:

8 unchanged sentences

(In millions)

May 1, January 30,

July 31, January 30,

Current assets:

16 unchanged sentences

Accrued and other current liabilities 3,903 2,552

Short-term debt 1,249 —

Total current liabilities 7,573 4,335

15 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MAY 1, 2022 AND MAY 2, 2021

FOR THE THREE MONTHS ENDED JULY 31, 2022 AND AUGUST 1, 2021

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 30, 2022 2,506 $ 3 $ 10,385 $ — $ ( 11 ) $ 16,235 $ 26,612

Balances, May 1, 2022 2,504 $ 3 $ 10,623 $ — $ ( 64 ) $ 15,758 $ 26,320

Net income — — — — — 656 656

2 unchanged sentences

Tax withholding related to vesting of restricted stock units ( 2 ) — ( 299 ) — — — ( 299 )

Share repurchase ( 9 ) — ( 1 ) — — ( 1,995 ) ( 1,996 )

Shares repurchased ( 19 ) ( 1 ) ( 1 ) — — ( 3,343 ) ( 3,345 )

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

1 unchanged sentence

Stock-based compensation — — 644 — — — 644

Balances, July 31, 2022 2,489 $ 2 $ 10,968 $ — $ ( 90 ) $ 12,971 $ 23,851

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

Net income — — — — — 2,374 2,374

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

Issuance of common stock from stock plans 7 — 2 — — — 2

Tax withholding related to vesting of restricted stock units ( 2 ) — — ( 362 ) — — ( 362 )

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

— — — — — ( 100 ) ( 100 )

Stock-based compensation — — 465 — — — 465

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

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JULY 31, 2022 AND AUGUST 1, 2021

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 30, 2022 2,506 $ 3 $ 10,385 $ — $ ( 11 ) $ 16,235 $ 26,612

3 unchanged sentences

Tax withholding related to vesting of restricted stock units ( 4 ) — ( 837 ) — — — ( 837 )

Shares repurchased ( 28 ) ( 1 ) ( 2 ) — — ( 5,338 ) ( 5,341 )

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

1 unchanged sentence

Stock-based compensation — — 1,217 — — — 1,217

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

Balances, July 31, 2022 2,489 $ 2 $ 10,968 $ — $ ( 90 ) $ 12,971 $ 23,851

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

Net income — — — — — 4,285 4,285

Other comprehensive loss — — — — ( 11 ) — ( 11 )

Issuance of common stock from stock plans 22 — 128 — — — 128

Tax withholding related to vesting of restricted stock units ( 5 ) — — ( 848 ) — — ( 848 )

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

— — — — — ( 198 ) ( 198 )

Stock-based compensation — — 898 — — — 898

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

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(In millions)

Three Months Ended

May 1, May 2,

Six Months Ended

July 31, August 1,

Cash flows from operating activities:

6 unchanged sentences

Deferred income taxes ( 985 ) ( 161 )

Other 23 ( 3 )

Changes in operating assets and liabilities, net of acquisitions:

15 unchanged sentences

Cash flows from financing activities:

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

Proceeds related to employee stock plans 205 128

4 unchanged sentences

Other 1 ( 2 )

Net cash used in financing activities ( 2,446 ) ( 471 )

Net cash provided by (used in) financing activities ( 6,208 ) 4,030

Change in cash and cash equivalents 1,023 4,781

1 unchanged sentence

Cash and cash equivalents at end of period $ 3,013 $ 5,628

Supplemental disclosures of cash flow information:

Cash paid for income taxes, net $ 1,108 $ 241

See accompanying Notes to Condensed Consolidated Financial Statements.

9 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 30, 2022.

On July 19, 2021, we executed a four -for-one stock split of our common stock.

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 years 2023 and 2022 are both 52-week years.

The first quarters of fiscal years 2023 and 2022 were both 13-week quarters.

The second quarters of fiscal years 2023 and 2022 were both 13-week quarters.

Reclassifications

7 unchanged sentences

Termination of the Arm Share Purchase Agreement

On February 8, 2022, NVIDIA and SoftBank Group Corp, or SoftBank, announced the termination of the Share Purchase Agreement whereby NVIDIA would have acquired Arm Limited from SoftBank.

In February 2022, NVIDIA and SoftBank Group Corp, or SoftBank, announced the termination of the Share Purchase Agreement whereby NVIDIA would have acquired Arm Limited from SoftBank.

The parties agreed to terminate because of significant regulatory challenges preventing the completion of the transaction.

2 unchanged sentences

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 2023 and 2035.

Future minimum lease payments under our non-cancelable operating leases as of May 1, 2022 are as follows:

Future minimum lease payments under our non-cancelable operating leases as of July 31, 2022 are as follows:

Operating Lease Obligations

(In millions)

2023 (excluding first quarter of fiscal year 2023)

2023 (excluding first half of fiscal year 2023)

2028 and thereafter

3 unchanged sentences

Long-term operating lease liabilities $ 743

In addition to our existing operating lease obligations, we have operating leases that are expected to commence between the second quarter of fiscal year 2023 and fiscal year 2024 with lease terms of 3 to 8 years for $ 755 million, consisting primarily of data center space.

Operating lease expenses were $ 44 million and $ 39 million for the first quarter of fiscal years 2023 and 2022, respectively.

Short-term and variable lease expenses for the first quarter of fiscal years 2023 and 2022 were not significant.

In addition to our existing operating lease obligations, we have operating leases that are expected to commence between the third quarter of fiscal year 2023 and fiscal year 2025 with lease terms of 2 to 8 years for $ 798 million, consisting primarily of data center space.

Operating lease expenses were $ 47 million and $ 42 million for the second quarter of fiscal years 2023 and 2022, respectively, and $ 90 million and $ 81 million for the first half of fiscal years 2023 and 2022, respectively.

Short-term and variable lease expenses for the second quarter and first half of fiscal years 2023 and 2022 were not significant.

Other information related to leases was as follows:

Three Months Ended

May 1, 2022 May 2, 2021

Six Months Ended

July 31, 2022 August 1, 2021

(In millions)

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of May 1, 2022, our operating leases had a weighted average remaining lease term of 7.2 years and a weighted average discount rate of 2.51 %.

As of July 31, 2022, our operating leases had a weighted average remaining lease term of 7.1 years and a weighted average discount rate of 2.73 %.

As of January 30, 2022, our operating leases had a weighted average remaining lease term of 7.1 years and a weighted average discount rate of 2.51 %.

2 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

2022 August 1,

2021 July 31,

2022 August 1,

(In millions)

11 unchanged sentences

Vested restricted stock ( 11 ) $ 86.77

Balances, May 1, 2022 42 $ 125.32

As of May 1, 2022, there was $ 4.95 billion of aggregate unearned stock-based compensation expense.

This amount is expected to be recognized over a weighted average period of 2.3 years for RSUs, PSUs, and market-based PSUs, and 1.1 years for ESPP.

Canceled and forfeited ( 1 ) $ 131.19

Balances, July 31, 2022 56 $ 148.43

As of July 31, 2022, there was $ 7.61 billion of aggregate unearned stock-based compensation expense.

This amount is expected to be recognized over a weighted average period of 2.8 years for RSUs, PSUs, and market-based PSUs, and 1.0 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 1, May 2,

Three Months Ended Six Months Ended

July 31, August 1, July 31, August 1,

2022 2021 2022 2021

(In millions, except per share data)

1 unchanged sentence

Basic weighted average shares

2,495 2,493 2,500 2,489

Dilutive impact of outstanding equity awards

Diluted weighted average shares

2,516 2,532 2,526 2,529

Net income per share:

5 unchanged sentences

Note 6 – Income Taxes

We recognized an income tax expense of $ 187 million and $ 132 million for the first quarter of fiscal years 2023 and 2022, respectively.

The income tax expense as a percentage of income before income tax was 10.3 % and 6.5 % for the first quarter of fiscal years 2023 and 2022, respectively.

The increase in our effective tax rate was primarily due to an increase in the amount of earnings subject to U.S.

tax, the Arm acquisition termination cost recorded in the first quarter of fiscal year 2023 which did not result in any material tax benefit, and a decreased impact of tax benefit from the U.S.

federal research tax credit, partially offset by the increased benefits from the foreign-derived intangible income deduction and stock-based compensation.

Our effective tax rate for the first quarter of fiscal year 2023 was lower than the U.S.

We recognized an income tax benefit of $ 181 million and an income tax expense of $ 6 million for the second quarter and first half of fiscal year 2023, respectively, and an income tax expense of $ 20 million and $ 153 million for the second quarter and first half of fiscal year 2022, respectively.

Income tax as a percentage of income before income tax was a benefit of 38.0 % for the second quarter of fiscal year 2023, and an expense of 0.3 % for the first half of fiscal year 2023 and an expense of 0.9 % and 3.4 % for the second quarter and first half of fiscal year 2022, respectively.

The decrease in our effective tax rate for the second quarter and first half of fiscal year 2023 as compared to the same periods of fiscal year 2022 was primarily due to the increased tax benefit of stock-based compensation, the foreign-derived intangible income deduction, and the U.S.

federal research tax credit, relative to a reduction in expected profitability.

This is partially offset by the impact of an increase in the proportion of earnings subject to U.S.

tax in fiscal year 2023 and the one-time discrete benefit from re-valuing certain deferred tax assets in connection with the domestication of one of our foreign subsidiaries, or the Domestication, in fiscal year 2022.

Our effective tax rate for the first half of fiscal year 2023 was lower than the U.S.

federal statutory rate of 21% due to tax benefits from the foreign-derived intangible income deduction, stock-based compensation and the U.S.

federal research tax credit.

Our effective tax rate for the first quarter of fiscal year 2022 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 and tax benefits related to stock-based compensation and the U.S.

federal research tax credit.

For the first quarter of fiscal year 2023, 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 earned in jurisdictions that are 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.

For the first half of fiscal year 2023, there were 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.

Additionally, there have been no material changes to our unrecognized tax benefits and any related interest or penalties since the fiscal year ended January 30, 2022.

While we believe that we have adequately provided for all uncertain tax positions, or tax positions where we believe it is not more-likely-than-not that the position will be sustained upon review, amounts asserted by tax authorities could be greater or less than our accrued position.

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 1, 2022, 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 July 31, 2022, 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 1, 2022 and January 30, 2022:

The following is a summary of cash equivalents and marketable securities as of July 31, 2022 and January 30, 2022:

July 31, 2022

Cost Unrealized

26 unchanged sentences

The following tables provide the breakdown of unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position:

July 31, 2022

Less than 12 Months 12 Months or Greater Total

2 unchanged sentences

Debt securities issued by the United States Treasury $ 2,793 $ ( 39 ) $ — $ — $ 2,793 $ ( 39 )

Debt securities issued by United States government agencies 2,312 ( 2 ) — — 2,312 ( 2 )

Corporate debt securities 1,925 ( 17 ) 105 ( 1 ) 2,030 ( 18 )

9 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 1, 2022 and January 30, 2022 are shown below by contractual maturity.

May 1, 2022 January 30, 2022

The amortized cost and estimated fair value of cash equivalents and marketable securities as of July 31, 2022 and January 30, 2022 are shown below by contractual maturity.

July 31, 2022 January 30, 2022

Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value

3 unchanged sentences

Total $ 16,650 $ 16,592 $ 20,930 $ 20,913

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 1, 2022 January 30, 2022

Pricing Category July 31, 2022 January 30, 2022

(In millions)

28 unchanged sentences

Level 2 $ 451 $ 551

(1) Unrealized losses of $ 24 million and an unrealized gain of $ 124 million from investments in publicly-traded equity securities were recorded in other income (expense), net, in the first quarter of fiscal years 2023 and 2022, respectively.

(1) Unrealized losses of $ 7 million and $ 31 million from investments in publicly-traded equity securities were recorded in other income (expense), net, in the second quarter and first half of fiscal year 2023, respectively.

An unrealized loss of $ 6 million on an investment in a publicly-traded equity security 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) These liabilities are carried on our Condensed Consolidated Balance Sheets at their original issuance value, net of unamortized debt discount and issuance costs.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 9 - Amortizable Intangible Assets and Goodwill

The components of our amortizable intangible assets are as follows:

May 1, 2022 January 30, 2022

July 31, 2022 January 30, 2022

Amount Accumulated

7 unchanged sentences

(1) During the first quarter of fiscal year 2023, we commenced amortization of the $ 630 million in-process research and development intangible asset related to our acquisition of Mellanox.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortization expense associated with intangible assets was $ 155 million and $ 137 million for the first quarter of fiscal years 2023 and 2022, respectively.

Future amortization expense related to the net carrying amount of intangible assets as of May 1, 2022 is estimated to be $ 541 million for the remainder of fiscal year 2023, $ 597 million in fiscal year 2024, $ 536 million in fiscal year 2025, $ 248 million in fiscal year 2026, $ 143 million in fiscal year 2027, and $ 146 million in fiscal year 2028 and thereafter.

In the first quarter of fiscal year 2023, goodwill increased by $ 16 million and intangible assets increased by $ 25 million from acquisitions.

Amortization expense associated with intangible assets was $ 182 million and $ 336 million for the second quarter and first half of fiscal year 2023, respectively, and $ 138 million and $ 275 million for the second quarter and first half of fiscal year 2022, respectively.

Future amortization expense related to the net carrying amount of intangible assets as of July 31, 2022 is estimated to be $ 364 million for the remainder of fiscal year 2023, $ 601 million in fiscal year 2024, $ 539 million in fiscal year 2025, $ 245 million in fiscal year 2026, $ 141 million in fiscal year 2027, and $ 146 million in fiscal year 2028 and thereafter.

In the first half of fiscal year 2023, goodwill increased by $ 23 million and intangible assets increased by $ 32 million from acquisitions.

We assigned $ 14 million of the increase in goodwill to our Compute & Networking segment and $ 9 million of the increase to our Graphics segment.

1 unchanged sentence

Certain balance sheet components are as follows:

May 1, January 30,

July 31, January 30,

Inventories (1) :

(In millions)

3 unchanged sentences

Total inventories $ 3,889 $ 2,605

May 1, January 30,

(1) During the second quarter of fiscal year 2023, we recorded an inventory reserve expense of approximately $ 570 million in cost of revenue.

July 31, January 30,

Other assets:

6 unchanged sentences

(1) Refer to Note 2 - Business Combination for further details on the Arm acquisition.

May 1, January 30,

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 31, January 30,

Accrued and Other Current Liabilities:

1 unchanged sentence

Customer program accruals $ 1,463 $ 1,000

Taxes payable 736 132

Deferred revenue (1) 334 300

Accrued payroll and related expenses 327 409

Payables to brokers for unsettled investment trades 325 —

Excess inventory purchase obligations (1) 866 196

Accrued payroll and related expenses 421 409

Deferred revenue (2) 359 300

Product warranty 168 46

Taxes payable 158 132

Other 468 469

Total accrued and other current liabilities $ 3,903 $ 2,552

(1) During the second quarter of fiscal year 2023, we recorded an expense of approximately $ 650 million in cost of revenue for inventory purchase obligations in excess of our current demand projections, and cancellation and underutilization penalties.

(2) Deferred revenue primarily includes customer advances and deferrals related to license and development arrangements, support for hardware and software, and cloud services.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

May 1, January 30,

July 31, January 30,

Other Long-Term Liabilities:

5 unchanged sentences

Total other long-term liabilities $ 1,609 $ 1,553

(1) As of May 1, 2022, income tax payable represents the long-term portion of the one-time transition tax payable of $ 251 million, unrecognized tax benefits of $ 733 million, and related interest and penalties of $ 67 million.

(1) As of July 31, 2022, income tax payable represents the long-term portion of the one-time transition tax payable of $ 188 million, unrecognized tax benefits of $ 762 million, and related interest and penalties of $ 72 million.

As of January 30, 2022, income tax payable represents the long-term portion of the one-time transition tax payable of $ 251 million, unrecognized tax benefits of $ 670 million, and related interest and penalties of $ 59 million.

1 unchanged sentence

Deferred Revenue

The following table shows the changes in deferred revenue during the first quarter of fiscal years 2023 and 2022:

May 1, May 2,

The following table shows the changes in deferred revenue during the first half of fiscal years 2023 and 2022:

July 31, August 1,

(In millions)

5 unchanged sentences

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

As of May 1, 2022, $ 652 million of revenue related to performance obligations had not been recognized, of which we expect to recognize approximately 47 % over the next twelve months and the remainder thereafter.

As of July 31, 2022, $ 645 million of revenue related to performance obligations had not been recognized, of which we expect to recognize approximately 48 % over the next twelve months and the remainder thereafter.

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 May 1, 2022 and January 30, 2022.

The fair value of the contracts was not significant as of July 31, 2022 and January 30, 2022.

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.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The table below presents the notional value of our foreign currency forward contracts outstanding as of May 1, 2022 and January 30, 2022:

The table below presents the notional value of our foreign currency forward contracts outstanding as of July 31, 2022 and January 30, 2022:

2022 January 30,

2 unchanged sentences

Not designated for hedge accounting $ 378 $ 408

As of May 1, 2022, all designated foreign currency forward contracts mature within eighteen months .

As of July 31, 2022, 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 twelve months was not significant.

During the first quarter of fiscal years 2023 and 2022, the impact of derivative financial instruments designated for hedge accounting treatment on other comprehensive income or loss was not significant.

During the first half of fiscal years 2023 and 2022, the impact of derivative financial instruments designated for hedge accounting treatment on other comprehensive income or loss was not significant.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12 - Debt

3 unchanged sentences

Remaining Term (years)

Interest Rate May 1, 2022 January 30, 2022

Interest Rate July 31, 2022 January 30, 2022

(In millions)

19 unchanged sentences

Net carrying amount $ 10,949 $ 10,946

Less short-term portion ( 1,249 ) —

Total long-term portion $ 9,700 $ 10,946

All our notes are unsecured senior obligations.

2 unchanged sentences

We may redeem each of our notes prior to maturity, subject to a make-whole premium as defined in the applicable form of note.

As of May 1, 2022, we have complied with the required covenants under the notes.

As of July 31, 2022, we have complied with the required covenants under the notes.

Commercial Paper

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

As of May 1, 2022, we had no t issued any commercial paper.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of July 31, 2022, we had no t issued any commercial paper.

Note 13 - Commitments and Contingencies

1 unchanged sentence

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.

We have entered into several long-term supply agreements, under which we have made advance payments and have $ 1.02 billion remaining unpaid.

As of May 1, 2022, we had outstanding inventory purchase and long-term supply obligations totaling $ 9.59 billion, inclusive of the $ 1.02 billion.

We have entered into several long-term supply agreements, under which we have made advance payments and have $ 929 million remaining unpaid.

As of July 31, 2022, we had outstanding inventory purchase and long-term supply obligations totaling $ 9.22 billion, inclusive of the $ 929 million.

We also had other purchase obligations totaling $ 1.36 billion.

Total future unconditional purchase commitments as of May 1, 2022, are as follows:

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total gross future unconditional purchase commitments as of July 31, 2022, are as follows:

(In millions)

2023 (excluding first quarter of fiscal year 2023)

2023 (excluding first half of fiscal year 2023)

2028 and thereafter

1 unchanged sentence

Accrual for Product Warranty Liabilities

The estimated amount of product warranty liabilities was $ 55 million and $ 46 million as of May 1, 2022 and January 30, 2022, respectively, and the activities were not significant.

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

The estimated amount of product warranty liabilities was $ 168 million and $ 46 million as of July 31, 2022 and January 30, 2022, respectively.

In the second quarter of fiscal year 2023, we recorded $ 122 million in product warranty liabilities primarily related to a defect identified in a third-party component embedded in certain Data Center products.

The estimated product returns and estimated product warranty activity consisted of the following:

Three Months Ended Six Months Ended

July 31, August 1, July 31, August 1,

2022 2021 2022 2021

(In millions)

Balance at beginning of period $ 55 $ 30 $ 46 $ 22

Additions 122 4 138 15

Deductions ( 9 ) ( 3 ) ( 16 ) ( 6 )

Balance at end of period $ 168 $ 31 $ 168 $ 31

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.

24 unchanged sentences

Accounting for Loss Contingencies

As of May 1, 2022, 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 July 31, 2022, 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.

2 unchanged sentences

Capital Return Program

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

During the first quarter of fiscal year 2023, we repurchased a total of 8.6 million shares for $ 2.00 billion.

Through May 1, 2022, we have repurchased an aggregate of 1.05 billion shares under our share repurchase program for a total cost of $ 9.08 billion.

On May 23, 2022, our Board of Directors increased and extended our share repurchase program to repurchase additional common stock up to a total of $ 15 billion through December 2023.

During the first quarter of fiscal years 2023 and 2022, we paid $ 100 million and $ 99 million in cash dividends to our shareholders, respectively.

During the second quarter and first half of fiscal year 2023, we repurchased a total of 19 million and 28 million shares for $ 3.35 billion and $ 5.34 billion, respectively.

Through July 31, 2022, we have repurchased an aggregate of 1.07 billion shares under our share repurchase program for a total cost of $ 12.42 billion.

As of July 31, 2022, we were authorized, subject to certain specifications, to repurchase additional common stock up to a total of $ 11.93 billion through December 2023.

During the second quarter and first half of fiscal year 2023, we paid $ 100 million and $ 200 million in cash dividends to our shareholders, respectively.

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.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15 - Segment Information

1 unchanged sentence

Our Graphics segment includes GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms;

Quadro/NVIDIA RTX GPUs for enterprise workstation

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Quadro/NVIDIA RTX GPUs for enterprise workstation graphics;

vGPU software for cloud-based visual and virtual computing;

18 unchanged sentences

(In millions)

Three Months Ended May 1, 2022

Three Months Ended July 31, 2022

Revenue $ 2,797 $ 3,907 $ — $ 6,704

Operating income (loss) $ 657 $ 816 $ ( 974 ) $ 499

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

Six Months Ended July 31, 2022

Revenue $ 7,413 $ 7,579 $ — $ 14,992

Operating income (loss) $ 3,133 $ 2,422 $ ( 3,188 ) $ 2,367

Six Months Ended August 1, 2021

Revenue $ 7,358 $ 4,810 $ — $ 12,168

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended Six Months Ended

2022 August 1,

2021 July 31,

2022 August 1,

(In millions)

Reconciling items included in "All Other" category:

Acquisition termination cost $ ( 1,353 ) $ —

Stock-based compensation expense $ ( 649 ) $ ( 465 ) $ ( 1,227 ) $ ( 894 )

1 unchanged sentence

Unallocated cost of revenue and operating expenses ( 148 ) ( 90 ) ( 275 ) ( 180 )

Contributions ( 2 ) — ( 2 ) —

IP-related and legal settlement costs — ( 4 ) ( 7 ) ( 9 )

Acquisition termination cost — — ( 1,353 ) —

Total $ ( 974 ) $ ( 717 ) $ ( 3,188 ) $ ( 1,408 )

1 unchanged sentence

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended

May 1, May 2,

Three Months Ended Six Months Ended

July 31, August 1, July 31, August 1,

2022 2021 2022 2021

(In millions)

Taiwan $ 2,777 $ 1,784

China (including Hong Kong) 2,081 1,391

United States $ 1,988 $ 996 $ 3,921 $ 1,764

China (including Hong Kong) 1,602 1,720 3,683 3,111

Taiwan 1,204 1,961 3,981 3,745

Other countries 1,910 1,830 3,407 3,548

1 unchanged sentence

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

Three Months Ended

May 1, May 2,

Three Months Ended Six Months Ended

July 31, August 1, July 31, August 1,

2022 2021 2022 2021

(In millions)

5 unchanged sentences

Total revenue $ 6,704 $ 6,507 $ 14,992 $ 12,168

No customer represented 10% or more of total revenue for the first quarter of fiscal years 2023 or 2022.

One customer represented 12 % of our accounts receivable balance as of May 1, 2022.

No customer represented 10% or more of total revenue for the second quarter and first half of fiscal years 2023 or 2022.

Two customers each represented 10% or more of accounts receivable for a total of 21 % of our accounts receivable balance as of July 31, 2022.

Two customers each represented 10% or more of accounts receivable for a total of 22 % as of January 30, 2022.

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