What changed in this filing

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Item 1. Financial Statements

2023-05-26 compared with 2022-11-18 · 146 added, 224 removed, 460 unchanged (45% of the section changed)

3 unchanged sentences

(In millions, except per share data)

Three Months Ended Nine Months Ended

October 30, October 31, October 30, October 31,

2022 2021 2022 2021

Three Months Ended

April 30, May 1,

Revenue $ 7,192 $ 8,288

11 unchanged sentences

Other income (expense), net

12 ( 33 ) ( 75 ) 5

Income before income tax 2,209 1,805

Income tax expense (benefit) ( 67 ) 174 ( 61 ) 327

Income tax expense 166 187

Net income $ 2,043 $ 1,618

9 unchanged sentences

(In millions)

Three Months Ended Nine Months Ended

October 30, October 31, October 30, October 31,

2022 2021 2022 2021

Three Months Ended

April 30, May 1,

Net income $ 2,043 $ 1,618

Other comprehensive income (loss), net of tax

Other comprehensive loss, net of tax

Available-for-sale securities:

Net change in unrealized loss ( 18 ) ( 4 ) ( 53 ) ( 5 )

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

Net change in unrealized loss ( 18 ) ( 4 ) ( 52 ) ( 5 )

Net change in unrealized gain (loss) 17 ( 22 )

Cash flow hedges:

Net unrealized gain (loss) ( 14 ) 22 ( 44 ) ( 5 )

Net unrealized loss ( 13 ) ( 29 )

Reclassification adjustments for net realized loss included in net income ( 11 ) ( 2 )

Net change in unrealized gain (loss) ( 15 ) 5 ( 60 ) ( 5 )

Other comprehensive income (loss), net of tax ( 33 ) 1 ( 112 ) ( 10 )

Net change in unrealized loss ( 24 ) ( 31 )

Other comprehensive loss, net of tax ( 7 ) ( 53 )

Total comprehensive income $ 2,036 $ 1,565

3 unchanged sentences

(In millions)

October 30, January 30,

April 30, January 29,

Current assets:

34 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED OCTOBER 30, 2022 AND OCTOBER 31, 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, July 31, 2022 2,489 $ 2 $ 10,968 $ — $ ( 90 ) $ 12,971 $ 23,851

Net income — — — — — 680 680

Other comprehensive loss — — — — ( 33 ) — ( 33 )

Issuance of common stock from stock plans 9 — 143 — — — 143

Tax withholding related to vesting of restricted stock units ( 2 ) — ( 294 ) — — — ( 294 )

Shares repurchased ( 28 ) — ( 1 ) — — ( 3,646 ) ( 3,647 )

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

— — — — — ( 100 ) ( 100 )

Stock-based compensation — — 749 — — — 749

Balances, October 30, 2022 2,468 $ 2 $ 11,565 $ — $ ( 123 ) $ 9,905 $ 21,349

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

Net income — — — — — 2,464 2,464

Other comprehensive income — — — — 1 — 1

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

Tax withholding related to vesting of restricted stock units ( 2 ) — — ( 434 ) — — ( 434 )

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

— — — — — ( 100 ) ( 100 )

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

Stock-based compensation — — 552 — — — 552

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

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED OCTOBER 30, 2022 AND OCTOBER 31, 2021

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

FOR THE THREE MONTHS ENDED APRIL 30, 2023 AND MAY 1, 2022

Outstanding Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Earnings Total Shareholders' Equity

(In millions, except per share data) Shares Amount

4 unchanged sentences

Tax withholding related to vesting of restricted stock units ( 2 ) — ( 507 ) — — ( 507 )

Shares repurchased ( 56 ) ( 1 ) ( 3 ) — — ( 8,984 ) ( 8,988 )

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

1 unchanged sentence

Stock-based compensation — — 743 — — 743

Balances, October 30, 2022 2,468 $ 2 $ 11,565 $ — $ ( 123 ) $ 9,905 $ 21,349

Balances, April 30, 2023 2,473 $ 2 $ 12,453 $ ( 50 ) $ 12,115 $ 24,520

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 ( 2 ) — ( 538 ) — — ( 538 )

Shares repurchased ( 9 ) — ( 1 ) — ( 1,995 ) ( 1,996 )

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

— — — — ( 100 ) ( 100 )

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

Stock-based compensation — — 573 — — 573

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

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

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(In millions)

Nine Months Ended

October 30, October 31,

Three Months Ended

April 30, May 1,

Cash flows from operating activities:

2 unchanged sentences

Stock-based compensation expense 735 578

Acquisition termination cost

Depreciation and amortization 384 334

Losses (gains) on investments in non-affiliates, net 35 ( 152 )

Losses on investments in non-affiliates 14 17

Deferred income taxes ( 1,135 ) ( 542 )

Acquisition termination cost

Other ( 34 ) 23

17 unchanged sentences

Proceeds related to employee stock plans 246 204

Payments related to repurchases of common stock ( 8,826 ) —

Payments related to tax on restricted stock units ( 507 ) ( 532 )

Dividends paid ( 99 ) ( 100 )

Principal payments on property and equipment and intangible asset ( 54 ) ( 62 )

Issuance of debt, net of issuance costs — 4,977

Repayment of debt — ( 1,000 )

Other 1 ( 2 )

Net cash provided by (used in) financing activities ( 9,961 ) 2,610

Principal payments on property and equipment and intangible assets ( 20 ) ( 22 )

Payments related to repurchases of common stock — ( 1,996 )

Net cash used in financing activities ( 380 ) ( 2,446 )

Change in cash and cash equivalents 1,690 1,897

1 unchanged sentence

Cash and cash equivalents at end of period $ 5,079 $ 3,887

Supplemental disclosures of cash flow information:

Cash paid for income taxes, net $ 1,372 $ 313

See accompanying Notes to Condensed Consolidated Financial Statements.

13 unchanged sentences

Fiscal years 2024 and 2023 are both 52-week years.

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

The first quarters of fiscal years 2024 and 2023 were both 13-week quarters.

Reclassifications

Certain prior fiscal year balances have been reclassified to conform to the current fiscal year presentation.

Prior period intangible asset gross carrying amount and accumulated amortization in Note 9 have been adjusted to write off immaterial fully amortized intangible assets as of January 30, 2022.

Principles of Consolidation

1 unchanged sentence

All intercompany balances and transactions have been eliminated in consolidation.

Note 2 - Business Combination

Termination of the Arm Share Purchase Agreement

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.

We recorded an acquisition termination cost of $ 1.35 billion in the first quarter of fiscal year 2023 reflecting the write-off of the prepayment provided at signing.

Use of Estimates

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Actual results could differ materially from our estimates.

On an on-going basis, we evaluate our estimates, including those related to revenue recognition, cash equivalents and marketable securities, accounts receivable, inventories, income taxes, goodwill, stock-based compensation, litigation, investigation and settlement costs, restructuring and other charges, property, plant, and equipment, and other contingencies.

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

In February 2023, we completed an assessment of the useful lives of our property, plant, and equipment.

Based on advances in technology and usage rate, we increased the estimated useful life of a majority of our server, storage, and network equipment from three to a range of four to five years , and our assembly and test equipment from five to seven years .

This change in accounting estimate became effective at the beginning of fiscal year 2024.

Based on the carrying amounts of a majority of our server, storage, network, and assembly and test equipment, net, in use as of the end of fiscal year 2023, the effect of this change in estimate for the three months ended April 30, 2023, was a benefit of $ 2 million and $ 31 million for cost of revenue and operating expenses, respectively.

This resulted in an increase in operating income of $ 33 million and net income of $ 28 million after tax, or $ 0.01 per both basic and diluted share.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2 - Business Combination

Termination of the Arm Share Purchase Agreement

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, or Arm, from SoftBank.

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

We recorded an acquisition termination cost of $ 1.35 billion in fiscal year 2023 reflecting the write-off of the prepayment provided at signing.

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 2024 and 2035.

Future minimum lease payments under our non-cancelable operating leases as of October 30, 2022 are as follows:

Future minimum lease payments under our non-cancelable operating leases as of April 30, 2023 are as follows:

Operating Lease Obligations

(In millions)

2023 (excluding first nine months of fiscal year 2023)

2024 (excluding first quarter)

2029 and thereafter

3 unchanged sentences

Long-term operating lease liabilities $ 939

In addition to our existing operating lease obligations, we have operating leases, primarily for our data centers, that are expected to commence between the fourth quarter of fiscal year 2023 and fiscal year 2025 with lease terms of 2 to 8 years for $ 647 million.

Operating lease expenses were $ 49 million and $ 44 million for the third quarter of fiscal years 2023 and 2022, respectively, and $ 139 million and $ 125 million for the first nine months of fiscal years 2023 and 2022, respectively.

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

In addition, we have operating leases, primarily for our data centers, that are expected to commence between the second quarter of fiscal year 2024 and fiscal year 2025 with lease terms of 2 to 8 years for $ 361 million.

Operating lease expenses were $ 59 million and $ 44 million for the first quarter of fiscal years 2024 and 2023, respectively.

Short-term and variable lease expenses for the first quarter of fiscal years 2024 and 2023 were not significant.

Other information related to leases was as follows:

Nine Months Ended

October 30, 2022 October 31, 2021

Three Months Ended

April 30, 2023 May 1, 2022

(In millions)

2 unchanged sentences

Operating lease assets obtained in exchange for lease obligations $ 106 $ 62

As of October 30, 2022, our operating leases had a weighted average remaining lease term of 6.9 years and a weighted average discount rate of 2.82 %.

As of April 30, 2023, our operating leases had a weighted average remaining lease term of 6.6 years and a weighted average discount rate of 3.33 %.

As of January 29, 2023, our operating leases had a weighted average remaining lease term of 6.8 years and a weighted average discount rate of 3.21 %.

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 Nine Months Ended

2022 October 31,

2021 October 30,

2022 October 31,

Three Months Ended

(In millions)

12 unchanged sentences

Canceled and forfeited ( 1 ) $ 199.37

Balances, October 30, 2022 50 $ 153.73

As of October 30, 2022, there was $ 7.19 billion of aggregate unearned stock-based compensation expense.

Balances, April 30, 2023 40 $ 167.07

As of April 30, 2023, there was $ 6.55 billion of aggregate unearned stock-based compensation expense.

This amount is expected to be recognized over a weighted average period of 2.5 years for RSUs, PSUs, and market-based PSUs, and 1.1 years for ESPP.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 5 – Net Income Per Share

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 Nine Months Ended

October 30, October 31, October 30, October 31,

2022 2021 2022 2021

Three Months Ended

April 30, May 1,

(In millions, except per share data)

1 unchanged sentence

Basic weighted average shares

2,483 2,499 2,495 2,493

Dilutive impact of outstanding equity awards 20 31

Diluted weighted average shares

2,499 2,538 2,517 2,532

Net income per share:

5 unchanged sentences

Note 6 – Income Taxes

We recognized an income tax benefit of $ 67 million and $ 61 million for the third quarter and first nine months of fiscal year 2023, respectively, and an income tax expense of $ 174 million and $ 327 million for the third quarter and first nine months of fiscal year 2022, respectively.

Income tax as a percentage of income before income tax was a benefit of 10.9 % and 2.1 % for the third quarter and first nine months of fiscal year 2023, respectively, and an expense of 6.6 % and 4.6 % for the third quarter and first nine months of fiscal year 2022, respectively.

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

federal research tax credit, relative to a lower 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 nine months 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.

Income tax expense was $ 166 million and $ 187 million for the first quarter of fiscal years 2024 and 2023, respectively.

The income tax expense as a percentage of income before income tax was 7.5 % and 10.3 % for the first quarter of fiscal years 2024 and 2023, respectively.

The decrease in the effective tax rate was primarily due to the tax impact of the Arm acquisition termination cost recorded in the first quarter of fiscal year 2023, which did not result in a tax benefit, and the increased impact of tax benefits from stock-based compensation, partially offset by decreased tax benefits impact from the foreign-derived intangible income deduction and the U.S.

federal research tax credit.

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.

Our effective tax rates for the first quarter of fiscal years 2024 and 2023 were 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.

For the first nine months of fiscal year 2023, there were no material changes to our tax years that remain subject to examination by major tax jurisdictions.

For the first quarter of fiscal year 2024, 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 29, 2023.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 October 30, 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.

As of April 30, 2023, 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 October 30, 2022 and January 30, 2022:

October 30, 2022

The following is a summary of cash equivalents and marketable securities:

April 30, 2023

Cost Unrealized

9 unchanged sentences

government agencies 2,442 1 ( 1 ) 2,442 199 2,243

Certificates of deposit 316 — — 316 58 258

Money market funds 1,502 — — 1,502 1,502 —

Certificates of deposit 395 — — 395 173 222

Foreign government bonds 49 — — 49 — 49

12 unchanged sentences

government agencies 1,836 — ( 2 ) 1,834 50 1,784

Certificates of deposit 1,561 — — 1,561 21 1,540

Money market funds 1,777 — — 1,777 1,777 —

Certificates of deposit 365 — — 365 134 231

Foreign government bonds 140 — — 140 100 40

1 unchanged sentence

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:

October 30, 2022

April 30, 2023

Less than 12 Months 12 Months or Greater Total

14 unchanged sentences

Corporate debt securities 1,188 ( 7 ) 696 ( 5 ) 1,884 ( 12 )

Debt securities issued by U.S.

government agencies 1,307 ( 2 ) — — 1,307 ( 2 )

Total $ 4,939 $ ( 30 ) $ 1,868 $ ( 28 ) $ 6,807 $ ( 58 )

1 unchanged sentence

Net realized 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 October 30, 2022 and January 30, 2022 are shown below by contractual maturity.

October 30, 2022 January 30, 2022

The amortized cost and estimated fair value of cash equivalents and marketable securities are shown below by contractual maturity.

April 30, 2023 January 29, 2023

Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value

3 unchanged sentences

Total $ 15,107 $ 15,071 $ 13,112 $ 13,055

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8 – Fair Value of Financial Assets and Liabilities

2 unchanged sentences

Fair Value at

Pricing Category October 30, 2022 January 30, 2022

Pricing Category April 30, 2023 January 29, 2023

(In millions)

30 unchanged sentences

Level 2 $ 403 $ 410

(1) Unrealized losses of $ 11 million and $ 35 million from investments in publicly-traded equity securities were recorded in other income (expense), net, in the third quarter and first nine months of fiscal year 2023, respectively.

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.

(1) Unrealized losses of $ 14 million and $ 24 million from investments in publicly-traded equity securities were recorded in other income (expense), net, in the first quarter of fiscal years 2024 and 2023, respectively.

(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:

October 30, 2022 January 30, 2022

April 30, 2023 January 29, 2023

Amount Accumulated

6 unchanged sentences

Total intangible assets $ 3,572 $ ( 2,031 ) $ 1,541 $ 3,539 $ ( 1,863 ) $ 1,676

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

Amortization expense associated with intangible assets was $ 181 million and $ 518 million for the third quarter and first nine months of fiscal year 2023, respectively, and $ 143 million and $ 418 million for the third quarter and first nine months of fiscal year 2022, respectively.

Future amortization expense related to the net carrying amount of intangible assets as of October 30, 2022 is estimated to be $ 181 million for the remainder of fiscal year 2023, $ 600 million in fiscal year 2024, $ 538 million in fiscal year 2025, $ 244 million in fiscal year 2026, $ 141 million in fiscal year 2027, and $ 146 million in fiscal year 2028 and thereafter.

In the first nine months of fiscal year 2023, goodwill increased by $ 23 million and intangible assets increased by $ 33 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.

Amortization expense associated with intangible assets was $ 181 million and $ 155 million for the first quarter of fiscal years 2024 and 2023, respectively.

The following table outlines the estimated future amortization expense related to the net carrying amount of intangible assets as of April 30, 2023:

Future Amortization Expense

(In millions)

2024 (excluding first quarter)

2029 and thereafter 109

Total $ 1,541

In the first quarter of fiscal year 2024, goodwill increased by $ 58 million from an acquisition, and was assigned to our Compute & Networking segment.

Note 10 - Balance Sheet Components

Certain balance sheet components are as follows:

October 30, January 30,

April 30, January 29,

(In millions)

3 unchanged sentences

Total inventories $ 4,611 $ 5,159

October 30, January 30,

April 30, January 29,

Other Assets:

(In millions)

Prepaid supply agreements $ 2,771 $ 1,747

Prepaid royalties 393 409

Prepaid supply and capacity agreements $ 3,002 $ 2,989

Investment in non-affiliated entities 505 299

Advanced consideration for acquisition (1) — 1,353

Prepaid royalties 381 387

Prepaid cloud services 171 23

Other 145 122

Total other assets $ 4,204 $ 3,820

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 30, January 30,

April 30, January 29,

Accrued and Other Current Liabilities:

(In millions)

Taxes payable $ 1,544 $ 467

Customer program accruals 1,245 1,196

2 unchanged sentences

Accrued payroll and related expenses 320 530

Unsettled share repurchases 162 —

Product warranty 104 46

Taxes payable 108 132

Operating leases 187 176

Licenses and royalties 143 149

Product warranty and return provisions 112 108

Other 165 186

1 unchanged sentence

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

October 30, January 30,

April 30, January 29,

Other Long-Term Liabilities:

3 unchanged sentences

Deferred revenue (2) 230 218

Other 269 126

Licenses payable 155 181

Total other long-term liabilities $ 2,037 $ 1,913

(1) As of October 30, 2022, income tax payable represents the long-term portion of the one-time transition tax payable of $ 188 million, unrecognized tax benefits of $ 789 million, and related interest and penalties of $ 80 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) Income tax payable is comprised of the long-term portion of the one-time transition tax payable, unrecognized tax benefits, and related interest and penalties.

(2) Deferred revenue primarily includes deferrals related to support for hardware and software.

Deferred Revenue

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

October 30, October 31,

The following table shows the changes in deferred revenue during the first quarter of fiscal years 2024 and 2023:

April 30, May 1,

(In millions)

3 unchanged sentences

Balance at end of period $ 597 $ 537

Revenue related to remaining performance obligations represents the contracted license and development arrangements and support for hardware and software.

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

As of October 30, 2022, $ 681 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.

Revenue allocated to remaining performance obligations, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods, was $ 639 million as of April 30, 2023.

We expect to recognize approximately 46 % of this revenue 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 October 30, 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.

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

The table below presents the notional value of our foreign currency forward contracts outstanding:

2023 January 29,

1 unchanged sentence

Designated as cash flow hedges $ 1,142 $ 1,128

Not designated for hedge accounting $ 330 $ 408

As of October 30, 2022, all designated foreign currency forward contracts mature within 18 months.

Non-designated hedges $ 350 $ 366

The unrealized gains and losses or fair value of our foreign currency forward contracts was not significant as of April 30, 2023 and January 29, 2023.

As of April 30, 2023, 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 nine months 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)

During the first quarter of fiscal years 2024 and 2023, 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.

Note 12 - Debt

Long-Term Debt

The carrying values of our outstanding notes and their associated interest rates were as follows:

The carrying value of our outstanding notes, the calendar year of maturity, and the associated interest rates were as follows:

Carrying Value at

Remaining Term (years)

Interest Rate October 30, 2022 January 30, 2022

Remaining Term (years) Effective

Interest Rate April 30, 2023 January 29, 2023

(In millions)

25 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 October 30, 2022, we have complied with the required covenants under the notes.

As of April 30, 2023, we were in compliance with the required covenants, which are non-financial in nature, under the outstanding notes.

Commercial Paper

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

As of October 30, 2022, we had no t issued any commercial paper.

As of April 30, 2023, we had no t issued any commercial paper.

Note 13 - Commitments and Contingencies

Purchase Obligations

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 $ 917 million remaining unpaid.

As of October 30, 2022, we had outstanding inventory purchase and long-term supply obligations totaling $ 7.02 billion, inclusive of the $ 917 million.

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

As of April 30, 2023, we had outstanding inventory purchase and long-term supply and capacity obligations totaling $ 7.27 billion.

During the normal course of business, to manage manufacturing lead times and help ensure adequate supply, we enter into agreements with contract manufacturers that allow them to procure inventory based upon criteria as defined by us, and in certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed, but these changes may result in the payment of costs incurred through the date of cancellation.

Other non-inventory purchase obligations of $ 3.26 billion include $ 2.43 billion of multi-year cloud service agreements.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total gross future unconditional purchase commitments as of October 30, 2022 are as follows:

Total future purchase commitments as of April 30, 2023 are as follows:

(In millions)

2023 (excluding first nine months of fiscal year 2023)

2024 (excluding first quarter)

2029 and thereafter

1 unchanged sentence

Accrual for Product Warranty Liabilities

The estimated amount of product warranty liabilities was $ 104 million and $ 46 million as of October 30, 2022 and January 30, 2022, respectively.

The estimated amount of product warranty liabilities was $ 77 million and $ 82 million as of April 30, 2023 and January 29, 2023, respectively.

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

Three Months Ended

Nine Months Ended

April 30, 2023 May 1, 2022

(In millions)

Balance at beginning of period

$ 168 $ 31 $ 46 $ 22

( 67 ) ( 4 ) ( 83 ) ( 10 )

Balance at end of period

$ 104 $ 32 $ 104 $ 32

In the third quarter of fiscal year 2023, we recognized a warranty-related benefit of approximately $ 70 million in cost of revenue due to favorable product recovery.

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.

8 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 an appeal from judgment in the United States Court of Appeals for the Ninth Circuit, case number 21-15604.

On March 30, 2021, plaintiffs filed an appeal from judgment

in the United States Court of Appeals for the Ninth Circuit, case number 21-15604.

Oral argument on the appeal was held on May 10, 2022.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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, was stayed pending resolution of the plaintiffs’ appeal in the In Re NVIDIA Corporation Securities Litigation action.

9 unchanged sentences

Accounting for Loss Contingencies

As of October 30, 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 April 30, 2023, 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

During the third quarter and first nine months of fiscal year 2023, we repurchased 28 million shares for $ 3.65 billion and 56 million shares for $ 8.99 billion, respectively.

Since the inception of our share repurchase program through October 30, 2022, we have repurchased an aggregate of 1.10 billion shares for $ 16.07 billion.

As of October 30, 2022, we were authorized, subject to certain specifications, to repurchase an additional $ 8.28 billion of shares through December 2023.

From October 31, 2022 through November 17, 2022, we repurchased 7 million shares for $ 1.05 billion pursuant to a Rule 10b5-1 trading plan.

During the third quarter and first nine months of fiscal year 2023, we paid $ 100 million and $ 300 million in cash dividends to our shareholders, respectively.

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.

Since the inception of our share repurchase program through April 30, 2023, we have repurchased an aggregate of 1.10 billion shares for a total cost of $ 17.12 billion.

As of April 30, 2023, we were authorized, subject to certain specifications, to repurchase an additional $ 7.23 billion of shares through December 2023.

We did not repurchase any shares during the first quarter of fiscal year 2024.

During the first quarter of fiscal years 2024 and 2023, we paid $ 99 million and $ 100 million in cash dividends to our shareholders, respectively.

Our cash dividend program and the payment of future cash dividends under that program are subject to our Board of Directors' continuing determination that the dividend program and the declaration of dividends thereunder are in the best interests of our shareholders.

Note 15 - Segment Information

Our Chief Executive Officer, who is considered to be our chief operating decision maker, or CODM, reviews financial information presented on an operating segment basis for purposes of making decisions and assessing financial performance.

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

Mellanox networking and interconnect solutions;

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

cryptocurrency mining processors, or CMP;

The Compute & Networking segment includes our Data Center accelerated computing platform;

automotive artificial intelligence, or AI, Cockpit, autonomous driving development agreements, and

autonomous vehicle solutions;

electric vehicle computing platforms;

Jetson for robotics and other embedded platforms;

and NVIDIA AI Enterprise and other software.

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)

vGPU software for cloud-based visual and virtual computing;

NVIDIA AI Enterprise and other software;

and cryptocurrency mining processors, or CMP.

The 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 graphics;

virtual GPU software for cloud-based visual and virtual computing;

automotive platforms for infotainment systems;

and Omniverse software for building 3D designs and virtual worlds.

and Omniverse Enterprise software for building and operating metaverse and 3D internet applications.

Operating results by segment include costs or expenses that are directly attributable to each segment, and costs or expenses that are leveraged across our unified architecture and therefore allocated between our two segments.

The “All Other” category includes the expenses that our CODM does not assign to either Compute & Networking or Graphics for purposes of making operating decisions or assessing financial performance.

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

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

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

6 unchanged sentences

(In millions)

Three Months Ended October 30, 2022

Revenue $ 3,816 $ 2,115 $ — $ 5,931

Operating income (loss) $ 1,086 $ 606 $ ( 1,091 ) $ 601

Three Months Ended October 31, 2021

Revenue $ 3,011 $ 4,092 $ — $ 7,103

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

Nine Months Ended October 30, 2022

Three Months Ended April 30, 2023

Revenue $ 4,460 $ 2,732 $ — $ 7,192

Operating income (loss) $ 2,160 $ 1,046 $ ( 1,066 ) $ 2,140

Nine Months Ended October 31, 2021

Three Months Ended May 1, 2022

Revenue $ 3,672 $ 4,616 $ — $ 8,288

Operating income (loss) $ 1,606 $ 2,476 $ ( 2,214 ) $ 1,868

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended Nine Months Ended

2022 October 31,

2021 October 30,

2022 October 31,

Three Months Ended

(In millions)

3 unchanged sentences

Unallocated cost of revenue and operating expenses ( 154 ) ( 127 )

Restructuring costs ( 16 ) — ( 16 ) —

Acquisition termination cost — — ( 1,353 ) —

IP-related and legal settlement costs ( 8 ) ( 7 )

Contributions — — ( 2 ) —

Acquisition termination cost — ( 1,353 )

Total $ ( 1,066 ) $ ( 2,214 )

2 unchanged sentences

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

Three Months Ended Nine Months Ended

October 30, October 31, October 30, October 31,

2022 2021 2022 2021

Three Months Ended

April 30, May 1,

(In millions)

2 unchanged sentences

China (including Hong Kong) 1,590 2,081

Singapore 762 454

Other countries 659 1,044

Total revenue $ 7,192 $ 8,288

No customer represented 10% or more of total revenue for the first quarter of fiscal years 2024 and 2023.

Two customers accounted for 12 % and 10 % of our accounts receivable balance as of April 30, 2023.

Two customers accounted for 14 % and 11 % of our accounts receivable balance as of January 29, 2023.

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

Three Months Ended Nine Months Ended

October 30, October 31, October 30, October 31,

2022 2021 2022 2021

Three Months Ended

April 30, May 1,

(In millions)

5 unchanged sentences

Total revenue $ 7,192 $ 8,288

One customer represented 10 % of our total revenue for the third quarter of fiscal year 2023 and was attributable primarily to the Compute & Networking segment.

No customer represented 10% or more of total revenue for the first nine months of fiscal year 2023 and for the third quarter and first nine months of fiscal year 2022.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

One customer represented 10% or more of accounts receivable for a total of 12 % of our accounts receivable balance as of October 30, 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