What changed in this filing

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Item 1. Financial Statements

2023-08-28 compared with 2023-05-26 · 210 added, 104 removed, 502 unchanged (38% of the section changed)

3 unchanged sentences

(In millions, except per share data)

Three Months Ended

April 30, May 1,

Three Months Ended Six Months Ended

July 30, July 31, July 30, July 31,

2023 2022 2023 2022

Revenue $ 13,507 $ 6,704 $ 20,699 $ 14,992

6 unchanged sentences

Total operating expenses 2,662 2,416 5,169 5,979

Income from operations 2,140 1,868

Operating income 6,800 499 8,941 2,367

Interest income 187 46 338 64

2 unchanged sentences

Other income (expense), net

181 ( 24 ) 249 ( 87 )

Income before income tax 6,981 475 9,190 2,280

Income tax expense 166 187

Income tax expense (benefit) 793 ( 181 ) 958 6

Net income $ 6,188 $ 656 $ 8,232 $ 2,274

9 unchanged sentences

(In millions)

Three Months Ended

April 30, May 1,

Three Months Ended Six Months Ended

July 30, July 31, July 30, July 31,

2023 2022 2023 2022

Net income $ 6,188 $ 656 $ 8,232 $ 2,274

1 unchanged sentence

Available-for-sale securities:

Net change in realized gain (loss) ( 11 ) ( 12 ) 7 ( 35 )

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

Net change in unrealized gain (loss) ( 11 ) ( 11 ) 7 ( 34 )

Cash flow hedges:

Net unrealized loss ( 13 ) ( 29 )

Net unrealized gain (loss) 22 ( 2 ) 8 ( 30 )

Reclassification adjustments for net realized loss included in net income ( 12 ) ( 13 ) ( 23 ) ( 15 )

Net change in unrealized loss ( 24 ) ( 31 )

Net change in unrealized gain (loss) 10 ( 15 ) ( 15 ) ( 45 )

Other comprehensive loss, net of tax ( 1 ) ( 26 ) ( 8 ) ( 79 )

4 unchanged sentences

(In millions)

April 30, January 29,

July 30, January 29,

Current assets:

34 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

FOR THE THREE MONTHS ENDED JULY 30, 2023 AND JULY 31, 2022

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

(In millions, except per share data) Shares Amount

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

Net income — — — — 6,188 6,188

Other comprehensive loss — — — ( 1 ) — ( 1 )

Issuance of common stock from stock plans 5 — 1 — — 1

Tax withholding related to vesting of restricted stock units ( 1 ) — ( 672 ) — — ( 672 )

Shares repurchased ( 8 ) — ( 1 ) — ( 3,283 ) ( 3,284 )

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

— — — — ( 99 ) ( 99 )

Stock-based compensation — — 848 — — 848

Balances, July 30, 2023 2,469 $ 2 $ 12,629 $ ( 51 ) $ 14,921 $ 27,501

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

Net income — — — — 656 656

Other comprehensive loss — — — ( 26 ) — ( 26 )

Issuance of common stock from stock plans 6 — 1 — — 1

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

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

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

— — — — ( 100 ) ( 100 )

Stock-based compensation — — 644 — — 644

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

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JULY 30, 2023 AND JULY 31, 2022

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

(In millions, except per share data) Shares Amount

Balances, January 29, 2023 2,466 $ 2 $ 11,971 $ ( 43 ) $ 10,171 $ 22,101

3 unchanged sentences

Tax withholding related to vesting of restricted stock units ( 3 ) — ( 1,179 ) — — ( 1,179 )

Shares repurchased ( 8 ) — ( 1 ) — ( 3,283 ) ( 3,284 )

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

1 unchanged sentence

Stock-based compensation — — 1,591 — — 1,591

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

Balances, July 30, 2023 2,469 $ 2 $ 12,629 $ ( 51 ) $ 14,921 $ 27,501

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

7 unchanged sentences

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

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

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

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(In millions)

Three Months Ended

April 30, May 1,

Six Months Ended

July 30, July 31,

Cash flows from operating activities:

3 unchanged sentences

Depreciation and amortization 749 712

Losses on investments in non-affiliates 14 17

(Gains) losses on investments in non-affiliates, net ( 45 ) 24

Deferred income taxes ( 1,881 ) ( 985 )

19 unchanged sentences

Proceeds related to employee stock plans 247 205

Payments related to repurchases of common stock ( 3,067 ) ( 5,341 )

Repayment of debt ( 1,250 ) —

Payments related to tax on restricted stock units ( 1,179 ) ( 837 )

1 unchanged sentence

Principal payments on property and equipment and intangible assets ( 31 ) ( 36 )

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

Net cash used in financing activities ( 5,479 ) ( 6,208 )

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

Cash and cash equivalents at beginning of period 3,389 1,990

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

Change in cash, cash equivalents, and restricted cash 2,493 1,023

Cash, cash equivalents, and restricted cash at beginning of period 3,389 1,990

Cash, cash equivalents, and restricted cash at end of period $ 5,882 $ 3,013

Reconciliation of cash, cash equivalents, and restricted cash to the Condensed Consolidated Balance Sheet:

Cash and cash equivalents $ 5,783 $ 3,013

Restricted cash, included in prepaid expenses and other current assets 99 —

Total cash, cash equivalents, and restricted cash $ 5,882 $ 3,013

Supplemental disclosure of cash flow information:

Cash paid for income taxes, net $ 328 $ 1,108

See accompanying Notes to Condensed Consolidated Financial Statements.

13 unchanged sentences

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

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

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

Reclassifications

12 unchanged sentences

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

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.

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 July 30, 2023 was a benefit of $ 5 million and $ 28 million for cost of revenue and operating expenses, respectively, which resulted in an increase in operating income of $ 33 million and net income of $ 27 million after tax, or $ 0.01 per both basic and diluted share.

The effect of this change in estimate for the first half of fiscal year 2024 was a benefit of $ 7 million and $ 59 million for

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

cost of revenue and operating expenses, respectively, which resulted in an increase in operating income of $ 66 million and net income of $ 55 million after tax, or $ 0.02 per both basic and diluted share.

Note 2 - Business Combination

5 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 2024 and 2035.

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

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

Operating Lease Obligations

(In millions)

2024 (excluding first quarter)

2024 (excluding first half of fiscal year 2024)

2029 and thereafter

3 unchanged sentences

Long-term operating lease liabilities $ 1,041

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.

In addition, we have operating leases, primarily for our data centers, that are expected to commence between the third quarter of fiscal year 2024 and the end of fiscal year 2025 with lease terms of 3 to 8 years for $ 205 million.

Operating lease expenses were $ 67 million and $ 47 million for the second quarter of fiscal years 2024 and 2023, respectively, and $ 126 million and $ 90 million for the first half of fiscal years 2024 and 2023, respectively.

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other information related to leases was as follows:

Three Months Ended

April 30, 2023 May 1, 2022

Six Months Ended

July 30, 2023 July 31, 2022

(In millions)

2 unchanged sentences

Operating lease assets obtained in exchange for lease obligations $ 299 $ 98

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 July 30, 2023, our operating leases had a weighted average remaining lease term of 6.5 years and a weighted average discount rate of 3.47 %.

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 %.

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

2023 July 31,

2022 July 30,

2023 July 31,

(In millions)

12 unchanged sentences

Canceled and forfeited ( 1 ) $ 194.70

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.

Balances, July 30, 2023 46 $ 219.47

As of July 30, 2023, there was $ 9.69 billion of aggregate unearned stock-based compensation expense.

This amount is expected to be recognized over a weighted average period of 2.7 years for RSUs, PSUs, and market-based PSUs, and 1.0 year 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

April 30, May 1,

(In millions, except per share data)

Three Months Ended Six Months Ended

July 30, July 31, July 30, July 31,

2023 2022 2023 2022

(In millions, except per share data)

Net income $ 6,188 $ 656 $ 8,232 $ 2,274

Basic weighted average shares 2,473 2,495 2,472 2,500

2 unchanged sentences

Net income per share:

$ 0.83 $ 0.65

$ 0.82 $ 0.64

Basic (1) $ 2.50 $ 0.26 $ 3.33 $ 0.91

Diluted (2) $ 2.48 $ 0.26 $ 3.30 $ 0.90

Equity awards excluded from diluted net income per share because their effect would have been anti-dilutive 10 33 14 25

2 unchanged sentences

Note 6 – Income Taxes

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 rates for the first quarter of fiscal years 2024 and 2023 were lower than the U.S.

Income tax was an expense of $ 793 million and $ 958 million for the second quarter and first half of fiscal year 2024, respectively, a benefit of $ 181 million for the second quarter of fiscal year 2023, and an expense of $ 6 million for the first half of fiscal year 2023.

The income tax as a percentage of income before income tax was an expense of 11.4 % and 10.4 % for the second quarter and first half of fiscal year 2024, respectively, 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.

The increase in the effective tax rate was primarily due to a decreased impact of tax benefits from the foreign-derived intangible income deduction, stock-based compensation, and the U.S.

federal research tax credit, relative to the increase in income before income tax.

Our effective tax rates for the first half 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 quarter of fiscal year 2024, there were no material changes to our tax years that remain subject to examination by major tax jurisdictions.

For the first half 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.

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 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.

As of July 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.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7 - Cash Equivalents and Marketable Securities

1 unchanged sentence

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

April 30, 2023

July 30, 2023

Cost Unrealized

29 unchanged sentences

Total $ 13,112 $ 1 $ ( 58 ) $ 13,055 $ 3,148 $ 9,907

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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:

April 30, 2023

July 30, 2023

Less than 12 Months 12 Months or Greater Total

3 unchanged sentences

Treasury $ 1,595 $ ( 16 ) $ 1,375 $ ( 15 ) $ 2,970 $ ( 31 )

Corporate debt securities 1,379 ( 9 ) 802 ( 4 ) 2,181 ( 13 )

Debt securities issued by U.S.

government agencies 2,223 ( 4 ) — — 2,223 ( 4 )

Corporate debt securities 945 ( 4 ) 838 ( 7 ) 1,783 ( 11 )

Total $ 5,197 $ ( 29 ) $ 2,177 $ ( 19 ) $ 7,374 $ ( 48 )

12 unchanged sentences

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

July 30, 2023 January 29, 2023

Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value

3 unchanged sentences

Total $ 15,895 $ 15,848 $ 13,112 $ 13,055

Restricted cash was $ 99 million as of July 30, 2023 and primarily represented amounts due to employees.

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 April 30, 2023 January 29, 2023

Pricing Category July 30, 2023 January 29, 2023

(In millions)

8 unchanged sentences

Foreign government bonds Level 2 $ 248 $ 140

Other assets (Investment in non-affiliated entities):

Other assets (Investments in non-affiliated entities):

Publicly-held equity securities Level 1 $ 124 $ 11

19 unchanged sentences

Level 2 $ 406 $ 410

(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.

(1) 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:

April 30, 2023 January 29, 2023

July 30, 2023 January 29, 2023

Amount Accumulated

6 unchanged sentences

Total intangible assets $ 3,095 $ ( 1,700 ) $ 1,395 $ 3,539 $ ( 1,863 ) $ 1,676

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:

Amortization expense associated with intangible assets was $ 146 million and $ 327 million for the second quarter and first half of fiscal year 2024, respectively, and $ 182 million and $ 336 million for the second quarter and first half of fiscal year 2023, respectively.

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

Future Amortization Expense

(In millions)

2024 (excluding first quarter)

2024 (excluding first half of fiscal year 2024)

2029 and thereafter 109

Total $ 1,395

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

In the first half 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:

April 30, January 29,

July 30, January 29,

Inventories (1):

(In millions)

3 unchanged sentences

Total inventories $ 4,319 $ 5,159

April 30, January 29,

(1) During the second quarter of fiscal years 2024 and 2023, we recorded an inventory provision of approximately $ 343 million and $ 570 million, respectively, in cost of revenue.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 30, January 29,

Other Assets:

1 unchanged sentence

Prepaid supply and capacity agreements (1) $ 3,008 $ 2,989

Investment in non-affiliated entities 505 299

Investments in non-affiliated entities 800 299

Prepaid royalties 375 387

2 unchanged sentences

Total other assets $ 4,501 $ 3,820

April 30, January 29,

(1) As of July 30, 2023 and January 29, 2023, there were $ 799 million and $ 458 million of short-term prepaid supply and capacity agreements included in Prepaid expenses and other current assets, respectively.

July 30, January 29,

Accrued and Other Current Liabilities:

3 unchanged sentences

Excess inventory purchase obligations (1) 870 954

Deferred revenue (1) 367 354

Accrued payroll and related expenses 642 530

Deferred revenue (2) 421 354

Unsettled share repurchases 217 —

Operating leases 208 176

Licenses and royalties 143 149

Product warranty and return provisions 168 108

Licenses and royalties 144 149

Other 201 186

Total accrued and other current liabilities $ 7,156 $ 4,120

(1) During the second quarter of fiscal years 2024 and 2023, we recorded an expense of approximately $ 232 million and $ 650 million, respectively, 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.

April 30, January 29,

July 30, January 29,

Other Long-Term Liabilities:

7 unchanged sentences

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred Revenue

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

April 30, May 1,

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

July 30, July 31,

(In millions)

3 unchanged sentences

Balance at end of period $ 729 $ 560

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.

Revenue allocated to remaining performance obligations, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods, was $ 717 million as of July 30, 2023.

We expect to recognize approximately 44 % of this revenue over the next twelve months and the remainder thereafter.

12 unchanged sentences

Non-designated hedges $ 367 $ 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 unrealized gains and losses or fair value of our foreign currency forward contracts was not significant as of July 30, 2023 and January 29, 2023.

As of July 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 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.

During the first half 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.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12 - Debt

3 unchanged sentences

Remaining Term (years) Effective

Interest Rate April 30, 2023 January 29, 2023

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

On June 15, 2023, we repaid the 0.309 % Notes Due 2023.

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

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

Note 13 - Commitments and Contingencies

1 unchanged sentence

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.

As of July 30, 2023, we had outstanding inventory purchase and long-term supply and capacity obligations totaling $ 11.15 billion.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

placed, but these changes may result in the payment of costs incurred through the date of cancellation.

Other non-inventory purchase obligations of $ 4.31 billion include $ 3.50 billion of multi-year cloud service agreements.

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

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

(In millions)

2024 (excluding first quarter)

2024 (excluding first half of fiscal year 2024)

2029 and thereafter

1 unchanged sentence

Accrual for Product Warranty Liabilities

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 amount of product warranty liabilities was $ 115 million and $ 82 million as of July 30, 2023 and January 29, 2023, respectively.

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

Three Months Ended

April 30, 2023 May 1, 2022

Six Months Ended

July 30, 2023 July 31, 2022 July 30, 2023 July 31, 2022

(In millions)

Balance at beginning of period

$ 77 $ 55 $ 82 $ 46

42 122 55 138

( 4 ) ( 9 ) ( 22 ) ( 16 )

Balance at end of period

$ 115 $ 168 $ 115 $ 168

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.

9 unchanged sentences

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

On August 25, 2023, a majority of a three-judge Ninth Circuit panel affirmed in part and reversed in part the district court’s dismissal of the case, with a third judge dissenting on the basis that the district court did not err in dismissing the case.

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 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.

As of July 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

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.

During the second quarter and first half of fiscal year 2024, we repurchased 7.5 million shares of our common stock for $ 3.28 billion.

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

Since the inception of our share repurchase program through July 30, 2023, we have repurchased an aggregate of 1.11 billion shares for a total cost of $ 20.40 billion.

As of July 30, 2023, we were authorized, subject to certain specifications, to repurchase shares of our common stock up to $ 3.95 billion.

On August 21, 2023, our Board of Directors approved an increase to our share repurchase program of an additional $ 25.00 billion, without expiration.

From July 31, 2023 through August 24, 2023, we repurchased 2 million shares for $ 998 million pursuant to a Rule 10b5-1 trading plan.

As of August 24, 2023, a total of $ 27.95 billion was available for repurchase.

Our share repurchase program aims to offset dilution from shares issued to employees.

We may pursue additional share repurchases as we weigh market factors and other investment opportunities.

During the second quarter and first half of fiscal year 2024, we paid $ 99 million and $ 199 million in cash dividends to our shareholders, respectively.

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.

Our cash dividend program and the payment of future cash dividends under that program are subject to our Board of Directors'

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

continuing determination that the dividend program and the declaration of dividends thereunder are in the best interests of our shareholders.

Note 15 - Segment Information

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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;

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

electric vehicle computing platforms;

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automotive platforms for infotainment systems;

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

and Omniverse Enterprise software for building and operating 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, 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.

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, contributions, 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.

Depreciation and amortization expense directly attributable to each reportable segment is included in operating results for each segment.

However, the CODM does not evaluate depreciation and amortization expense by operating segment and, therefore, it is not separately presented.

However, our CODM does not evaluate depreciation and amortization expense by operating segment and, therefore, it is not separately presented.

There is no intersegment revenue.

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Compute & Networking Graphics All Other Consolidated

(In millions)

Three Months Ended April 30, 2023

Three Months Ended July 30, 2023

Revenue $ 10,402 $ 3,105 $ — $ 13,507

Operating income (loss) $ 6,728 $ 1,211 $ ( 1,139 ) $ 6,800

Three Months Ended May 1, 2022

Three Months Ended July 31, 2022

Revenue $ 3,907 $ 2,797 $ — $ 6,704

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

Three Months Ended

Six Months Ended July 30, 2023

Revenue $ 14,862 $ 5,837 $ — $ 20,699

Operating income (loss) $ 8,887 $ 2,258 $ ( 2,204 ) $ 8,941

Six Months Ended July 31, 2022

Revenue $ 7,579 $ 7,413 $ — $ 14,992

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

Three Months Ended Six Months Ended

2023 July 31,

2022 July 30,

2023 July 31,

(In millions)

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Stock-based compensation expense $ ( 842 ) $ ( 649 ) $ ( 1,576 ) $ ( 1,227 )

Acquisition-related and other costs ( 173 ) ( 149 )

Unallocated cost of revenue and operating expenses ( 163 ) ( 148 ) ( 317 ) ( 275 )

Acquisition-related and other costs ( 137 ) ( 175 ) ( 311 ) ( 324 )

IP-related and legal settlement costs ( 2 ) — ( 10 ) ( 7 )

Acquisition termination cost — — — ( 1,353 )

Contributions — ( 2 ) — ( 2 )

Other 5 — 10 —

Total $ ( 1,139 ) $ ( 974 ) $ ( 2,204 ) $ ( 3,188 )

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End customer location may be different than our customer’s billing location.

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

Three Months Ended

April 30, May 1,

The following table

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Three Months Ended Six Months Ended

July 30, July 31, July 30, July 31,

2023 2022 2023 2022

(In millions)

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China (including Hong Kong) 2,740 1,602 4,330 3,683

Singapore 762 454

Other countries 1,885 1,910 3,306 3,407

Total revenue $ 13,507 $ 6,704 $ 20,699 $ 14,992

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.

One data center distributor customer represented approximately 17 % and 13 % of total revenue for the second quarter and first half of fiscal year 2024, respectively, and was attributable to the Compute & Networking segment.

There were no customers with 10% or more of total revenue for the second quarter and first half of fiscal year 2023.

A large cloud service provider, or CSP, which primarily purchases indirectly through multiple system integrators and distributors, is estimated to represent approximately 22 % and 19 % of total revenue for the second quarter and first half of fiscal year 2024, respectively, and was attributable to our Compute & Networking segment.

Two customers accounted for 16 % and 13 % of our accounts receivable balance as of July 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

April 30, May 1,

Three Months Ended Six Months Ended

July 30, July 31, July 30, July 31,

2023 2022 2023 2022

(In millions)

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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