UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-23985

NVIDIA CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	94-3177549
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
2788 San Tomas Expressway, Santa Clara, California	95051
(Address of principal executive offices)	(Zip Code)

(408) 486-2000

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	NVDA	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of common stock, $0.001 par value, outstanding as of August 18, 2023, was 2.47 billion.

NVIDIA CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED JULY 30, 2023

TABLE OF CONTENTS

		Page
	PART I : FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	a) Condensed Consolidated Statements of Income for the three and six months ended July 30, 2023 and July 31, 2022	3
	b) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 30, 2023 and July 31, 2022	4
	c) Condensed Consolidated Balance Sheets as of July 30, 2023 and January 29, 2023	5
	d) Condensed Consolidated Statements of Shareholders' Equity for the three and six months ended July 30, 2023 and July 31, 2022	6
	e) Condensed Consolidated Statements of Cash Flows for the six months ended July 30, 2023 and July 31, 2022	8
	f) Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
	PART II : OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
Signature		47

WHERE YOU CAN FIND MORE INFORMATION

Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We also use the following social media channels as a means of disclosing information about the company, our products, our planned financial and other announcements and attendance at upcoming investor and industry conferences, and other matters, and for complying with our disclosure obligations under Regulation FD: 

NVIDIA Company Blog (http://blogs.nvidia.com)

NVIDIA LinkedIn Page (http://www.linkedin.com/company/nvidia)

NVIDIA Facebook Page (https://www.facebook.com/nvidia)

NVIDIA Instagram Page (https://www.instagram.com/nvidia)

NVIDIA Twitter Account (https://twitter.com/nvidia)

In addition, investors and others can view NVIDIA videos on YouTube (https://www.YouTube.com/nvidia).

The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these accounts and the blog, in addition to following our press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q. These channels may be updated from time to time on NVIDIA's investor relations website.

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)

	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
Cost of revenue	4,045		3,789		6,589		6,646
Gross profit	9,462		2,915		14,110		8,346
Operating expenses
Research and development	2,040		1,824		3,916		3,443
Sales, general and administrative	622		592		1,253		1,183
Acquisition termination cost	—		—		—		1,353
Total operating expenses	2,662		2,416		5,169		5,979
Operating income	6,800		499		8,941		2,367
Interest income	187		46		338		64
Interest expense	(65)		(65)		(131)		(132)
Other, net	59		(5)		42		(19)
Other income (expense), net	181		(24)		249		(87)
Income before income tax	6,981		475		9,190		2,280
Income tax expense (benefit)	793		(181)		958		6
Net income	$	6,188	$	656	$	8,232	$	2,274
Net income per share:
Basic	$	2.50	$	0.26	$	3.33	$	0.91
Diluted	$	2.48	$	0.26	$	3.30	$	0.90
Weighted average shares used in per share computation:
Basic	2,473		2,495		2,472		2,500
Diluted	2,499		2,516		2,495		2,526

See accompanying Notes to Condensed Consolidated Financial Statements.

3

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

	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
Other comprehensive loss, net of tax
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 gain (loss)	22		(2)		8		(30)
Reclassification adjustments for net realized loss included in net income	(12)		(13)		(23)		(15)
Net change in unrealized gain (loss)	10		(15)		(15)		(45)
Other comprehensive loss, net of tax	(1)		(26)		(8)		(79)
Total comprehensive income	$	6,187	$	630	$	8,224	$	2,195

See accompanying Notes to Condensed Consolidated Financial Statements.

4

NVIDIA CORPORATION AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

	July 30,		January 29,
	2023		2023
ASSETS
Current assets:
Cash and cash equivalents	$	5,783	$	3,389
Marketable securities	10,240		9,907
Accounts receivable, net	7,066		3,827
Inventories	4,319		5,159
Prepaid expenses and other current assets	1,389		791
Total current assets	28,797		23,073
Property and equipment, net	3,799		3,807
Operating lease assets	1,235		1,038
Goodwill	4,430		4,372
Intangible assets, net	1,395		1,676
Deferred income tax assets	5,398		3,396
Other assets	4,501		3,820
Total assets	$	49,555	$	41,182
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,929	$	1,193
Accrued and other current liabilities	7,156		4,120
Short-term debt	1,249		1,250
Total current liabilities	10,334		6,563
Long-term debt	8,456		9,703
Long-term operating lease liabilities	1,041		902
Other long-term liabilities	2,223		1,913
Total liabilities	22,054		19,081
Commitments and contingencies - see Note 13
Shareholders’ equity:
Preferred stock	—		—
Common stock	2		2
Additional paid-in capital	12,629		11,971
Accumulated other comprehensive loss	(51)		(43)
Retained earnings	14,921		10,171
Total shareholders' equity	27,501		22,101
Total liabilities and shareholders' equity	$	49,555	$	41,182

See accompanying Notes to Condensed Consolidated Financial Statements.

5

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

(Unaudited)

	Common Stock 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.

6

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

(Unaudited)

	Common Stock 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
Net income	—	—		—		—		8,232		8,232
Other comprehensive loss	—	—		—		(8)		—		(8)
Issuance of common stock from stock plans	14	—		247		—		—		247
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)	—	—		—		—		(199)		(199)
Stock-based compensation	—	—		1,591		—		—		1,591
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
Net income	—	—		—		—		2,274		2,274
Other comprehensive loss	—	—		—		(79)		—		(79)
Issuance of common stock from stock plans	15	—		205		—		—		205
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)	—	—		—		—		(200)		(200)
Stock-based compensation	—	—		1,217		—		—		1,217
Balances, July 31, 2022	2,489	$	2	$	10,968	$	(90)	$	12,971	$	23,851

See accompanying Notes to Condensed Consolidated Financial Statements.

7

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Six Months Ended
	July 30,		July 31,
	2023		2022
Cash flows from operating activities:
Net income	$	8,232	$	2,274
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense	1,576		1,226
Depreciation and amortization	749		712
(Gains) losses on investments in non-affiliates, net	(45)		24
Deferred income taxes	(1,881)		(985)
Acquisition termination cost	—		1,353
Other	(102)		18
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(3,239)		(668)
Inventories	861		(1,285)
Prepaid expenses and other assets	(592)		(1,554)
Accounts payable	789		559
Accrued and other current liabilities	2,675		1,267
Other long-term liabilities	236		60
Net cash provided by operating activities	9,259		3,001
Cash flows from investing activities:
Proceeds from maturities of marketable securities	5,111		10,983
Proceeds from sales of marketable securities	—		1,731
Purchases of marketable securities	(5,343)		(7,576)
Purchases related to property and equipment and intangible assets	(537)		(794)
Acquisitions, net of cash acquired	(83)		(49)
Investments and other, net	(435)		(65)
Net cash provided by (used in) investing activities	(1,287)		4,230
Cash flows from financing activities:
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)
Dividends paid	(199)		(200)
Principal payments on property and equipment and intangible assets	(31)		(36)
Other	—		1
Net cash used in financing activities	(5,479)		(6,208)
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.

8

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, or SEC, Regulation S-X. The January 29, 2023 consolidated balance sheet was derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 29, 2023, as filed with the SEC, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair statement of results of operations and financial position, have been included. The results for the interim periods presented are not necessarily indicative of the results expected for any future period. 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 29, 2023. 

Significant Accounting Policies

There have been no material changes to our significant accounting policies disclosed in Note 1 - Organization and Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 29, 2023.

Fiscal Year

We operate on a 52- or 53-week year, ending on the last Sunday in January. Fiscal years 2024 and 2023 are both 52-week years. The second 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.

Principles of Consolidation

Our condensed consolidated financial statements include the accounts of NVIDIA Corporation and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

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 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

9

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

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 July 30, 2023 are as follows:

	Operating Lease Obligations
	(In millions)
Fiscal Year:
2024 (excluding first half of fiscal year 2024)	$	134
2025	249
2026	227
2027	211
2028	191
2029 and thereafter	415
Total	1,427
Less imputed interest	178
Present value of net future minimum lease payments	1,249
Less short-term operating lease liabilities	208
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 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.

10

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Other information related to leases was as follows:

	Six Months Ended
	July 30, 2023		July 31, 2022
	(In millions)
Supplemental cash flows information
Operating cash flows used for operating leases	$	135	$	91
Operating lease assets obtained in exchange for lease obligations	$	299	$	98

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%.

Note 4 - Stock-Based Compensation

Our stock-based compensation expense is associated with restricted stock units, or RSUs, performance stock units that are based on our corporate financial performance targets, or PSUs, performance stock units that are based on market conditions, or market-based PSUs, and our employee stock purchase plan, or ESPP.

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

	Three Months Ended				Six Months Ended
	July 30, 2023		July 31, 2022		July 30, 2023		July 31, 2022
	(In millions)
Cost of revenue	$	31	$	38	$	58	$	76
Research and development	600		452		1,124		836
Sales, general and administrative	211		159		394		315
Total	$	842	$	649	$	1,576	$	1,227

Equity Award Activity

The following is a summary of our equity award transactions under our equity incentive plans:

	RSUs, PSUs, and Market-based PSUs Outstanding
	Number of Shares	Weighted Average Grant-Date Fair Value Per Share
	(In millions, except per share data)
Balances, January 29, 2023	45	$	158.45
Granted	13	$	359.70
Vested restricted stock	(11)	$	127.12
Canceled and forfeited	(1)	$	194.70
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.

11

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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				Six Months Ended
	July 30,		July 31,		July 30,		July 31,
	2023		2022		2023		2022
	(In millions, except per share data)
Numerator:
Net income	$	6,188	$	656	$	8,232	$	2,274
Denominator:
Basic weighted average shares	2,473		2,495		2,472		2,500
Dilutive impact of outstanding equity awards	26		21		23		26
Diluted weighted average shares	2,499		2,516		2,495		2,526
Net income per share:
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

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

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

Note 6 – Income Taxes

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 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. 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.

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 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.

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(Unaudited)

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:

	July 30, 2023
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value		Reported as
									Cash Equivalents		Marketable Securities
	(In millions)
Corporate debt securities	$	5,990	$	1	$	(13)	$	5,978	$	2,149	$	3,829
Debt securities issued by the U.S. Treasury	3,716		—		(31)		3,685		—		3,685
Debt securities issued by U.S. government agencies	2,903		—		(4)		2,899		647		2,252
Money market funds	2,348		—		—		2,348		2,348		—
Certificates of deposit	690		—		—		690		265		425
Foreign government bonds	248		—		—		248		199		49
Total	$	15,895	$	1	$	(48)	$	15,848	$	5,608	$	10,240

	January 29, 2023
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value		Reported as
									Cash Equivalents		Marketable Securities
	(In millions)
Corporate debt securities	$	4,809	$	—	$	(12)	$	4,797	$	1,087	$	3,710
Debt securities issued by the U.S. Treasury	4,185		1		(44)		4,142		—		4,142
Debt securities issued by U.S. government agencies	1,836		—		(2)		1,834		50		1,784
Money market funds	1,777		—		—		1,777		1,777		—
Certificates of deposit	365		—		—		365		134		231
Foreign government bonds	140		—		—		140		100		40
Total	$	13,112	$	1	$	(58)	$	13,055	$	3,148	$	9,907

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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 30, 2023
	Less than 12 Months				12 Months or Greater				Total
	Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss
	(In millions)
Debt securities issued by the U.S. 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)
Total	$	5,197	$	(29)	$	2,177	$	(19)	$	7,374	$	(48)

	January 29, 2023
	Less than 12 Months				12 Months or Greater				Total
	Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss		Estimated Fair Value		Gross Unrealized Loss
	(In millions)
Debt securities issued by the U.S. Treasury	$	2,444	$	(21)	$	1,172	$	(23)	$	3,616	$	(44)
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)

The gross unrealized losses are related to fixed income securities, driven primarily by changes in interest rates. 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 are shown below by contractual maturity.

	July 30, 2023				January 29, 2023
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(In millions)
Less than one year	$	12,613	$	12,592	$	9,738	$	9,708
Due in 1 - 5 years	3,282		3,256		3,374		3,347
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.

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(Unaudited)

Note 8 – Fair Value of Financial Assets and Liabilities

The fair values of our financial assets and liabilities are determined using quoted market prices of identical assets or quoted market prices of similar assets from active markets. We review fair value hierarchy classification on a quarterly basis.

		Fair Value at
	Pricing Category	July 30, 2023		January 29, 2023
		(In millions)
Assets
Cash equivalents and marketable securities:
Money market funds	Level 1	$	2,348	$	1,777
Corporate debt securities	Level 2	$	5,978	$	4,797
Debt securities issued by the U.S. Treasury	Level 2	$	3,685	$	4,142
Debt securities issued by U.S. government agencies	Level 2	$	2,899	$	1,834
Certificates of deposit	Level 2	$	690	$	365
Foreign government bonds	Level 2	$	248	$	140
Other assets (Investments in non-affiliated entities):
Publicly-held equity securities	Level 1	$	124	$	11
Privately-held equity securities	Level 3	$	676	$	288
Liabilities (1)
0.309% Notes Due 2023	Level 2	$	—	$	1,230
0.584% Notes Due 2024	Level 2	$	1,199	$	1,185
3.20% Notes Due 2026	Level 2	$	959	$	966
1.55% Notes Due 2028	Level 2	$	1,089	$	1,099
2.85% Notes Due 2030	Level 2	$	1,355	$	1,364
2.00% Notes Due 2031	Level 2	$	1,042	$	1,044
3.50% Notes Due 2040	Level 2	$	848	$	870
3.50% Notes Due 2050	Level 2	$	1,609	$	1,637
3.70% Notes Due 2060	Level 2	$	406	$	410

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

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(Unaudited)

Note 9 - Amortizable Intangible Assets and Goodwill

The components of our amortizable intangible assets are as follows:

	July 30, 2023						January 29, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(In millions)
Acquisition-related intangible assets	$	2,642	$	(1,448)	$	1,194	$	3,093	$	(1,614)	$	1,479
Patents and licensed technology	453		(252)		201		446		(249)		197
Total intangible assets	$	3,095	$	(1,700)	$	1,395	$	3,539	$	(1,863)	$	1,676

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)
Fiscal Year:
2024 (excluding first half of fiscal year 2024)	$	288
2025	554
2026	259
2027	149
2028	36
2029 and thereafter	109
Total	$	1,395

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:

	July 30,		January 29,
	2023		2023
Inventories (1):	(In millions)
Raw materials	$	1,632	$	2,430
Work in-process	1,058		466
Finished goods	1,629		2,263
Total inventories	$	4,319	$	5,159

(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.

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(Unaudited)

	July 30,		January 29,
	2023		2023
Other Assets:	(In millions)
Prepaid supply and capacity agreements (1)	$	3,008	$	2,989
Investments in non-affiliated entities	800		299
Prepaid royalties	375		387
Prepaid cloud services	170		23
Other	148		122
Total other assets	$	4,501	$	3,820

(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,
	2023		2023
Accrued and Other Current Liabilities:	(In millions)
Taxes payable	$	2,803	$	467
Customer program accruals	1,482		1,196
Excess inventory purchase obligations (1)	870		954
Accrued payroll and related expenses	642		530
Deferred revenue (2)	421		354
Unsettled share repurchases	217		—
Operating leases	208		176
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.

	July 30,		January 29,
	2023		2023
Other Long-Term Liabilities:	(In millions)
Income tax payable (1)	$	1,350	$	1,204
Deferred income tax	373		247
Deferred revenue (2)	308		218
Licenses payable	127		181
Other	65		63
Total other long-term liabilities	$	2,223	$	1,913

(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.

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(Unaudited)

Deferred Revenue

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

	July 30,		July 31,
	2023		2022
	(In millions)
Balance at beginning of period	$	572	$	502
Deferred revenue additions during the period	713		399
Revenue recognized during the period	(556)		(341)
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 $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. This excludes revenue related to performance obligations for contracts with a length of one year or less.

Note 11 - Derivative Financial Instruments

We enter into foreign currency forward contracts to mitigate the impact of foreign currency exchange rate movements on our operating expenses. These contracts are designated as cash flow hedges for hedge accounting treatment. 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.

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. dollar. These forward contracts were not designated for hedge accounting treatment. 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:

	July 30, 2023		January 29, 2023
	(In millions)
Designated as cash flow hedges	$	1,138	$	1,128
Non-designated hedges	$	367	$	366

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 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.

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(Unaudited)

Note 12 - Debt

Long-Term Debt

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

			Carrying Value at
	Expected Remaining Term (years)	Effective Interest Rate	July 30, 2023		January 29, 2023
			(In millions)
0.309% Notes Due 2023	—	0.41%	$	—	$	1,250
0.584% Notes Due 2024	0.9	0.66%	1,250		1,250
3.20% Notes Due 2026	3.1	3.31%	1,000		1,000
1.55% Notes Due 2028	4.9	1.64%	1,250		1,250
2.85% Notes Due 2030	6.7	2.93%	1,500		1,500
2.00% Notes Due 2031	7.9	2.09%	1,250		1,250
3.50% Notes Due 2040	16.7	3.54%	1,000		1,000
3.50% Notes Due 2050	26.7	3.54%	2,000		2,000
3.70% Notes Due 2060	36.7	3.73%	500		500
Unamortized debt discount and issuance costs			(45)		(47)
Net carrying amount			9,705		10,953
Less short-term portion			(1,249)		(1,250)
Total long-term portion			$	8,456	$	9,703

All our notes are unsecured senior obligations. All existing and future liabilities of our subsidiaries will be effectively senior to the notes. Our notes pay interest semi-annually. We may redeem each of our notes prior to maturity, subject to a make-whole premium as defined in the applicable form of note.

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 July 30, 2023, we had not issued any commercial paper.

Note 13 - Commitments and Contingencies

Purchase Obligations

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

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(Unaudited)

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 July 30, 2023 are as follows:

	Commitments
	(In millions)
Fiscal Year:
2024 (excluding first half of fiscal year 2024)	$	8,439
2025	3,960
2026	957
2027	999
2028	637
2029 and thereafter	468
Total	$	15,460

Accrual for Product Warranty Liabilities

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				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
Additions	42		122		55		138
Utilization	(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. We have included intellectual property indemnification provisions in our technology-related agreements with third parties. Maximum potential future payments cannot be estimated because many of these agreements do not have a maximum stated liability. We have not recorded any liability in our Condensed Consolidated Financial Statements for such indemnifications.

Litigation

Securities Class Action and Derivative Lawsuits

The plaintiffs in the putative securities class action lawsuit, captioned 4:18-cv-07669-HSG, initially filed on December 21, 2018 in the United States District Court for the Northern District of California, and titled In Re NVIDIA Corporation Securities Litigation, filed an amended complaint on May 13, 2020. The amended complaint asserted that NVIDIA and certain NVIDIA executives violated Section 10(b) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and SEC Rule 10b-5, by making materially false or misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand between May 10, 2017 and November 14, 2018. Plaintiffs also alleged that the NVIDIA executives who they named as defendants violated Section 20(a) of the Exchange Act. Plaintiffs sought class certification, an award of unspecified compensatory damages, an award of reasonable costs and expenses, including attorneys’ fees and expert fees, and further relief as the Court may deem just and proper. 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

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(Unaudited)

in the United States Court of Appeals for the Ninth Circuit, case number 21-15604. 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. On February 22, 2022, the court administratively closed the case, but stated that it would reopen the case once the appeal in the In Re NVIDIA Corporation Securities Litigation action is resolved. The lawsuit asserts claims, purportedly on behalf of us, against certain officers and directors of the Company for breach of fiduciary duty, unjust enrichment, waste of corporate assets, and violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act based on the dissemination of allegedly false and misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand. The plaintiffs are seeking unspecified damages and other relief, including reforms and improvements to NVIDIA’s corporate governance and internal procedures.

The putative derivative actions initially filed September 24, 2019 and pending in the United States District Court for the District of Delaware, Lipchitz v. Huang, et al. (Case No. 1:19-cv-01795-UNA) and Nelson v. Huang, et. al. (Case No. 1:19-cv-01798- UNA), remain stayed pending resolution of the plaintiffs’ appeal in the In Re NVIDIA Corporation Securities Litigation action. The lawsuits assert claims, purportedly on behalf of us, against certain officers and directors of the Company for breach of fiduciary duty, unjust enrichment, insider trading, misappropriation of information, corporate waste and violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act based on the dissemination of allegedly false, and misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand. The plaintiffs seek unspecified damages and other relief, including disgorgement of profits from the sale of NVIDIA stock and unspecified corporate governance measures.

Accounting for Loss Contingencies

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

Note 14 - Shareholders’ Equity 

Capital Return Program 

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'

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(Unaudited)

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.

The Compute & Networking segment includes our Data Center accelerated computing platform; networking; 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; 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 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, 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, our CODM does not evaluate depreciation and amortization expense by operating segment and, therefore, it is not separately presented. There is no intersegment revenue. The accounting policies for segment reporting are the same as for our consolidated financial statements. The table below presents details of our reportable segments and the “All Other” category.

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(Unaudited)

	Compute & Networking		Graphics		All Other		Consolidated
	(In millions)
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 July 31, 2022
Revenue	$	3,907	$	2,797	$	—	$	6,704
Operating income (loss)	$	816	$	657	$	(974)	$	499
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
	July 30, 2023		July 31, 2022		July 30, 2023		July 31, 2022
	(In millions)
Reconciling items included in "All Other" category:
Stock-based compensation expense	$	(842)	$	(649)	$	(1,576)	$	(1,227)
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