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 31,						August 1,						July 31,						August 1,
			2022						2021						2022						2021
Revenue			$	6,704					$	6,507					$	14,992					$	12,168
Cost of revenue			3,789						2,292						6,646						4,324
Gross profit			2,915						4,215						8,346						7,844
Operating expenses
Research and development			1,824						1,245						3,443						2,398
Sales, general and administrative			592						526						1,183						1,046
Acquisition termination cost			—						—						1,353						—
Total operating expenses			2,416						1,771						5,979						3,444
Income from operations			499						2,444						2,367						4,400
Interest income			46						6						64						13
Interest expense			(65)						(60)						(132)						(113)
Other, net			(5)						4						(19)						138
Other income (expense), net			(24)						(50)						(87)						38
Income before income tax			475						2,394						2,280						4,438
Income tax expense (benefit)			(181)						20						6						153
Net income			$	656					$	2,374					$	2,274					$	4,285
Net income per share:
Basic			$	0.26					$	0.95					$	0.91					$	1.72
Diluted			$	0.26					$	0.94					$	0.90					$	1.69
Weighted average shares used in per share computation:
Basic			2,495						2,493						2,500						2,489
Diluted			2,516						2,532						2,526						2,529

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

			Three Months Ended												Six Months Ended
			July 31,						August 1,						July 31,						August 1,
			2022						2021						2022						2021
Net income			$	656					$	2,374					$	2,274					$	4,285
Other comprehensive loss, net of tax
Available-for-sale securities:
Net change in unrealized loss			(12)						—						(35)						(1)
Reclassification adjustments for net realized gain included in net income			1						—						1						—
Net change in unrealized loss			(11)						—						(34)						(1)
Cash flow hedges:
Net unrealized loss			(2)						(14)						(30)						(27)
Reclassification adjustments for net realized gain (loss) included in net income			(13)						8						(15)						17
Net change in unrealized loss			(15)						(6)						(45)						(10)
Other comprehensive loss, net of tax			(26)						(6)						(79)						(11)
Total comprehensive income			$	630					$	2,368					$	2,195					$	4,274

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

			July 31,						January 30,
			2022						2022
ASSETS
Current assets:
Cash and cash equivalents			$	3,013					$	1,990
Marketable securities			14,024						19,218
Accounts receivable, net			5,317						4,650
Inventories			3,889						2,605
Prepaid expenses and other current assets			1,175						366
Total current assets			27,418						28,829
Property and equipment, net			3,233						2,778
Operating lease assets			852						829
Goodwill			4,372						4,349
Intangible assets, net			2,036						2,339
Deferred income tax assets			2,225						1,222
Other assets			3,340						3,841
Total assets			$	43,476					$	44,187
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	2,421					$	1,783
Accrued and other current liabilities			3,903						2,552
Short-term debt			1,249						—
Total current liabilities			7,573						4,335
Long-term debt			9,700						10,946
Long-term operating lease liabilities			743						741
Other long-term liabilities			1,609						1,553
Total liabilities			19,625						17,575
Commitments and contingencies - see Note 13
Shareholders’ equity:
Preferred stock			—						—
Common stock			2						3
Additional paid-in capital			10,968						10,385
Accumulated other comprehensive loss			(90)						(11)
Retained earnings			12,971						16,235
Total shareholders' equity			23,851						26,612
Total liabilities and shareholders' equity			$	43,476					$	44,187

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

(Unaudited)

			Common Stock Outstanding												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, 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
Balances, May 2, 2021			2,491						$	3					$	9,278					$	(11,242)					$	14					$	20,721					$	18,774
Net income			—						—						—						—						—						2,374						2,374
Other comprehensive loss			—						—						—						—						(6)						—						(6)
Issuance of common stock from stock plans			7						—						2						—						—						—						2
Tax withholding related to vesting of restricted stock units			(2)						—						—						(362)						—						—						(362)
Cash dividends declared and paid ($0.04 per common share)			—						—						—						—						—						(100)						(100)
Stock-based compensation			—						—						465						—						—						—						465
Balances, August 1, 2021			2,496						$	3					$	9,745					$	(11,604)					$	8					$	22,995					$	21,147

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

(Unaudited)

			Common Stock Outstanding												Additional Paid-in Capital						Treasury Stock						Accumulated Other Comprehensive Income (Loss)						Retained Earnings						Total Shareholders' Equity
(In millions, except per share data)			Shares						Amount
Balances, January 30, 2022			2,506						$	3					$	10,385					$	—					$	(11)					$	16,235					$	26,612
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
Balances, January 31, 2021			2,479						$	3					$	8,719					$	(10,756)					$	19					$	18,908					$	16,893
Net income			—						—						—						—						—						4,285						4,285
Other comprehensive loss			—						—						—						—						(11)						—						(11)
Issuance of common stock from stock plans			22						—						128						—						—						—						128
Tax withholding related to vesting of restricted stock units			(5)						—						—						(848)						—						—						(848)
Cash dividends declared and paid ($0.08 per common share)			—						—						—						—						—						(198)						(198)
Stock-based compensation			—						—						898						—						—						—						898
Balances, August 1, 2021			2,496						$	3					$	9,745					$	(11,604)					$	8					$	22,995					$	21,147

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

			Six Months Ended
			July 31,						August 1,
			2022						2021
Cash flows from operating activities:
Net income			$	2,274					$	4,285
Adjustments to reconcile net income to net cash provided by operating activities:
Acquisition termination cost			1,353						—
Stock-based compensation expense			1,226						894
Depreciation and amortization			712						567
Losses (gains) on investments in non-affiliates, net			24						(133)
Deferred income taxes			(985)						(161)
Other			18						16
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable			(668)						(1,157)
Inventories			(1,285)						(282)
Prepaid expenses and other assets			(1,554)						18
Accounts payable			559						245
Accrued and other current liabilities			1,267						166
Other long-term liabilities			60						98
Net cash provided by operating activities			3,001						4,556
Cash flows from investing activities:
Proceeds from maturities of marketable securities			10,983						5,236
Proceeds from sales of marketable securities			1,731						705
Purchases of marketable securities			(7,576)						(9,268)
Purchases related to property and equipment and intangible assets			(794)						(481)
Acquisitions, net of cash acquired			(49)						—
Investments and other, net			(65)						3
Net cash provided by (used in) investing activities			4,230						(3,805)
Cash flows from financing activities:
Issuance of debt, net of issuance costs			—						4,985
Proceeds related to employee stock plans			205						128
Payments related to repurchases of common stock			(5,341)						—
Payments related to tax on restricted stock units			(837)						(843)
Dividends paid			(200)						(198)
Principal payments on property and equipment and intangible asset			(36)						(40)
Other			1						(2)
Net cash provided by (used in) financing activities			(6,208)						4,030
Change in cash and cash equivalents			1,023						4,781
Cash and cash equivalents at beginning of period			1,990						847
Cash and cash equivalents at end of period			$	3,013					$	5,628
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net			$	1,108					$	241

See accompanying Notes to Condensed Consolidated Financial Statements.

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 30, 2022 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 30, 2022, 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 30, 2022.

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 30, 2022.

Fiscal Year

We operate on a 52- or 53-week year, ending on the last Sunday in January. Fiscal years 2023 and 2022 are both 52-week years. The second quarters of fiscal years 2023 and 2022 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.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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 in September 2020.

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 2023 and 2035.

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

			Operating Lease Obligations
			(In millions)
Fiscal Year:
2023 (excluding first half of fiscal year 2023)			$	91
2024			169
2025			148
2026			132
2027			123
2028 and thereafter			348
Total			1,011
Less imputed interest			123
Present value of net future minimum lease payments			888
Less short-term operating lease liabilities			145
Long-term operating lease liabilities			$	743

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

Operating lease expenses were $47 million and $42 million for the second quarter of fiscal years 2023 and 2022, respectively, and $90 million and $81 million for the first half of fiscal years 2023 and 2022, respectively. Short-term and variable lease expenses for the second quarter and first half of fiscal years 2023 and 2022 were not significant.

Other information related to leases was as follows:

			Six Months Ended
			July 31, 2022						August 1, 2021
			(In millions)
Supplemental cash flows information
Operating cash flows used for operating leases			$	91					$	75
Operating lease assets obtained in exchange for lease obligations			$	98					$	164

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As of July 31, 2022, our operating leases had a weighted average remaining lease term of 7.1 years and a weighted average discount rate of 2.73%. As of January 30, 2022, our operating leases had a weighted average remaining lease term of 7.1 years and a weighted average discount rate of 2.51%.

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 31, 2022						August 1, 2021						July 31, 2022						August 1, 2021
			(In millions)
Cost of revenue			$	38					$	32					$	76					$	57
Research and development			452						297						836						573
Sales, general and administrative			159						136						315						264
Total			$	649					$	465					$	1,227					$	894

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 30, 2022			46						$	114.19
Granted			22						$	187.51
Vested restricted stock			(11)						$	86.77
Canceled and forfeited			(1)						$	131.19
Balances, July 31, 2022			56						$	148.43

As of July 31, 2022, there was $7.61 billion of aggregate unearned stock-based compensation expense. This amount is expected to be recognized over a weighted average period of 2.8 years for RSUs, PSUs, and market-based PSUs, and 1.0 year for ESPP.

NVIDIA CORPORATION AND SUBSIDIARIES

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 31,						August 1,						July 31,						August 1,
			2022						2021						2022						2021
			(In millions, except per share data)
Numerator:
Net income			$	656					$	2,374					$	2,274					$	4,285
Denominator:
Basic weighted average shares			2,495						2,493						2,500						2,489
Dilutive impact of outstanding equity awards			21						39						26						40
Diluted weighted average shares			2,516						2,532						2,526						2,529
Net income per share:
Basic (1)			$	0.26					$	0.95					$	0.91					$	1.72
Diluted (2)			$	0.26					$	0.94					$	0.90					$	1.69
Equity awards excluded from diluted net income per share because their effect would have been anti-dilutive			33						13						25						15

(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

We recognized an income tax benefit of $181 million and an income tax expense of $6 million for the second quarter and first half of fiscal year 2023, respectively, and an income tax expense of $20 million and $153 million for the second quarter and first half of fiscal year 2022, respectively. Income tax as a percentage of income before income tax was a benefit of 38.0% for the second quarter of fiscal year 2023, and an expense of 0.3% for the first half of fiscal year 2023 and an expense of 0.9% and 3.4% for the second quarter and first half of fiscal year 2022, respectively.

The decrease in our effective tax rate for the second quarter and first half of fiscal year 2023 as compared to the same periods of fiscal year 2022 was primarily due to the increased tax benefit of stock-based compensation, the foreign-derived intangible income deduction, and the U.S. federal research tax credit, relative to a reduction in expected profitability. This is partially offset by the impact of an increase in the proportion of earnings subject to U.S. tax in fiscal year 2023 and the one-time discrete benefit from re-valuing certain deferred tax assets in connection with the domestication of one of our foreign subsidiaries, or the Domestication, in fiscal year 2022.

Our effective tax rate for the first half of fiscal year 2023 was lower than the U.S. federal statutory rate of 21% due to tax benefits from the foreign-derived intangible income deduction, stock-based compensation and the U.S. federal research tax credit.

Our effective tax rate for the first half of fiscal year 2022 was lower than the U.S. federal statutory rate of 21% due to the discrete benefit of the Domestication, tax benefits related to the foreign-derived intangible income deduction, income earned in jurisdictions that are subject to taxes lower than the U.S. federal statutory tax rate, and tax benefits related to the U.S. federal research tax credit and stock-based compensation.

For the first half of fiscal year 2023, there were no material changes to our tax years that remain subject to examination by major tax jurisdictions. We are currently under examination by the Internal Revenue Service for our fiscal years 2018 and 2019. Additionally, there have been no material changes to our unrecognized tax benefits and any related interest or penalties since the fiscal year ended January 30, 2022.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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 31, 2022, we do not believe that our estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next 12 months.

Note 7 - Cash Equivalents and Marketable Securities

Our cash equivalents and marketable securities related to debt securities are classified as “available-for-sale” debt securities.

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

			July 31, 2022
			Amortized Cost						Unrealized Gain						Unrealized Loss						Estimated Fair Value						Reported as
															Cash Equivalents						Marketable Securities
			(In millions)
Corporate debt securities			$	8,016					$	—					$	(18)					$	7,998					$	1,115					$	6,883
Debt securities issued by the United States Treasury			4,068						1						(39)						4,030						108						3,922
Debt securities issued by United States government agencies			3,056						—						(2)						3,054						564						2,490
Certificates of deposit			856						—						—						856						128						728
Money market funds			639						—						—						639						639						—
Foreign government bonds			15						—						—						15						15						—
Total			$	16,650					$	1					$	(59)					$	16,592					$	2,569					$	14,023

			January 30, 2022
			Amortized Cost						Unrealized Gain						Unrealized Loss						Estimated Fair Value						Reported as
															Cash Equivalents						Marketable Securities
			(In millions)
Corporate debt securities			$	9,977					$	—					$	(3)					$	9,974					$	1,102					$	8,872
Debt securities issued by the United States Treasury			7,314						—						(14)						7,300						—						7,300
Debt securities issued by United States government agencies			1,612						—						—						1,612						256						1,356
Certificates of deposit			1,561						—						—						1,561						21						1,540
Money market funds			316						—						—						316						316						—
Foreign government bonds			150						—						—						150						—						150
Total			$	20,930					$	—					$	(17)					$	20,913					$	1,695					$	19,218

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

			July 31, 2022
			Less than 12 Months												12 Months or Greater												Total
			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 United States Treasury			$	2,793					$	(39)					$	—					$	—					$	2,793					$	(39)
Debt securities issued by United States government agencies			2,312						(2)						—						—						2,312						(2)
Corporate debt securities			1,925						(17)						105						(1)						2,030						(18)
Total			$	7,030					$	(58)					$	105					$	(1)					$	7,135					$	(59)

			January 30, 2022
			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 United States Treasury			$	5,292					$	(14)					$	—					$	—					$	5,292					$	(14)
Corporate debt securities			2,445						(3)						19						—						2,464						(3)
Total			$	7,737					$	(17)					$	19					$	—					$	7,756					$	(17)

The gross unrealized losses are related to fixed income securities, driven primarily by changes in interest rates. Net realized gains and unrealized gains and losses were not significant for all periods presented.

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

			July 31, 2022												January 30, 2022
			Amortized Cost						Estimated Fair Value						Amortized Cost						Estimated Fair Value
			(In millions)
Less than one year			$	12,628					$	12,607					$	16,346					$	16,343
Due in 1 - 5 years			4,022						3,985						4,584						4,570
Total			$	16,650					$	16,592					$	20,930					$	20,913

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(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 31, 2022						January 30, 2022
									(In millions)
Assets
Cash equivalents and marketable securities:
Money market funds			Level 1						$	639					$	316
Corporate debt securities			Level 2						$	7,998					$	9,974
Debt securities issued by the United States Treasury			Level 2						$	4,030					$	7,300
Debt securities issued by United States government agencies			Level 2						$	3,054					$	1,612
Certificates of deposit			Level 2						$	856					$	1,561
Foreign government bonds			Level 2						$	15					$	150
Other assets (Investment in non-affiliated entities):
Publicly-held equity securities (1)			Level 1						$	41					$	58
Privately-held equity securities			Level 3						$	266					$	208
Liabilities (2)
0.309% Notes Due 2023			Level 2						$	1,220					$	1,236
0.584% Notes Due 2024			Level 2						$	1,193					$	1,224
3.20% Notes Due 2026			Level 2						$	1,013					$	1,055
1.55% Notes Due 2028			Level 2						$	1,136					$	1,200
2.85% Notes Due 2030			Level 2						$	1,431					$	1,542
2.00% Notes Due 2031			Level 2						$	1,116					$	1,200
3.50% Notes Due 2040			Level 2						$	927					$	1,066
3.50% Notes Due 2050			Level 2						$	1,815					$	2,147
3.70% Notes Due 2060			Level 2						$	451					$	551

(1) Unrealized losses of $7 million and $31 million from investments in publicly-traded equity securities were recorded in other income (expense), net, in the second quarter and first half of fiscal year 2023, respectively. An unrealized loss of $6 million on an investment in a publicly-traded equity security was recorded in other income (expense), net in the second quarter of fiscal year 2022 and an unrealized gain of $118 million was recorded in other income (expense), net in the first half of fiscal year 2022.

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 9 - Amortizable Intangible Assets and Goodwill

The components of our amortizable intangible assets are as follows:

			July 31, 2022																		January 30, 2022
			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
			(In millions)
Acquisition-related intangible assets (1)			$	3,260					$	(1,434)					$	1,826					$	3,418					$	(1,304)					$	2,114
Patents and licensed technology			718						(508)						210						717						(492)						225
Total intangible assets			$	3,978					$	(1,942)					$	2,036					$	4,135					$	(1,796)					$	2,339

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

Amortization expense associated with intangible assets was $182 million and $336 million for the second quarter and first half of fiscal year 2023, respectively, and $138 million and $275 million for the second quarter and first half of fiscal year 2022, respectively. Future amortization expense related to the net carrying amount of intangible assets as of July 31, 2022 is estimated to be $364 million for the remainder of fiscal year 2023, $601 million in fiscal year 2024, $539 million in fiscal year 2025, $245 million in fiscal year 2026, $141 million in fiscal year 2027, and $146 million in fiscal year 2028 and thereafter.

In the first half of fiscal year 2023, goodwill increased by $23 million and intangible assets increased by $32 million from acquisitions. We assigned $14 million of the increase in goodwill to our Compute & Networking segment and $9 million of the increase to our Graphics segment.

Note 10 - Balance Sheet Components

Certain balance sheet components are as follows:

			July 31,						January 30,
			2022						2022
Inventories (1):			(In millions)
Raw materials			$	1,534					$	791
Work in-process			767						692
Finished goods			1,588						1,122
Total inventories			$	3,889					$	2,605

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

			July 31,						January 30,
			2022						2022
Other assets:			(In millions)
Prepaid supply agreements			$	2,523					$	1,747
Prepaid royalties			399						409
Investment in non-affiliated entities			307						266
Advanced consideration for acquisition (1)			—						1,353
Other			111						66
Total other assets			$	3,340					$	3,841

(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)

(Unaudited)

			July 31,						January 30,
			2022						2022
Accrued and Other Current Liabilities:			(In millions)
Customer program accruals			$	1,463					$	1,000
Excess inventory purchase obligations (1)			866						196
Accrued payroll and related expenses			421						409
Deferred revenue (2)			359						300
Product warranty			168						46
Taxes payable			158						132
Other			468						469
Total accrued and other current liabilities			$	3,903					$	2,552

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

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

			July 31,						January 30,
			2022						2022
Other Long-Term Liabilities:			(In millions)
Income tax payable (1)			$	1,022					$	980
Deferred income tax			252						245
Deferred revenue (2)			201						202
Other			134						126
Total other long-term liabilities			$	1,609					$	1,553

(1) As of July 31, 2022, income tax payable represents the long-term portion of the one-time transition tax payable of $188 million, unrecognized tax benefits of $762 million, and related interest and penalties of $72 million. As of January 30, 2022, income tax payable represents the long-term portion of the one-time transition tax payable of $251 million, unrecognized tax benefits of $670 million, and related interest and penalties of $59 million.

(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 half of fiscal years 2023 and 2022:

			July 31,						August 1,
			2022						2021
			(In millions)
Balance at beginning of period			$	502					$	451
Deferred revenue additions during the period			399						401
Revenue recognized during the period			(341)						(362)
Balance at end of period			$	560					$	490

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 July 31, 2022, $645 million of revenue related to performance obligations had not been recognized, of which we expect to recognize approximately 48% over the next twelve months and the remainder thereafter. This excludes revenue related to performance obligations for contracts with a length of one year or less.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

We also enter into foreign currency forward contracts to mitigate the impact of foreign currency movements on monetary assets and liabilities that are denominated in currencies other than the U.S. 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 as of July 31, 2022 and January 30, 2022:

			July 31, 2022						January 30, 2022
			(In millions)
Designated as cash flow hedges			$	1,090					$	1,023
Not designated for hedge accounting			$	378					$	408

As of July 31, 2022, all designated foreign currency forward contracts mature within 18 months. The expected realized gains and losses deferred into accumulated other comprehensive income or loss related to foreign currency forward contracts within the next twelve months was not significant.

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 12 - Debt

Long-Term Debt

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

																		Carrying Value at
						Expected Remaining Term (years)						Effective Interest Rate						July 31, 2022						January 30, 2022
																		(In millions)
0.309% Notes Due 2023						0.9						0.41%						$	1,250					$	1,250
0.584% Notes Due 2024						1.9						0.66%						1,250						1,250
3.20% Notes Due 2026						4.1						3.31%						1,000						1,000
1.55% Notes Due 2028						5.9						1.64%						1,250						1,250
2.85% Notes Due 2030						7.7						2.93%						1,500						1,500
2.00% Notes Due 2031						8.9						2.09%						1,250						1,250
3.50% Notes Due 2040						17.7						3.54%						1,000						1,000
3.50% Notes Due 2050						27.7						3.54%						2,000						2,000
3.70% Notes Due 2060						37.7						3.73%						500						500
Unamortized debt discount and issuance costs																		(51)						(54)
Net carrying amount																		$	10,949					$	10,946
Less short-term portion																		(1,249)						—
Total long-term portion																		$	9,700					$	10,946

All our notes are unsecured senior obligations. 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.

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

Commercial Paper

We have a $575 million commercial paper program to support general corporate purposes. As of July 31, 2022, we had not 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 $929 million remaining unpaid. As of July 31, 2022, we had outstanding inventory purchase and long-term supply obligations totaling $9.22 billion, inclusive of the $929 million. We also had other purchase obligations totaling $1.36 billion.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

			Commitments
			(In millions)
Fiscal Year:
2023 (excluding first half of fiscal year 2023)			$	7,108
2024			2,730
2025			295
2026			49
2027			71
2028 and thereafter			331
Total			$	10,584

Accrual for Product Warranty Liabilities

The estimated amount of product warranty liabilities was $168 million and $46 million as of July 31, 2022 and January 30, 2022, respectively. In the second quarter of fiscal year 2023, we recorded $122 million in product warranty liabilities primarily related to a defect identified in a third-party component embedded in certain Data Center products. The estimated product returns and estimated product warranty activity consisted of the following:

			Three Months Ended												Six Months Ended
			July 31,						August 1,						July 31,						August 1,
			2022						2021						2022						2021
			(In millions)
Balance at beginning of period			$	55					$	30					$	46					$	22
Additions			122						4						138						15
Deductions			(9)						(3)						(16)						(6)
Balance at end of period			$	168					$	31					$	168					$	31

In connection with certain agreements that we have entered in the past, we have provided indemnities for matters such as tax, product, and employee liabilities. We have included intellectual property indemnification provisions in our technology-related agreements with third parties. 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.

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 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)

(Unaudited)

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.

Settlement

In May 2022, NVIDIA entered into a settlement with the SEC relating to MD&A disclosures in our Forms 10-Q for the second and third quarters of fiscal year 2018 concerning the impact of cryptocurrency mining on year-over-year growth in revenue for our gaming specialized market during those periods. As part of the settlement, without admitting or denying the findings in the administrative order issued by the SEC, NVIDIA agreed to cease-and-desist from violating certain federal securities laws and paid a $5.5 million civil penalty.

Accounting for Loss Contingencies

As of July 31, 2022, we have not recorded any accrual for contingent liabilities associated with the legal proceedings described above based on our belief that liabilities, while possible, are not probable. Further, except as specifically described above, any possible loss or range of loss in these matters cannot be reasonably estimated at this time. 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 2023, we repurchased a total of 19 million and 28 million shares for $3.35 billion and $5.34 billion, respectively. Through July 31, 2022, we have repurchased an aggregate of 1.07 billion shares under our share repurchase program for a total cost of $12.42 billion. As of July 31, 2022, we were authorized, subject to certain specifications, to repurchase additional common stock up to a total of $11.93 billion through December 2023.

During the second quarter and first half of fiscal year 2023, we paid $100 million and $200 million in cash dividends to our shareholders, respectively. During the second quarter and first half of fiscal year 2022, we paid $100 million and $198 million in cash dividends to our shareholders, respectively.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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 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; vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building 3D designs and virtual worlds.

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; Jetson for robotics and other embedded platforms; and NVIDIA AI Enterprise and other software.

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 Graphics or Compute & Networking for purposes of making operating decisions or assessing financial performance. The expenses include stock-based compensation expense, corporate infrastructure and support costs, acquisition-related costs, IP-related costs, and other non-recurring charges and benefits that our CODM deems to be enterprise in nature.

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. 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.

			Graphics						Compute & Networking						All Other						Consolidated
			(In millions)
Three Months Ended July 31, 2022
Revenue			$	2,797					$	3,907					$	—					$	6,704
Operating income (loss)			$	657					$	816					$	(974)					$	499
Three Months Ended August 1, 2021
Revenue			$	3,907					$	2,600					$	—					$	6,507
Operating income (loss)			$	2,127					$	1,034					$	(717)					$	2,444
Six Months Ended July 31, 2022
Revenue			$	7,413					$	7,579					$	—					$	14,992
Operating income (loss)			$	3,133					$	2,422					$	(3,188)					$	2,367
Six Months Ended August 1, 2021
Revenue			$	7,358					$	4,810					$	—					$	12,168
Operating income (loss)			$	3,913					$	1,895					$	(1,408)					$	4,400

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

			Three Months Ended												Six Months Ended
			July 31, 2022						August 1, 2021						July 31, 2022						August 1, 2021
			(In millions)
Reconciling items included in "All Other" category:
Stock-based compensation expense			$	(649)					$	(465)					$	(1,227)					$	(894)
Acquisition-related and other costs			(175)						(158)						(324)						(325)
Unallocated cost of revenue and operating expenses			(148)						(90)						(275)						(180)
Contributions			(2)						—						(2)						—
IP-related and legal settlement costs			—						(4)						(7)						(9)
Acquisition termination cost			—						—						(1,353)						—
Total			$	(974)					$	(717)					$	(3,188)					$	(1,408)

Revenue by geographic region is allocated to individual countries based on the location to which the products are initially billed even if our customers’ revenue is attributable to end customers that are located in a different location. The following table summarizes information pertaining to our revenue from customers based on the invoicing address by geographic regions:

			Three Months Ended												Six Months Ended
			July 31,						August 1,						July 31,						August 1,
			2022						2021						2022						2021
			(In millions)
Revenue:
United States			$	1,988					$	996					$	3,921					$	1,764
China (including Hong Kong)			1,602						1,720						3,683						3,111
Taiwan			1,204						1,961						3,981						3,745
Other countries			1,910						1,830						3,407						3,548
Total revenue			$	6,704					$	6,507					$	14,992					$	12,168

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

			Three Months Ended												Six Months Ended
			July 31,						August 1,						July 31,						August 1,
			2022						2021						2022						2021
			(In millions)
Revenue:
Gaming			$	2,042					$	3,061					$	5,662					$	5,821
Data Center			3,806						2,366						7,556						4,414
Professional Visualization			496						519						1,118						891
Automotive			220						152						358						306
OEM and Other			140						409						298						736
Total revenue			$	6,704					$	6,507					$	14,992					$	12,168

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

Two customers each represented 10% or more of accounts receivable for a total of 21% of our accounts receivable balance as of July 31, 2022. Two customers each represented 10% or more of accounts receivable for a total of 22% as of January 30, 2022.