NVIDIA CORP [NVDA] Filings

10-Q 1 nvda-20220501.htm 10-Q nvda-20220501

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 May 1, 2022


☐			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

(408) 486-2000

(Address, including zip code, and telephone number,

including area code, of principal executive offices)

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 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 May 20, 2022, was 2.50 billion.

NVIDIA CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED May 1, 2022

TABLE OF CONTENTS


		Page
	PART I : FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	a) Condensed Consolidated Statements of Income for the three months ended May 1, 2022 and May 2, 2021	3

	b) Condensed Consolidated Statements of Comprehensive Income for the three months ended May 1, 2022 and May 2, 2021	4

	c) Condensed Consolidated Balance Sheets as of May 1, 2022 and January 30, 2022	5

	d) Condensed Consolidated Statements of Shareholders' Equity for the three months ended May 1, 2022 and May 2, 2021	6

	e) Condensed Consolidated Statements of Cash Flows for the three months ended May 1, 2022 and May 2, 2021	7

	f) Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

	PART II : OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 6.	Exhibits	37

Signature		38

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

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

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

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

NVIDIA Instagram Page (https://www.instagram.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.

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
	May 1,		May 2,
	2022		2021

Revenue	$	8,288	$	5,661
Cost of revenue	2,857		2,032
Gross profit	5,431		3,629
Operating expenses
Research and development	1,618		1,153
Sales, general and administrative	592		520
Acquisition termination cost	1,353		—

Total operating expenses	3,563		1,673
Income from operations	1,868		1,956
Interest income	18		6
Interest expense	(68)		(53)
Other, net	(13)		135
Other income (expense), net	(63)		88
Income before income tax	1,805		2,044
Income tax expense	187		132
Net income	$	1,618	$	1,912

Net income per share:
Basic	$	0.65	$	0.77
Diluted	$	0.64	$	0.76

Weighted average shares used in per share computation:
Basic	2,506		2,484
Diluted	2,537		2,528

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended
	May 1,		May 2,
	2022		2021

Net income	$	1,618	$	1,912
Other comprehensive loss, net of tax
Available-for-sale securities:
Net change in unrealized loss	(22)		—


Cash flow hedges:
Net unrealized loss	(29)		(14)
Reclassification adjustments for net realized gain (loss) included in net income	(2)		9
Net change in unrealized loss	(31)		(5)
Other comprehensive loss, net of tax	(53)		(5)
Total comprehensive income	$	1,565	$	1,907

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)


	May 1,		January 30,
	2022		2022
ASSETS
Current assets:
Cash and cash equivalents	$	3,887	$	1,990
Marketable securities	16,451		19,218
Accounts receivable, net	5,438		4,650
Inventories	3,163		2,605
Prepaid expenses and other current assets	636		366
Total current assets	29,575		28,829
Property and equipment, net	2,916		2,778
Operating lease assets	856		829
Goodwill	4,365		4,349
Intangible assets, net	2,211		2,339
Deferred income tax assets	1,784		1,222
Other assets	3,505		3,841
Total assets	$	45,212	$	44,187

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,999	$	1,783
Accrued and other current liabilities	3,563		2,552

Total current liabilities	5,562		4,335
Long-term debt	10,947		10,946
Long-term operating lease liabilities	752		741
Other long-term liabilities	1,631		1,553
Total liabilities	18,892		17,575
Commitments and contingencies - see Note 13

Shareholders’ equity:
Preferred stock	—		—
Common stock	3		3
Additional paid-in capital	10,623		10,385

Accumulated other comprehensive loss	(64)		(11)
Retained earnings	15,758		16,235
Total shareholders' equity	26,320		26,612
Total liabilities and shareholders' equity	$	45,212	$	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 MAY 1, 2022 AND MAY 2, 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	—	—		—		—		—		1,618		1,618
Other comprehensive loss	—	—		—		—		(53)		—		(53)
Issuance of common stock from stock plans	9	—		204		—		—		—		204
Tax withholding related to vesting of restricted stock units	(2)	—		(538)		—		—		—		(538)
Share repurchase	(9)	—		(1)		—		—		(1,995)		(1,996)
Cash dividends declared and paid ($0.04 per common share)	—	—		—		—		—		(100)		(100)

Stock-based compensation	—	—		573		—		—		—		573
Balances, May 1, 2022	2,504	$	3	$	10,623	$	—	$	(64)	$	15,758	$	26,320
Balances, January 31, 2021	2,479	$	3	$	8,719	$	(10,756)	$	19	$	18,908	$	16,893
Net income	—	—		—		—		—		1,912		1,912
Other comprehensive loss	—	—		—		—		(5)		—		(5)
Issuance of common stock from stock plans	15	—		126		—		—		—		126
Tax withholding related to vesting of restricted stock units	(3)	—		—		(486)		—		—		(486)

Cash dividends declared and paid ($0.04 per common share)	—	—		—		—		—		(99)		(99)

Stock-based compensation	—	—		433		—		—		—		433
Balances, May 2, 2021	2,491	$	3	$	9,278	$	(11,242)	$	14	$	20,721	$	18,774

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Three Months Ended
	May 1,		May 2,
	2022		2021
Cash flows from operating activities:
Net income	$	1,618	$	1,912
Adjustments to reconcile net income to net cash provided by operating activities:
Acquisition termination cost	1,353		—
Stock-based compensation expense	578		429
Depreciation and amortization	334		281
Losses (gains) on investments in non-affiliates, net	17		(133)
Deferred income taxes	(542)		24

Other	23		(3)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(788)		(595)
Inventories	(560)		(159)
Prepaid expenses and other assets	(1,261)		2
Accounts payable	255		36
Accrued and other current liabilities	634		33
Other long-term liabilities	70		47
Net cash provided by operating activities	1,731		1,874
Cash flows from investing activities:
Proceeds from maturities of marketable securities	5,947		3,140
Proceeds from sales of marketable securities	1,029		358

Purchases of marketable securities	(3,932)		(4,470)
Purchases related to property and equipment and intangible assets	(361)		(298)
Acquisitions, net of cash acquired	(36)		—
Investments and other, net	(35)		(2)
Net cash provided by (used in) investing activities	2,612		(1,272)
Cash flows from financing activities:

Proceeds related to employee stock plans	204		126
Payments related to repurchases of common stock	(1,996)		—
Payments related to tax on restricted stock units	(532)		(477)

Dividends paid	(100)		(99)
Principal payments on property and equipment and intangible asset	(22)		(19)

Other	—		(2)
Net cash used in financing activities	(2,446)		(471)
Change in cash and cash equivalents	1,897		131
Cash and cash equivalents at beginning of period	1,990		847
Cash and cash equivalents at end of period	$	3,887	$	978

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.

On July 19, 2021, we executed a four-for-one stock split of our common stock. All share, equity award, and per share amounts and related shareholders' equity balances presented herein have been retroactively adjusted to reflect the stock split.

Significant Accounting Policies

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 first 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

On February 8, 2022, NVIDIA and SoftBank Group Corp, or SoftBank, announced the termination of the Share Purchase Agreement whereby NVIDIA would have acquired Arm Limited from SoftBank. 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 May 1, 2022 are as follows:


	Operating Lease Obligations
	(In millions)
Fiscal Year:
2023 (excluding first quarter of fiscal year 2023)	$	121
2024	167
2025	144
2026	130
2027	119
2028 and thereafter	318
Total	999
Less imputed interest	100
Present value of net future minimum lease payments	899
Less short-term operating lease liabilities	147
Long-term operating lease liabilities	$	752

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

Operating lease expenses were $44 million and $39 million for the first quarter of fiscal years 2023 and 2022, respectively. Short-term and variable lease expenses for the first quarter of fiscal years 2023 and 2022 were not significant.

Other information related to leases was as follows:


	Three Months Ended
	May 1, 2022		May 2, 2021

	(In millions)
Supplemental cash flows information
Operating cash flows used for operating leases	$	45	$	39
Operating lease assets obtained in exchange for lease obligations	$	62	$	54

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As of May 1, 2022, our operating leases had a weighted average remaining lease term of 7.2 years and a weighted average discount rate of 2.51%. As of 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
	May 1, 2022		May 2, 2021

	(In millions)
Cost of revenue	$	38	$	25
Research and development	384		276
Sales, general and administrative	156		128
Total	$	578	$	429

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	3	$	216.00

Vested restricted stock	(7)	$	83.70

Balances, May 1, 2022	42	$	125.32

As of May 1, 2022, there was $4.95 billion of aggregate unearned stock-based compensation expense. This amount is expected to be recognized over a weighted average period of 2.3 years for RSUs, PSUs, and market-based PSUs, and 1.1 years for ESPP.

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
	May 1,		May 2,
	2022		2021

	(In millions, except per share data)
Numerator:
Net income	$	1,618	$	1,912
Denominator:
Basic weighted average shares	2,506		2,484
Dilutive impact of outstanding equity awards	31		44


Diluted weighted average shares	2,537		2,528
Net income per share:
Basic (1)	$	0.65	$	0.77
Diluted (2)	$	0.64	$	0.76
Equity awards excluded from diluted net income per share because their effect would have been anti-dilutive	3		4

(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 expense of $187 million and $132 million for the first quarter of fiscal years 2023 and 2022, respectively. The income tax expense as a percentage of income before income tax was 10.3% and 6.5% for the first quarter of fiscal years 2023 and 2022, respectively.

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

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

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

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

While we believe that we have adequately provided for all uncertain tax positions, or tax positions where we believe it is not more-likely-than-not that the position will be sustained upon review, amounts asserted by tax authorities could be greater or less than our accrued position. Accordingly, our provisions on federal, state and foreign tax related matters to be recorded in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved with the respective tax authorities. As of May 1, 2022, we do not believe that our estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next 12 months.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(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 as of May 1, 2022 and January 30, 2022:


	May 1, 2022
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value		Reported as
									Cash Equivalents		Marketable Securities

	(In millions)
Corporate debt securities	$	9,827	$	—	$	(9)	$	9,818	$	1,232	$	8,586
Debt securities issued by the United States Treasury	6,157		3		(38)		6,122		1,324		4,798
Debt securities issued by United States government agencies	2,116		—		—		2,116		460		1,656
Certificates of deposit	1,302		—		—		1,302		41		1,261
Money market funds	419		—		—		419		419		—
Foreign government bonds	185		—		—		185		35		150


Total	$	20,006	$	3	$	(47)	$	19,962	$	3,511	$	16,451


	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:


	May 1, 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	$	2,955	$	(38)	$	—	$	—	$	2,955	$	(38)
Corporate debt securities	2,594		(9)		19		—		2,613		(9)

Total	$	5,549	$	(47)	$	19	$	—	$	5,568	$	(47)


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


	May 1, 2022				January 30, 2022
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value

	(In millions)
Less than one year	$	15,196	$	15,185	$	16,346	$	16,343
Due in 1 - 5 years	4,810		4,777		4,584		4,570

Total	$	20,006	$	19,962	$	20,930	$	20,913

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.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


		Fair Value at
	Pricing Category	May 1, 2022		January 30, 2022

		(In millions)
Assets
Cash equivalents and marketable securities:
Money market funds	Level 1	$	419	$	316
Corporate debt securities	Level 2	$	9,818	$	9,974
Debt securities issued by the United States Treasury	Level 2	$	6,122	$	7,300
Debt securities issued by United States government agencies	Level 2	$	2,116	$	1,612
Certificates of deposit	Level 2	$	1,302	$	1,561
Foreign government bonds	Level 2	$	185	$	150


Other assets (Investment in non-affiliated entities):
Publicly-held equity securities (1)	Level 1	$	48	$	58
Privately-held equity securities	Level 3	$	238	$	208



Liabilities (2)




0.309% Notes Due 2023	Level 2	$	1,221	$	1,236
0.584% Notes Due 2024	Level 2	$	1,191	$	1,224
3.20% Notes Due 2026	Level 2	$	995	$	1,055
1.55% Notes Due 2028	Level 2	$	1,100	$	1,200
2.85% Notes Due 2030	Level 2	$	1,393	$	1,542
2.00% Notes Due 2031	Level 2	$	1,071	$	1,200
3.50% Notes Due 2040	Level 2	$	903	$	1,066
3.50% Notes Due 2050	Level 2	$	1,756	$	2,147
3.70% Notes Due 2060	Level 2	$	433	$	551

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

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

Note 9 - Amortizable Intangible Assets and Goodwill

The components of our amortizable intangible assets are as follows:


	May 1, 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)	$	3,253	$	(1,260)	$	1,993	$	3,418	$	(1,304)	$	2,114
Patents and licensed technology	719		(501)		218		717		(492)		225
Total intangible assets	$	3,972	$	(1,761)	$	2,211	$	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.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Amortization expense associated with intangible assets was $155 million and $137 million for the first quarter of fiscal years 2023 and 2022, respectively. Future amortization expense related to the net carrying amount of intangible assets as of May 1, 2022 is estimated to be $541 million for the remainder of fiscal year 2023, $597 million in fiscal year 2024, $536 million in fiscal year 2025, $248 million in fiscal year 2026, $143 million in fiscal year 2027, and $146 million in fiscal year 2028 and thereafter.

In the first quarter of fiscal year 2023, goodwill increased by $16 million and intangible assets increased by $25 million from acquisitions. We assigned $14 million of the increase in goodwill to our Compute & Networking segment and $2 million of the increase to our Graphics segment.

Note 10 - Balance Sheet Components

Certain balance sheet components are as follows:


	May 1,		January 30,
	2022		2022

Inventories:	(In millions)
Raw materials	$	1,119	$	791
Work in-process	672		692
Finished goods	1,372		1,122
Total inventories	$	3,163	$	2,605


	May 1,		January 30,
	2022		2022

Other assets:	(In millions)
Prepaid supply agreements	$	2,752	$	1,747
Prepaid royalties	405		409
Investment in non-affiliated entities	285		266


Advanced consideration for acquisition (1)	—		1,353
Other	63		66
Total other assets	$	3,505	$	3,841

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


	May 1,		January 30,
	2022		2022

Accrued and Other Current Liabilities:	(In millions)
Customer program accruals	$	1,088	$	1,000
Taxes payable	736		132
Deferred revenue (1)	334		300
Accrued payroll and related expenses	327		409









Payables to brokers for unsettled investment trades	325		—
Excess inventory purchase obligations	258		196




Other	495		515
Total accrued and other current liabilities	$	3,563	$	2,552

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	May 1,		January 30,
	2022		2022

Other Long-Term Liabilities:	(In millions)
Income tax payable (1)	$	1,051	$	980
Deferred income tax	257		245
Deferred revenue (2)	203		202



Other	120		126
Total other long-term liabilities	$	1,631	$	1,553

(1) As of May 1, 2022, income tax payable represents the long-term portion of the one-time transition tax payable of $251 million, unrecognized tax benefits of $733 million, and related interest and penalties of $67 million. 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 quarter of fiscal years 2023 and 2022:


	May 1,		May 2,
	2022		2021

	(In millions)
Balance at beginning of period	$	502	$	451
Deferred revenue additions during the period	212		178

Revenue recognized during the period	(177)		(123)
Balance at end of period	$	537	$	506

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

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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


	May 1, 2022		January 30, 2022

	(In millions)
Designated as cash flow hedges	$	1,070	$	1,023
Not designated for hedge accounting	$	382	$	408

As of May 1, 2022, all designated foreign currency forward contracts mature within eighteen months. The expected realized gains and losses deferred into accumulated other comprehensive income or loss related to foreign currency forward contracts within the next twelve months was not significant.

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

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	May 1, 2022		January 30, 2022

			(In millions)

0.309% Notes Due 2023	1.1	0.41%	$	1,250	$	1,250
0.584% Notes Due 2024	2.1	0.66%	1,250		1,250
3.20% Notes Due 2026	4.4	3.31%	1,000		1,000
1.55% Notes Due 2028	6.1	1.64%	1,250		1,250
2.85% Notes Due 2030	7.9	2.93%	1,500		1,500
2.00% Notes Due 2031	9.1	2.09%	1,250		1,250
3.50% Notes Due 2040	17.9	3.54%	1,000		1,000
3.50% Notes Due 2050	27.9	3.54%	2,000		2,000
3.70% Notes Due 2060	37.9	3.73%	500		500
Unamortized debt discount and issuance costs			(53)		(54)
Net carrying amount			$