•Quarterly revenue of $6.70 billion, up 3% from a year ago

•Data Center revenue of $3.81 billion, up 61% from a year ago

•Quarterly return to shareholders of $3.44 billion

SANTA CLARA, Calif.-Aug. 24, 2022- NVIDIA (NASDAQ: NVDA) today reported revenue for the second quarter ended July 31, 2022, of $6.70 billion, up 3% from a year ago and down 19% from the previous quarter.

GAAP earnings per diluted share for the quarter were $0.26, down 72% from a year ago and down 59% from the previous quarter. Non-GAAP earnings per diluted share were $0.51, down 51% from a year ago and down 63% from the previous quarter.

“We are navigating our supply chain transitions in a challenging macro environment and we will get through this,” said Jensen Huang, founder and CEO of NVIDIA.

“Accelerated computing and AI, the pioneering work of our company, are transforming industries. Automotive is becoming a tech industry and is on track to be our next billion-dollar business. Advances in AI are driving our Data Center business while accelerating breakthroughs in fields from drug discovery to climate science to robotics.

“I look forward to next month’s GTC conference, where we will share new advances in RTX, as well as breakthroughs in AI and the metaverse, the next evolution of the internet. Join us,” he said.

During the second quarter of fiscal 2023, NVIDIA returned to shareholders $3.44 billion in share repurchases and cash dividends, following a return of $2.10 billion in the first quarter. The company has $11.93 billion remaining under its share repurchase authorization through December 2023. NVIDIA plans to continue share repurchases this fiscal year.

NVIDIA will pay its next quarterly cash dividend of $0.04 per share on September 29, 2022, to all shareholders of record on September 8, 2022.

NVIDIA’s outlook for the third quarter of fiscal 2023 is as follows:

•Revenue is expected to be $5.90 billion, plus or minus 2%. Gaming and Professional Visualization revenue are expected to decline sequentially, as OEMs and channel partners reduce inventory levels to align with current levels of demand and prepare for NVIDIA’s new product generation. The company expects that decline to be partially offset by sequential growth in Data Center and Automotive.

•GAAP and non-GAAP gross margins are expected to be 62.4% and 65.0%, respectively, plus or minus 50 basis points.

•GAAP and non-GAAP operating expenses are expected to be approximately $2.59 billion and $1.82 billion, respectively.

•GAAP and non-GAAP other income and expense are expected to be an expense of approximately $10 million, excluding gains and losses from non-affiliated investments.

•GAAP and non-GAAP tax rates are expected to be 9.5%, plus or minus 1%, excluding any discrete items.

NVIDIA achieved progress since its previous earnings announcement in these areas:

•Second-quarter revenue was $3.81 billion, up 61% from a year ago and up 1% from the previous quarter.

•Announced that NVIDIA Grace™ superchips are being used to create HGX™ systems by some of the world’s leading computer makers — including Atos, Dell Technologies, GIGABYTE, HPE, Inspur, Lenovo and Supermicro.

•Unveiled QODA™, the NVIDIA Quantum Optimized Device Architecture, a unified computing platform for speeding breakthroughs in quantum research and development across AI, HPC, health, finance and other disciplines.

•Provided updates for the NeMo™ Megatron large language model framework that enable training speedups of up to 30%.

•Expanded NVIDIA Fleet Command™ — a cloud service for deploying, managing and scaling AI applications at the edge — with features that enhance the seamless management of edge AI deployments.

•Shared that, in the latest MLPerf training benchmark submissions, NVIDIA and its partners continued to provide the best overall AI training performance and the most submissions across all benchmarks.

•Second-quarter revenue was $2.04 billion, down 33% from a year ago and down 44% from the previous quarter.

•Added 30 RTX ON games and apps — including A Plague Tale: Requiem, Evil Dead: The Game and F1 22 — bringing the total available to 280+.

•Increased the number of GeForce® RTX™ and NVIDIA Studio™ laptops to a record 180+, including introduction of the fastest-ever laptops with GeForce RTX 3080 Ti, 2-in-1 convertible gaming laptops and a broad range of Studio laptops.

•Expanded the GeForce NOW™ library with 80 additional games — including Genshin Impact, Evil Dead the Game, Mass Effect Legendary Edition and Loopmancer with RTX — bringing the total to over 1,350.

•Second-quarter revenue was $496 million, down 4% from a year ago and down 20% from the previous quarter.

•Expanded its partnership with Siemens to enable the industrial metaverse and increase use of AI-driven digital twin technology.

•Announced Omniverse™ Avatar Cloud Engine, a suite of cloud-native AI models and services that make it easier to build and customize lifelike virtual assistants and digital humans.

•Launched a broad initiative to evolve Universal Scene Description, the open-source and extensible language of 3D worlds, to become a foundation of the open metaverse.

•Announced a major release of Omniverse with new frameworks, tools, apps and plugins, including 11 new connectors to the Omniverse USD ecosystem that bring the total to 112.

•Co-founded the Metaverse Standards Forum to align with other members on the best ways to build the foundations of the metaverse.

•Second-quarter revenue was $220 million, up 45% from a year ago and up 59% from the previous quarter.

•Announced rollout plans of new model vehicles using the DRIVE Orin™ compute platform by partners NIO, Li Auto, JIDU, and Human Horizons, as well as Pony.ai’s use of DRIVE Orin across its line of self-driving trucks and robotaxis.

Commentary on the quarter by Colette Kress, NVIDIA’s executive vice president and chief financial officer, is available at https://investor.nvidia.com/.

NVIDIA will conduct a conference call with analysts and investors to discuss its second quarter fiscal 2023 financial results and current financial prospects today at 2 p.m. Pacific time (5 p.m. Eastern time). A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, https://investor.nvidia.com. The webcast will be recorded and available for replay until NVIDIA’s conference call to discuss its financial results for its third quarter of fiscal 2023.

To supplement NVIDIA’s condensed consolidated financial statements presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance.

These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP other income (expense), net, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, and free cash flow. For NVIDIA’s investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude acquisition termination costs, stock-based compensation expense, acquisition-related and other costs, contributions, IP-related costs, legal settlement costs, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, the associated tax impact of these items where applicable, domestication tax benefit, and foreign tax benefit. Free cash flow is calculated as GAAP net cash provided by operating activities less both purchases of property and equipment and intangible assets and principal payments on property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user’s overall understanding of the company’s historical financial performance. The presentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures may be different from non-GAAP measures used by other companies.

Since its founding in 1993, NVIDIA (NASDAQ: NVDA) has been a pioneer in accelerated computing. The company’s invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined computer graphics and ignited the era of modern AI. NVIDIA is now a full-stack computing company with data-center-scale offerings that are reshaping industry. More information at https://nvidianews.nvidia.com/.

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Certain statements in this press release including, but not limited to, statements as to: plans to continue share repurchases this fiscal year; the company navigating supply chain transitions in a challenging macro environment and getting through it; accelerated computing and AI transforming industries; Automotive becoming a tech industry and being on track to be the company’s next billion-dollar business; advances in AI driving the company’s Data Center business while accelerating breakthroughs; sharing at GTC new advances in RTX as well as breakthroughs in AI and the metaverse; the use of NVIDIA Grace superchips to create HGX systems by some of the world’s leading computer makers; QODA as a unified computing platform for speeding breakthroughs in quantum research and development; the NeMo Megatron large language model framework enabling training speedups; NVIDIA Fleet Command features enhancing management of edge AI deployments; NVIDIA and its partners continuing to provide the best overall AI training performance and the most submissions across all MLPerf training benchmarks; the expanded partnership with Siemens enabling the industrial metaverse and increasing use of AI-driven digital twin technology; Omniverse Avatar Cloud Engine making it easier to build and customize lifelike virtual assistants and digital humans; the initiative to evolve Universal Scene Description to become a foundation of the open metaverse; aligning with other members of the Metaverse Standards Forum on the best ways to build the foundations of the metaverse; NVIDIA’s next quarterly cash dividend; NVIDIA’s financial outlook for the third quarter of fiscal 2023; expectations that Gaming and Professional Visualization revenue will decline sequentially and be partially offset by sequential growth in Data Center and Automotive; and NVIDIA’s expected tax rates for the third quarter of fiscal 2023 are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact of technological development and competition; development of new products and technologies or enhancements to our existing product and technologies; market acceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

© 2022 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, GeForce NOW, GeForce RTX, NVIDIA DRIVE, NVIDIA DRIVE Orin, NVIDIA Fleet Command, NVIDIA HGX, NVIDIA Grace, NVIDIA NeMo, NVIDIA Omniverse, NVIDIA QODA and NVIDIA Studio are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respective companies with which they are associated. Features, pricing, availability, and specifications are subject to change without notice.

(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

                            

We specialize in markets where our computing platforms can provide tremendous acceleration for applications. These platforms incorporate processors, interconnects, software, algorithms, systems, and services to deliver unique value. Our platforms address four large markets where our expertise is critical: Gaming, Data Center, Professional Visualization, and Automotive.

Revenue was $6.70 billion, up 3% from a year ago and down 19% sequentially. Revenue was lower than our outlook issued in May primarily due to weaker Gaming revenue. Data Center revenue was somewhat short of our expectations, as it was impacted by supply chain disruptions.

Gaming revenue was down 33% from a year ago and down 44% sequentially. These decreases were primarily attributable to lower sell-in of Gaming products, reflecting reduced channel partner sales due to macroeconomic headwinds. In addition to reducing sell-in, we implemented pricing programs with channel partners to address challenging market conditions that are expected to persist into the third quarter.

Our GPUs are capable of cryptocurrency mining, though we have limited visibility into how much this impacts our overall GPU demand. Volatility in the cryptocurrency market – such as declines in cryptocurrency prices or changes in method of verifying transactions, including proof of work or proof of stake – has in the past impacted, and can in the future impact, demand for our products and our ability to accurately estimate it. As noted last quarter, we had expected cryptocurrency mining to make a diminishing contribution to Gaming demand. We are unable to accurately quantify the extent to which reduced cryptocurrency mining contributed to the decline in Gaming demand.

Data Center revenue was up 61% from a year ago and up 1% sequentially. The year-on-year increase was primarily driven by hyperscale customer revenue, which nearly doubled. Sequentially, sales to North America hyperscale and cloud computing customers increased, but were more than offset by lower sales to China hyperscale customers affected by economic conditions in China. Vertical industries grew both sequentially and year-on-year. Key workloads driving growth included natural language processing, deep recommenders, autonomous vehicle fleet data processing and training, and cloud graphics.

Professional Visualization revenue was down 4% from a year ago and down 20% sequentially. The sequential increase in mobile revenue was more than offset by lower desktop revenue, particularly at the high end.

Automotive revenue was up 45% from a year ago and up 59% sequentially. These increases were driven by revenue from self-driving and AI cockpit solutions, partially offset by a decline of legacy cockpit revenue.

OEM and Other revenue was down 66% from a year ago and down 11% sequentially. The sequential decline was driven by lower notebook OEM sales, partially offset by higher Jetson sales. Cryptocurrency Mining Processor (CMP) revenue was nominal in the current and prior quarter, and $266 million a year ago.

Data Center revenue included $287 million for orders originally scheduled for delivery primarily in the third quarter that were converted to second-quarter delivery with extended payment terms, while a number of second-quarter orders will be fulfilled in the third quarter given supply chain disruptions.

GAAP and non-GAAP gross margin decreases were primarily due to a $1.34 billion charge, comprised of $1.22 billion for inventory and related reserves and $122 million for warranty reserves.

The $1.22 billion charge for inventory and related reserves is based on revised expectations of future demand, primarily relating to Data Center and Gaming. The charge consists of approximately $570 million for inventory on hand and approximately $650 million for inventory purchase obligations in excess of our current demand projections, and cancellation and underutilization penalties.

GAAP operating expense includes a $1.35 billion acquisition termination charge related to the Arm transaction in the prior quarter. GAAP and non-GAAP operating expenses were influenced primarily by employee growth costs, as well as increases in salaries to support our employees during this high inflationary environment, and engineering development of new products coming to market.

GAAP other income and expense (OI&E) includes interest income, interest expense, gains and losses from non-affiliated investments and other. Non-GAAP OI&E excludes the portion of interest expense from the amortization of the debt discount and the gains or losses from non-affiliated investments.

Interest income was $46 million, up from a year ago and sequentially, due to higher interest rates earned on investments. Net loss from non-affiliated investments was $7 million due to the mark-to-market of publicly traded equity investments and changes in value from our non-affiliated private investments.

GAAP effective tax rate was a benefit of 38.0%. The benefit was driven by a reduction in profitability and discrete items affecting our tax rate including excess tax benefits related to stock-based compensation. Non-GAAP effective tax rate was 1.3%, also driven by the reduction in profitability.

Cash, cash equivalents and marketable securities were $17.04 billion, down from $19.65 billion a year ago and down from $20.34 billion a quarter ago. The year-on-year and sequential decreases reflect share repurchases offset by free cash flow generation.

Accounts receivable was $5.32 billion compared with $3.59 billion a year ago and $5.44 billion a quarter ago. DSO was 72 days, up from 50 days a year ago and up from 60 days a quarter ago.

Inventory was $3.89 billion compared with $2.11 billion a year ago and $3.16 billion a quarter ago. Outstanding gross inventory purchase and long-term supply obligations were $9.22 billion, up from $4.79 billion a year ago due to longer lead-times throughout the supply chain, and down from $9.59 billion a quarter ago. Prepaid supply agreements were $3.14 billion, up from $3.06 billion a quarter ago. DSI was 93 days, up from 84 days a year ago and down from 101 days a quarter ago.

Cash flow from operating activities was $1.27 billion, down from $2.68 billion a year ago and down from $1.73 billion a quarter ago. The year-on-year decrease reflects lower revenue, higher cash tax payments, and increased inventory levels. The sequential decrease reflects lower revenue and higher cash tax payments, partially offset by reduced advance long term supply payments.

Free cash flow was $824 million, down from $2.48 billion a year ago and down from $1.35 billion a quarter ago.

Depreciation and amortization expense was $378 million, including amortization of acquisition-related intangible assets. Capital expenditures including principal payments on property and equipment were $447 million, up from $204 million a year ago and $383 million a quarter ago, primarily driven by equipment to support product bring-up and compute infrastructure for research and development.

During the second quarter of fiscal 2023, we returned $3.44 billion to shareholders in the form of share repurchases and cash dividends. During the first half of fiscal 2023, we returned $5.54 billion to shareholders in the form of share repurchases and cash dividends. We have $11.93 billion remaining under our share repurchase authorization through December 2023. We plan to continue share repurchases this fiscal year.

We have slowed operating expense growth, balancing investments for long-term revenue growth, while managing near-term profitability. Our full-year non-GAAP operating expense is expected to grow by over 30%. Outlook for the third quarter of fiscal 2023 is as follows:

•Revenue is expected to be $5.90 billion, plus or minus 2%. Gaming and Professional Visualization revenue are expected to decline sequentially, as OEMs and channel partners reduce inventory levels to align with current levels of demand and prepare for our new product generation. We expect that decline to be partially offset by sequential growth in Data Center and Automotive.

•GAAP and non-GAAP gross margins are expected to be 62.4% and 65.0%, respectively, plus or minus 50 basis points.

•GAAP and non-GAAP operating expenses are expected to be approximately $2.59 billion and $1.82 billion, respectively.

•GAAP and non-GAAP other income and expense are expected to be an expense of approximately $10 million, excluding gains and losses from non-affiliated investments.

•GAAP and non-GAAP tax rates are expected to be 9.5%, plus or minus 1%, excluding any discrete items.

•Capital expenditures are expected to be approximately $550 million to $600 million, including principal payments on property and equipment.

___________________________

To supplement NVIDIA’s condensed consolidated financial statements presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP other income (expense), net, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, and free cash flow. In order for NVIDIA’s investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude acquisition termination costs, stock-based compensation expense, acquisition-related and other costs, contributions, IP-related costs, legal settlement costs, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, the associated tax impact of these items where applicable, domestication tax benefit, and foreign tax benefit. Free cash flow is calculated as GAAP net cash provided by operating activities less both purchases of property and equipment and intangible assets and principal payments on property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user's overall understanding of the company’s historical financial performance. The presentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures may be different from non-GAAP measures used by other companies.

Certain statements in this CFO Commentary including, but not limited to, statements as to: our computing platforms providing tremendous acceleration for applications and delivering unique value; challenging market conditions expected to persist into the third quarter; volatility in the cryptocurrency market and its impact on demand for our products and our ability to accurately estimate it; our revised expectations of future demand and our current demand projections; our plan to continue share repurchases this fiscal year; our full-year non-GAAP operating expense being expected to grow by over 30%; our financial outlook for the third quarter of fiscal 2023; our expectation that Gaming and Professional Visualization revenue will decline sequentially and to be partially offset by sequential growth in Data Center and Automotive; our expected tax rates for the third quarter of fiscal 2023; and our expected capital expenditures for the third quarter of fiscal 2023 are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations.

Important factors that could cause actual results to differ materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact of technological development and competition; development of new products and technologies or enhancements to our existing product and technologies; market acceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

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© 2022 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, and NVIDIA Jetson are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respective companies with which they are associated. Features, pricing, availability, and specifications are subject to change without notice.