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 October ~~25, 2020~~31, 2021


☐			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 November ~~13, 2020,~~12, 2021, was ~~619 million.~~2.50 billion.

NVIDIA CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED October ~~25, 2020~~31, 2021

TABLE OF CONTENTS


		Page
	PART I : FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	a) Condensed Consolidated Statements of Income for the three and nine months ended October ~~25, 2020~~31, 2021 and October ~~27, 2019~~25, 2020	3

	b) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended October ~~25, 2020~~31, 2021 and October ~~27, 2019~~25, 2020	4

	c) Condensed Consolidated Balance Sheets as of October ~~25, 2020~~31, 2021 and January ~~26, 2020~~31, 2021	5

	d) Condensed Consolidated Statements of Shareholders' Equity for the three and nine months ended October ~~25, 2020~~31, 2021 and October ~~27, 2019~~25, 2020	6

	e) Condensed Consolidated Statements of Cash Flows for the nine months ended October ~~25, 2020~~31, 2021 and October ~~27, 2019~~25, 2020	8

	f) Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3633

Item 4.	Controls and Procedures	3633

	PART II : OTHER INFORMATION

Item 1.	Legal Proceedings	3633

Item 1A.	Risk Factors	3633

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3940

Item 6.	Exhibits	4142

Signature		4243

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.~~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~~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 Nine Months Ended
October 25, October 27, October 25, October 27,
2020 2019 2020 2019
Revenue $ 4,726 $ 3,014 $ 11,672 $ 7,813
Cost of revenue 1,766 1,098 4,432 3,060
Gross profit 2,960 1,916 7,240 4,753
Operating expenses
Research and development 1,047 712 2,778 2,091
Sales, general and administrative 515 277 1,437 806
Total operating expenses 1,562 989 4,215 2,897
Income from operations 1,398 927 3,025 1,856
Interest income 7 45 50 137
Interest expense (53) (13) (131) (39)
Other, net (4) 0 (5) 0
Other income (expense), net (50) 32 (86) 98
Income before income tax 1,348 959 2,939 1,954
Income tax expense 12 60 64 109
Net income $ 1,336 $ 899 $ 2,875 $ 1,845
Net income per share:
Basic $ 2.16 $ 1.47 $ 4.67 $ 3.03
Diluted $ 2.12 $ 1.45 $ 4.59 $ 2.99
Weighted average shares used in per share computation:
Basic 618 610 616 609
Diluted 630 618 626 617


	Three Months Ended				Nine Months Ended
	October 31,		October 25,		October 31,		October 25,
	2021		2020		2021		2020

Revenue	$	7,103	$	4,726	$	19,271	$	11,672
Cost of revenue	2,472		1,766		6,795		4,432
Gross profit	4,631		2,960		12,476		7,240
Operating expenses
Research and development	1,403		1,047		3,802		2,778
Sales, general and administrative	557		515		1,603		1,437

Total operating expenses	1,960		1,562		5,405		4,215
Income from operations	2,671		1,398		7,071		3,025
Interest income	7		7		20		50
Interest expense	(62)		(53)		(175)		(131)
Other, net	22		(4)		160		(5)
Other income (expense), net	(33)		(50)		5		(86)
Income before income tax	2,638		1,348		7,076		2,939
Income tax expense	174		12		327		64
Net income	$	2,464	$	1,336	$	6,749	$	2,875

Net income per share:
Basic	$	0.99	$	0.54	$	2.71	$	1.17
Diluted	$	0.97	$	0.53	$	2.67	$	1.15

Weighted average shares used in per share computation:
Basic	2,499		2,472		2,493		2,464
Diluted	2,538		2,520		2,532		2,504

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

Three Months Ended Nine Months Ended
October 25, October 27, October 25, October 27,
2020 2019 2020 2019

Net income $ 1,336 $ 899 $ 2,875 $ 1,845
Other comprehensive income (loss), net of tax
Available-for-sale securities:
Net change in unrealized gain (loss) (1) 0 3 9
Reclassification adjustments for net realized gain (loss) included in net income 0 0 (2) 0
Net change in unrealized gain (loss) (1) 0 1 9
Cash flow hedges:
Net unrealized gain 5 0 10 4
Reclassification adjustments for net realized gain included in net income 4 (2) 0 (4)
Net change in unrealized gain (loss) 9 (2) 10 0
Other comprehensive income (loss), net of tax 8 (2) 11 9
Total comprehensive income $ 1,344 $ 897 $ 2,886 $ 1,854


	Three Months Ended				Nine Months Ended
	October 31,		October 25,		October 31,		October 25,
	2021		2020		2021		2020

Net income	$	2,464	$	1,336	$	6,749	$	2,875
Other comprehensive income (loss), net of tax
Available-for-sale securities:
Net change in unrealized gain (loss)	(4)		(1)		(5)		3
Reclassification adjustments for net realized gain (loss) included in net income	—		—		—		(2)
Net change in unrealized gain (loss)	(4)		(1)		(5)		1
Cash flow hedges:
Net unrealized gain (loss)	22		5		(5)		10
Reclassification adjustments for net realized gain (loss) included in net income	(17)		4		—		—
Net change in unrealized gain (loss)	5		9		(5)		10
Other comprehensive income (loss), net of tax	1		8		(10)		11
Total comprehensive income	$	2,465	$	1,344	$	6,739	$	2,886

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

October 25, January 26,
2020 2020
ASSETS
Current assets:
Cash and cash equivalents $ 2,251 $ 10,896
Marketable securities 7,888 1
Accounts receivable, net 2,546 1,657
Inventories 1,495 979
Prepaid expenses and other current assets 213 157
Total current assets 14,393 13,690
Property and equipment, net 2,059 1,674
Operating lease assets 681 618
Goodwill 4,193 618
Intangible assets, net 2,861 49
Deferred income tax assets 666 548
Other assets 2,028 118
Total assets $ 26,881 $ 17,315
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,097 $ 687
Accrued and other current liabilities 1,574 1,097
Short-term debt 998 0
Total current liabilities 3,669 1,784
Long-term debt 5,963 1,991
Long-term operating lease liabilities 604 561
Other long-term liabilities 1,311 775
Total liabilities 11,547 5,111
Commitments and contingencies - see Note 13
Shareholders’ equity:
Preferred stock 0 0
Common stock 1 1
Additional paid-in capital 8,301 7,045
Treasury stock, at cost (10,530) (9,814)
Accumulated other comprehensive income 12 1
Retained earnings 17,550 14,971
Total shareholders' equity 15,334 12,204
Total liabilities and shareholders' equity $ 26,881 $ 17,315


	October 31,		January 31,
	2021		2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,288	$	847
Marketable securities	18,010		10,714
Accounts receivable, net	3,954		2,429
Inventories	2,233		1,826
Prepaid expenses and other current assets	321		239
Total current assets	25,806		16,055
Property and equipment, net	2,509		2,149
Operating lease assets	830		707
Goodwill	4,302		4,193
Intangible assets, net	2,454		2,737
Deferred income tax assets	970		806
Other assets	3,761		2,144
Total assets	$	40,632	$	28,791

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,664	$	1,201
Accrued and other current liabilities	1,948		1,725
Short-term debt	—		999
Total current liabilities	3,612		3,925
Long-term debt	10,944		5,964
Long-term operating lease liabilities	743		634
Other long-term liabilities	1,535		1,375
Total liabilities	16,834		11,898
Commitments and contingencies - see Note 13	0		0

Shareholders’ equity:
Preferred stock	—		—
Common stock	3		3
Additional paid-in capital	10,465		8,719
Treasury stock, at cost	(12,038)		(10,756)
Accumulated other comprehensive income	9		19
Retained earnings	25,359		18,908
Total shareholders' equity	23,798		16,893
Total liabilities and shareholders' equity	$	40,632	$	28,791

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED OCTOBER ~~25, 2020~~31, 2021 AND OCTOBER ~~27, 2019~~25, 2020

(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, July 26, 2020 617 $ 1 $ 7,828 $ (10,232) $ 4 $ 16,313 $ 13,914
Net income — — — — — 1,336 1,336
Other comprehensive income — — — — 8 — 8
Issuance of common stock from stock plans 3 — 96 — — — 96
Tax withholding related to vesting of restricted stock units (1) — — (298) — — (298)
Cash dividends declared and paid ($0.16 per common share) — — — — — (99) (99)
Stock-based compensation — — 377 — — — 377
Balances, October 25, 2020 619 $ 1 $ 8,301 $ (10,530) $ 12 $ 17,550 $ 15,334
Balances, July 28, 2019 609 $ 1 $ 6,543 $ (9,524) $ (1) $ 13,317 $ 10,336
Net income — — — — — 899 899
Other comprehensive loss — — — — (2) — (2)
Issuance of common stock from stock plans 4 — 63 — — — 63
Tax withholding related to vesting of restricted stock units (1) — — (202) — — (202)
Cash dividends declared and paid ($0.16 per common share) — — — — — (98) (98)
Stock-based compensation — — 218 — — — 218
Balances, October 27, 2019 612 $ 1 $ 6,824 $ (9,726) $ (3) $ 14,118 $ 11,214


	Common Stock Outstanding			Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income		Retained Earnings		Total Shareholders' Equity
(In millions, except per share data)	Shares	Amount
Balances, August 1, 2021	2,496	$	3	$	9,745	$	(11,604)	$	8	$	22,995	$	21,147
Net income	—	—		—		—		—		2,464		2,464
Other comprehensive income	—	—		—		—		1		—		1
Issuance of common stock from stock plans	8	—		150		—		—		—		150
Tax withholding related to vesting of restricted stock units	(2)	—		—		(434)		—		—		(434)

Cash dividends declared and paid ($0.04 per common share)	—	—		—		—		—		(100)		(100)
Fair value of partially vested equity awards assumed in connection with acquisitions	—	—		18		—		—		—		18
Stock-based compensation	—	—		552		—		—		—		552
Balances, October 31, 2021	2,502	$	3	$	10,465	$	(12,038)	$	9	$	25,359	$	23,798
Balances, July 26, 2020	2,467	$	3	$	7,826	$	(10,232)	$	4	$	16,313	$	13,914
Net income	—	—		—		—		—		1,336		1,336
Other comprehensive income	—	—		—		—		8		—		8
Issuance of common stock from stock plans	10	—		96		—		—		—		96
Tax withholding related to vesting of restricted stock units	(2)	—		—		(298)		—		—		(298)

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

Stock-based compensation	—	—		377		—		—		—		377
Balances, October 25, 2020	2,475	$	3	$	8,299	$	(10,530)	$	12	$	17,550	$	15,334

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED OCTOBER ~~25, 2020~~31, 2021 AND OCTOBER ~~27, 2019~~25, 2020

(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 26, 2020 612 $ 1 $ 7,045 $ (9,814) $ 1 $ 14,971 $ 12,204
Net income — — — — — 2,875 2,875
Other comprehensive income — — — — 11 — 11
Issuance of common stock from stock plans 9 — 190 — — — 190
Tax withholding related to vesting of restricted stock units (2) — — (716) — — (716)
Cash dividends declared and paid ($0.48 per common share) — — — — — (296) (296)
Fair value of partially vested equity awards assumed in connection with acquisitions — — 86 — — — 86
Stock-based compensation — — 980 — — — 980
Balances, October 25, 2020 619 $ 1 $ 8,301 $ (10,530) $ 12 $ 17,550 $ 15,334
Balances, January 27, 2019 606 $ 1 $ 6,051 $ (9,263) $ (12) $ 12,565 $ 9,342
Net income — — — — — 1,845 1,845
Other comprehensive income — — — — 9 — 9
Issuance of common stock from stock plans 9 — 146 — — — 146
Tax withholding related to vesting of restricted stock units (3) — — (463) — — (463)
Cash dividends declared and paid ($0.48 per common share) — — — — — (292) (292)
Stock-based compensation — — 627 — — — 627
Balances, October 27, 2019 612 $ 1 $ 6,824 $ (9,726) $ (3) $ 14,118 $ 11,214


	Common Stock Outstanding			Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income		Retained Earnings		Total Shareholders' Equity
(In millions, except per share data)	Shares	Amount
Balances, January 31, 2021	2,479	$	3	$	8,719	$	(10,756)	$	19	$	18,908	$	16,893
Net income	—	—		—		—		—		6,749		6,749
Other comprehensive loss	—	—		—		—		(10)		—		(10)
Issuance of common stock from stock plans	30	—		277		—		—		—		277
Tax withholding related to vesting of restricted stock units	(7)	—		—		(1,282)		—		—		(1,282)

Cash dividends declared and paid ($0.12 per common share)	—	—		—		—		—		(298)		(298)
Fair value of partially vested equity awards assumed in connection with acquisitions	—	—		18		—		—		—		18
Stock-based compensation	—	—		1,451		—		—		—		1,451
Balances, October 31, 2021	2,502	$	3	$	10,465	$	(12,038)	$	9	$	25,359	$	23,798
Balances, January 26, 2020	2,450	$	3	$	7,043	$	(9,814)	$	1	$	14,971	$	12,204
Net income	—	—		—		—		—		2,875		2,875
Other comprehensive income	—	—		—		—		11		—		11
Issuance of common stock from stock plans	34	—		190		—		—		—		190
Tax withholding related to vesting of restricted stock units	(9)	—		—		(716)		—		—		(716)

Cash dividends declared and paid ($0.12 per common share)	—	—		—		—		—		(296)		(296)
Fair value of partially vested equity awards assumed in connection with acquisitions	—	—		86		—		—		—		86
Stock-based compensation	—	—		980		—		—		—		980
Balances, October 25, 2020	2,475	$	3	$	8,299	$	(10,530)	$	12	$	17,550	$	15,334

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Nine Months Ended
October 25, October 27,
2020 2019
Cash flows from operating activities:
Net income $ 2,875 $ 1,845
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense 981 624
Depreciation and amortization 810 275
Deferred income taxes (117) (5)
Other (2) 5
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (667) (32)
Inventories (190) 531
Prepaid expenses and other assets (409) 55
Accounts payable 289 91
Accrued and other current liabilities 111 (103)
Other long-term liabilities 74 10
Net cash provided by operating activities 3,755 3,296
Cash flows from investing activities:
Proceeds from maturities of marketable securities 5,165 4,744
Proceeds from sales of marketable securities 502 3,363
Purchases of marketable securities (12,840) (1,461)
Acquisitions, net of cash acquired (8,524) 0
Purchases related to property and equipment and intangible assets (845) (344)
Investments and other, net (4) (6)
Net cash provided by (used in) investing activities (16,546) 6,296
Cash flows from financing activities:
Issuance of debt, net of issuance costs 4,971 0
Proceeds related to employee stock plans 190 146
Payments related to tax on restricted stock units (716) (463)
Dividends paid (296) (292)
Other (3) 0
Net cash provided by (used in) financing activities 4,146 (609)
Change in cash and cash equivalents (8,645) 8,983
Cash and cash equivalents at beginning of period 10,896 782
Cash and cash equivalents at end of period $ 2,251 $ 9,765


	Nine Months Ended
	October 31,		October 25,
	2021		2020
Cash flows from operating activities:
Net income	$	6,749	$	2,875
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense	1,453		981
Depreciation and amortization	865		810
Deferred income taxes	(182)		(117)

(Gains) losses on investments in non-affiliates, net	(152)		9
Other	25		(11)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(1,523)		(667)
Inventories	(400)		(190)
Prepaid expenses and other assets	(1,557)		(409)
Accounts payable	474		289
Accrued and other current liabilities	70		111
Other long-term liabilities	253		74
Net cash provided by operating activities	6,075		3,755
Cash flows from investing activities:
Proceeds from maturities of marketable securities	7,780		5,165
Proceeds from sales of marketable securities	916		502

Purchases of marketable securities	(16,020)		(12,840)
Purchases related to property and equipment and intangible assets	(703)		(845)
Acquisitions, net of cash acquired	(203)		(8,524)
Investments and other, net	(14)		(4)
Net cash used in investing activities	(8,244)		(16,546)
Cash flows from financing activities:
Issuance of debt, net of issuance costs	4,977		4,971
Proceeds related to employee stock plans	277		190
Payments related to tax on restricted stock units	(1,282)		(716)
Repayment of debt	(1,000)		—
Dividends paid	(298)		(296)
Principal payments on property and equipment	(62)		—


Other	(2)		(3)
Net cash provided by financing activities	2,610		4,146
Change in cash and cash equivalents	441		(8,645)
Cash and cash equivalents at beginning of period	847		10,896
Cash and cash equivalents at end of period	$	1,288	$	2,251

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 ~~26, 2020~~31, 2021 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 ~~26, 2020,~~31, 2021, 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 ~~26, 2020.~~31, 2021.

~~The unaudited condensed consolidated financial statements~~On May 21, 2021, our Board of Directors declared a 4-for-one split of our common stock in ~~this report include~~ the ~~financial results~~form of ~~Mellanox Technologies Ltd.,~~a stock dividend, or ~~Mellanox, prospectively~~the Stock Split, which was conditioned upon obtaining stockholder approval to increase the number of our authorized shares of common stock from ~~April 27, 2020. For~~2 billion to 4 billion. On June 3, 2021, at the 2021 Annual Meeting of Stockholders, our stockholders approved the amendment to our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock to 4 billion. As a result, each stockholder of record at the close of business on June 21, 2021 received a dividend of 3 additional ~~details, refer~~shares of common stock for every share held on the record date, distributed after the close of trading on July 19, 2021. All share, equity award, and per share amounts and related shareholders' equity balances presented herein have been retroactively adjusted to ~~Note 2 - Business Combination.~~reflect the Stock Split.

Significant Accounting Policies

~~Except for the accounting policies for business combination and investment in non-affiliated entities, there~~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 ~~26, 2020.~~

~~Business Combination~~

We allocate the fair value of the purchase price of an acquisition to the tangible assets acquired, liabilities assumed, and intangible assets acquired, including in-process research and development, or IPR&D, based on their estimated fair values. The excess of the fair value of the purchase price over the fair values of these net tangible and intangible assets acquired is recorded as goodwill. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but our estimates and assumptions are inherently uncertain and subject to refinement. The estimates and assumptions used in valuing intangible assets include, but are not limited to, the amount and timing of projected future cash flows, discount rate used to determine the present value of these cash flows and asset lives. These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made. As a result, during the measurement period of up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded to our condensed consolidated statements of income.

We initially capitalize the fair value of IPR&D as an intangible asset with an indefinite life. We assess for impairment thereafter. When IPR&D projects are completed, we reclassify the IPR&D as an amortizable purchased intangible asset and amortize over the asset’s estimated useful life.

~~Acquisition-related expenses are recognized separately from the business combination and expensed as incurred.~~

~~Investment in Non-Affiliated Entities~~

Non-marketable equity investments in privately-held companies are recorded at fair value on a non-recurring basis only if an impairment or observable price adjustment occurs in the period with changes in fair value recorded through net income. These investments are valued using observable and unobservable inputs or data in an inactive market and the valuation requires our judgment due to the absence of market prices and inherent lack of liquidity. The estimated fair value is based on quantitative and qualitative factors including subsequent financing activities by the investee.

~~NVIDIA CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

31, 2021.

Fiscal Year

We operate on a 52- or 53-week year, ending on the last Sunday in January. Fiscal year ~~2021~~2022 is a ~~53-week~~52-week year and fiscal year ~~2020 is~~2021 was a ~~52-week~~53-week year. The third quarters of fiscal years ~~2021~~2022 and ~~2020~~2021 were both 13-week quarters.

Reclassifications

Certain prior fiscal year balances have been reclassified to conform to the current fiscal year presentation.

Principles of Consolidation

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

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from our estimates. On an ~~on-going~~ongoing basis, we evaluate our estimates, including those related to revenue recognition, cash equivalents and marketable securities, accounts receivable, inventories, income taxes, goodwill, stock-based compensation, litigation, investigation and settlement costs, restructuring and other charges, and other contingencies. The inputs into our judgments and estimates consider the economic implications of ~~COVID-19 on our critical and significant accounting estimates.~~COVID-19. These estimates are based on historical facts and various other assumptions that we believe are reasonable.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Adoption of New and Recently Issued Accounting ~~Pronouncements~~Pronouncement

Recently Adopted Accounting Pronouncement

In ~~June 2016,~~October 2021, the Financial Accounting Standards Board issued a new accounting standard to ~~replace the existing incurred loss impairment methodology~~require that an acquirer recognize and measure contract assets and liabilities acquired in a business combination in accordance with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates for accounts receivable and other financial instruments, including available-for-sale debt securities.Accounting Standards Codification 606, Revenue from Contracts with Customers. We early adopted ~~the~~this accounting standard in the ~~first~~third quarter of fiscal year ~~2021~~2022 and the impact ~~of the adoption~~ was ~~not material to our consolidated financial statements.~~immaterial.

Note 2 - Business Combination

Pending Acquisition of Arm Limited

On September 13, 2020, we entered into a Share Purchase Agreement, or the Purchase Agreement, with Arm Limited, or Arm, and SoftBank Group Capital Limited and SVF Holdco (UK) Limited, or together, SoftBank, ~~for us~~ to acquire, from SoftBank, all ~~of the~~ allotted and issued ordinary shares of Arm in a transaction valued at $40 billion. We paid $2 billion in cash at signing, or the Signing Consideration, and will pay upon closing of the acquisition $10 billion in cash and issue to SoftBank ~~44.3~~177.5 million shares of our common stock, ~~with~~which had an aggregate value of $21.5 ~~billion.~~billion as of the date of the Purchase Agreement, and was valued at $56.2 billion as of November 18, 2021. The transaction includes a potential earn out, which is contingent on the achievement of certain financial performance targets by Arm during the fiscal year ending March 31, 2022. If the financial targets are achieved, SoftBank can elect to receive either up to an additional $5 billion in cash or up to ~~10.3~~an additional 41.3 million shares of our common ~~stock.~~stock, which was valued at $13.1 billion as of November 18, 2021. We will issue up to $1.5 billion in restricted stock units to Arm employees after closing. The ~~$2 billion paid upon signing~~Signing Consideration was allocated between advanced consideration for the acquisition of $1.36 billion and the prepayment of intellectual property licenses from Arm of $0.17 billion and royalties of $0.47 ~~billion.~~ billion, both with a 20-year term. The Signing Consideration was allocated on a fair value basis and any refund of the Signing Consideration will use stated values in the Purchase Agreement. The Purchase Agreement can be terminated by either party if the transaction has not closed by September 2022, subject to certain qualifications. If the transaction does not close due to failure to receive regulatory approval, and all other covenants have been met, we will not be refunded $1.25 billion of the advanced consideration for the acquisition we paid at signing.

The closing of the acquisition is subject to customary closing conditions, including receipt of specified governmental and regulatory consents and approvals and the expiration of any related mandatory waiting period, and Arm's implementation of the reorganization and distribution of Arm’s IoT Services Group and certain other assets and liabilities. If

We are seeking regulatory approval in the ~~Purchase Agreement is terminated~~United States, the United Kingdom, the European Union, China and other jurisdictions. Regulators at the United States Federal Trade Commission, or the FTC, have expressed concerns regarding the transaction, and we are engaged in discussions with the FTC regarding remedies to address those concerns. The transaction has been under ~~certain circumstances, we will be refunded $1.25 billion~~the review of China’s antitrust authority, pending the formal case initiation. Regulators in the United Kingdom and the European Union declined to approve the transaction in Phase 1 of their review processes, expressed numerous concerns, began a more in-depth Phase 2 review on the transaction’s impact on competition, and, in the United Kingdom, a Phase 2 review of the ~~Signing Consideration. The $2 billion payment upon signing was allocated~~impact on ~~a fair value basis~~the United Kingdom’s national security interests. Although regulators and ~~any refund of~~some Arm licensees have expressed concerns or objected to the ~~Signing Consideration will use stated values~~transaction, we continue to believe in the ~~Purchase Agreement. We believe the closing~~merits and benefits of the acquisition ~~will likely occur in~~to Arm, its licensees, and the ~~first quarter of calendar year 2022.~~

~~NVIDIA CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

industry.

Acquisition of Mellanox Technologies, Ltd.

On April 27, 2020, we completed the acquisition of all outstanding shares of Mellanox for a total purchase consideration of $7.13 billion. Mellanox is a supplier of high-performance interconnect products for computing, storage and communications applications. We acquired Mellanox to optimize data center workloads to scale across the entire computing, networking, and storage stack.

~~Preliminary Purchase Price Allocation~~

~~The aggregate purchase consideration has been preliminarily allocated as follows (in millions):~~


~~Purchase Price~~
~~Cash paid for outstanding Mellanox ordinary shares (1)~~	$	~~7,033~~
~~Cash for Mellanox equity awards (2)~~	16
~~Total cash consideration~~	~~7,049~~
~~Fair value of Mellanox equity awards assumed by NVIDIA (3)~~	85
~~Total purchase consideration~~	$	~~7,134~~

~~Allocation~~
~~Cash and cash equivalents~~	$	~~115~~
~~Marketable securities~~	~~699~~
~~Accounts receivable, net~~	~~216~~
~~Inventories~~	~~320~~
~~Prepaid expenses and other assets~~	~~179~~
~~Property and equipment, net~~	~~144~~
~~Goodwill~~	~~3,431~~
~~Intangible assets~~	~~2,970~~
~~Accounts payable~~	~~(136)~~
~~Accrued and other current liabilities~~	~~(236)~~
~~Income tax liability~~	~~(191)~~
~~Deferred income tax liability~~	~~(258)~~
~~Other long-term liabilities~~	~~(119)~~
	$	~~7,134~~

~~(1) Represents the cash consideration of $125.00 per share paid to Mellanox shareholders for approximately 56 million shares of outstanding Mellanox ordinary shares.~~

~~(2) Represents the cash consideration for the settlement of approximately 249 thousand Mellanox stock options held by employees and non-employee directors of Mellanox.~~

~~(3) Represents the fair value of Mellanox’s stock-based compensation awards attributable to pre-combination services.~~

We allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their estimated fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of the acquisition and are subject to change during the measurement period which is not expected to exceed one year. The primary tasks that are required to be completed include validation of business level forecasts, jurisdictional forecasts, customer attrition rates, contingent liabilities assessments and any related tax impacts from the acquisition. Any adjustments to our preliminary purchase price allocation identified during the measurement period will be recognized in the period in which the adjustments are determined.

The goodwill is primarily attributable to the planned growth in the combined business of NVIDIA and Mellanox. Goodwill is not amortized to earnings, but instead is reviewed for impairment at least annually, absent any interim indicators of impairment. Goodwill recognized in the acquisition is not expected to be deductible for foreign tax purposes. Goodwill

1110

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~arising from the Mellanox acquisition has been allocated to the Compute and Networking segment. Refer to Note 15 – Segment Information for further details on segments.~~

The operating results of Mellanox have been included in our condensed consolidated financial statements for the third quarter and first nine months of fiscal year 2021 since the acquisition date of April 27, 2020. Revenue attributable to Mellanox was approximately 13% and 10% of consolidated revenue for the third quarter and first nine months of fiscal year 2021, respectively. There is not a practical way to determine net income attributable to Mellanox due to integration. Acquisition-related costs attributable to Mellanox of $27 million were included in selling, general and administrative expense for the first nine months of fiscal year 2021.

~~Intangible Assets~~

~~The estimated fair value and weighted average useful life of the acquired intangible assets are as follows:~~


	~~Fair Value~~		~~Weighted Average Useful Lives~~
	~~(In millions)~~
~~Developed technology (1)~~	$	~~1,640~~	~~5 years~~
~~Customer relationships (2)~~	~~440~~		~~3 years~~
~~Order backlog (3)~~	~~190~~		~~Based on actual shipments~~
~~Trade names (4)~~	70		~~5 years~~
~~Total identified finite-lived intangible assets~~	~~2,340~~
~~IPR&D (5)~~	~~630~~		~~N/A~~
~~Total identified intangible assets~~	$	~~2,970~~

~~(1) The fair value of developed technology was identified using the Multi-Period Excess Earning Method.~~

~~(2) Customer relationships represent the fair value of the existing relationships using the With and Without Method.~~

~~(3) Order backlog represents primarily the fair value of purchase arrangements with customers using the Multi-Period Excess Earning Method.~~

~~(4) Trade names primarily relate to Mellanox trade names and fair value was determined by applying the Relief-from-Royalty Method under the income approach.~~

~~(5) The fair value of IPR&D was determined using the Multi-Period Excess Earning Method.~~

The fair value of the finite-lived intangible assets will be amortized over the estimated useful lives based on the pattern in which the economic benefits are expected to be received to cost of revenue and operating expenses.

Mellanox had an IPR&D project associated with the next generation interconnect product that had not yet reached technological feasibility as of the acquisition date. Accordingly, we recorded an indefinite-lived intangible asset of $630 million for the fair value of this project, which will initially not be amortized. Instead, the project will be tested for impairment whenever events or changes in circumstances indicate that the project may be impaired or may have reached technological feasibility. Once the project reaches technological feasibility, we will begin to amortize the intangible asset over its estimated useful life.

Supplemental Unaudited Pro Forma Information

The following unaudited pro forma financial information summarizes the combined results of operations for NVIDIA and Mellanox as if the companies were combined as of the beginning of fiscal year 2020:

Pro Forma
Three Months Ended Nine Months Ended
October 25,
2020 October 27,
2019 October 25,
2020 October 27,
2019
(In millions)
Revenue $ 4,726 $ 3,350 $ 12,101 $ 8,765
Net income $ 1,388 $ 786 $ 3,267 $ 1,190

~~NVIDIA CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~


	Pro Forma
	Three Months Ended		Nine Months Ended
	October 25, 2020		October 25, 2020

	(In millions)
Revenue	$	4,726	$	12,101
Net income	$	1,388	$	3,267

The unaudited pro forma information includes adjustments related to amortization of acquired intangible assets, adjustments to stock-based compensation expense, fair value of acquired inventory, and transaction costs. The unaudited pro forma information presented above is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had the acquisition ~~actually~~ occurred at the beginning of fiscal year 2020 or of the results of our future operations of the combined businesses.

The pro forma results ~~reflect~~exclude the inventory step-up expense of $161 million ~~in the first nine months of fiscal year 2020 and were excluded from the pro forma results~~ for the first nine months of fiscal year 2021. There were no other material nonrecurring adjustments.

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 ~~2021~~2022 and 2035.

Future minimum lease payments under our non-cancelable operating leases as of October ~~25, 2020,~~31, 2021, are as follows:


		Operating Lease Obligations			Operating Lease Obligations
		(In millions)			(In millions)
Fiscal Year:	Fiscal Year:			Fiscal Year:
2021 (excluding first nine months of fiscal year 2021)		$	38
2022		143
2022 (excluding first nine months of fiscal year 2022)				2022 (excluding first nine months of fiscal year 2022)	$	43
2023	2023	122		2023	169
2024	2024	102		2024	152
2025	2025	83		2025	128
2026 and thereafter		347
2026				2026	118
2027 and thereafter				2027 and thereafter	385
Total	Total	835		Total	995
Less imputed interest	Less imputed interest	115		Less imputed interest	112
Present value of net future minimum lease payments	Present value of net future minimum lease payments	720		Present value of net future minimum lease payments	883
Less short-term operating lease liabilities	Less short-term operating lease liabilities	116		Less short-term operating lease liabilities	140
Long-term operating lease liabilities	Long-term operating lease liabilities	$	604	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 fourth quarter of fiscal year 2022 and fiscal year 2023 with lease terms of 7 years for $132 million.

Operating lease ~~expense was $37~~expenses were $44 million and ~~$28~~$37 million for the third quarter of fiscal years ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$104~~$125 million and ~~$83~~$104 million for the first nine months of fiscal years 2022 and 2021, ~~and 2020,~~ respectively. ~~Short-term and variable lease expenses for the third quarter and first nine months of fiscal years 2021 and 2020 were not significant.~~

~~Other information related to leases was as follows:~~

Nine Months Ended
October 25, 2020 October 27, 2019
(In millions)
Supplemental cash flows information
Operating cash flows used for operating leases $ 103 $ 78
Operating lease assets obtained in exchange for lease obligations (1) $ 147 $ 122

~~(1) The first nine months of fiscal year 2021 includes $80 million of operating lease assets addition due to a business combination.~~

As of October 25, 2020, our operating leases had a weighted average remaining lease term of 7.8 years and a weighted average discount rate of 3.06%. As of January 26, 2020, our operating leases had a weighted average remaining lease term of 8.3 years and a weighted average discount rate of 3.45%.

1311

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Short-term and variable lease expenses for the third quarter and first nine months of fiscal years 2022 and 2021 were not significant.

Other information related to leases was as follows:


	Nine Months Ended
	October 31, 2021		October 25, 2020

	(In millions)
Supplemental cash flows information
Operating cash flows used for operating leases	$	114	$	103
Operating lease assets obtained in exchange for lease obligations	$	230	$	147

As of October 31, 2021, our operating leases had a weighted average remaining lease term of 7.3 years and a weighted average discount rate of 2.54%. As of January 31, 2021, our operating leases had a weighted average remaining lease term of 7.6 years and a weighted average discount rate of 2.87%.

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				Nine Months Ended					Three Months Ended				Nine Months Ended
		October 25, 2020		October 27, 2019		October 25, 2020		October 27, 2019			October 31, 2021		October 25, 2020		October 31, 2021		October 25, 2020

		(In millions)									(In millions)
Cost of revenue	Cost of revenue	$	28	$	15	$	62	$	27	Cost of revenue	$	44	$	28	$	102	$	62
Research and development	Research and development	232		141		594		400		Research and development	363		232		935		594
Sales, general and administrative	Sales, general and administrative	123		67		325		197		Sales, general and administrative	152		123		416		325
Total	Total	$	383	$	223	$	981	$	624	Total	$	559	$	383	$	1,453	$	981

Equity Award Activity

The following is a summary of 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 26, 2020 14 $ 176.72
Granted 8 $ 300.75
Vested restricted stock (6) $ 152.46
Balances, October 25, 2020 16 $ 253.81


	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 31, 2021	59	$	66.17
Granted	17	$	184.63

Vested restricted stock	(23)	$	62.39
Canceled and forfeited	(1)	$	80.50
Balances, October 31, 2021	52	$	107.42

As of October ~~25, 2020,~~31, 2021, there was ~~$3.42~~$5.16 billion of aggregate unearned stock-based compensation expense, net of forfeitures. This amount is expected to be recognized over a weighted average period of ~~2.7~~2.6 years for RSUs, PSUs, and market-based PSUs, and ~~0.9 years~~1 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				Nine Months Ended					Three Months Ended				Nine Months Ended
		October 25,		October 27,		October 25,		October 27,			October 31,		October 25,		October 31,		October 25,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions, except per share data)									(In millions, except per share data)
Numerator:	Numerator:									Numerator:
Net income	Net income	$	1,336	$	899	$	2,875	$	1,845	Net income	$	2,464	$	1,336	$	6,749	$	2,875
Denominator:	Denominator:									Denominator:
Basic weighted average shares	Basic weighted average shares	618		610		616		609		Basic weighted average shares	2,499		2,472		2,493		2,464
Dilutive impact of outstanding equity awards	Dilutive impact of outstanding equity awards	12		8		10		8		Dilutive impact of outstanding equity awards	39		48		39		40

Diluted weighted average shares	Diluted weighted average shares	630		618		626		617		Diluted weighted average shares	2,538		2,520		2,532		2,504
Net income per share:	Net income per share:									Net income per share:
Basic (1)	Basic (1)	$	2.16	$	1.47	$	4.67	$	3.03	Basic (1)	$	0.99	$	0.54	$	2.71	$	1.17
Diluted (2)	Diluted (2)	$	2.12	$	1.45	$	4.59	$	2.99	Diluted (2)	$	0.97	$	0.53	$	2.67	$	1.15
Equity awards excluded from diluted net income per share because their effect would have been anti-dilutive	Equity awards excluded from diluted net income per share because their effect would have been anti-dilutive	0		5		8		11		Equity awards excluded from diluted net income per share because their effect would have been anti-dilutive	2		—		21		32

(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 $174 million and $327 million for the third quarter and first nine months of fiscal year 2022, respectively, and an income tax expense of $12 million and $64 million for the third quarter and first nine months of fiscal year 2021, ~~respectively, and $60 million and $109 million for the third quarter and first nine months of fiscal year 2020,~~ respectively. The income tax expense as a percentage of income before income tax was 6.6% and 4.6% for the third quarter and first nine months of fiscal year 2022, respectively, and 0.9% and 2.2% for the third quarter and first nine months of fiscal year 2021, ~~respectively,~~respectively.

On June 28, 2021, we simplified our corporate structure by repatriating the economic rights of certain non-U.S. intellectual property to the United States via domestication of a foreign subsidiary, or the Domestication. The Domestication more closely aligns our corporate structure to our operating structure in accordance with the Organization for Economic Cooperation and ~~6.3%~~Development’s Base Erosion and ~~5.6% for~~Profit Shifting conclusions and changes to U.S. and European tax laws. The impact of the ~~third~~Domestication, which is regarded as a change in tax status, resulted in a discrete benefit primarily from re-valuing certain deferred tax assets, net of deferred tax liabilities, of $252 million in the second quarter ~~and first nine months~~ of fiscal year ~~2020, respectively.~~2022.

The ~~decrease~~increase in our effective tax rate for the third quarter and first nine months of fiscal year ~~2021~~2022 as compared to the same periods of fiscal year ~~2020~~2021 was primarily due to ~~a decrease~~an increase in the ~~proportional~~ amount of earnings subject to ~~United States~~U.S. tax, and ~~an increase~~a decreased impact of tax benefits from stock-based ~~compensation.~~compensation and the U.S. federal research tax credit, partially offset, for the first nine months, by the discrete benefit of the Domestication.

Our effective tax ~~rates~~rate for the first nine months of fiscal ~~years~~year 2021 ~~and 2020 were~~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, the benefit of the U.S. federal research tax credit, and tax benefits related to stock-based compensation.

~~During~~Our effective tax rate for the ~~second quarter~~first nine months of fiscal year ~~2021, we completed~~2022 was lower than the ~~acquisition~~U.S. federal statutory rate of ~~Mellanox. As a result~~21% due to tax benefits from the foreign-derived intangible income deduction, income earned in jurisdictions that are subject to taxes lower than the U.S. federal statutory tax rate, the discrete benefit of the ~~acquisition, we recorded $256 million of net deferred~~Domestication, and tax liabilities primarily on the excess of book basis over the tax basis of the acquired intangible assets and undistributed earnings in certain foreign subsidiaries. We also recorded $153 million of long-term tax liabilitiesbenefits related to stock-based compensation and the U.S. federal research tax ~~basis differences in Mellanox. The net deferred tax liabilities and long-term tax liabilities are based upon certain assumptions underlying our purchase price allocation. Upon finalization~~credit.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As of ~~the purchase price allocation, additional adjustments to the amount of our net deferred taxes and long-term tax liabilities may be required. As a result of the acquisition,~~October 31, 2021, we intend to indefinitely reinvest approximately ~~$675~~$1.7 billion and $231 million of cumulative undistributed earnings held by ~~Mellanox non-U.S. subsidiaries.~~certain subsidiaries in Israel and the United Kingdom, respectively. We have not provided the amount of unrecognized deferred tax liabilities for temporary differences related to these investments ~~in Mellanox non-U.S. subsidiaries~~ as the determination of such amount is not practicable.

For the first nine months of fiscal year ~~2021,~~2022, 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. ~~In the second quarter of fiscal year 2021, we assumed $59 million of unrecognized tax~~

~~NVIDIA CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~benefits and $4 million of related interest through the Mellanox acquisition. Other than these amounts,~~Additionally, there have been no material changes to our unrecognized tax benefits and any related interest or penalties since the fiscal year ended January ~~26, 2020.~~31, 2021.

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 October ~~25, 2020,~~31, 2021, we do not believe that our estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next ~~twelve~~12 months.

Note 7 - Cash Equivalents and Marketable Securities

Our cash equivalents and marketable securities ~~except for money market funds and certificates of deposits,~~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 October ~~25, 2020~~31, 2021 and January ~~26, 2020:~~31, 2021:


		October 25, 2020																October 31, 2021
		Amortized Cost		Unrealized Gain				Unrealized Loss			Estimated Fair Value		Reported as					Amortized Cost					Unrealized Gain			Unrealized Loss		Estimated Fair Value			Reported as
										Cash Equivalents			Marketable Securities												Cash Equivalents					Marketable Securities

		(In millions)																			(In millions)
Corporate debt securities																	Corporate debt securities	$	9,179				$	2		$	(1)	$	9,180		$	135	$	9,045
Debt securities issued by the United States Treasury	Debt securities issued by the United States Treasury	$	3,881			$	0				$	0	$	3,881	$	1,116			$	2,765		Debt securities issued by the United States Treasury	4,887			—		(2)			4,885		195		4,690
Corporate debt securities		3,139		2				0			3,141		427		2,714
Debt securities issued by United States government agencies	Debt securities issued by United States government agencies	1,571		1				0			1,572		0		1,572		Debt securities issued by United States government agencies	2,861					—			—		2,861			307		2,554
Certificates of deposit	Certificates of deposit	797		0				0			797		29		768		Certificates of deposit	1,512					—			—		1,512			32		1,480
Money market funds	Money market funds	388		0				0			388		388		0		Money market funds	360					—			—		360			360		—
Foreign government bonds	Foreign government bonds	117		0				0			117		48		69		Foreign government bonds	241					—			—		241			—		241

Total	Total	$	9,893	$	3			$	0		$	9,896	$	2,008	$	7,888	Total	$	19,040				$	2		$	(3)	$	19,039		$	1,029	$	18,010


		January 26, 2020																January 31, 2021
		Amortized Cost		Unrealized Gain				Unrealized Loss			Estimated Fair Value		Reported as					Amortized Cost					Unrealized Gain			Unrealized Loss		Estimated Fair Value			Reported as
										Cash Equivalents			Marketable Securities												Cash Equivalents					Marketable Securities

		(In millions)																			(In millions)
Corporate debt securities																	Corporate debt securities	$	4,442				$	2		$	—	$	4,444		$	234	$	4,210
Debt securities issued by United States government agencies																	Debt securities issued by United States government agencies	2,975					1			—		2,976			28		2,948
Debt securities issued by the United States Treasury																	Debt securities issued by the United States Treasury	2,846					—			—		2,846			25		2,821
Certificates of deposit																	Certificates of deposit	705					—			—		705			37		668
Money market funds	Money market funds	$	7,507			$	0				$	0	$	7,507	$	7,507			$	0		Money market funds	313			—		—			313		313		—
Debt securities issued by the United States Treasury		1,358		0				0			1,358		1,358		0
Debt securities issued by United States government agencies		1,096		0				0			1,096		1,096		0
Corporate debt securities		592		0				0			592		592		0
Foreign government bonds	Foreign government bonds	200		0				0			200		200		0		Foreign government bonds	67					—			—		67			—		67
Certificates of deposit		27		0				0			27		27		0
Asset-backed securities		1		0				0			1		0		1

Total	Total	$	10,781	$	0			$	0		$	10,781	$	10,780	$	1	Total	$	11,348				$	3		$	—	$	11,351		$	637	$	10,714

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 October ~~25, 2020~~31, 2021 and January ~~26, 2020~~31, 2021 are shown below by contractual maturity.

October 25, 2020 January 26, 2020
Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value
(In millions)
Less than one year $ 9,329 $ 9,330 $ 10,781 $ 10,781
Due in 1 - 5 years 564 566 0 0
Total $ 9,893 $ 9,896 $ 10,781 $ 10,781


	October 31, 2021				January 31, 2021
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value

	(In millions)
Less than one year	$	16,243	$	16,244	$	10,782	$	10,783
Due in 1 - 5 years	2,797		2,795		566		568

Total	$	19,040	$	19,039	$	11,348	$	11,351

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.

1614

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Fair Value at
Pricing Category October 25, 2020 January 26, 2020
(In millions)
Assets
Cash equivalents and marketable securities:
Money market funds Level 1 $ 388 $ 7,507
Debt securities issued by the United States Treasury Level 2 $ 3,881 $ 1,358
Corporate debt securities Level 2 $ 3,141 $ 592
Debt securities issued by United States government agencies Level 2 $ 1,572 $ 1,096
Certificates of deposit Level 2 $ 797 $ 27
Foreign government bonds Level 2 $ 117 $ 200
Asset-backed securities Level 2 $ 0 $ 1
Other asset:
Investment in non-affiliated entities (1) Level 3 $ 106 $ 77
Liabilities
Other non-current liabilities:
2.20% Notes Due 2021 (2) Level 2 $ 1,016 $ 1,006
3.20% Notes Due 2026 (2) Level 2 $ 1,127 $ 1,065
2.85% Notes Due 2030 (2) Level 2 $ 1,676 $ 0
3.50% Notes Due 2040 (2) Level 2 $ 1,163 $ 0
3.50% Notes Due 2050 (2) Level 2 $ 2,311 $ 0
3.70% Notes Due 2060 (2) Level 2 $ 594 $ 0


		Fair Value at
	Pricing Category	October 31, 2021		January 31, 2021

		(In millions)
Assets
Cash equivalents and marketable securities:
Money market funds	Level 1	$	360	$	313
Corporate debt securities	Level 2	$	9,180	$	4,444
Debt securities issued by the United States Treasury	Level 2	$	4,885	$	2,846
Debt securities issued by United States government agencies	Level 2	$	2,861	$	2,976
Certificates of deposit	Level 2	$	1,512	$	705
Foreign government bonds	Level 2	$	241	$	67


Other assets (Investment in non-affiliated entities):
Publicly-held equity security (1)	Level 1	$	136	$	—
Privately-held equity securities	Level 3	$	172	$	144



Liabilities (2)



2.20% Notes Due 2021	Level 2	$	—	$	1,011
0.309% Notes Due 2023	Level 2	$	1,247	$	—
0.584% Notes Due 2024	Level 2	$	1,244	$	—
3.20% Notes Due 2026	Level 2	$	1,086	$	1,124
1.55% Notes Due 2028	Level 2	$	1,233	$	—
2.85% Notes Due 2030	Level 2	$	1,597	$	1,654
2.00% Notes Due 2031	Level 2	$	1,239	$	—
3.50% Notes Due 2040	Level 2	$	1,118	$	1,152
3.50% Notes Due 2050	Level 2	$	2,285	$	2,308
3.70% Notes Due 2060	Level 2	$	594	$	602

(1) ~~Investment~~Unrealized gains of $8 million and $126 million from an investment in ~~non-affiliated entities is privately held and~~a publicly-traded equity security were recorded ~~at fair value on a non-recurring basis only if an impairment or observable price adjustment occurs~~in other income (expense), net, in the ~~period with changes in fair value recorded through net income. The amount recorded as~~third quarter and first nine months of ~~October 25, 2020 has not been significant.~~fiscal year 2022, respectively.

(2) These liabilities are carried on our Consolidated Balance Sheets at their original issuance value, net of unamortized debt discount and issuance ~~costs, and are not marked to fair value each period. Refer to Note 12 of these Notes to Condensed Consolidated Financial Statements for additional information.~~

costs.

1715

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:


		October 25, 2020						January 26, 2020							October 31, 2021						January 31, 2021
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

		(In millions)													(In millions)
Acquisition-related intangible assets (1)	Acquisition-related intangible assets (1)	$	3,287	$	(642)	$	2,645	$	195	$	(192)	$	3	Acquisition-related intangible assets (1)	$	3,396	$	(1,166)	$	2,230	$	3,280	$	(774)	$	2,506
Patents and licensed technology	Patents and licensed technology	705		(489)		216		520		(474)		46		Patents and licensed technology	709		(485)		224		706		(475)		231
Total intangible assets	Total intangible assets	$	3,992	$	(1,131)	$	2,861	$	715	$	(666)	$	49	Total intangible assets	$	4,105	$	(1,651)	$	2,454	$	3,986	$	(1,249)	$	2,737

(1) As of October ~~25, 2020,~~31, 2021, acquisition-related intangible assets include the fair value of a Mellanox ~~IPR&D~~in-process research and development project of $630 million, which has not been amortized. Once the project reaches technological feasibility, we will begin to amortize the intangible asset over its estimated useful life. Refer to Note 2 of these Notes to Condensed Consolidated Financial Statements for further details.yet commenced amortization.

Amortization expense associated with intangible assets was $143 million and $418 million for the third quarter and first nine months of fiscal year 2022, respectively, and $174 million and $465 million for the third quarter and first nine months of fiscal year 2021, ~~respectively, and $6 million and $19 million for the third quarter and first nine months of fiscal year 2020,~~ respectively. Future amortization expense related to the net carrying amount of intangible assets, excluding in-process research and development, as of October ~~25, 2020~~31, 2021 is estimated to be ~~$146~~$145 million for the remainder of fiscal year ~~2021, $542 million in fiscal year~~ 2022, ~~$539~~$576 million in fiscal year 2023, ~~$418~~$453 million in fiscal year 2024, ~~$364~~$400 million in fiscal year 2025, ~~and $852~~$117 million in fiscal year 2026, and $133 million in fiscal year 2027 and thereafter. ~~Refer~~

In both the third quarter and first nine months of fiscal year 2022, goodwill increased by $109 million and intangible assets increased by $119 million from acquisitions. We assigned $96 million of the increase in goodwill to ~~Note 2~~our Compute & Networking segment and assigned $13 million of ~~these Notes~~the increase to ~~Condensed Consolidated Financial Statements for further details on intangible assets.~~our Graphics segment.

Note 10 - Balance Sheet Components

Certain balance sheet components are as follows:

October 25, January 26,
2020 2020
Inventories: (In millions)
Raw materials $ 455 $ 249
Work in-process 380 265
Finished goods 660 465
Total inventories $ 1,495 $ 979

October 25, January 26,
2020 2020
Other assets: (In millions)
Advanced consideration for acquisition (1) $ 1,357 $ 0
Prepaid royalties (1) 446 1
Investment in non-affiliated entities 106 77
Other 119 40
Total other assets $ 2,028 $ 118

(1) Advanced consideration for acquisition and long-term prepaid royalties are related to the pending acquisition of Arm. Refer to Note 2 of these Notes to Condensed Consolidated Financial Statements for further details.


	October 31,		January 31,
	2021		2021

Inventories:	(In millions)
Raw materials	$	755	$	632
Work in-process	538		457
Finished goods	940		737
Total inventories	$	2,233	$	1,826

1816

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

October 25, January 26,
2020 2020
Accrued and Other Current Liabilities: (In millions)
Customer program accruals $ 609 $ 462
Accrued payroll and related expenses 277 185
Deferred revenue (1) 235 141
Licenses and royalties 124 66
Operating leases 116 91
Taxes payable 70 61
Product warranty and return provisions 33 24
Professional service fee 28 18
Coupon interest on debt obligations 19 20
Other 63 29
Total accrued and other current liabilities $ 1,574 $ 1,097


	October 31,		January 31,
	2021		2021

Other assets:	(In millions)
Prepaid supply agreements	$	1,606	$	—
Advanced consideration for acquisition	1,357		1,357
Prepaid royalties	416		440
Investment in non-affiliated entities	308		144

Deposits	22		136
Other	52		67
Total other assets	$	3,761	$	2,144


	October 31,		January 31,
	2021		2021

Accrued and Other Current Liabilities:	(In millions)
Customer program accruals	$	857	$	630
Deferred revenue (1)	298		288
Accrued payroll and related expenses	295		297
Operating leases	140		121
Licenses and royalties	108		128
Product warranty and return provisions	45		39
Coupon interest on debt obligations	37		74
Taxes payable	36		61

Professional service fees	30		26








Other	102		61
Total accrued and other current liabilities	$	1,948	$	1,725

(1) Deferred revenue primarily includes customer advances and deferrals related to license and development arrangements and ~~post contract~~post-contract customer support, or PCS.


		October 25,		January 26,			October 31,		January 31,
		2020		2020			2021		2021

Other Long-Term Liabilities:	Other Long-Term Liabilities:	(In millions)				Other Long-Term Liabilities:	(In millions)
Income tax payable (1)	Income tax payable (1)	$	747	$	528	Income tax payable (1)	$	1,051	$	836
Deferred income tax ~~(2)~~	Deferred income tax ~~(2)~~	258		29		Deferred income tax ~~(2)~~	225		241
Deferred revenue ~~(3)~~(2)	Deferred revenue ~~(3)~~(2)	147		60		Deferred revenue ~~(3)~~(2)	191		163
Employee benefits						Employee benefits	38		33
Licenses payable	Licenses payable	71		110		Licenses payable	21		56
Employee benefits		40		22

Other	Other	48		26		Other	9		46
Total other long-term liabilities	Total other long-term liabilities	$	1,311	$	775	Total other long-term liabilities	$	1,535	$	1,375

(1) As of October ~~25, 2020,~~31, 2021, income tax payable represents the long-term portion of the one-time transition tax payable of ~~$284~~$251 million, unrecognized tax benefits of ~~$264~~$578 million, related interest and penalties of ~~$46~~$60 million, and other foreign long-term tax payable of ~~$153~~$162 million.

(2) ~~Deferred income tax primarily relates to acquired intangible assets.~~

~~(3)~~ Deferred revenue primarily includes deferrals related to PCS.

~~Deferred Revenue~~

~~The following table shows the changes in deferred revenue during the first nine months of fiscal years 2021 and 2020:~~

October 25, October 27,
2020 2019
(In millions)
Balance at beginning of period $ 201 $ 138
Deferred revenue added during the period 361 237
Addition due to business combinations 75 0
Revenue recognized during the period (255) (199)
Balance at end of period $ 382 $ 176

1917

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Deferred Revenue

The following table shows the changes in deferred revenue during the first nine months of fiscal years 2022 and 2021:


	October 31,		October 25,
	2021		2020

	(In millions)
Balance at beginning of period	$	451	$	201
Deferred revenue added during the period	621		361
Addition due to business combinations	—		75
Revenue recognized during the period	(583)		(255)
Balance at end of period	$	489	$	382

Revenue related to remaining performance obligations represents the ~~remaining~~ contracted license, development arrangements and PCS that has not been recognized. This includes ~~related~~ deferred revenue currently recorded and amounts that will be invoiced in future periods. As of October ~~25, 2020, the amount~~31, 2021, $620 million of ~~our remaining~~revenue related to performance obligations ~~that has~~had not been recognized, ~~as revenue was $679 million,~~ of which we expect to recognize approximately ~~41% as revenue~~49% over the next ~~twelve~~12 months and the remainder thereafter. This ~~amount~~ excludes ~~the value of remaining~~revenue related to performance obligations for contracts with ~~an original expected~~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 October ~~25, 2020~~31, 2021 and January ~~26, 2020.~~31, 2021.

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, including intercompany hedging instruments, or intercompany derivatives, with wholly-owned subsidiaries in order to hedge certain forecasted expenses 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 October ~~25, 2020~~31, 2021 and January ~~26, 2020:~~31, 2021:


		October 25, 2020		January 26, 2020			October 31, 2021		January 31, 2021

		(In millions)					(In millions)
Designated as cash flow hedges	Designated as cash flow hedges	$	744	$	428	Designated as cash flow hedges	$	949	$	840
Not designated for hedge accounting	Not designated for hedge accounting	$	352	$	287	Not designated for hedge accounting	$	430	$	441

As of October ~~25, 2020,~~31, 2021, all designated foreign currency forward contracts mature within ~~eighteen~~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~~12 months was not significant.

During the first nine months of fiscal years ~~2021~~2022 and ~~2020,~~2021, the impact of derivative financial instruments designated for hedge accounting treatment on other comprehensive income or loss was not ~~significant and all such instruments were determined to be highly effective. Therefore, there were no gains or losses associated with ineffectiveness.~~significant.

Note 12 - Debt

Long-Term Debt

In June 2021, we issued $1.25 billion of the 0.309% Notes Due 2023, $1.25 billion of the 0.584% Notes Due 2024, $1.25 billion of the 1.55% Notes Due 2028, and $1.25 billion of the 2.00% Notes Due 2031, or collectively, the June 2021 Notes. Interest on the 0.584% Notes Due 2024 is payable on June 14 and December 14 of each year, beginning on

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

December 14, 2021. Interest on all other series of the June 2021 Notes is payable on June 15 and December 15 of each year, beginning on December 15, 2021. We may redeem the June 2021 Notes for cash prior to maturity. However, no make-whole premium will be paid for redemptions of the Notes Due 2023 on or after June 15, 2022, the Notes Due 2024 on or after June 14, 2023, the Notes Due 2028 on or after April 15, 2028, or the Notes Due 2031 on or after March 15, 2031. The net proceeds from the June 2021 Notes were $4.98 billion, after deducting debt discount and issuance costs.

In March 2020, we issued $1.50 billion of the 2.85% Notes Due 2030, $1.00 billion of the 3.50% Notes Due 2040, $2.00 billion of the 3.50% Notes Due 2050, and $500 million of the 3.70% Notes Due 2060, or collectively, the March 2020 Notes. Interest on the March 2020 Notes is payable on April 1 and October 1 of each ~~year, beginning on October 1, 2020. Upon 30 days' notice to holders of~~year.

On August 16, 2021, we repaid the Notes, we may redeem the Notes for cash prior to maturity, at redemption prices that include accrued and unpaid interest, if any, and a make-whole premium. However, no make-whole premium will be paid for redemptions of the Notes Due 2030 on or after January 1, 2030, the Notes Due 2040 on or after October 1, 2039, the Notes Due 2050 on or after October 1, 2049, or the Notes Due 2060 on or after October 1, 2059. The net proceeds from the March 2020 Notes were $4.97 billion, after deducting debt discount and issuance costs.

~~In September 2016, we issued~~ $1.00 billion of ~~the~~ 2.20% Notes Due ~~2021 and~~2021. Interest on the $1.00 billion of the 3.20% Notes Due 2026, or ~~collectively, the September 2016 Notes. Interest on the~~ September 2016 Notes, is payable on March 16 and September 16 of each year. Upon 30 days' notice to holders of the Notes, we may redeem the Notes for cash prior to maturity, at redemption prices that include accrued and unpaid interest, if any, and a make-whole premium. However, no make-

~~NVIDIA CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~whole premium will be paid for redemptions of the Notes Due 2021 on or after August 16, 2021, or for redemptions of the Notes Due 2026 on or after June 16, 2026.~~ The ~~net proceeds from the~~ September 2016 Notes, ~~were $1.98 billion, after deducting debt discount and issuance costs.~~

~~Both~~ the ~~September 2016~~March 2020 Notes, and the ~~March 2020~~June 2021 Notes, or collectively, the Notes, are our unsecured senior obligations and rank equally in right of payment with all existing and future unsecured and unsubordinated indebtedness. The Notes are structurally subordinated to the liabilities of our subsidiaries and are effectively subordinated to any secured indebtedness to the extent of the value of the assets securing such indebtedness.obligations. All existing and future liabilities of our subsidiaries will be effectively senior to the Notes.

The carrying value of the Notes and the associated interest rates were as follows:

Expected
Remaining Term (years)
Effective
Interest Rate October 25, 2020 January 26, 2020
(In millions)
2.20% Notes Due 2021 0.9 2.38% $ 1,000 $ 1,000
3.20% Notes Due 2026 5.9 3.31% 1,000 1,000
2.85% Notes Due 2030 9.4 2.93% 1,500 0
3.50% Notes Due 2040 19.4 3.54% 1,000 0
3.50% Notes Due 2050 29.5 3.54% 2,000 0
3.70% Notes Due 2060 39.5 3.73% 500 0
Unamortized debt discount and issuance costs (39) (9)
Net carrying amount $ 6,961 $ 1,991


	Expected Remaining Term (years)	Effective Interest Rate	October 31, 2021		January 31, 2021

			(In millions)
2.20% Notes Due 2021	—	2.38%	$	—	$	1,000
0.309% Notes Due 2023	1.6	0.41%	1,250		—
0.584% Notes Due 2024	2.6	0.66%	1,250		—
3.20% Notes Due 2026	4.9	3.31%	1,000		1,000
1.55% Notes Due 2028	6.6	1.64%	1,250		—
2.85% Notes Due 2030	8.4	2.93%	1,500		1,500
2.00% Notes Due 2031	9.6	2.09%	1,250		—
3.50% Notes Due 2040	18.4	3.54%	1,000		1,000
3.50% Notes Due 2050	28.4	3.54%	2,000		2,000
3.70% Notes Due 2060	38.4	3.73%	500		500
Unamortized debt discount and issuance costs			(56)		(37)
Net carrying amount			10,944		6,963
Less short-term portion			—		(999)
Total long-term portion			$	10,944	$	5,964

As of October ~~25, 2020,~~31, 2021, we were in compliance with the required covenants under the Notes.

~~Revolving Credit Facility~~

We have a Credit Agreement under which we may borrow up to $575 million for general corporate purposes and can obtain revolving loan commitments up to $425 million. As of October 25, 2020, we had 0t borrowed any amounts and were in compliance with the required covenants under this agreement.

Commercial Paper

We have a $575 million commercial paper program to support general corporate purposes. As of October ~~25, 2020,~~31, 2021, we had 0tnot 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.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

We recently entered into several long-term supply agreements, under which we have made advance payments and have $1.79 billion remaining unpaid. As of October ~~25, 2020,~~31, 2021, we had outstanding inventory purchase and long-term supply obligations totaling ~~$2.57~~$6.90 billion, inclusive of the $1.79 billion, and other purchase obligations totaling ~~$398~~$935 million.

Total future unconditional purchase commitments as of October 31, 2021, are as follows:


	Commitments
	(In millions)
Fiscal Year:
2022 (excluding first nine months of fiscal year 2022)	$	2,944
2023	4,637
2024	172
2025	52
2026	28

Total	$	7,833

Accrual for Product Warranty Liabilities

The estimated amount of product ~~returns and~~ warranty liabilities was ~~$19~~$32 million and ~~$15~~$22 million as of October ~~25, 2020~~31, 2021 and January ~~26, 2020,~~31, 2021, respectively, and the activities ~~related to the warranty liabilities~~ were not significant.

In connection with certain agreements that we have entered in the past, we have provided indemnities ~~to cover the indemnified party~~ 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.

~~NVIDIA CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Litigation

Securities Class Action and Derivative Lawsuits

The plaintiffs in the putative securities class action lawsuit, captioned 4:18-cv-07669-HSG, initially filed on December 21, 2018 in the United States District Court for the Northern District of California, and titled In Re NVIDIA Corporation Securities Litigation, filed an amended complaint on May 13, 2020. The amended complaint ~~asserts~~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 ~~allege~~alleged that the NVIDIA executives who they named as defendants violated Section 20(a) of the Exchange Act. Plaintiffs ~~seek~~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 ~~June 29, 2020, NVIDIA moved~~March 2, 2021, the district court granted NVIDIA’s motion to dismiss the ~~amended~~ complaint onwithout leave to amend, entered judgment in favor of NVIDIA and closed the ~~basis that~~case. On August 11, 2021, plaintiffs ~~failed to state any claims~~filed an appeal from judgment in the United States Court of Appeals for ~~violations of~~ the ~~securities laws by NVIDIA or the individual defendants. As of September 14, 2020, the motion was fully briefed but the Court has not yet issued a decision.~~Ninth Circuit, case number 21-15604.

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, remains stayed pending resolution of ~~NVIDIA’s motion to dismiss~~ the ~~complaint~~plaintiffs’ appeal in the In Re NVIDIA Corporation Securities Litigation action. The lawsuit asserts claims 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-~~19-

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

cv-01798- UNA), remain stayed pending resolution of ~~NVIDIA’s motion to dismiss~~ the ~~complaint~~plaintiffs’ appeal in the In Re NVIDIA Corporation Securities Litigation action. The lawsuits assert claims 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.

It is possible that additional suits will be filed, or allegations received from shareholders, with respect to these same or other matters, naming NVIDIA and/or its officers and directors as defendants.

Accounting for Loss Contingencies

As of October ~~25, 2020,~~31, 2021, 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

Beginning August 2004, our Board of Directors authorized us to repurchase our stock.

Through October ~~25, 2020,~~31, 2021, we have repurchased an aggregate of ~~260 million~~1.04 billion shares under our share repurchase program for a total cost of $7.08 billion. All shares delivered from these repurchases have been placed into treasury stock. As of October ~~25, 2020,~~31, 2021, we were authorized, subject to certain specifications, to repurchase additional shares of our common stock up to $7.24 billion through December 2022.

During the third quarter and first nine months of fiscal year 2022, we paid $100 million and $298 million in cash dividends to our shareholders, respectively. During the third quarter and first nine months of fiscal year 2021, we paid $99 million and $296 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. ~~In the prior fiscal year, we had reported~~Our 2 operating segments: GPU and Tegra Processor. During the first quarter of fiscal year 2021, we changed our operating segments to be consistent with the revised manner in which our CODM reviews our financial performance and allocates resources. The 2 new operating segments are "Graphics" and "Compute & ~~Networking". Comparative periods presented reflect this change.~~Networking." Our operating segments are equivalent to our reportable segments.

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~~Quadro/NVIDIA RTX GPUs for enterprise design; GRID software for cloud-based visual and virtual computing; and automotive platforms for infotainment systems.

Our Compute & Networking segment includes Data Center platforms and systems for artificial intelligence, or AI, high performance computing, or HPC, and accelerated computing; ~~Mellanox~~ networking and interconnect solutions; ~~DRIVE for~~automotive AI Cockpit, autonomous ~~vehicles;~~driving development agreements, and autonomous vehicle solutions; cryptocurrency mining processors, or CMP; and Jetson for robotics and other embedded platforms.

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 2 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, ~~legal settlement~~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 October 25, 2020
Revenue $ 2,787 $ 1,939 $ 0 $ 4,726
Operating income (loss) $ 1,345 $ 738 $ (685) $ 1,398
Three Months Ended October 27, 2019
Revenue $ 2,226 $ 788 $ 0 $ 3,014
Operating income (loss) $ 1,068 $ 158 $ (299) $ 927
Nine Months Ended October 25, 2020
Revenue $ 6,778 $ 4,894 $ 0 $ 11,672
Operating income (loss) $ 3,092 $ 1,880 $ (1,947) $ 3,025
Nine Months Ended October 27, 2019
Revenue $ 5,555 $ 2,258 $ 0 $ 7,813
Operating income (loss) $ 2,307 $ 418 $ (869) $ 1,856

2321

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Three Months Ended Nine Months Ended
October 25,
2020 October 27,
2019 October 25,
2020 October 27,
2019
(In millions)
Reconciling items included in "All Other" category:
Stock-based compensation expense $ (383) $ (223) $ (981) $ (624)
Acquisition-related and other costs (192) (7) (669) (22)
Unallocated cost of revenue and operating expenses (89) (69) (259) (210)
Legal settlement costs (21) 0 (38) (13)
Total $ (685) $ (299) $ (1,947) $ (869)
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 October 31, 2021
Revenue	$	4,092	$	3,011	$	—	$	7,103

Operating income (loss)	$	2,160	$	1,332	$	(821)	$	2,671

Three Months Ended October 25, 2020
Revenue	$	2,787	$	1,939	$	—	$	4,726

Operating income (loss)	$	1,345	$	738	$	(685)	$	1,398

Nine Months Ended October 31, 2021
Revenue	$	11,450	$	7,821	$	—	$	19,271

Operating income (loss)	$	6,073	$	3,227	$	(2,229)	$	7,071

Nine Months Ended October 25, 2020
Revenue	$	6,778	$	4,894	$	—	$	11,672

Operating income (loss)	$	3,092	$	1,880	$	(1,947)	$	3,025


	Three Months Ended				Nine Months Ended
	October 31, 2021		October 25, 2020		October 31, 2021		October 25, 2020

	(In millions)
Reconciling items included in "All Other" category:

Stock-based compensation expense	$	(559)	$	(383)	$	(1,453)	$	(981)
Acquisition-related and other costs	(156)		(192)		(482)		(669)
Unallocated cost of revenue and operating expenses	(106)		(89)		(286)		(259)
IP-related costs	—		(21)		(8)		(38)


Total	$	(821)	$	(685)	$	(2,229)	$	(1,947)

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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				Nine Months Ended					Three Months Ended				Nine Months Ended
		October 25,		October 27,		October 25,		October 27,			October 31,		October 25,		October 31,		October 25,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Revenue:	Revenue:									Revenue:
Taiwan	Taiwan	$	1,296	$	838	$	3,062	$	2,171	Taiwan	$	2,187	$	1,296	$	5,932	$	3,062
China (including Hong Kong)	China (including Hong Kong)	1,113		758		2,727		1,894		China (including Hong Kong)	2,017		1,113		5,128		2,727
Other Asia Pacific	Other Asia Pacific	955		805		2,260		1,983		Other Asia Pacific	1,067		955		3,115		2,260
United States	United States	890		236		2,331		589		United States	1,126		890		2,890		2,331
Europe	Europe	247		216		741		753		Europe	340		247		1,150		741
Other countries	Other countries	225		161		551		423		Other countries	366		225		1,056		551
Total revenue	Total revenue	$	4,726	$	3,014	$	11,672	$	7,813	Total revenue	$	7,103	$	4,726	$	19,271	$	11,672

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

Three Months Ended Nine Months Ended
October 25, October 27, October 25, October 27,
2020 2019 2020 2019
(In millions)
Revenue:
Gaming $ 2,271 $ 1,659 $ 5,264 $ 4,027
Professional Visualization 236 324 746 881
Data Center 1,900 726 4,793 2,015
Automotive 125 162 391 537
OEM and Other 194 143 478 353
Total revenue $ 4,726 $ 3,014 $ 11,672 $ 7,813

~~NVIDIA CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~


	Three Months Ended				Nine Months Ended
	October 31,		October 25,		October 31,		October 25,
	2021		2020		2021		2020

	(In millions)
Revenue:
Gaming	$	3,221	$	2,271	$	9,042	$	5,264
Data Center	2,936		1,900		7,350		4,793
Professional Visualization	577		236		1,468		746
Automotive	135		125		441		391
OEM and Other	234		194		970		478
Total revenue	$	7,103	$	4,726	$	19,271	$	11,672

No customer represented 10% or more of total revenue for the third quarter and first nine months of fiscal ~~year~~years 2022 or 2021. ~~One customer represented 10% and 11% of our total revenue for the third quarter and first nine months of fiscal year 2020, respectively, and was attributable primarily to the Graphics segment.~~

One customer represented ~~13%~~14% and ~~21%~~16% of our accounts receivable balance as of October ~~25, 2020~~31, 2021 and January ~~26, 2020,~~31, 2021, respectively.

~~Note 16 - Goodwill~~

During the first quarter of fiscal year 2021, we changed our operating segments to Graphics and Compute & Networking, as discussed in Note 15 of these Notes to Condensed Consolidated Financial Statements. As a result, our reporting units also changed, and we reassigned the goodwill balance to the new reporting units based on their relative fair values. We determined there was 0 goodwill impairment immediately prior to the reorganization. As of October 25, 2020, the total carrying amount of goodwill was $4.19 billion and the amount of goodwill allocated to our Graphics and Compute & Networking reporting units was $347 million and $3.85 billion, respectively. In the first nine months of fiscal year 2021, goodwill increased by $3.57 billion. The increase in goodwill in the first nine months of fiscal year 2021 was due to goodwill of $3.43 billion arising from the Mellanox acquisition, and goodwill of $133 million from other acquisition activity, both of which were allocated to the Compute & Networking reporting unit.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “goal,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential” and similar expressions intended to identify forward-looking statements. Other statements in this Quarterly Report on Form 10-Q regarding the potential future impact of the COVID-19 pandemic on the Company’s business and results of operations are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. We discuss many of these risks, uncertainties and other factors in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021 in greater detail under the heading “Risk ~~Factors.”~~Factors” of such reports. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

All references to “NVIDIA,” “we,” “us,” “our” or the “Company” mean NVIDIA Corporation and its subsidiaries.

NVIDIA, the NVIDIA logo, GeForce, GeForce NOW, Mellanox, NVIDIA AI Enterprise, NVIDIA Clara, NVIDIA DRIVE Orin, NVIDIA Jetson AGX Orin, GeForce NOW, GeForce RTX SUPER, NVIDIA A100, NVIDIA Broadcast, NVIDIA CloudXR, NVIDIA CUDA, NVIDIA DLSS, NVIDIA DGX A100, NVIDIA DGX SuperPOD, NVIDIA DRIVE, NVIDIA EGX, NVIDIA GRID, NVIDIA Jarvis, NVIDIA Jetson, NVIDIA Maxine, NVIDIA Merlin, NVIDIA Omniverse, NVIDIA ~~Omniverse Machinima, NVIDIA Reflex,~~ReOpt, NVIDIA RTX, ~~Mellanox,~~NVIDIA Triton Inference Server and Quadro, ~~Quadro RTX, Quadro View and Tegra~~ are trademarks and/or registered trademarks of NVIDIA Corporation in the United States 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.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with ~~“Item 6. Selected Financial Data”~~the risk factors set forth in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended January ~~26, 2020~~31, 2021 and ~~“Item~~Part II, Item 1A. ~~Risk~~“Risk Factors” of this Quarterly Report on Form 10-Q and our Condensed Consolidated Financial Statements and related Notes thereto, as well as other cautionary statements and risks described elsewhere in this Quarterly Report on Form 10-Q, before deciding to purchase or sell shares of our common stock.

Overview

Our Company and Our Businesses

NVIDIA pioneered accelerated computing to help solve the most challenging computational problems. ~~Starting with a~~Since our original focus on PC graphics, we ~~extended our focus in recent years~~have expanded to ~~the revolutionary field of AI.~~several other large and important computationally intensive fields. Fueled by the sustained demand for exceptional 3D graphics and the scale of the gaming market, NVIDIA has leveraged its GPU architecture to create platforms for scientific computing, AI, data science, autonomous vehicles, or AV, robotics, and augmented and virtual reality, ~~HPC,~~or AR and ~~AI.~~VR.

~~Through fiscal year 2020, our reportable~~Our two operating segments ~~were GPU and Tegra Processor. Starting with the first quarter of fiscal year 2021, our reportable segments have changed to~~are "Graphics" and "Compute & ~~Networking".~~

~~Our Graphics segment includes GeForce GPUs for gaming and PCs,~~Networking," as described in Note 15 of the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro GPUs for enterprise design; GRID software for cloud-based visual and virtual computing; and automotive platforms for infotainment systems.

Our Compute & Networking segment includes Data Center platforms and systems for AI, HPC, and accelerated computing; Mellanox networking and interconnect solutions; DRIVE for autonomous vehicles; and Jetson for robotics and other embedded platforms.

~~All prior period comparisons presented reflect our new reportable segments. Our market platforms – Gaming, Professional Visualization, Data Center, Automotive, OEM and Other – remain unchanged.~~Notes to Condensed Consolidated Financial Statements.

Headquartered in Santa Clara, California, NVIDIA was incorporated in California in April 1993 and reincorporated in Delaware in April 1998.

Recent Developments, Future Objectives and Challenges

Pending Acquisition of Arm Limited

On September 13, 2020, we entered into athe Purchase Agreement with Arm and SoftBank ~~for us~~ to acquire, from SoftBank, all ~~of the~~ allotted and issued ordinary shares of Arm in a transaction valued at $40 billion. We paid ~~$2 billion in~~the Signing Consideration, and will pay upon closing of the acquisition $10 billion in cash and issue to SoftBank ~~44.3~~177.5 million shares of our common

stock, ~~with~~which had an aggregate value of $21.5 ~~billion.~~billion as of the date of the Purchase Agreement, and was valued at $56.2 billion as of November 18, 2021. The transaction includes a potential earn out, which is contingent on the achievement of certain financial performance targets by Arm during the fiscal year ending March 31, 2022. If the financial ~~performance~~ targets are achieved, ~~Softbank~~SoftBank can elect to receive either up to an additional $5 billion in cash or up to ~~10.3~~an additional 41.3 million shares of our common ~~stock.~~stock, which was valued at $13.1 billion as of November 18, 2021. We will issue up to $1.5 billion in restricted stock units to Arm employees after closing. The ~~$2 billion paid upon signing~~Signing Consideration was allocated between advanced consideration for the acquisition of $1.36 billion and the prepayment of intellectual property licenses from Arm of $0.17 billion and royalties of $0.47 ~~billion.~~ billion, both with a 20-year term. The Signing Consideration was allocated on a fair value basis and any refund of the Signing Consideration will use stated values in the Purchase Agreement. The Purchase Agreement can be terminated by either party if the transaction has not closed by September 2022, subject to certain qualifications. If the transaction does not close due to failure to receive regulatory approval, and all other covenants have been met, we will not be refunded $1.25 billion of the advanced consideration for the acquisition we paid at signing.

We are seeking regulatory approval in the ~~Purchase Agreement is terminated~~United States, the United Kingdom, the European Union, China and other jurisdictions. Regulators at the FTC have expressed concerns regarding the transaction, and we are engaged in discussions with the FTC regarding remedies to address those concerns. The transaction has been under ~~certain circumstances, we will be refunded $1.25 billion~~the review of China’s antitrust authority, pending the formal case initiation. Regulators in the United Kingdom and the European Union declined to approve the transaction in Phase 1 of their review processes, expressed numerous concerns, began a more in-depth Phase 2 review on the transaction’s impact on competition, and, in the United Kingdom, a Phase 2 review of the ~~Signing Consideration. The $2 billion payment upon signing was allocated~~impact on ~~a fair value basis~~the United Kingdom’s national security interests. Although regulators and ~~any refund of~~some Arm licensees have expressed concerns or objected to the ~~Signing Consideration will use stated values~~transaction, we continue to believe in the ~~Purchase Agreement. We believe the closing~~merits and benefits of the acquisition ~~will likely occur~~to Arm, its licensees, and the industry.

Demand

Demand for our products is based on many factors, including our product introductions, time to market, transitions, competitor product releases and announcements, and competing technologies, all of which can impact the timing and volume of our revenue. GPUs have many use cases including their intended marketed use case. GPUs can be used for cryptocurrency mining, though we do not have visibility into how much of our GPU usage is for cryptocurrency mining nor the future demand for GPUs to mine cryptocurrency. Volatility in the ~~first~~cryptocurrency market, including new compute technologies, price changes in cryptocurrencies, changes in government cryptocurrency policies and regulations, and new cryptocurrency standards can impact cryptocurrency demand, and further impact demand for our products and our ability to estimate demand for our products. Changes to cryptocurrency standards and processes including, but not limited to, the pending Ethereum 2.0 standard may decrease the usage of GPUs for Ethereum mining and may also create increased aftermarket resale of our GPUs, impact retail prices for our GPUs, increase returns of our products in the distribution channel, and may reduce demand for our new GPUs. We have introduced Lite Hash Rate, or LHR, GeForce GPUs with limited Ethereum mining capability. During the third quarter of ~~calendar~~fiscal year ~~2022.~~2022, nearly all our desktop Ampere architecture GeForce GPU shipments were LHR in our effort to direct GeForce to gamers. There have been aftermarket attempts to increase the Ethereum mining capability of our LHR cards. Additionally, consumer and enterprise behavior during the COVID-19 pandemic has made it more difficult for us to estimate future demand, and these challenges may be more pronounced or volatile in the future on both a global and regional basis if and when the effects of the pandemic subside. In estimating demand and evaluating trends, we make multiple assumptions, any of which may prove to be incorrect.

Supply

products in advance of our normal lead times, paid premiums and provided deposits to secure normal and incremental future supply and capacity and may need to continue to do so in the future. Ordering product in advance of our normal lead times to secure supply in a constrained environment may trigger excess inventory or other charges if there is a partial or complete reduction in long term demand for our products or if such demand is served by our competitors. Given our long lead times on inventory purchasing, demand may be perishable or may disappear.

COVID-19

The worldwide COVID-19 pandemic ~~is prompting~~has caused governments and businesses to take unprecedented measures including restrictions on travel, temporary business closures, quarantines and shelter-in-place orders. It has significantly impacted global economic activity and caused volatility and disruption in global financial markets. ~~Since March 2020,~~Some regions are easing COVID-19 related restrictions; however, most of our employees ~~have been working~~continue to work remotely and we ~~have~~continue to temporarily ~~prohibited~~prohibit most business travel.

~~Our~~The COVID-19 pandemic continues to evolve and affect our business and financial results. During the third quarter of fiscal year 2022, our Gaming, ~~and~~ Data Center and Professional Visualization market platforms have benefited from stronger demand as people continue to work, learn, and play from home. ~~In Professional Visualization, stronger demand for mobile workstations due~~As our own offices begin to ~~work from home trends was partially offset by lower demand for desktop workstations. In Automotive, customers' production volumes have largely returned~~reopen, we expect to ~~pre-COVID levels. In our supply chain, stronger demand globally has limited the availability of capacity~~incur incremental expenses as we resume onsite services and ~~components.~~

related in-office costs.

As the COVID-19 pandemic continues, the timing and overall demand from customers and the availability of supply chain, rising inflation, logistical services and component supply may have a material net negative impact on our business and financial results. ~~Refer to Part II, Item 1A of this Quarterly Report on Form 10-Q for additional information under the heading “Risk Factors”.~~

~~The Company believes its~~We believe our existing balances of cash, cash equivalents and marketable securities, along with commercial paper ~~and other short-term liquidity~~ arrangements, will be sufficient to satisfy ~~its~~our working capital needs, capital asset purchases, dividends, debt repayments and other liquidity requirements associated with ~~its~~our existing operations.

Third Quarter of Fiscal Year ~~2021~~2022 Summary


		Three Months Ended														Three Months Ended
		October 25, 2020			July 26, 2020			October 27, 2019			Quarter-over-Quarter Change		Year-over-Year Change			October 31, 2021			August 1, 2021			October 25, 2020			Quarter-over-Quarter Change		Year-over-Year Change

		($ in millions, except per share data)														($ in millions, except per share data)
Revenue	Revenue	$	4,726		$	3,866		$	3,014		22	%	57	%	Revenue	$	7,103		$	6,507		$	4,726		9	%	50	%
Gross margin	Gross margin	62.6		%	58.8		%	63.6		%	380 bps		(100) bps		Gross margin	65.2		%	64.8		%	62.6		%	40 bps		260 bps
Operating expenses	Operating expenses	$	1,562		$	1,624		$	989		(4)	%	58	%	Operating expenses	$	1,960		$	1,771		$	1,562		11	%	25	%
Income from operations	Income from operations	$	1,398		$	651		$	927		115	%	51	%	Income from operations	$	2,671		$	2,444		$	1,398		9	%	91	%
Net income	Net income	$	1,336		$	622		$	899		115	%	49	%	Net income	$	2,464		$	2,374		$	1,336		4	%	84	%
Net income per diluted share	Net income per diluted share	$	2.12		$	0.99		$	1.45		114	%	46	%	Net income per diluted share	$	0.97		$	0.94		$	0.53		3	%	83	%

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 for the third quarter of fiscal year 2022 was $7.10 billion, up 50% from a year earlier.

Gaming revenue was up 42% from a year ago and up 5% sequentially, reflecting higher sales of GeForce GPUs. We benefited from strong demand for our NVIDIA Ampere architecture products leading into the holiday season. Nearly all our desktop Ampere architecture GeForce GPU shipments are LHR in our effort to direct GeForce to gamers.

Data Center revenue was up 55% from a year ago and up 24% sequentially, driven by sales of NVIDIA Ampere architecture products to hyperscale customers for cloud computing and workloads such as natural language processing and deep recommender models, as well as to vertical industries.

Professional Visualization revenue was up 144% from a year earlier and up 11% sequentially, driven by NVIDIA Ampere architecture products, with growth in desktop and notebook workstation GPUs as enterprises deploy systems to support hybrid work environments.

2726

~~Revenue for the third quarter of fiscal year 2021~~Automotive revenue was ~~$4.73 billion,~~ up ~~57%~~8% from a year earlier and ~~up 22%~~down 11% sequentially. The year-on-year growth was due to the ramp of self-driving programs, while the sequential decline was related to automotive makers’ supply constraints.

~~Graphics segment~~OEM and Other revenue was ~~$2.79 billion,~~up 21% from a year ago and down 43% sequentially. The year-on-year growth reflects CMP revenue of $105 million this quarter. The sequential decline primarily reflects lower CMP revenue.

GAAP gross margin for the third quarter was up 260 basis points from a year earlier, primarily due to a higher-end mix within desktop and notebook GeForce GPUs. The year-on-year increase also benefited from a reduced impact of acquisition-related costs. Sequentially, gross margin was up 40 basis points primarily due to growth in Data Center, partially offset by a mix shift in Gaming.

Operating expenses for the third quarter were up 25% from a year earlier and up ~~34% sequentially.~~

~~Compute & Networking segment revenue was $1.94 billion, up 146% from a year ago and up 9% sequentially.~~

From a market-platform perspective, Gaming revenue was $2.27 billion, up 37% both from a year ago and sequentially. The increases reflect higher sales across desktop and notebook gaming GPUs, and game console SOCs. Desktop gaming sales benefited from the launch of our GeForce RTX 30 Series based on the NVIDIA Ampere architecture.

Professional Visualization revenue was $236 million, down 27% from a year earlier and up 16% sequentially. The year-on-year decline was influenced by COVID-19, with reduced demand for desktop workstations. The sequential increase reflects a sharp rebound in mobile workstations due to work from home trends.

Data Center revenue was $1.90 billion, up 162% from a year ago and up 8% sequentially. Our recent acquisition of Mellanox contributed 13% of total company revenue and approximately a third of Data Center revenue. In addition to Mellanox, the year-on-year and sequential increases were driven by the ramp of NVIDIA Ampere architecture products.

Automotive revenue was $125 million, down 23% from a year earlier and up 13% sequentially. The year-on-year decrease reflects a decline in revenue from legacy infotainment modules and autonomous driving development agreements. The sequential increase reflects higher sales of AI cockpit solutions.

~~OEM and Other revenue was $194 million, up 36% from a year ago and up 33% sequentially, primarily due to higher volume of entry-level laptop GPUs.~~

Gross margin was 62.6% in the third quarter, down 100 basis points from a year earlier and up 380 basis points sequentially. The year-on-year decline reflects charges related to the Mellanox acquisition and lower margins in Gaming, partially offset by a shift in product mix with higher Data Center and lower Automotive sales. The sequential increase was primarily driven by the absence of a non-recurring inventory step-up expense related to the Mellanox acquisition in the prior quarter.

~~Operating expenses were $1.56 billion, up 58% from a year earlier and down 4%~~11% sequentially. The year-on-year increase was primarily driven by compensation-related costs ~~the Mellanox acquisition,~~relating to employee growth and higher infrastructure ~~costs,~~costs. The sequential increase was primarily driven by development materials and employee growth. ~~The sequential decrease was due to a reduction in acquisition-related costs.~~

Income from operations was ~~$1.40~~$2.67 billion, up ~~51%~~91% from a year earlier and up ~~115%~~9% sequentially. Net income was ~~$1.34~~$2.46 billion. Net income per diluted share was ~~$2.12,~~$0.97, up ~~46%~~83% from a year earlier and up ~~114%~~3% sequentially.

Cash, cash equivalents and marketable securities ~~at the end of the third quarter~~ were ~~$10.14~~$19.30 billion, up from ~~$9.77~~$10.14 billion a year earlier and down from ~~$10.98~~$19.65 billion in the prior quarter. The year-on-year increase ~~primarily~~ reflects ~~the issuance of the~~ $5 billion of ~~notes in March 2020~~debt issuance proceeds and operating cash flow ~~generation, partially offset by acquisitions.~~generation. The sequential decrease primarily reflects ~~the $2~~prepayments for long-term supply, $1 billion ~~payment under the Purchase Agreement to acquire Arm.~~of debt maturity and business acquisitions.

We paid ~~$99~~$100 million in quarterly cash dividends in the third quarter.

Market Platform Highlights

~~During~~At our recent GTC conference, we announced general availability of NVIDIA Omniverse Enterprise; 65 new and updated software development kits, including NVIDIA Riva, Modulus, ReOpt, Morpheus, cuNumeric, and Clara Holoscan; tools for developing and deploying large language models, including NVIDIA NeMo Megatron; new capabilities in the open source NVIDIA Triton Inference Server software; the NVIDIA Quantum-2 400Gbps switch and end-to-end networking platform; and NVIDIA Jetson AGX Orin for edge AI and autonomous machines.

Additionally, in our Gaming platform during the third quarter of fiscal year ~~2021,~~2022, we announced RTX capabilities coming to blockbuster titles; announced new RTX-accelerated AI features in Adobe applications; and introduced a new high-performance membership tier to GeForce NOW.

In our ~~Gaming~~Data Center platform, we ~~unveiled GeForce RTX 30 Series GPUs;~~ announced ~~that Fortnite will support NVIDA RTX real-time ray tracing~~plans to build Earth-2, an AI supercomputer dedicated to addressing the global climate change crisis; announced the availability of NVIDIA AI Enterprise; expanded NVIDIA LaunchPad; and ~~DLSS AI super-resolution; introduced NVIDIA Reflex; and unveiled NVIDIA Broadcast.~~announced further collaboration with VMware to develop an AI-ready enterprise platform based on VMware vSphere with Tanzu.

In our Professional Visualization platform, we ~~brought to open beta NVIDIA Omniverse;~~ announced ~~NVIDIA Omniverse Machinima; and collaborated with Adobe to bring GPU-accelerated neural filters to Adobe Photoshop AI-powered tools.~~

~~In our Data Center platform, we shared news that Amazon Web Services and Oracle Cloud Infrastructure announced~~the general availability of ~~cloud computing instances based on the~~ NVIDIA A100 GPU; announced the NVIDIA DGX SuperPOD Solution for Enterprise; announced that five supercomputers backed by EuroHPC will use NVIDIA’s data center accelerators or networking; introduced the new family of NVIDIA BlueField-2 DPUs (data processing units); announced a broad partnership with VMware to create an end-to-end enterprise platform for AI and a new architecture for data center, cloud and edge; unveiled NVIDIA Maxine; introduced the NVIDIA RTX A6000 and NVIDIA A40 GPUs; extended our lead on MLPerf performance benchmarks for inference; announced a partnership with GSK to integrate computing

~~platforms for imaging, genomics and AI into the drug and vaccine discovery process; and introduced NVIDIA A100 80GB GPU, NVIDIA DGX Station A100, and NVIDIA Mellanox InfiniBand.~~Omniverse Enterprise.

In our Automotive platform, we announced ~~with Mercedes-Benz~~ that NVIDIA DRIVE Orin is ~~powering the next-generation MBUX AI cockpit system; announced with Hyundai Motor Group that the Korean automaker’s entire lineup of Hyundai, Kia~~being used by autonomous truck company Kodiak Robotics, automaker Lotus, autonomous driving-solutions provider QCraft and Genesis models will come standard with NVIDIA DRIVE in-vehicle infotainment systems, starting in 2022; and announced that China’s Li Auto will develop its next-generation of electric vehicles using NVIDIA DRIVE AGX Orin, a software-defined platform for autonomous vehicles.EV startup WM Motor.

Financial Information by Business Segment and Geographic Data

Refer to Note 15 of the Notes to Condensed Consolidated Financial Statements for disclosure regarding segment information.

~~Critical Accounting Policies and Estimates~~

Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, cost of revenue, expenses and related disclosure of contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Our management has discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of our Board of Directors. The Audit Committee has reviewed our disclosures relating to our critical accounting policies and estimates in this Quarterly Report on Form 10-Q. Due to the Mellanox acquisition, we added the following critical accounting policy:

~~Business Combinations~~

The application of acquisition accounting to a business acquisition requires that we identify the individual assets acquired and liabilities assumed and estimate the fair value of each. The fair value of assets acquired and liabilities assumed in a business acquisition are recognized at the acquisition date, with the purchase price exceeding the fair values being recognized as goodwill. Determining fair value of identifiable assets, particularly intangibles, liabilities acquired and contingent obligations assumed requires management to make estimates. In certain circumstances, the allocations of the purchase price are based upon preliminary estimates and assumptions and subject to revision when we receive final information, including appraisals and other analysis. Accordingly, the measurement period for such purchase price allocations will end when the information, or the facts and circumstances, becomes available, but will not exceed twelve months. We will recognize measurement-period adjustments during the period of resolution, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date.

Goodwill and intangible assets often represent a significant portion of the assets acquired in a business combination. We recognize the fair value of an acquired intangible apart from goodwill whenever the intangible arises from contractual or other legal rights, or when it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Intangible assets consist primarily of technology, customer relationships, order backlog and trade name acquired in a business combination and IPR&D. We generally assess the estimated fair values of acquired intangibles using a combination of valuation techniques. To estimate fair value, we are required to make certain estimates and assumptions, including future economic and market conditions, revenue growth, technology migration curve, and risk-adjusted discount rates. Our estimates require significant judgment and are based on historical data, various internal estimates, and external sources. Our assessment of IPR&D also includes consideration of the risk of the projects not achieving technological feasibility.

There have been no other material changes in our critical accounting policies and estimates since our Annual Report on Form 10-K for the fiscal year ended January 26, 2020. Refer to Note 1 “Basis of Presentation” to the condensed consolidated financial statements for additional details. In addition, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended January 26, 2020 for a more complete discussion of our critical accounting policies and estimates.

2927

Results of Operations

The following table sets forth, for the periods indicated, certain items in our Condensed Consolidated Statements of Income expressed as a percentage of revenue.


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		October 25, 2020		October 27, 2019		October 25, 2020		October 27, 2019			October 31, 2021		October 25, 2020		October 31, 2021		October 25, 2020
Revenue	Revenue	100.0	%	100.0	%	100.0	%	100.0	%	Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue	Cost of revenue	37.4		36.4		38.0		39.2		Cost of revenue	34.8		37.4		35.3		38.0
Gross profit	Gross profit	62.6		63.6		62.0		60.8		Gross profit	65.2		62.6		64.7		62.0
Operating expenses	Operating expenses									Operating expenses
Research and development	Research and development	22.2		23.6		23.8		26.8		Research and development	19.8		22.2		19.7		23.8
Sales, general and administrative	Sales, general and administrative	10.9		9.2		12.3		10.3		Sales, general and administrative	7.8		10.9		8.3		12.3

Total operating expenses	Total operating expenses	33.1		32.8		36.1		37.1		Total operating expenses	27.6		33.1		28.0		36.1
Income from operations	Income from operations	29.5		30.8		25.9		23.7		Income from operations	37.6		29.5		36.7		25.9
Interest income	Interest income	0.1		1.5		0.4		1.8		Interest income	0.1		0.1		0.1		0.4
Interest expense	Interest expense	(1.1)		(0.4)		(1.1)		(0.5)		Interest expense	(0.9)		(1.1)		(0.9)		(1.1)
Other, net	Other, net	(0.1)		—		—		—		Other, net	0.3		(0.1)		0.8		—
Other income (expense), net	Other income (expense), net	(1.1)		1.1		(0.7)		1.3		Other income (expense), net	(0.5)		(1.1)		—		(0.7)
Income before income tax	Income before income tax	28.4		31.9		25.2		25.0		Income before income tax	37.1		28.4		36.7		25.2
Income tax expense	Income tax expense	0.3		2.0		0.5		1.4		Income tax expense	2.4		0.3		1.7		0.5
Net income	Net income	28.1	%	29.9	%	24.7	%	23.6	%	Net income	34.7	%	28.1	%	35.0	%	24.7	%

Revenue

Revenue by Reportable Segments


		Three Months Ended								Nine Months Ended									Three Months Ended								Nine Months Ended
		October 25, 2020		October 27, 2019		$ Change		% Change		October 25, 2020		October 27, 2019		$ Change		% Change			October 31, 2021		October 25, 2020		$ Change		% Change		October 31, 2021		October 25, 2020		$ Change		% Change

		($ in millions)																	($ in millions)
Graphics	Graphics	$	2,787	$	2,226	$	561	25	%	$	6,778	$	5,555	$	1,223	22	%	Graphics	$	4,092	$	2,787	$	1,305	47	%	$	11,450	$	6,778	$	4,672	69	%
Compute & Networking	Compute & Networking	1,939		788		1,151		146	%	4,894		2,258		2,636		117	%	Compute & Networking	3,011		1,939		1,072		55	%	7,821		4,894		2,927		60	%
Total	Total	$	4,726	$	3,014	$	1,712	57	%	$	11,672	$	7,813	$	3,859	49	%	Total	$	7,103	$	4,726	$	2,377	50	%	$	19,271	$	11,672	$	7,599	65	%

Graphics - Graphics segment revenue ~~for~~increased 47% in the third quarter of fiscal year ~~2021~~2022 compared to the third quarter of fiscal year ~~2020 increased by 25%~~2021 and ~~revenue for~~69% in the first nine months of fiscal year ~~2021~~2022 compared to the first nine months of fiscal year ~~2020~~2021, reflecting strong demand for our NVIDIA Ampere architecture products. Additionally, revenue increased ~~by 22%. These increases reflect~~from growth in ~~GeForce GPUs~~desktop and ~~game console SOCs, partially offset by lower sales of Quadro workstations.~~mobile workstation GPUs.

Compute & Networking -Compute & Networking segment revenue increased 55% for the third quarter of fiscal year ~~2021~~2022 compared to the third quarter of fiscal year ~~2020 increased by 146%~~2021 and ~~revenue for~~60% in the first nine months of fiscal year ~~2021~~2022 compared to the first nine months of fiscal year ~~2020 increased~~2021. Year-on-year growth in the third quarter was driven by ~~117%. These increases reflect~~sales of NVIDIA Ampere architecture products to vertical industries, and to hyperscale customers for cloud computing and workloads such as natural language processing and deep recommender models. The increase in the first nine months of fiscal year 2022 also reflects the addition of Mellanox, which we acquired on April 27, 2020, and ~~the continued ramp of NVIDIA Ampere GPU architecture systems and new products, partially offset by lower autonomous driving development agreement revenue.~~CMP products.

Concentration of Revenue

Revenue from sales to customers outside of the United States accounted for ~~81%~~84% and ~~80%~~85% of total revenue for the third quarter and first nine months of fiscal year ~~2021,~~2022, respectively, and ~~92%~~81% and 80% of total revenue for the third quarter

and first nine months of fiscal year ~~2020.~~2021, respectively. Revenue by geographic region is allocated to individual countries based on the location to which the products are initially billed even if the revenue is attributable to end customers in a different location.

No customer represented 10% or more of total revenue for the third quarter and first nine months of fiscal ~~year~~years 2022 or 2021. ~~One customer represented 10%~~

Gross Margin

Our overall gross margin increased to 65.2% and ~~11% of our total revenue~~64.7% for the third quarter and first nine months of fiscal year ~~2020,~~2022, respectively, from 62.6% and ~~was attributable primarily to the Graphics segment.~~

~~Gross Margin~~

~~Our overall gross margin decreased to 62.6%~~62.0% for the third quarter ~~of fiscal year 2021 from 63.6% for the third quarter of fiscal year 2020, reflecting charges related to the Mellanox acquisition~~ and ~~lower margins in Gaming, partially offset by a shift in product mix with higher Data Center and lower Automotive sales. Our overall gross margin increased to 62.0% for the~~ first nine months of fiscal year 2021, ~~from 60.8%~~respectively. The year-on-year increase in the third quarter was primarily due to a higher-end mix within desktop and notebook GeForce GPUs, reflecting strong demand for our Ampere architecture. The increase in the first nine months ~~of fiscal year 2020,~~was primarily ~~driven~~due to a higher-end mix within desktop and notebook GeForce GPUs, partially offset by ~~Mellanox products, lower Automotive sales and lower product costs~~a mix shift within the Compute & Networking ~~partially offset by Mellanox~~segment. These increases also benefited from a reduced impact of acquisition-related ~~costs including a non-recurring inventory step-up charge of $161 million and ongoing intangible asset amortization of $171 million.~~costs.

Inventory provisions totaled ~~$15~~$107 million and ~~$42~~$15 million for the third quarter of fiscal years ~~2021~~2022 and ~~2020,~~2021, respectively. Sales of inventory that was previously written-off or -down totaled ~~$29~~$48 million and ~~$78~~$29 million for the third quarter of fiscal years ~~2021~~2022 and ~~2020,~~2021, respectively. As a result, the overall net effect on our gross margin was an unfavorable impact of 0.8% and a favorable impact of 0.3% ~~and 1.2%~~ in the third quarter of fiscal years ~~2021~~2022 and ~~2020,~~2021, respectively.

Inventory provisions totaled ~~$96~~$238 million and ~~$114~~$96 million for the first nine months of fiscal years ~~2021~~2022 and ~~2020,~~2021, respectively. Sales of inventory that was previously written-off or -down totaled ~~$116~~$89 million and ~~$109~~$116 million for the first nine months of fiscal years ~~2021~~2022 and ~~2020,~~2021, respectively. As a result, the overall net effect on our gross margin was an unfavorable impact of 0.8% and a favorable impact of 0.2% in the first nine months of fiscal ~~year~~years 2022 and 2021, ~~and an unfavorable impact of 0.1% for the first nine months of fiscal year 2020.~~respectively.

A discussion of our gross margin results for each of our reportable segments is as follows:

Graphics - The gross margin of our Graphics segment ~~decreased~~increased during the third quarter and first nine months of fiscal year ~~2021~~2022 compared to the third quarter ~~of fiscal year 2020, primarily driven by a shift in product mix~~ and ~~higher product costs. The gross margin of our Graphics segment increased during the~~ first nine months of fiscal year 2021, ~~compared~~primarily due to ~~the first nine months of fiscal year 2020, primarily driven by lower legacy infotainment sales and product~~a higher-end mix within ~~Quadro.~~desktop and notebook GeForce GPUs.

Compute & Networking - The gross margin of our Compute & Networking segment increased during the third quarter ~~and~~of fiscal year 2022 compared to the third quarter of fiscal year 2021 due to higher average selling prices of our compute products, partially offset by product mix. The gross margin of our Compute & Networking segment decreased during the first nine months of fiscal year 2022 compared to the first nine months of fiscal year 2021, ~~compared~~primarily due to ~~the third quarter and first nine months~~a shift in product mix, partially offset by higher average selling prices of ~~fiscal year 2020, primarily driven by Mellanox~~our compute products and ~~lower product costs.~~a reduced contribution from Automotive solutions.

Operating Expenses


		Three Months Ended										Nine Months Ended											Three Months Ended										Nine Months Ended
		October 25, 2020			October 27, 2019			$ Change		% Change		October 25, 2020			October 27, 2019			$ Change		% Change			October 31, 2021			October 25, 2020			$ Change		% Change		October 31, 2021			October 25, 2020			$ Change		% Change

		($ in millions)																					($ in millions)
Research and development expenses	Research and development expenses	$	1,047		$	712		$	335	47	%	$	2,778		$	2,091		$	687	33	%	Research and development expenses	$	1,403		$	1,047		$	356	34	%	$	3,802		$	2,778		$	1,024	37	%
% of net revenue	% of net revenue	22		%	24		%					24		%	27		%					% of net revenue	20		%	22		%					20		%	24		%
Sales, general and administrative expenses	Sales, general and administrative expenses	515			277			238		86	%	1,437			806			631		78	%	Sales, general and administrative expenses	557			515			42		8	%	1,603			1,437			166		12	%
% of net revenue	% of net revenue	11		%	9		%					12		%	10		%					% of net revenue	8		%	11		%					8		%	12		%
Total operating expenses	Total operating expenses	$	1,562		$	989		$	573	58	%	$	4,215		$	2,897		$	1,318	45	%	Total operating expenses	$	1,960		$	1,562		$	398	25	%	$	5,405		$	4,215		$	1,190	28	%

3129

Research and Development

Research and development expenses increased by ~~47% and 33%~~34% during the third quarter of fiscal year 2022 compared to the third quarter of fiscal year 2021, primarily driven by employee additions and higher employee compensation, including stock-based compensation, and infrastructure costs.

Research and development expenses increased by 37% during the first nine months of fiscal year 2022 compared to the first nine months of fiscal year 2021, ~~compared to the third quarter and first nine months of fiscal year 2020, respectively,~~ primarily driven by ~~expenses related to the Mellanox acquisition. In addition to Mellanox, increases reflect~~employee additions and higher employee compensation, ~~and related costs,~~ including stock-based compensation, infrastructure costs, and ~~infrastructure costs.~~the acquisition of Mellanox.

Sales, General and Administrative

Sales, general and administrative expenses increased by ~~86% and 78%~~8% during the third quarter ~~and first nine months~~ of fiscal year ~~2021,~~2022 compared to the third quarter of fiscal year ~~2020, respectively,~~2021, primarily driven by ~~Mellanox acquisition-related expenses. In addition to Mellanox, increases reflect~~employee additions and higher employee compensation, ~~and related costs,~~ including stock-based ~~compensation.~~compensation, partially offset by lower amortization of intangible assets.

Sales, general and administrative expenses increased by 12% during the first nine months of fiscal year 2022 compared to the first nine months of fiscal year 2021, primarily driven by employee additions and higher employee compensation, including stock-based compensation, the acquisition of Mellanox, partially offset by lower amortization of intangible assets.

Other Income (Expense), Net

Interest income consists of interest earned on cash, cash equivalents and marketable securities. Interest income was $7 million ~~and $45 million during~~for both the third ~~quarter~~quarters of fiscal years 2022 and 2021, and ~~2020, respectively,~~$20 million and $50 ~~million and $137~~ million during the first nine months of fiscal years ~~2021~~2022 and ~~2020,~~2021, respectively. The decrease in interest income was primarily due to lower interest rates earned on our investments.

Interest expense is primarily comprised of coupon interest and debt discount amortization related to our September 2016 Notes, ~~and~~ March 2020 Notes, and June 2021 Notes. Interest expense was ~~$53~~$62 million and ~~$13~~$53 million during the third quarter of fiscal years ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$131~~$175 million and ~~$39~~$131 million during the first nine months of fiscal years 2022 and 2021, respectively.

Other, net, consists primarily of realized or unrealized gains and ~~2020, respectively.~~losses from investments in non-affiliated entities and the impact of changes in foreign currency rates. Other, net, was an income of $22 million and $160 million during the third quarter and first nine months of fiscal year 2022, respectively, and not significant during the third quarter and first nine months of fiscal year 2021. The increase during the third quarter and first nine months of fiscal year 2022 was primarily due to unrealized gains from our investments in non-affiliated entities. Refer to Note 8 of the Notes to Condensed Consolidated Financial Statements for additional information regarding our investments in non-affiliated entities.

Income Taxes

compensation and the U.S. federal research tax credit, partially offset, for the first nine months, by the discrete benefit of the Domestication. Refer to Note 6 of the Notes to Condensed Consolidated Financial Statements for further ~~information.~~information, including the Domestication.

3230

Liquidity and Capital Resources


		October 25, 2020		January 26, 2020			October 31, 2021		January 31, 2021

		(In millions)					(In millions)
Cash and cash equivalents	Cash and cash equivalents	$	2,251	$	10,896	Cash and cash equivalents	$	1,288	$	847
Marketable securities	Marketable securities	7,888		1		Marketable securities	18,010		10,714
Cash, cash equivalents and marketable securities	Cash, cash equivalents and marketable securities	$	10,139	$	10,897	Cash, cash equivalents and marketable securities	$	19,298	$	11,561

Nine Months Ended
October 25, 2020 October 27, 2019
(In millions)
Net cash provided by operating activities $ 3,755 $ 3,296
Net cash provided by (used in) investing activities $ (16,546) $ 6,296
Net cash provided by (used in) financing activities $ 4,146 $ (609)


	Nine Months Ended
	October 31, 2021		October 25, 2020

	(In millions)
Net cash provided by operating activities	$	6,075	$	3,755
Net cash used in investing activities	$	(8,244)	$	(16,546)
Net cash provided by financing activities	$	2,610	$	4,146

As of October ~~25, 2020,~~31, 2021, we had ~~$10.14~~$19.30 billion in cash, cash equivalents and marketable securities, ~~a decrease~~an increase of ~~$758 million~~$7.74 billion from the end of fiscal year ~~2020.~~2021. Our investment policy requires the purchase of highly rated fixed income securities, the diversification of investment types and credit exposures, and certain maturity limits on our portfolio.

In the third quarter of fiscal year 2021, we paid $2 billion as part of the proposed acquisition of Arm, which was allocated between advanced consideration for the acquisition of $1.36 billion and the prepayment of intellectual property licenses from Arm of $0.17 billion and royalties of $0.47 billion. The cash flow allocation of the payment resulted in $1.36 billion advanced consideration included in acquisitions, net of cash acquired, $0.17 billion for the intellectual property license included in purchases related to property and equipment and intangible assets and $0.47 billion prepayment of royalties included in changes in prepaid expenses and other assets.

Cash provided by operating activities increased in the first nine months of fiscal year ~~2021~~2022 compared to the first nine months of fiscal year ~~2020,~~2021, due to higher net income, partially offset by changes in working capital. Changes in working capital ~~include~~were primarily driven by prepayments of $1.65 billion for long-term supply agreements and increases in ~~outstanding~~ trade receivables ~~purchases of inventory, and a prepayment of royalties~~due to ~~Arm.~~higher revenue.

Cash used in investing activities ~~increased~~decreased in the first nine months of fiscal year 2022 compared to cash used in the first nine months of fiscal year 2021, primarily driven by the acquisition of Mellanox in the second quarter of fiscal year 2021, and higher marketable securities sales and maturities, partially offset by higher purchases of marketable securities.

Cash provided by financing activities decreased in the first nine months of fiscal year 2022 compared to cash provided in the first nine months of fiscal year ~~2020,~~2021, which primarily reflects cash used for the acquisition of Mellanox and the advanced consideration for the proposed acquisition of Arm, higher purchases of marketable securities, higher maturities of marketable securities, higher purchases of property and equipment and intangible assets, and lower sales of marketable securities.

~~Cash provided by financing activities increased~~a debt repayment in the ~~first nine months of fiscal year 2021 compared to cash used in the first nine months of fiscal year 2020, which primarily reflects the debt issued in the first~~third quarter of fiscal year ~~2021~~2022 and higher tax payments ~~related to tax~~ on restricted stock units.

Liquidity

Our primary sources of liquidity are our cash and cash equivalents, our marketable securities, and the cash generated by our operations. As of October ~~25, 2020,~~31, 2021, we had ~~$10.14~~$19.30 billion in cash, cash equivalents, and marketable securities. Our marketable securities consist of certificates of deposits and debt securities issued by the U.S. government and its agencies, highly rated corporations and financial institutions, and foreign government ~~entities, and certificates of deposits.~~entities. These marketable securities are primarily denominated in U.S. dollars. Refer to Note 7 of the Notes to Condensed Consolidated Financial Statements for additional information. We believe that we have sufficient liquidity to meet our operating requirements ~~and capital expenditures~~ for at least the next ~~twelve months.~~12 months, and for the foreseeable future, including our proposed acquisition of Arm and current and future obligations to secure normal and incremental supply. We continuously evaluate our liquidity and capital resources, including our access to external capital, to ensure we can finance our future capital requirements.

We have approximately ~~$1.2~~$1.9 billion of cash, cash equivalents, and marketable securities ~~that~~held outside the U.S. for which we have not accrued any related foreign or state taxes if we repatriate these amounts to the ~~United States.~~U.S. Other than that, ~~as a result of the Tax Cuts and Jobs Act, or TCJA,~~ substantially all of our cash, cash equivalents and marketable securities held outside of the

~~United States~~ U.S. as of October ~~25, 2020~~31, 2021 are available for use in the ~~United States~~U.S. without incurring additional U.S. federal income taxes. Following the Domestication, we expect to fully utilize our accumulated U.S. federal research tax credits during fiscal year 2022, resulting in higher cash tax payments starting in fiscal year 2023.

Capital Return to Shareholders

In the first nine months of fiscal year ~~2021,~~2022, we paid ~~$296~~$298 million in quarterly cash dividends. Our cash dividend program and the payment of future cash dividends under that program are subject to ~~our Board's~~the continuing determination by our Board of Directors that the dividend program and the declaration of dividends thereunder are in the best interests of our shareholders.

As of October ~~25, 2020,~~31, 2021, we were authorized, subject to certain specifications, to repurchase additional shares of our common stock up to $7.24 billion through December 2022. We did not repurchase any shares during the first nine months of fiscal year ~~2021.~~2022.

Outstanding Indebtedness and ~~Credit Facilities~~Commercial Paper

~~In March 2020,~~As of October 31, 2021, we ~~issued $1.50~~had outstanding:

•$1.25 billion of ~~the 2.85%~~ Notes Due ~~2030,~~2023;

•$1.25 billion of Notes Due 2024;

•$1.00 billion of Notes Due 2026;

•$1.25 billion of Notes Due 2028;

•$1.50 billion of Notes Due 2030;

•$1.25 billion of Notes Due 2031;

•$1.00 billion of Notes Due 2040;

•$2.00 billion of Notes Due 2050; and

•$500 million of Notes Due 2060.

On August 16, 2021, we repaid the $1.00 billion of the 3.50% Notes Due 2040, $2.00 billion of the 3.50% Notes Due 2050, and $500 million of the 3.70% Notes Due 2060, or collectively, the March 2020 Notes. The net proceeds from the March 2020 Notes were $4.97 billion, after deducting debt discounts and issuance costs.

~~In September 2016, we issued $1.00 billion of the~~ 2.20% Notes Due 2021 and $1.00 billion of the 3.20% Notes Due 2026, or collectively, the September 2016 Notes. The net proceeds from the September 2016 Notes were $1.98 billion, after deducting debt discounts and issuance costs.

We have a Credit Agreement under which we may borrow up to $575 million for general corporate purposes and can obtain revolving loan commitments up to $425 million. As of October 25, 2020, we had not borrowed any amounts under this agreement.2021.

We have a $575 million commercial paper program to support general corporate purposes. As of October ~~25, 2020,~~31, 2021, we had not issued any commercial paper.

~~Off-Balance Sheet Arrangements~~

~~As of October 25, 2020, we had no material off-balance sheet arrangements as defined by applicable SEC regulations.~~

Contractual Obligations

~~There are $155~~We have $163 million of long-term tax liabilities related to tax basis differences in Mellanox and unrecognized tax benefits of ~~$310~~$638 million, which includes related interest and penalties of ~~$46~~$60 million recorded in non-current income tax payable as of October ~~25, 2020.~~31, 2021. We are unable to reasonably estimate the timing of any potential tax liability, interest payments, or penalties in individual years due to uncertainties in the underlying income tax positions and the timing of the effective settlement of such tax positions. We are currently under examination by the Internal Revenue Service for our fiscal years 2018 and 2019. Refer to Note 6 of the Notes to Condensed Consolidated Financial Statements for further information.

Other than the contractual obligations described above, there were no material changes outside the ordinary course of business in our contractual obligations from those disclosed in our Annual Report on Form 10-K for the fiscal year ended January ~~26, 2020.~~31, 2021. Refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” in our Annual Report on Form 10-K for the fiscal year ended January ~~26, 2020~~31, 2021 for a description of our contractual obligations. For a description of our operating lease obligations, long-term debt, ~~purchase obligations,~~ and ~~operating lease~~purchase obligations, refer to Note 3, Note 12, and Note 13 ~~and Note 3~~ of the Notes to Condensed Consolidated Financial Statements, respectively.

Climate Change

In the area of sustainability, we continue to address our climate impact across our product lifecycle and to assess relevant risks, including current and emerging regulations and market impacts. We undertake efforts to reduce greenhouse gas emissions, water usage and waste in our data centers, labs and offices, including sourcing a portion of our global electricity from renewable energy. Our investments include sustainability features when opening new offices and new construction to incorporate green building standards, such as our LEED Gold headquarters in Santa Clara, California, and energy-efficient systems and technologies in our data centers. We focus on energy efficiency in our processor design and utilize recyclable packaging to minimize our environmental footprint. To date, there has been no material impact to our results of operations associated with global sustainability regulations, compliance, or costs from sourcing renewable energy. We have announced plans to build the world’s most powerful AI supercomputer, Earth-2, dedicated to predicting climate change.

Adoption of New and Recently Issued Accounting Pronouncements

Refer to Note 1 of the Notes to Condensed Consolidated Financial Statements for a discussion of adoption of a new and recently issued accounting ~~pronouncements.~~pronouncement.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Investment and Interest Rate Risk

Financial market risks related to investment and interest rate risk are described in our Annual Report on Form 10-K for the fiscal year ended January ~~26, 2020.~~31, 2021. As of October ~~25, 2020,~~31, 2021, there have been no material changes, including the impact of the COVID-19 pandemic, to the financial market risks described as of January ~~26, 2020.~~31, 2021.

Foreign Exchange Rate Risk

The impact of foreign currency transactions related to foreign exchange rate risk is described in our Annual Report on Form 10-K for the fiscal year ended January ~~26, 2020.~~31, 2021. As of October ~~25, 2020,~~31, 2021, there have been no material changes, including the impact of the COVID-19 pandemic, to the foreign exchange rate risks described as of January ~~26, 2020.~~31, 2021.

Refer to Note 11 of the Notes to Condensed Consolidated Financial Statements for additional information.

ITEM 4. CONTROLS AND PROCEDURES

Controls and Procedures

Disclosure Controls and Procedures

Based on their evaluation as of October ~~25, 2020,~~31, 2021, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) were effective to provide reasonable assurance.

Changes in Internal Control Over Financial Reporting

~~Other than the acquisition of Mellanox that occurred during the second quarter of fiscal year 2021, there~~There were no changes in our internal control over financial reporting during the third quarter of fiscal year ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting despite the fact that virtually all of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their operating effectiveness. We are in the process of integrating Mellanox into our systems and control environment. We believe that we have taken the necessary steps to monitor and maintain appropriate internal control over financial reporting during this integration.reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls, will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within NVIDIA have been detected.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Part I, Item 1, Note 13 of the Notes to Condensed Consolidated Financial Statements for a discussion of significant developments in our legal proceedings since January ~~26, 2020.~~31, 2021. Also refer to Item 3, “Legal Proceedings” in our Annual Report on Form 10-K for the fiscal year ended January ~~26, 2020~~31, 2021 for a prior discussion of our legal proceedings.

ITEM 1A. RISK FACTORS

Other than the risk factors listed below, there have been no material changes from the risk factors previously described under Item 1A of our Annual Report on Form 10-K for the fiscal year ended January ~~26, 2020~~31, 2021 and Item 1A of our Quarterly Reports on Form 10-Q for the fiscal quarters ended ~~April 26, 2020~~May 2, 2021 and ~~July 26, 2020.~~August 1, 2021.

Before you buy our common stock, you should know that making such an investment involves some risks including, but not limited to, the risks described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January ~~26, 2020~~31, 2021 and Item 1A of our Quarterly ~~Reports~~Report on Form 10-Q for the fiscal quarters ended ~~April 26, 2020~~May 2, 2021 and ~~July 26, 2020.~~August 1, 2021. Additionally, any one of those risks could harm our business, financial condition and results of operations, which could cause our stock price to decline. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

Risks Related to Our Supply and Manufacturing

We depend on third parties and their technology to manufacture, assemble, test and/or package our products, which reduces our control over product quantity and quality, manufacturing yields, development, enhancement and product delivery schedule and could harm our business.

We do not manufacture the silicon wafers used for our products and do not own or operate a wafer fabrication facility. Instead, we are dependent on industry-leading foundries, such as Taiwan Semiconductor Manufacturing Company Limited and Samsung Electronics Co. Ltd., to manufacture our semiconductor wafers using their fabrication equipment and techniques. Similarly, we do not directly assemble, test or package our products, but instead rely on independent subcontractors. We must continue to scale and adapt our supply chain or it could have an adverse impact on our business. While we may enter into long-term supply and capacity commitments as our business grows or in periods with limited availability of capacity and components in our supply chain, we may not be able to secure sufficient commitments to address our business needs or at all. As a result, we face several significant risks which could have an adverse effect on our ability to meet customer demand and scale our supply chain and/or negatively impact longer-term demand for our products and services, our business operations, gross margin, revenue and/or financial results, including:

•a lack of guaranteed supply of wafers, components and capacity and potential higher wafer and component prices, which could be impacted by our failure to correctly estimate demand and to place orders with our suppliers in sufficient quantities and/or in a timely manner;

•a failure by our foundries or contract manufacturers to procure raw materials or to provide or allocate adequate, or any, manufacturing or test capacity for our products;

•a failure by our foundries to develop, obtain or successfully implement high quality, leading-edge process technologies, including transitions to smaller geometry process technologies such as advanced process node technologies and memory designs needed to manufacture our products profitably or on a timely basis;

•a limited number of suppliers, including foundries, contract manufacturers, assembly and test providers, and memory manufacturers;

•loss of a supplier and additional expense and/or production delays as a result of qualifying a new foundry or subcontractor and commencing volume production or testing in the event of a loss of or a decision to add or change a supplier;

•a lack of direct control over delivery schedules or product quantity and quality; and

•delays in product shipments, shortages, a decrease in product quality and/or higher expenses in the event our subcontractors or foundries prioritize our competitors’ orders over our orders or otherwise.

In addition, low manufacturing yields could have an adverse effect on our ability to meet customer demand, increase manufacturing costs, harm customer or partner relationships, and/or negatively impact our business operations, gross margin, revenue and/or financial results. Manufacturing yields for our products are a function of product design, which is developed largely by us, and process technology, which typically is proprietary to the foundry. Low yields may result from either product design or process technology failure. We do not know whether a yield problem will exist until our design is actually manufactured by the foundry. As a result, yield problems may not be identified until well into the manufacturing process and require us and the foundry to cooperate to resolve the problem.

We also rely on third-party software development tools to assist us in the design, simulation and verification of new products or product enhancements, and to bring such new products and enhancements to market in a timely manner. In the past, we have experienced delays in the introduction of products and enhancements as a result of the inability of then available software development tools to fully simulate the complex features and functionalities of our products. The design requirements necessary to meet consumer demands for more features and greater functionality from our products may exceed the capabilities of available software development tools. If we miss design cycles or lose design wins due to the unavailability of such software development tools, we could lose market share and our revenues could decline. If we fail to achieve design wins for our products, our business will be harmed.

Risks Related to Our Operating Business

If we fail to estimate customer demand properly or if demand exceeds supply, our financial results could be harmed.

Our products are manufactured based on estimates of customers’ future demand and our manufacturing lead times are very long. This could lead to a significant mismatch between supply and demand, giving rise to product shortages or excess inventory, and make our demand forecast more uncertain. We sell many of our products through a channel model, and our channel customers sell to retailers, distributors, and/or end customers. As a result, the decisions made by our channel partners, retailers, and distributors in response to changing market conditions and the changing demand for our products could impact our ability to properly forecast demand. To have shorter shipment lead times and quicker delivery schedules for our customers, we may build finished products and maintain in inventory for anticipated periods of growth which do not occur, anticipating demand that does not materialize, or for what we believe is pent-up demand. In periods with limited availability of capacity and components in our supply chain, we have placed and may continue to place non-cancellable inventory orders in advance of our normal lead times, pay premiums and/or provide deposits to secure normal and incremental future supply and capacity. Ordering product in advance of our normal lead times to secure supply in a constrained environment may trigger excess inventory or other charges if there is a partial or complete reduction in long term demand for our products or if such demand is served by our competitors, which could negatively impact our financial results. Given our long lead times on inventory purchasing, demand may be perishable or may disappear. Demand for our products is based on many factors, including our product introductions, time to market, and transitions, competitor product releases and announcements, and competing technologies, all of which can impact the timing and volume of our revenue. GPUs have many use cases including their intended marketed use case and other uses. For example, GPUs can be used for digital currency mining, though we do not have visibility into how much of our GPU usage is for cryptocurrency nor the past or future demand for GPU usage in cryptocurrency mining. Volatility in the cryptocurrency market, including new compute technologies, price changes in cryptocurrencies, changes in government cryptocurrency policies and regulations, and new cryptocurrency standards can impact cryptocurrency demand, and further impact demand for our products and our ability to estimate demand for our products. Changes to cryptocurrency standards and processes including, but not limited to, the pending Ethereum 2.0 standard may decrease the usage of GPUs for Ethereum mining and may also create increased aftermarket resales of our GPUs, impact retail prices for our GPUs, increase returns of our products in the distribution channel, and may reduce demand for our new GPUs. Although we have introduced LHR GeForce GPUs with limited Ethereum mining capability in order to address demand from gamers, if attempts in the aftermarket to improve the hash rate capabilities of our LHR cards are successful, our gaming cards may become attractive to miners and increase demand for our GPUs, and therefore exacerbate our ability to supply our cards to gamers or other customers. Additionally, consumer and enterprise behavior during the COVID-19 pandemic, such as increased demand for our Gaming, Data Center and mobile workstation and laptop products and suppressed corporate demand for desktop workstations, has made it more difficult for us to estimate future demand, and these challenges may be more pronounced in the future if and when the effects of the pandemic subside. In estimating demand, we make multiple assumptions, any of which may prove to be incorrect. If we are unable to accurately anticipate demand for our products, our business and financial results could be adversely impacted. Situations that may result in excess or obsolete inventory include:

•changes in business and economic conditions, including downturns in our target markets and/or overall economy;

•changes in consumer confidence caused by changes in market conditions, including changes in the credit market;

•a sudden and significant decrease in demand for our products;

•a higher incidence of inventory obsolescence because of rapidly changing technology or customer requirements;

•our introduction of new products resulting in lower demand for older products;

•less demand than expected for newly-introduced products; or

•increased competition, including competitive pricing actions.

The cancellation or deferral of customer purchase orders could result in our holding excess inventory, which could adversely affect our gross margins. In addition, because we often sell a substantial portion of our products in the last month of each quarter, we may not be able to reduce our inventory purchase commitments in a timely manner in response to customer cancellations or deferrals. We could be required to write-down our inventory to the lower of cost

or net realizable value or excess inventory, and we could experience a reduction in average selling prices if we incorrectly forecast product demand, any of which could harm our financial results.

Conversely, if we underestimate our customers' demand for our products, our foundry partners may not have adequate lead-time or capacity to increase production and we may not be able to obtain sufficient inventory to fill customers' orders on a timely basis. We may also face supply constraints caused by natural disasters or other events. In such cases, even if we are able to increase production levels to meet customer demand, we may not be able to do so in a cost-effective or timely manner. If we fail to fulfill our customers' orders on a timely basis, or at all, our customer relationships could be damaged, we could lose revenue and market share and our reputation could be damaged.

System security and data protection breaches, as well as cyber-attacks, could disrupt our operations, reduce our expected revenue and increase our expenses, which could adversely affect our stock price and damage our reputation.

Security breaches, computer malware, phishing, and cyber-attacks continue to become more prevalent and sophisticated. These threats are constantly evolving, making it increasingly difficult to successfully defend against them or implement adequate preventative measures. These attacks have occurred on our systems in the past and are expected to occur in the future. Experienced computer programmers, attackers and employees may penetrate our security controls and misappropriate or compromise our confidential information, or that of our employees or third parties. These attacks may create system disruptions or cause shutdowns. Attackers may also develop and deploy viruses, worms and other malicious software that attacks or otherwise exploits security vulnerabilities in our products and services, including consumer, enterprise and automotive products. For portions of our critical infrastructure, including business management and communication software products, we rely on products and services provided by third parties, potentially exposing us to supply-chain attacks which may impact our systems. Data security breaches may also result from non-technical means, such as actions by an employee with access to our systems. To defend against security threats, both to our internal systems and those of our customers, we must continuously engineer more secure products and enhance security and reliability features, which may result in increased expenses. We must also continue to develop security measures within NVIDIA, ensure our suppliers have appropriate security measures in place, and continue to meet the evolving security requirements of our customers or our business could be negatively impacted.

Actual or perceived breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us, our partners, our customers or third parties could expose us and the parties affected to a risk of loss or misuse of this information, resulting in litigation and potential liability, paying damages, regulatory inquiries or actions, damage to our brand and reputation or other harm to our business. Reported or perceived vulnerabilities, even if not exploited, can cause us harm. Our efforts to prevent and overcome these and similar challenges could increase our expenses and may not be successful. We may experience interruptions, delays, cessation of service and loss of existing or potential customers. Such disruptions could adversely impact our ability to fulfill orders and interrupt other critical functions. Delayed sales, lower margins or lost customers as a result of these disruptions could adversely affect our financial results, stock price and reputation.

Our operating results have in the past fluctuated and may in the future fluctuate, and if our operating results are below the expectations of securities analysts or investors, our stock price could decline.

Our operating results have in the past fluctuated and may in the future continue to fluctuate due to numerous factors. Therefore, investors should not rely on quarterly comparisons of our results of operations as an indication of our future performance. Additional factors, other than or in addition to those described elsewhere in these risk factors, that could affect our results of operations in the future include, but are not limited to:

•our ability to achieve volume production of our next-generation products;

•our inability to adjust spending to offset revenue shortfalls due to the multi-year development cycle for some of our products and services;

•fluctuations in the demand for our products related to cryptocurrencies and COVID-19, as discussed further in the risk factor “If we fail to estimate customer demand properly, our financial results could be harmed” above;

•supply constraints for and changes in the cost of the other components incorporated into our products;

•changes in the timing of product orders due to unexpected delays in the introduction of our partners’ products;

•our ability to cover the manufacturing and design costs of our products through competitive pricing;

•our ability to comply and continue to comply with our customers’ contractual obligations;

•product rates of return in excess of that forecasted or expected due to quality issues;

•our ability to secure appropriate safety certifications and meet industry safety standards;

•rising inflation and our ability to control costs, including our operating expenses;

•inventory write-downs;

•our ability to continue generating revenue from our partner network, including by generating sales within our partner network and ensuring our products are incorporated into our partners product ecosystems, and our partner network’s ability to sell products that incorporate our technologies;

•our dependence on third party vendors and end users to adopt our products, including InfiniBand;

•the inability of certain of our customers to make required payments to us, and our ability to obtain credit insurance over the purchasing credit extended to these customers;

•customer bad debt write-offs;

•any unanticipated costs associated with environmental liabilities;

•unexpected costs related to our ownership of real property;

•our ability to maintain and scale our business processes, information systems and internal controls;

•increases in our future tax rates, as discussed further in the risk factor “We may have exposure to additional tax liabilities and our operating results may be adversely impacted by higher than expected tax rates” below;

•changes in financial accounting standards or interpretations of existing standards; and

•general macroeconomic or industry events and factors affecting the overall market and our target markets.

Any one or more of the factors discussed above could prevent us from achieving our expected future financial results. Any such failure to meet our expectations or the expectations of our investors or security analysts could cause our stock price to decline or experience substantial price volatility.

We may not be able to realize the potential ~~financial or strategic~~ benefits of business acquisitions or ~~strategic~~ investments, including the Mellanox acquisition and the planned Arm ~~acquisitions,~~acquisition, and we may not be able to successfully integrate acquisition targets, which could hurt our ability to grow our business, develop new products or sell our products.

We hold and may in the future hold investments in publicly traded companies which could create volatility in our results and may generate losses up to the value of the investment. We have in the past acquired and invested in, and may continue to acquire and invest in, other businesses that offer products, services and technologies that we believe will help expand or enhance our existing products, strategic objectives and business. We completed our acquisition of Mellanox for approximately $7 billion onin April ~~27,~~ 2020. In September 2020, we announced our agreement to acquire all ~~of the allotted and issued ordinary~~ shares of Arm in a transaction valued at $40 billion. The actual valuation of the transaction will likely differ significantly from the estimated amount due to the significant increase in the price of our common stock since entry into the Purchase Agreement.

We are seeking regulatory approval for our proposed acquisition of Arm in the United States, the United Kingdom, the European Union, China and other jurisdictions. Regulators at the FTC have expressed concerns regarding the transaction, and we are engaged in discussions with the FTC regarding remedies to address those concerns. The transaction has been under the review of China’s antitrust authority, pending the formal case initiation. Regulators in the United Kingdom and the European Union declined to clear the transaction in Phase 1 of their review processes, expressed numerous concerns, and began a more in-depth Phase 2 review on the transactions impact on competition, and, in the United Kingdom, a Phase 2 review of the impact on the United Kingdom’s national security interests. We are in discussions with regulators in the United States, United Kingdom and European Union regarding our proposed remedies. Unless regulators accept our proposed remedies and approve the transaction, the regulatory process is likely to extend beyond September 2022, which may result in the termination of the Purchase Agreement and the failure to close the transaction. If the transaction does not close due to failure to receive regulatory approval, and all other

covenants have been met, we will not be refunded $1.25 billion of the advanced consideration for the acquisition we paid at signing.

The Mellanox acquisition, the planned Arm acquisition and ~~other past or~~ future acquisitions or investments involve significant challenges and risks, and could impair our ability to grow our business, develop new products or sell our products, and ultimately could have a negative impact on our growth or our financial results. Given that our resources are limited, our decision to pursue a transaction has opportunity costs; accordingly, if we pursue a particular transaction, we may need to forgo the prospect of entering into other transactions that could help us achieve our strategic objectives. Furthermore, if we are unable to complete acquisitions in a timely manner, including due to delays in obtaining regulatory approvals, such as with respect to the planned Arm acquisition, we may be unable to pursue other transactions, we may not be able to retain critical talent from the target company, technology may evolve, making the acquisition less attractive, and other changes can take place which could jeopardize or reduce the anticipated benefits of the transaction and negatively impact our business. In addition, we have made and may in the future make strategic investments in private companies and may not realize a return on our investments. Additional risks related to the Mellanox acquisition, the planned Arm acquisition and other acquisitions or strategic investments include, but are not limited to:

•difficulty in combining the technology, products, ~~operations~~ or ~~workforce~~operations of the acquired business with our business;

•difficulty in integrating and retaining the acquired workforce, including key employees;

•diversion of capital and other resources, including management’s attention;

•assumption of liabilities and incurring amortization expenses, impairment charges to goodwill or write-downs of acquired assets;

•integrating financial forecasting and controls, procedures and reporting cycles;

•coordinating and integrating operations in countries in which we have not previously operated;

•acquiring business challenges and risks, including, but not limited to, disputes with management and integrating international operations and joint ventures;

•difficulty in realizing a satisfactory return, if any return at all;

•difficulty in obtaining or inability to obtain governmental and regulatory consents and approvals, other approvals or financing;

•the ~~potential~~impact of complying with governmental or other regulatory restrictions placed on an acquisition;

•the impact on our stock price and financial results or reputation if we are unable to obtain regulatory approval for an acquisition, are required to pay reverse breakup fees or are otherwise unable to close an acquisition;

•failure and costs associated with the failure to consummate a proposed acquisition or other strategic ~~investment;~~investment, including any negative publicity associated with any of these events;

•legal proceedings initiated as a result of an acquisition or investment;

•the potential for our acquisitions to result in dilutive issuances of our equity securities;

•the potential variability of the amount and form of any performance-based consideration;

•uncertainties and time needed to realize the benefits of an acquisition or strategic investment, if at all;

•negative changes in general economic conditions in the regions or the industries in which we or our target operate;

•the need to determine an alternative strategy if an acquisition does not meet our expectations;

•potential failure of our due diligence processes to identify significant issues with the acquired assets or company; and

•impairment of relationships with, or loss of our or our target’s employees, vendors and customers, as a result of our acquisition or investment.

~~The COVID-19 pandemic continues to impact our business and could materially adversely affect our financial condition and results of operations.~~

COVID-19 has spread worldwide, resulting in shutdowns of manufacturing and commerce. COVID-19 has resulted in government authorities implementing numerous measures to try to contain the disease, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns. These measures have impacted, and may further impact, our workforce and operations, the operations of our customers and our partners, and those of our respective vendors and suppliers (including our subcontractors and third-party contract manufacturers). Our critical business operations, including our headquarters, most of our finished goods inventory and many of our key suppliers, are located in regions which have been impacted by COVID-19. Our customers and suppliers worldwide have also been affected and may continue to be affected by COVID-19 related restrictions and closures.

The COVID-19 pandemic has increased economic and demand uncertainty. In the third quarter of fiscal year 2021, our Gaming and Data Center market platforms benefited from stronger demand as people continue to work, learn, and play from home. Our Professional Visualization market platform experienced stronger demand for mobile workstations due to work from home trends, but was negatively affected by lower corporate demand for desktop workstations. Industry production volume returned to pre-COVID levels in our Auto market platform, but these production volumes may be further impacted by COVID-19. In some regions, markets, or industries, where COVID-19 has driven an increase in sales for our products, the demand may not be sustainable if conditions change. Additionally, stronger demand globally has limited the availability of capacity and components in our supply chain, which could cause us to order an excess amount if demand changes, pay higher prices, or limit our ability to obtain supply at necessary levels or at all.

The manufacture of product components, the final assembly of our products and other critical operations are concentrated in certain geographic locations, including Taiwan, China, Hong Kong and Korea. Additionally, a significant portion of our finished goods product distribution occurs through Hong Kong. Each of these countries has been affected by the pandemic and has taken measures to try to contain it. There is considerable uncertainty regarding the impact of such measures and potential future measures, including restrictions on manufacturing facilities, on our support operations or workforce, or on our customers, partners, vendors and suppliers. Such measures, as well as restrictions or disruptions of transportation, such as reduced availability or increased cost of air transport, port closures and increased border controls or closures, could limit our capacity to meet customer demand and have a material adverse effect on our financial condition and results of operations.

The spread of COVID-19 has caused us to modify our business practices (including employee travel, mandatory work-from-home policies and cancellation of physical participation in meetings, events and conferences), and we may take further actions as required by government authorities or that we determine are in the best interests of our employees, customers, partners and suppliers. Most of our employees in the third quarter continued to work remotely. There is no certainty that such measures will be sufficient to mitigate the risks posed by the disease, and our ability to perform critical functions could be harmed.

In addition, while the extent and duration of the COVID-19 pandemic on the global economy and our business in particular is difficult to assess or predict, the pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, which may reduce our ability to access capital or our customers’ ability to pay us for past or future purchases, which could negatively affect our liquidity. A recession or financial market correction resulting from the lack of containment and spread of COVID-19 could impact overall technology spending, adversely affecting demand for our products, our business and the value of our common stock.

The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. The extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, will depend on future developments, including, but not limited to, the duration and continued spread of the pandemic, its severity, the actions to contain the

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~~disease or treat its impact, further related restrictions on travel, and the duration, timing and severity of the~~Climate change may have a long-term impact on customer spending, including any recession resulting from the pandemic, all of which are uncertain and cannot be predicted. An extended period of global supply chain and economic disruption as a result of the COVID-19 pandemic couldour business.

Climate change may have ~~a material negative~~an increasingly adverse impact on our business and those of our customers, partners and vendors. While we seek to mitigate the risks associated with climate change on our operations, there are inherent climate-related risks globally. Water and energy availability and reliability in the communities where we conduct business is critical. We have facilities in regions that may be vulnerable to the impacts of extreme weather events. For example, extreme heat in Northern California combined with concerns about wildfire risk have led to, and in the future may lead to, several prolonged power safety shut offs that have had, and in the future may have, adverse implications for our Santa Clara, California headquarter operations. Severe weather events such as these may impair the ability of our employees to work effectively. Climate change, including the increasing frequency of extreme weather, its impact on our supply chain and critical infrastructure worldwide and its potential to increase political instability in regions where we, our customers, partners and our vendors do business, may disrupt our business and may cause us to experience higher attrition, losses and costs to maintain or resume operations. Although we maintain a program of insurance coverage for a variety of property, casualty, and other risks, the types and amounts of insurance we obtain vary depending on availability and cost. Some of our policies have large deductibles and broad exclusions. In addition, one or more of our insurance providers may be unable or unwilling to pay a claim. Losses not covered by insurance may be large, which could harm our results of operations ~~access to sources of liquidity~~ and financial ~~condition, though~~condition.

Our operations, products and services, as well as those of our suppliers and customers, may also be subject to climate-related laws, regulations and lawsuits. Regulations such as carbon taxes, fuel or energy taxes, and pollution limits could result in greater direct costs, including manufacturing costs such as costs associated with changes to manufacturing processes or the ~~full extent~~procurement of raw materials used in manufacturing processes, increased levels of capital expenditures to improve facilities and ~~duration is uncertain.~~

~~Business disruptions could harm~~equipment, and higher compliance and energy costs to reduce emissions, as well as greater indirect costs resulting from our ~~business, lead~~customers, suppliers or both incurring additional compliance costs that are passed on to ~~a decline in revenues~~us. These costs and ~~increase our costs.~~

Our worldwide operations could be disrupted by earthquakes, telecommunications failures, power or water shortages, outages at cloud service providers, tsunamis, floods, hurricanes, typhoons, fires, extreme weather conditions, cyber-attacks, terrorist attacks, medical epidemics or pandemics (including, but not limited to, COVID-19) and other natural or man-made disasters, catastrophic events or climate change. The occurrence of any of these disruptionsrestrictions could harm our business and results of operations by increasing our expenses or requiring us to alter our operations and product design activities. Furthermore, while we have endeavored to provide transparency by disclosing our environmental, social and governance efforts, it is possible that if we are deemed by one or more stakeholder groups to be insufficiently responsive to the implications of climate change to our business or insufficiently forthcoming about our practices, we could face legal action or reputational harm. For example, we may not achieve our goal to source 65% of our global electricity use from renewable energy by the end of fiscal year 2025, which could harm our reputation, or we may incur additional, unexpected costs to achieve such a goal, which could affect our business and financial condition in an adverse manner. We may also experience contractual disputes due to supply chain delays arising from climate change-related disruptions, which could result in ~~significant losses,~~increased litigation and costs.

We also face risks related to business trends that may be influenced by climate change concerns. For example, decreased consumer or customer demand for computationally powerful but energy intensive products, such as our GPUs, despite their energy efficient design, and/or increased consumer or customer expectations around the energy efficiency of our products, could negatively impact our business and financial performance. We may also face increased competition to develop additional products and services with a ~~decline~~lower carbon impact, and our investments in ~~revenue~~new technologies may not be successful. Additionally, these changing trends related to climate change may negatively affect our attractiveness to existing and ~~an increase in~~prospective employees, which may make it difficult for us to attract and/or retain critical personnel.

Our business is dependent upon the proper functioning of our ~~costs~~business processes and ~~expenses. Any~~information systems and modification or interruption of such systems may disrupt our business, processes and internal controls.

We rely upon a number of internal business processes and information systems to support key business functions, including our assessment of internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act. The efficient operation of these processes and systems is critical to our business. Our business ~~disruptions could require substantial expenditures~~processes and ~~recovery~~information systems need to be scalable to support our growth, including for acquisitions of other businesses. We will need to make modifications and upgrades from time to time in order to ~~fully resume operations. Such risks are discussed further~~meet our business needs. We expect in the ~~risk factor “The COVID-19 pandemic continues~~first quarter of fiscal year 2023 to commence implementation of accounting and consolidation functionality related to a new enterprise resource planning, or ERP, system. Any ERP system problems upon implementation, such as quality issues or programming errors, could impact our continued ability to successfully operate our business or to timely and accurately report our financial results. These changes may be costly and disruptive to our operations and could impose substantial demands on management time. Failure to implement new or updated controls, or difficulties encountered in the implementation of such controls, either in our existing business or in businesses that we acquire, could harm our operating results or cause us to fail to meet our reporting obligations.

If we identify material weaknesses in our internal controls, the disclosure of that fact, even if quickly remediated, may cause investors to lose confidence in our financial statements and the trading price of our common stock may decline. Remediation of any material weakness could require us to incur significant expenses and if we fail to remediate any material weakness, our financial statements may be inaccurate, we may be required to restate our financial statements, our ability to report our financial results on a timely and accurate basis may be adversely affected, our access to the capital markets may be restricted, the trading price of our common stock may decline, and we may be subject to sanctions or investigation by regulatory authorities.

Risks Related to Regulatory, Legal, Our Common Stock and Other Matters

We may have exposure to additional tax liabilities and our operating results may be adversely impacted by higher than expected tax rates.

As a multinational corporation, we are subject to income taxes as well as non-income based taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the United States and various foreign jurisdictions. Our domestic and international tax liabilities are subject to the allocation of revenue and expenses in different jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities. We are regularly under audit by tax authorities in different jurisdictions. For example, we are currently under examination by the Internal Revenue Service for our fiscal years 2018 and 2019 and under audit in Germany, Israel and India. Although we believe our tax estimates are reasonable, tax authorities may disagree with certain positions we have taken, and any adverse outcome of such a review or audit could increase our worldwide effective tax rate, increase the amount of non-income taxes imposed on our business, and ~~could materially adversely affect~~harm our financial ~~condition and~~position, results of ~~operations.”~~ operations, and cash flows. Further, changes in United States federal, and state or international tax laws applicable to multinational corporations or other fundamental law changes, including proposed changes to existing tax rules and regulations under the current U.S. administration and Congress and as a result of recommendations from intergovernmental economic organizations such as the Organization for Economic Cooperation and Development, may materially impact our tax expense and cash flows, as we experienced in fiscal year 2018 with the passage of the Tax Cuts and Jobs Act.

Our ~~corporate headquarters,~~future effective tax rate may also be affected by such factors as changes in our business or statutory rates, changes in jurisdictions in which our profits are determined to be earned and ~~a portion~~taxed, changes in available tax credits, the resolution of issues arising from tax audits, changes in United States generally accepted accounting principles, adjustments to income taxes upon finalization of tax returns, increases in expenses not deductible for tax purposes, changes in the valuation of our ~~research~~deferred tax assets and ~~development activities, are located~~liabilities and in ~~California,~~deferred tax valuation allowances, changing interpretation of existing laws or regulations, the impact of accounting for stock-based compensation and ~~other critical~~the recognition of excess tax benefits and tax deficiencies within the income tax provision in the period in which they occur, the impact of accounting for business ~~operations, finished goods inventory, and some~~combinations, shifts in the amount of our suppliers are located in Asia, near major earthquake faults known for seismic activity. In addition, a large portion of our current data center capacity is located in California, making our operations vulnerable to natural disasters or other business disruptions occurring in these geographical areas. The manufacture of product components, the final assembly of our products and other critical operations are concentrated in certain geographic locations, including Taiwan, China, Hong Kong, and Korea. Additionally, a significant portion of our finished goods product distribution occurs through Hong Kong. Geopolitical change or changes in government regulations and policiesearnings in the United States compared with other regions in the world and overall levels of income before tax, changes in the domestic or abroad may result in changing regulatory requirements, trade policies, import duties and economic disruptions that could impact our operating strategies, product demand, access to global markets, hiring, and profitability. In particular, revisions to laws or regulations or their interpretation and enforcement could result in increased taxation, trade sanctions, the impositioninternational organization of ~~import duties or tariffs, restrictions and controls on imports or exports, or other retaliatory actions, which could have an adverse effect on~~ our business ~~plans. For example, regulations to implement~~and structure, as well as the ~~Export Control Reform Act~~expiration of ~~2018 could have an adverse effect on~~statute of limitations and settlements of audits. Any changes in our business plans. Catastrophic events can also have an impact on third-party vendors who provide us critical infrastructure services for IT and research and development systems and personnel. In addition, geopolitical and domestic political developments, such as existing and potential trade wars, political or social unrest, elections and post-election developments, and other events beyondeffective tax rate may reduce our control, can increase levels of political and economic unpredictability globally and increase the volatility of global financial markets. Political instability or adverse political developments in or around any of the major countries in which we do business would also likely harm our business, financial condition and results of operations. Our operations could be harmed if manufacturing, logistics or other operations in these locations are disrupted for any reason, including natural disasters, high heat events or water shortages, information technology system failures, military actions or economic, business, labor, environmental, public health, regulatory or political issues. The ultimate impact on us, our third-party foundries and other suppliers and our general infrastructure of being located near major earthquake faults and being consolidated in certain geographical areas is unknown. In the event a major earthquake or other disaster or catastrophic event affects us or the third-party systems on which we rely, our business could be harmed as a result of declines in revenue, increases in expenses, substantial expenditures and time spent to fully resume operations. All of these risks and conditions could materially adversely affect our future sales and operating results.net income.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

Beginning August 2004, our Board of Directors authorized us to repurchase our stock.

Since the inception of our share repurchase program, we have repurchased an aggregate of ~~260 million~~1.04 billion shares for a total cost of $7.08 billion through October ~~25, 2020.~~31, 2021. All shares delivered from these repurchases have been placed into treasury stock.

The repurchases can be made in the open market, in privately negotiated transactions, or in structured share repurchase programs, and can be made in one or more larger ~~repurchases.~~repurchases, in compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, subject to market conditions, applicable legal requirements, and other factors. The program does not obligate NVIDIA to acquire any particular amount of common stock and the program may be suspended at any time at our discretion.

In the first nine months of fiscal year ~~2021,~~2022, we paid ~~$296~~$298 million in quarterly cash dividends. As of October ~~25, 2020,~~31, 2021, we were authorized, subject to certain specifications, to repurchase additional shares of our common stock up to $7.24 billion through December 2022. We did not repurchase any shares during the first nine months of fiscal year ~~2021.~~2022.

Restricted Stock Unit Share Withholding

We also withhold common stock shares associated with net share settlements to cover tax withholding obligations upon the vesting of restricted stock unit awards under our employee equity incentive program. During the third quarter of fiscal year ~~2021,~~2022, we withheld approximately 12 million shares at a total cost of ~~$298~~$434 million through net share settlements. During the first nine months of fiscal year ~~2021,~~2022, we withheld approximately 27 million shares at a total cost of ~~$716 million~~$1.28 billion through net share settlements.

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ITEM 6. EXHIBITS

Exhibit No. Exhibit Description Schedule
/Form File Number Exhibit Filing Date
2.1
Share Purchase Agreement, dated September 13, 2020, by and among NVIDIA, NVIDIA Holdings, Arm, SoftBank and Vision Fund *
8-K 000-23985 2.1 9/14/2020
31.1**
Certification of Chief Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934
31.2**
Certification of Chief Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934
32.1#**
Certification of Chief Executive Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934
32.2#**
Certification of Chief Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934
101.INS** Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH** Inline XBRL Taxonomy Extension Schema Document
101.CAL** Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF** Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB** Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE** Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

* Certain exhibits and schedules have been omitted in accordance with Regulation S-K Item 601(a)(5). NVIDIA agrees to supplementally furnish to the SEC a copy of any omitted exhibits or schedules upon request of the SEC.

Exhibit No.

Exhibit Description

Schedule
/Form

File Number

Exhibit

Filing Date

31.1**

Certification of Chief Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2**

Certification of Chief Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

32.1#**

Certification of Chief Executive Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934

32.2#**

Certification of Chief Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934

101.INS**

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH**

Inline XBRL Taxonomy Extension Schema Document

101.CAL**

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**

Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE**

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

** Filed herewith.

# In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management's Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purpose of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

Copies of above exhibits not contained herein are available to any shareholder upon written request to:

Investor Relations: NVIDIA Corporation, 2788 San Tomas Expressway, Santa Clara, CA 95051.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November ~~18, 2020~~19, 2021


			NVIDIA Corporation
By:			/s/ Colette M. Kress

			Colette M. Kress
			Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

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