CFO Commentary on Third Quarter Fiscal 2024 Results

Q3 Fiscal 2024 Summary

GAAP
($ in millions, except earnings per Q3 FY24 Q2 FY24 Q3 FY23 Q/Q Y/Y
share)
Revenue $18,120 $13,507 $5,931 Up 34% Up 206%
Gross margin 74.0 % 70.1 % 53.6 % Up 3.9 pts Up 20.4 pts
Operating expenses $2,983 $2,662 $2,576 Up 12% Up 16%
Operating income $10,417 $6,800 $601 Up 53% Up 1,633%
Net income $9,243 $6,188 $680 Up 49% Up 1,259%
Diluted earnings per share $3.71 $2.48 $0.27 Up 50% Up 1,274%

Non-GAAP
($ in millions, except earnings per Q3 FY24 Q2 FY24 Q3 FY23 Q/Q Y/Y
share)
Revenue $18,120 $13,507 $5,931 Up 34% Up 206%
Gross margin 75.0 % 71.2 % 56.1 % Up 3.8 pts Up 18.9 pts
Operating expenses $2,026 $1,838 $1,793 Up 10% Up 13%
Operating income $11,557 $7,776 $1,536 Up 49% Up 652%
Net income $10,020 $6,740 $1,456 Up 49% Up 588%
Diluted earnings per share $4.02 $2.70 $0.58 Up 49% Up 593%

Revenue by Reportable Segments

($ in millions) Q3 FY24 Q2 FY24 Q3 FY23 Q/Q Y/Y
Compute & Networking $14,645 $10,402 $3,816 Up 41% Up 284%
Graphics 3,475 3,105 2,115 Up 12% Up 64%
Total $18,120 $13,507 $5,931 Up 34% Up 206%

Revenue by Market Platform

($ in millions) Q3 FY24 Q2 FY24 Q3 FY23 Q/Q Y/Y
Data Center $14,514 $10,323 $3,833 Up 41% Up 279%
Gaming 2,856 2,486 1,574 Up 15% Up 81%
Professional Visualization 416 379 200 Up 10% Up 108%
Automotive 261 253 251 Up 3% Up 4%
OEM and Other 73 66 73 Up 11% —
Total $18,120 $13,507 $5,931 Up 34% Up 206%
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: Data Center, Gaming, Professional Visualization, and Automotive.

Revenue
Revenue was $18.12 billion, up 206% from a year ago and up 34% sequentially.

Data Center revenue was a record, up 279% from a year ago and up 41% sequentially. Strong sales of
the NVIDIA HGX platform were driven by global demand for the training and inferencing of large
language models, recommendation engines, and generative AI applications. Data Center compute
grew 324% from a year ago and 38% sequentially, largely reflecting the strong ramp of our Hopper
GPU architecture-based HGX platform from cloud service providers (CSPs), including GPU-specialized
CSPs; consumer internet companies; and enterprises. Our sales of Ampere GPU architecture-based
Data Center products were significant but declined sequentially, as we approach the tail end of this
architecture. We recognized initial revenue on the ramp of our L40S GPU and the GH200 Grace
Hopper Superchip for a broad range of customers. CSPs drove roughly half of Data Center revenue,
while consumer internet companies and enterprises comprised approximately the other half.
Networking was up 155% from a year ago and up 52% sequentially, almost entirely due to strong
growth in InfiniBand infrastructure to support our HGX platform.

On October 17, 2023, the U.S. government (USG) announced new and updated licensing requirements
effective in our fourth quarter of fiscal 2024 for exports to China and Country Groups D1, D4, and D5
(including but not limited to Saudi Arabia, the United Arab Emirates, and Vietnam, but excluding
Israel) of our products exceeding certain performance thresholds, including A100, A800, H100, H800,
L4, L40, L40S and RTX 4090. The licensing requirements also apply to the export of products
exceeding certain performance thresholds to a party headquartered in, or with an ultimate parent
headquartered in, Country Group D5, including China. On October 23, 2023, the USG informed us the
licensing requirements were effective immediately for shipments of our A100, A800, H100, H800,
and L40S products. These licensing requirements did not have a meaningful impact on our revenue in
the third quarter of fiscal 2024 as they were announced near the end of the fiscal quarter and we
had additional demand from customers outside of the named country groups. Our sales to China and
other affected destinations, derived from products that are now subject to licensing requirements,
have consistently contributed approximately 20-25% of Data Center revenue over the past few
quarters. We expect that our sales to these destinations will decline significantly in the fourth
quarter of fiscal 2024, though we believe the decline will be more than offset by strong growth in
other regions.

Gaming revenue was up 81% from a year ago and up 15% sequentially. Strong year-on-year growth
reflects higher sell-in to partners following normalization of channel inventory levels. Sequential
growth reflects strong demand for our GeForce RTX 40 Series GPUs for back-to-school and the start
of the holiday season.

Professional Visualization revenue was up 108% from a year ago and up 10% sequentially. The year-
on-year increase reflects higher sell-in to partners following normalization of channel inventory levels.
The sequential increase was primarily due to stronger enterprise workstation demand and the ramp
of notebook workstations based on the Ada Lovelace GPU architecture.

Automotive revenue was up 4% from a year ago and up 3% sequentially. The year-on-year increase
primarily reflects growth in sales of auto cockpit solutions and self-driving platforms. The sequential
increase was driven by sales of self-driving platforms.
Gross Margin
GAAP and non-GAAP gross margins increased significantly from a year ago and sequentially, driven
by improved product mix from Data Center revenue growth and lower net inventory provisions and
related charges.

In the third quarter of fiscal 2024, provisions for inventory and related charges were $681 million.
Sales of previously reserved inventory or settlements of excess inventory purchase obligations
resulted in a provision release of $239 million, primarily from Ampere GPU architecture products. The
net inventory provisions were $442 million and the unfavorable effect on our gross margin was 2.4
percentage points.

In the third quarter of fiscal 2023, provisions for inventory and related charges were $702 million.
Sales of previously reserved inventory or settlements of excess inventory purchase obligations
resulted in a provision release of $21 million. The net inventory provisions were $681 million and the
unfavorable effect on our gross margin was 11.5 percentage points.

Expenses
GAAP operating expenses were up 16% from a year ago and up 12% sequentially, driven by
compensation and benefits, including stock-based compensation, primarily reflecting growth in
employees and compensation increases.

Non-GAAP operating expenses were up 13% from a year ago and up 10% sequentially, primarily
reflecting growth in employees and compensation increases.

We are monitoring the impact of the geopolitical conflict in and around Israel on our operations,
including the health and safety of our approximately 3,400 employees in the region who primarily
support the research and development, operations, and sales and marketing of our networking
products. Our operating expenses in the third quarter of fiscal 2024 include expenses for financial
support to impacted employees and charitable activity.

Other Income & Expense and Income Tax

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

Interest income was $234 million, up from a year ago and sequentially, reflecting higher cash and
investments and higher yields. Net losses from non-affiliated investments were $69 million, driven
predominantly by mark-to-market losses from publicly traded equity investments.

GAAP effective tax rate was 12.2%, which reflects tax benefits from the foreign-derived intangible
income deduction, stock-based compensation, a resolution of an Internal Revenue Service audit, and
the U.S. federal research tax credit. Non-GAAP effective tax rate was 14.6%.

Balance Sheet and Cash Flow

Cash, cash equivalents and marketable securities were $18.28 billion, up from $13.14 billion a year
ago and $16.02 billion a quarter ago. The increases primarily reflect higher revenue partially offset by
taxes paid and stock repurchases.

Accounts receivable was $8.31 billion with days sales outstanding (DSO) of 42, with the DSO decline
from prior periods due to the linearity of shipments. Accounts receivable was reduced by
approximately $570 million from customer payments received prior to the invoice due date.
Inventory was $4.78 billion with days sales of inventory (DSI) of 92. Purchase commitments and
obligations for inventory and manufacturing capacity were $17.11 billion and prepaid supply
agreements were $3.67 billion. Other non-inventory purchase obligations were $4.43 billion which
includes $3.60 billion of multi-year cloud service agreements, primarily to support our research and
development efforts.

Cash flow from operating activities was $7.33 billion, up from $392 million a year ago and $6.35
billion a quarter ago, driven by higher revenue partially offset by higher cash tax payments. We paid
$4.35 billion in cash taxes in the third quarter of fiscal 2024, largely for previously deferred federal
income tax payments related to the disaster relief made available by the IRS for certain California
taxpayers.

Depreciation and amortization expense was $372 million, including amortization of acquisition-
related intangible assets. Starting in fiscal 2024, we extended the useful lives of most of our servers,
storage, and network equipment from three years to a range of four to five years, and assembly and
test equipment from five to seven years. This change in useful lives drove a favorable impact to
operating expenses of $24 million and to cost of revenue of $17 million in the third quarter.

During the third quarter, we utilized cash of $3.91 billion towards shareholder returns, including
$3.81 billion in share repurchases and $99 million in cash dividends.

Fourth Quarter of Fiscal 2024 Outlook

Outlook for the fourth quarter of fiscal 2024 is as follows:

• Revenue is expected to be $20.00 billion, plus or minus 2%.

• GAAP and non-GAAP gross margins are expected to be 74.5% and 75.5%, respectively, plus or
minus 50 basis points.

• GAAP and non-GAAP operating expenses are expected to be approximately $3.17 billion and
$2.20 billion, respectively.

• GAAP and non-GAAP other income and expense are expected to be an income of
approximately $200 million, excluding gains and losses from non-affiliated investments.

• GAAP and non-GAAP tax rates are expected to be 15.0%, plus or minus 1%, excluding any
discrete items.

___________________________
For further information, contact:

Simona Jankowski Robert Sherbin

Investor Relations Corporate Communications
NVIDIA Corporation NVIDIA Corporation
sjankowski@nvidia.com rsherbin@nvidia.com

Non-GAAP Measures
To supplement NVIDIA’s condensed consolidated financial statements presented in accordance with
GAAP, the company uses non-GAAP measures of certain components of financial performance.
These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating expenses, non-GAAP income from operations, non-GAAP other income (expense), net, non-
GAAP net income, non-GAAP net income, or earnings, per diluted share, and free cash flow. In order
for NVIDIA’s investors to be better able to compare its current results with those of previous periods,
the company has shown a reconciliation of GAAP to non-GAAP financial measures. These
reconciliations adjust the related GAAP financial measures to exclude acquisition termination costs,
stock-based compensation expense, acquisition-related and other costs, IP-related costs, other,
gains and losses from non-affiliated investments, interest expense related to amortization of debt
discount, and the associated tax impact of these items where applicable. Free cash flow is calculated
as GAAP net cash provided by operating activities less both purchases of property and equipment
and intangible assets and principal payments on property and equipment and intangible assets.
NVIDIA believes the presentation of its non-GAAP financial measures enhances the user's overall
understanding of the company’s historical financial performance. The presentation of the company’s
non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the
company’s financial results prepared in accordance with GAAP, and the company’s non-GAAP
measures may be different from non-GAAP measures used by other companies.
Certain statements in this CFO Commentary including, but not limited to, statements as to: our computing platforms
providing tremendous acceleration for applications and delivering unique value; markets where our expertise is critical; our
expected sales to China and other affected destinations declining significantly in the fourth quarter, and our belief that the
decline will be more than offset by strong growth in other regions; and our financial outlook and expected tax rates for the
fourth quarter of fiscal 2024 are forward-looking statements that are subject to risks and uncertainties that could cause
results to be materially different than expectations. Important factors that could cause actual results to differ materially
include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products;
the impact of technological development and competition; development of new products and technologies or
enhancements to our existing product and technologies; market acceptance of our products or our partners’ products;
design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards
and interfaces; and unexpected loss of performance of our products or technologies when integrated into systems; as well
as other factors detailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange
Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q.
Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge.
These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and,
except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future
events or circumstances.

###

© 2023 NVIDIA Corporation. All rights reserved. NVIDIA and the NVIDIA logo are trademarks and/or registered trademarks
of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the
respective companies with which they are associated. Features, pricing, availability, and specifications are subject to change
without notice.
 NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)

Three Months Ended Nine Months Ended

October 29, July 30, October 30, October 29, October 30,
2023 2023 2022 2023 2022

GAAP gross profit $ 13,400 $ 9,462 $ 3,177 $ 27,510 $ 11,523

GAAP gross margin 74.0 % 70.1 % 53.6 % 70.9 % 55.1 %
Acquisition-related and other costs (A) 119 119 120 358 335
Stock-based compensation expense (B) 38 31 32 96 108
IP-related costs 26 2 — 36 —
Non-GAAP gross profit $ 13,583 $ 9,614 $ 3,329 $ 28,000 $ 11,966
Non-GAAP gross margin 75.0 % 71.2 % 56.1 % 72.1 % 57.2 %

GAAP operating expenses $ 2,983 $ 2,662 $ 2,576 $ 8,152 $ 8,555

Stock-based compensation expense (B) (941) (811) (713) (2,459) (1,863)
Acquisition-related and other costs (A) (16) (18) (54) (88) (164)
Acquisition termination cost — — — — (1,353)
Other (C) — 5 (16) 10 (25)
Non-GAAP operating expenses $ 2,026 $ 1,838 $ 1,793 $ 5,615 $ 5,150

GAAP operating income $ 10,417 $ 6,800 $ 601 $ 19,358 $ 2,968

Total impact of non-GAAP adjustments
to operating income 1,140 976 935 3,027 3,848
Non-GAAP operating income $ 11,557 $ 7,776 $ 1,536 $ 22,385 $ 6,816

GAAP other income (expense), net $ 105 $ 181 $ 12 $ 354 $ (75)

(Gains) losses from non-affiliated
investments 69 (62) 11 23 36
Interest expense related to amortization
of debt discount 1 1 1 3 3
Non-GAAP other income (expense), net $ 175 $ 120 $ 24 $ 380 $ (36)

GAAP net income $ 9,243 $ 6,188 $ 680 $ 17,475 $ 2,954

Total pre-tax impact of non-GAAP
adjustments 1,210 915 947 3,053 3,887
Income tax impact of non-GAAP
adjustments (D) (433) (363) (171) (1,055) (649)
Non-GAAP net income $ 10,020 $ 6,740 $ 1,456 $ 19,473 $ 6,192
 Three Months Ended Nine Months Ended
October 29, July 30, October 30, October 29, October 30,
2023 2023 2022 2023 2022
Diluted net income per share
GAAP $ 3.71 $ 2.48 $ 0.27 $ 7.01 $ 1.17
Non-GAAP $ 4.02 $ 2.70 $ 0.58 $ 7.81 $ 2.46

Weighted average shares used in diluted net

income per share computation 2,494 2,499 2,499 2,494 2,517

GAAP net cash provided by operating

activities $ 7,333 $ 6,348 $ 392 $ 16,591 $ 3,393
Purchases related to property and
equipment and intangible assets (278) (289) (530) (815) (1,324)
Principal payments on property and
equipment and intangible assets (13) (11) (18) (44) (54)
Free cash flow $ 7,042 $ 6,048 $ (156) $ 15,732 $ 2,015

(A) Acquisition-related and other costs are comprised of amortization of intangible assets and transaction
costs, and are included in the following line items:
Three Months Ended Nine Months Ended
October 29, July 30, October 30, October 29, October 30,
2023 2023 2022 2023 2022
Cost of revenue $ 119 $ 119 $ 120 $ 358 $ 335
Research and development $ 12 $ 12 $ 10 $ 37 $ 29
Sales, general and administrative $ 4 $ 6 $ 44 $ 51 $ 135

(B) Stock-based compensation consists of the following:

Three Months Ended Nine Months Ended
October 29, July 30, October 30, October 29, October 30,
2023 2023 2022 2023 2022
Cost of revenue $ 38 $ 31 $ 32 $ 96 $ 108
Research and development $ 701 $ 600 $ 530 $ 1,826 $ 1,365
Sales, general and administrative $ 240 $ 211 $ 183 $ 633 $ 498

(C) Other consists of costs related to Russia branch office closure, assets held for sale related adjustments,
legal settlement costs, and contributions.

(D) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or
deficiencies related to stock-based compensation under GAAP accounting standard (ASU 2016-09).
 NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK

Q4 FY2024
Outlook
($ in millions)
GAAP gross margin 74.5 %
Impact of stock-based compensation expense, acquisition-related costs, and other 1.0 %
costs
Non-GAAP gross margin 75.5 %

GAAP operating expenses $ 3,165

Stock-based compensation expense, acquisition-related costs, and other costs (965)
Non-GAAP operating expenses $ 2,200