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UNITED STATESSECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549______________
FORM 8-K
CURRENT REPORTPURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 18, 2021
NVIDIA CORPORATION(Exact name of registrant as specified in its charter)
Delaware 0-23985 94-3177549(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2788 San Tomas Expressway, Santa Clara, CA 95051
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (408) 486-2000Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of thefollowing provisions:☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of thischapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 anynew or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On August 18, 2021, NVIDIA Corporation, or the Company, issued a press release announcing its results for the quarter ended August 1, 2021. Thepress release is attached as Exhibit 99.1 and is incorporated herein by reference.
Attached hereto as Exhibit 99.2 and incorporated by reference herein is financial information and commentary by Colette M. Kress, Executive VicePresident and Chief Financial Officer of the Company, regarding results of the quarter ended August 1, 2021, or the CFO Commentary. The CFOCommentary will be posted to http://investor.nvidia.com immediately after the filing of this Current Report.
The press release and CFO Commentary are furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of1934, as amended, or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The informationin this Current Report shall not be incorporated by reference in any filing with the U.S. Securities and Exchange Commission made by the Company,whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description99.1 Press Release, dated August 18, 2021, entitled "NVIDIA Announces Financial Results for Second Quarter Fiscal 2022"99.2 CFO Commentary on Second Quarter Fiscal 2022 Results
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 theundersigned hereunto duly authorized.
NVIDIA CorporationDate: August 18, 2021 By: /s/ Colette M. Kress Colette M. Kress Executive Vice President and Chief Financial Officer
FOR IMMEDIATE RELEASE:
NVIDIA Announces Financial Results for Second Quarter Fiscal 2022• Record revenue of $6.51 billion, up 68 percent from a year earlier
• Record Gaming revenue of $3.06 billion, up 85 percent from a year earlier
• Record Data Center revenue of $2.37 billion, up 35 percent from a year earlier
SANTA CLARA, Calif.-Aug. 18, 2021- NVIDIA (NASDAQ: NVDA) today reported record revenue for the second quarter endedAugust 1, 2021, of $6.51 billion, up 68 percent from a year earlier and up 15 percent from the previous quarter, with recordrevenue from the company’s Gaming, Data Center and Professional Visualization platforms.
GAAP earnings per diluted share for the quarter were $0.94, up 276 percent from a year ago and up 24 percent from theprevious quarter. Non-GAAP earnings per diluted share were $1.04, up 89 percent from a year ago and up 14 percent from theprevious quarter.
“NVIDIA’s pioneering work in accelerated computing continues to advance graphics, scientific computing and AI,” said JensenHuang, founder and CEO of NVIDIA.
“Enabled by the NVIDIA platform, developers are creating the most impactful technologies of our time – from natural languageunderstanding and recommender systems, to autonomous vehicles and logistic centers, to digital biology and climate science, tometaverse worlds that obey the laws of physics.
“This quarter, we launched NVIDIA Base Command and Fleet Command to develop, deploy, scale and orchestrate the AIworkloads that run on the NVIDIA AI Enterprise software suite. With our new enterprise software, wide range of NVIDIA-poweredsystems and global network of system and integration partners, we can accelerate the world’s largest industries racing to benefitfrom the transformative power of AI.
“We are thrilled to have launched NVIDIA Omniverse, a simulation platform nearly five years in the making that runs physicallyrealistic virtual worlds and connects to other digital platforms. We imagine engineers, designers and even autonomous machinesconnecting to Omniverse to create digital twins and industrial metaverses,” he said.
NVIDIA paid quarterly cash dividends of $100 million in the second quarter. It will pay its next quarterly cash dividend of $0.04per share on September 23, 2021, to all shareholders of record on September 1, 2021.
On July 19, 2021, the company completed a four-for-one split of its common stock in the form of a stock dividend toshareholders of record as of June 21, 2021. All share and per share amounts presented have been retroactively adjusted toreflect the stock split.
Q2 Fiscal 2022 Summary
GAAP($ in millions, except earnings pershare) Q2 FY22 Q1 FY22 Q2 FY21 Q/Q Y/YRevenue $6,507 $5,661 $3,866 Up 15% Up 68%Gross margin 64.8 % 64.1 % 58.8 % Up 70 bps Up 600 bpsOperating expenses $1,771 $1,673 $1,624 Up 6% Up 9%Operating income $2,444 $1,956 $651 Up 25% Up 275%Net income $2,374 $1,912 $622 Up 24% Up 282%Diluted earnings per share $0.94 $0.76 $0.25 Up 24% Up 276%
Non-GAAP($ in millions, except earnings pershare) Q2 FY22 Q1 FY22 Q2 FY21 Q/Q Y/YRevenue $6,507 $5,661 $3,866 Up 15% Up 68%Gross margin 66.7 % 66.2 % 66.0 % Up 50 bps Up 70 bpsOperating expenses $1,266 $1,189 $1,035 Up 6% Up 22%Operating income $3,071 $2,557 $1,516 Up 20% Up 103%Net income $2,623 $2,313 $1,366 Up 13% Up 92%Diluted earnings per share $1.04 $0.91 $0.55 Up 14% Up 89%
NVIDIA’s outlook for the third quarter of fiscal 2022 is as follows:
• Revenue is expected to be $6.80 billion, plus or minus 2 percent.
• GAAP and non-GAAP gross margins are expected to be 65.2 percent and 67.0 percent, respectively, plus or minus 50basis points.
• GAAP and non-GAAP operating expenses are expected to be approximately $1.96 billion and $1.37 billion, respectively.
• GAAP and non-GAAP other income and expense are both expected to be an expense of approximately $60 million,excluding gains and losses on equity securities.
• GAAP and non-GAAP tax rates are both expected to be 11 percent, plus or minus 1 percent, excluding any discrete itemssuch as excess tax benefits or deficiencies related to stock-based compensation.
HighlightsNVIDIA achieved progress since its previous earnings announcement in these areas:
Gaming
• Second-quarter revenue was a record $3.06 billion, up 85 percent from a year earlier and up 11 percent from the previousquarter.
• Introduced GeForce RTX 3080 Ti and GeForce RTX 3070 Ti, delivering up to 50 percent more performance over theprevious generation.
• Announced that NVIDIA RTX is featured in 130+ games and applications, including Red Dead Redemption 2, F1 2021and Minecraft RTX, in China, as well as Adobe Photoshop and Premiere Pro.
• Announced that NVIDIA Reflex, which reduces gaming latency, is supported in 20 games, including top e-sports titles.
• Announced that GeForce RTX technologies are available for Arm platforms, with demos of Wolfenstein: Youngblood andThe Bistro.
• Announced that GeForce NOW gives members access to more than 1,000 PC games, more than any other cloud-gaming service.
Data Center
• Second-quarter revenue was a record $2.37 billion, up 35 percent from a year earlier and up 16 percent from the previousquarter.
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• Unveiled NVIDIA Base Command and Fleet Command – software platforms optimized for NVIDIA-powered systemsrunning NVIDIA AI software – to develop, deploy, and manage AI applications across the enterprise and the industrialedge.
• Announced NVIDIA AI LaunchPad, a program delivered by hybrid-cloud providers giving enterprises instant AIinfrastructure, with Equinix as the first partner.
• Launched TensorRT 8, the latest generation of NVIDIA’s AI inference software, delivering record-setting speed fornatural language processing and other AI applications.
• Announced NVIDIA technology supports 342 supercomputers on the latest TOP500 list, including 70 percent of all newsystems and 8 of the top 10, and powers 35 of the top 40 greenest systems.
• Announced NVIDIA is powering major new supercomputers, including: Perlmutter, the world’s fastest AI supercomputer,at the U.S. National Energy Research Scientific Computing Center; Cambridge-1, the U.K.’s most powerfulsupercomputer; Tesla’s new training system; and Petrobras’ Dragão supercomputer, Latin America’s fastest.
• Extended the Arm ecosystem with the NVIDIA Arm HPC Developer Kit, with applicants for early access from 70+ leadingorganizations.
• Set performance records across all eight AI training benchmarks for commercially available systems in the latest MLPerfresults, delivering up to 3.5x more performance than last year’s scores.
• Announced there are now more than 55 NVIDIA-Certified Systems offered by the world’s leading server makerssupporting NVIDIA AI Enterprise software, with many powered by NVIDIA BlueField -2 DPUs and NVIDIA DOCA .
• Supported Microsoft Azure’s general availability of NVIDIA A100 GPU VMs, their most powerful virtual machines forsupercomputer-class AI and HPC workloads.
• Worked with Google Cloud to establish the first AI-on-5G Innovation Lab, helping to accelerate the creation of smartcities, smart factories and other 5G and AI applications.
• Powered Palo Alto Networks’ virtual next-generation firewall – the industry’s first running on DPUs – with NVIDIABlueField-2, enabling up to 5x acceleration and maximizing data center security.
Professional Visualization
• Second-quarter revenue was a record $519 million, up 156 percent from a year earlier and up 40 percent from theprevious quarter.
• Expanded NVIDIA Omniverse , the world’s first 3D, real-time simulation and collaboration platform, through newintegrations with Blender and Adobe, applications used by millions of users.
• Launched the NVIDIA RTX A2000, which brings RTX to the volume segment of the desktop workstation market andenables a range of new form factors from backs of displays to edge devices.
Automotive
• Second-quarter revenue was $152 million, up 37 percent from a year earlier and down 1 percent from the previousquarter.
• Announced that self-driving startup AutoX’s Gen5 robotaxi platform uses NVIDIA DRIVE to achieve level 4 autonomy.
• Collaborated with autonomous trucking company Plus on plans to provide Amazon with at least 1,000 self-drivingsystems, which are powered by NVIDIA DRIVE.
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• Announced that autonomous trucking platform startup Embark is using NVIDIA DRIVE to create systems for Freightliner,Navistar International, PACCAR and Volvo.
CFO CommentaryCommentary on the quarter by Colette Kress, NVIDIA’s executive vice president and chief financial officer, is available athttps://investor.nvidia.com/.
Conference Call and Webcast InformationNVIDIA will conduct a conference call with analysts and investors to discuss its second quarter financial results and currentfinancial prospects today at 2 p.m. Pacific time (5 p.m. Eastern time). A live webcast (listen-only mode) of the conference call willbe accessible at NVIDIA’s investor relations website, https://investor.nvidia.com. The webcast will be recorded and available forreplay until NVIDIA’s conference call to discuss its financial results for its third quarter of fiscal 2022.
Non-GAAP MeasuresTo supplement NVIDIA’s condensed consolidated financial statements presented in accordance with GAAP, the company usesnon-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP grossprofit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP other income(expense), net, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, and free cash flow. For NVIDIA’sinvestors to be better able to compare its current results with those of previous periods, the company has shown a reconciliationof GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude stock-based compensation expense, acquisition-related and other costs, IP-related costs, gains and losses from non-affiliatedinvestments, mark to market adjustments of our publicly traded equity securities, interest expense related to amortization of debtdiscount, the associated tax impact of these items where applicable, and domestication tax benefit. Free cash flow is calculatedas GAAP net cash provided by operating activities less both purchases of property and equipment and intangible assets andprincipal payments on property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financialmeasures enhances the user’s overall understanding of the company’s historical financial performance. The presentation of thecompany’s non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company’s financialresults prepared in accordance with GAAP, and the company’s non-GAAP measures may be different from non-GAAPmeasures used by other companies.
About NVIDIANVIDIA’s (NASDAQ: NVDA) invention of the GPU in 1999 sparked the growth of the PC gaming market and has redefinedmodern computer graphics, high performance computing and artificial intelligence. The company’s pioneering work inaccelerated computing and AI is reshaping trillion-dollar industries, such as transportation, healthcare and manufacturing, andfueling the growth of many others. More information at https://nvidianews.nvidia.com/.
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For further information, contact:
Simona Jankowski Robert SherbinInvestor Relations Corporate CommunicationsNVIDIA Corporation NVIDIA [email protected] [email protected]
Certain statements in this press release including, but not limited to, statements as to: NVIDIA’s pioneering work in accelerated computing and its impacts;NVIDIA’s platform enabling developers to create the most impactful technologies of our time; NVIDIA accelerating the world’s largest industries racing to benefitfrom the transformative power of AI; the benefits, performance and abilities of our products and technologies, including NVIDIA Base Command, FleetCommand, NVIDIA Omniverse, GeForce RTX 3080 Ti and 3070 Ti, NVIDIA Reflex, GeForce NOW, NVIDIA AI LaunchPad, TensorRT 8, NVIDIA A100 GPUVMs, NVIDIA BlueField-2, NVIDIA RTX A2000, and NVIDIA DRIVE; our ability to bring the power of AI to the world’s largest industries with our global network ofsystem partners and new enterprise software and subscriptions; engineers, designers and autonomous machines connecting to Omniverse to create digitaltwins and industrial metaverses; NVIDIA’s next quarterly cash dividend; NVIDIA’s financial outlook for the third quarter of fiscal 2022; NVIDIA’s expected taxrates for the third quarter of fiscal 2022; and the impact of the first AI-on-5G Innovation Lab are forward-looking statements that are subject to risks anduncertainties 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 andcompetition; development of new products and technologies or enhancements to our existing product and technologies; market acceptance of our products orour partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces;unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the mostrecent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterlyreports 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 anyobligation to update these forward-looking statements to reflect future events or circumstances.
© 2021 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, BlueField, Fleet Command, GeForce NOW, GeForce RTX, NVIDIA BaseCommand, NVIDIA DOCA, NVIDIA DRIVE, NVIDIA Omniverse, NVIDIA RTX, GeForce NOW, GeForce RTX and TensorRT are trademarks and/or registeredtrademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respective companies withwhich they are associated. Features, pricing, availability, and specifications are subject to change without notice.
NVIDIA CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)(Unaudited)
Three Months Ended Six Months Ended August 1, July 26, August 1, July 26,
2021 2020 2021 2020
Revenue $ 6,507 $ 3,866 $ 12,168 $ 6,946 Cost of revenue 2,292 1,591 4,324 2,667 Gross profit 4,215 2,275 7,844 4,279 Operating expenses
Research and development 1,245 997 2,398 1,732 Sales, general and administrative 526 627 1,046 920 Total operating expenses 1,771 1,624 3,444 2,652
Income from operations 2,444 651 4,400 1,627 Interest income 6 13 13 44 Interest expense (60) (54) (113) (78)Other, net 4 (1) 138 (2)Other income (expense), net (50) (42) 38 (36)
Income before income tax 2,394 609 4,438 1,591 Income tax expense (benefit) 20 (13) 153 52 Net income $ 2,374 $ 622 $ 4,285 $ 1,539
Net income per share (A):Basic $ 0.95 $ 0.25 $ 1.72 $ 0.63 Diluted $ 0.94 $ 0.25 $ 1.69 $ 0.62
Weighted average shares used in per share computation(A):
Basic 2,493 2,464 2,489 2,460 Diluted 2,532 2,504 2,529 2,496
(A) Reflects a four-for-one stock split on July 19, 2021.
NVIDIA CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)(Unaudited)
August 1, January 31,2021 2021
ASSETS
Current assets:Cash, cash equivalents and marketable securities $ 19,654 $ 11,561 Accounts receivable, net 3,586 2,429 Inventories 2,114 1,826 Prepaid expenses and other current assets 452 239 Total current assets 25,806 16,055
Property and equipment, net 2,364 2,149 Operating lease assets 801 707 Goodwill 4,193 4,193 Intangible assets, net 2,478 2,737 Deferred income tax assets 958 806 Other assets 2,050 2,144
Total assets $ 38,650 $ 28,791
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:Accounts payable $ 1,474 $ 1,201 Accrued and other current liabilities 1,974 1,725 Short-term debt 1,000 999 Total current liabilities 4,448 3,925
Long-term debt 10,943 5,964 Long-term operating lease liabilities 716 634 Other long-term liabilities 1,396 1,375
Total liabilities 17,503 11,898
Shareholders' equity 21,147 16,893 Total liabilities and shareholders' equity $ 38,650 $ 28,791
NVIDIA CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)(Unaudited)
Three Months Ended Six Months EndedAugust 1, July 26, August 1, July 26,
2021 2020 2021 2020Cash flows from operating activities: Net income $ 2,374 $ 622 $ 4,285 $ 1,539 Adjustments to reconcile net income to net cashprovided by operating activities:
Stock-based compensation expense 465 374 894 598 Depreciation and amortization 286 404 567 511 Deferred income taxes (185) (80) (161) (64)(Gains) losses on investments in non affiliates, net 1 2 (133) 5 Other 18 (10) 16 (10)
Changes in operating assets and liabilities, net of acquisitions:Accounts receivable (563) 44 (1,157) (205)Inventories (123) 54 (282) (97)Prepaid expenses and other assets 16 42 18 34 Accounts payable 209 (8) 279 63 Accrued and other current liabilities 133 112 132 81 Other long-term liabilities 51 10 98 21
Net cash provided by operating activities 2,682 1,566 4,556 2,476 Cash flows from investing activities:
Proceeds from maturities of marketable securities 2,096 1,032 5,236 1,032 Proceeds from sales of marketable securities 347 258 705 259 Purchases of marketable securities (4,798) (7,425) (9,268) (8,286)Purchases related to property and equipment and intangible assets (183) (217) (481) (372)Investments and other, net 5 — 3 (7)Acquisitions, net of cash acquired — (7,137) — (7,171)
Net cash used in investing activities (2,533) (13,489) (3,805) (14,545)Cash flows from financing activities:
Issuance of debt, net of issuance costs 4,985 (8) 4,985 4,971 Proceeds related to employee stock plans 2 6 128 94 Payments related to tax on restricted stock units (365) (196) (843) (418)Dividends paid (100) (99) (198) (197)Principal payments on property and equipment (21) — (40) — Other — — (2) (3)
Net cash provided by (used in) financing activities 4,501 (297) 4,030 4,447 Change in cash and cash equivalents 4,650 (12,220) 4,781 (7,622)Cash and cash equivalents at beginning of period 978 15,494 847 10,896 Cash and cash equivalents at end of period $ 5,628 $ 3,274 $ 5,628 $ 3,274
NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data) (Unaudited)
Three Months Ended Six Months Ended August 1, May 2, July 26, August 1, July 26, 2021 2021 2020 2021 2020
GAAP gross profit $ 4,215 $ 3,629 $ 2,275 $ 7,844 $ 4,279 GAAP gross margin 64.8 % 64.1 % 58.8 % 64.5 % 61.6 %
Acquisition-related and other costs (A) 86 87 245 173 246 Stock-based compensation expense (B) 32 25 14 57 35 IP-related costs 4 5 17 9 17
Non-GAAP gross profit $ 4,337 $ 3,746 $ 2,551 $ 8,083 $ 4,577 Non-GAAP gross margin 66.7 % 66.2 % 66.0 % 66.4 % 65.9 %
GAAP operating expenses $ 1,771 $ 1,673 $ 1,624 $ 3,444 $ 2,652 Stock-based compensation expense (B) (433) (404) (360) (837) (563)Acquisition-related and other costs (A) (72) (80) (229) (152) (233)
Non-GAAP operating expenses $ 1,266 $ 1,189 $ 1,035 $ 2,455 $ 1,856
GAAP income from operations $ 2,444 $ 1,956 $ 651 $ 4,400 $ 1,627 Total impact of non-GAAP adjustments to incomefrom operations 627 601 865 1,228 1,094
Non-GAAP income from operations $ 3,071 $ 2,557 $ 1,516 $ 5,628 $ 2,721
GAAP other income (expense), net $ (50) $ 88 $ (42) $ 38 $ (36)(Gains) losses from non-affiliated investments — (134) 2 (133) 5 Interest expense related to amortization of debtdiscount 1 1 1 2 1
Non-GAAP other income (expense), net $ (49) $ (45) $ (39) $ (93) $ (30)
GAAP net income $ 2,374 $ 1,912 $ 622 $ 4,285 $ 1,539 Total pre-tax impact of non-GAAP adjustments 628 468 868 1,097 1,100 Income tax impact of non-GAAP adjustments (C) (127) (67) (124) (194) (153)Domestication tax benefit (252) — — (252) —
Non-GAAP net income $ 2,623 $ 2,313 $ 1,366 $ 4,936 $ 2,486
Three Months Ended Six Months EndedAugust 1, May 2, July 26, August 1, July 26,
2021 2021 2020 2021 2020Diluted net income per share (D)
GAAP $ 0.94 $ 0.76 $ 0.25 $ 1.69 $ 0.62 Non-GAAP $ 1.04 $ 0.91 $ 0.55 $ 1.95 $ 1.00
Weighted average shares used in diluted net income pershare computation (D) 2,532 2,528 2,504 2,529 2,496
GAAP net cash provided by operating activities $ 2,682 $ 1,874 $ 1,566 $ 4,556 $ 2,476 Purchases related to property and equipment andintangible assets (183) (298) (217) (481) (372)Principal payments on property and equipment (21) (19) — (40) —
Free cash flow $ 2,478 $ 1,557 $ 1,349 $ 4,035 $ 2,104
(A) Acquisition-related and other costs primarily include amortization of intangible assets, inventory step-up, transaction costs, and certaincompensation charges presented as follows:
Three Months Ended Six Months Ended August 1, May 2, July 26, August 1, July 26, 2021 2021 2020 2021 2020
Cost of revenue $ 86 $ 87 $ 245 $ 173 $ 246 Research and development $ 1 $ 1 $ 3 $ 4 $ 5 Sales, general and administrative $ 71 $ 79 $ 226 $ 148 $ 228
(B) Stock-based compensation consists of the following:Three Months Ended Six Months Ended
August 1, May 2, July 26, August 1, July 26,2021 2021 2020 2021 2020
Cost of revenue $ 32 $ 25 $ 14 $ 57 $ 35 Research and development $ 297 $ 276 $ 228 $ 573 $ 362 Sales, general and administrative $ 136 $ 128 $ 132 $ 264 $ 201
(C) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or deficiencies related to stock-basedcompensation under GAAP accounting standard (ASU 2016-09).
(D) Reflects a four-for-one stock split on July 19, 2021.
NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q3 FY2022 Outlook($ in millions)
GAAP gross margin 65.2 %Impact of stock-based compensation expense, acquisition-related costs, and other costs 1.8 %
Non-GAAP gross margin 67.0 %
GAAP operating expenses $ 1,960 Stock-based compensation expense, acquisition-related costs, and other costs (590)
Non-GAAP operating expenses $ 1,370
CFO Commentary on Second Quarter Fiscal 2022 Results
Q2 Fiscal 2022 Summary
GAAP($ in millions, except earnings pershare) Q2 FY22 Q1 FY22 Q2 FY21 Q/Q Y/YRevenue $6,507 $5,661 $3,866 Up 15% Up 68%Gross margin 64.8 % 64.1 % 58.8 % Up 70 bps Up 600 bpsOperating expenses $1,771 $1,673 $1,624 Up 6% Up 9%Operating income $2,444 $1,956 $651 Up 25% Up 275%Net income $2,374 $1,912 $622 Up 24% Up 282%Diluted earnings per share $0.94 $0.76 $0.25 Up 24% Up 276%
Non-GAAP($ in millions, except earnings pershare) Q2 FY22 Q1 FY22 Q2 FY21 Q/Q Y/YRevenue $6,507 $5,661 $3,866 Up 15% Up 68%Gross margin 66.7 % 66.2 % 66.0 % Up 50 bps Up 70 bpsOperating expenses $1,266 $1,189 $1,035 Up 6% Up 22%Operating income $3,071 $2,557 $1,516 Up 20% Up 103%Net income $2,623 $2,313 $1,366 Up 13% Up 92%Diluted earnings per share $1.04 $0.91 $0.55 Up 14% Up 89%
Revenue by Reportable Segments($ in millions) Q2 FY22 Q1 FY22 Q2 FY21 Q/Q Y/YGraphics $3,907 $3,451 $2,085 Up 13% Up 87%Compute & Networking 2,600 2,210 1,781 Up 18% Up 46%Total $6,507 $5,661 $3,866 Up 15% Up 68%
Revenue by Market Platform($ in millions) Q2 FY22 Q1 FY22 Q2 FY21 Q/Q Y/YGaming $3,061 $2,760 $1,654 Up 11% Up 85%Data Center 2,366 2,048 1,752 Up 16% Up 35%Professional Visualization 519 372 203 Up 40% Up 156%Automotive 152 154 111 Down 1% Up 37%OEM and Other 409 327 146 Up 25% Up 180%Total $6,507 $5,661 $3,866 Up 15% Up 68%
We specialize in markets where our computing platforms can provide tremendous acceleration for applications. These platformsincorporate processors, interconnects, software, algorithms, systems, and services to deliver unique value. Our platformsaddress four large markets where our expertise is critical: Gaming, Data Center, Professional Visualization, and Automotive.
On July 19, 2021, we completed a four-for-one split of our common stock in the form of a stock dividend to shareholders ofrecord as of June 21, 2021. All share and per share amounts presented herein have been retroactively adjusted to reflect thestock split.
RevenueRevenue for the second quarter was a record $6.51 billion, up 68 percent from a year earlier. Record quarterly revenue wasachieved in Gaming, Data Center, and Professional Visualization.
Gaming revenue was up 85 percent from a year ago and up 11 percent sequentially, reflecting higher sales in GeForce GPUsand game-console SOCs. We continued to benefit from strong sales of our GeForce RTX 30 Series based on the NVIDIAAmpere architecture. We have introduced Low Hash Rate (LHR) GeForce GPUs with limited Ethereum mining capability andincreased the supply of Cryptocurrency Mining Processors (CMP) in an effort to direct GeForce to gamers and CMP to miners.Over 80 percent of our Ampere architecture-based GeForce GPU shipments in the quarter were LHR GPUs. CMP is included inOEM.
Data Center revenue was up 35 percent from a year ago and up 16 percent sequentially. The year-on-year growth was led bythe ramp of NVIDIA Ampere architecture products into vertical industries and hyperscale customers, including strong growth ininference. Sequentially, growth stemmed from both compute and networking products, led by hyperscale customers.
Professional Visualization revenue was up 156 percent from a year earlier and up 40 percent sequentially, driven by the ramp ofNVIDIA Ampere architecture GPUs, with growth led by desktop workstation GPUs.
Automotive revenue was up 37 percent from a year earlier and down 1 percent sequentially. The year-on-year increase was dueto the recovery in automotive demand which was impacted by the pandemic in the prior year.
OEM and Other revenue was up 180 percent from a year ago and up 25 percent sequentially, primarily reflecting growth in CMP,which generated revenue of $266 million.
Gross Margin
Reconciliation of GAAP to Non-GAAP Gross Margin($ in millions) Q2 FY22 Q1 FY22 Q2 FY21GAAP gross profit $4,215 $3,629 $2,275GAAP gross margin 64.8 % 64.1 % 58.8 %
Acquisition-related and other costs 86 87 245Stock-based compensation expense 32 25 14IP-related costs 4 5 17Non-GAAP gross profit $4,337 $3,746 $2,551Non-GAAP gross margin 66.7 % 66.2 % 66.0 %
GAAP gross margin for the second quarter was up 600 basis points from a year earlier, primarily due to a non-recurringinventory step-up expense of $161 million related to the Mellanox acquisition in the year-ago quarter. GAAP gross margin wasup 70 basis points sequentially.
TM
Non-GAAP gross margin was up 70 basis points from a year earlier and up 50 basis points sequentially, reflecting higher ASPswithin desktop GeForce GPUs with continued growth in high-end Ampere architecture products, partially offset by a mix shiftwithin Data Center.
Expenses
Reconciliation of GAAP to Non-GAAP Operating Expenses($ in millions) Q2 FY22 Q1 FY22 Q2 FY21GAAP operating expenses $1,771 $1,673 $1,624Stock-based compensation expense (433) (404) (360)Acquisition-related and other costs (72) (80) (229)Non-GAAP operating expenses $1,266 $1,189 $1,035
GAAP operating expenses for the second quarter were up 9 percent from a year earlier and up 6 percent sequentially. Non-GAAP operating expenses were up 22 percent from a year earlier and up 6 percent sequentially. The year-on-year andsequential increases were primarily driven by compensation-related costs largely relating to employee growth. The year-on-yearincreases also reflect growth of infrastructure costs.
Operating IncomeGAAP operating income for the second quarter was a record $2.44 billion, up 275 percent from a year earlier and up 25 percentsequentially. Non-GAAP operating income was $3.07 billion, up 103 percent from a year earlier and up 20 percent sequentially.
Other Income & Expense and Income TaxGAAP other income and expense, or OI&E, includes interest income, interest expense, and other items. Non-GAAP OI&Eexcludes the portion of interest expense from the amortization of the debt discount and the gains or losses from non-affiliatedinvestments.
GAAP OI&E for the second quarter was an expense of $50 million, compared with an expense of $42 million a year earlier andincome of $88 million in the prior quarter. The sequential decrease primarily reflects a reduction of $130 million in net unrealizedgains from an equity investment. Non-GAAP OI&E was an expense of $49 million, compared with an expense of $39 million ayear earlier and an expense of $45 million in the prior quarter. The year-on-year expense increase primarily reflects higherinterest expense from our $5 billion note issuance in June 2021 and lower average yields in interest income.
On June 28, 2021, we simplified our corporate structure by repatriating the economic rights of certain non-U.S. intellectualproperty to the United States via domestication of a foreign subsidiary. The GAAP effective tax rate for the second quarter was0.9 percent, reflecting a discrete benefit from the domestication of $252 million. Additionally, the effective rate was affected bytax benefits related to foreign-derived intangible income deduction, the U.S. research tax credit, and excess tax benefits relatedto stock-based compensation. The non-GAAP effective tax rate was 13.2 percent.
Net Income and EPSGAAP net income for the second quarter was a record $2.37 billion. GAAP earnings per diluted share for the second quarterwere $0.94, up 276 percent from a year earlier and up 24 percent sequentially.
Non-GAAP net income was $2.62 billion. Non-GAAP earnings per diluted share were $1.04, up 89 percent from a year earlierand up 14 percent sequentially.
Balance Sheet and Cash FlowCash, cash equivalents and marketable securities were $19.65 billion, up from $10.98 billion a year earlier and up from $12.67billion in the prior quarter. The year-on-year and sequential increases reflect $5 billion of debt issuance proceeds and free cashflow generation.
Accounts receivable was $3.59 billion compared with $2.08 billion a year earlier and $3.02 billion in the prior quarter. DSO was50 days, up from 49 days both a year earlier and in the prior quarter.
Inventory was $2.11 billion compared with $1.40 billion a year earlier and $1.99 billion in the prior quarter. Outstanding inventorypurchase and long-term supply obligations were $4.79 billion, up from $2.04 billion a year earlier and up from $3.46 billion in theprior quarter, due to longer lead-times throughout the supply chain and long-term capacity obligations. DSI was 84 days, up from80 days a year earlier and down from 89 days in the prior quarter.
Cash flow from operating activities was a record $2.68 billion, up from $1.57 billion a year earlier and up from $1.87 billion in theprior quarter. The year-on-year increase primarily reflects higher operating income, partially offset by higher accounts receivabledue to shipment linearity. The sequential increase primarily reflects higher operating income.
Free cash flow was $2.48 billion, up from $1.35 billion a year earlier and up from $1.56 billion in the previous quarter.
Depreciation and amortization expense was $286 million, including amortization of intangible assets related to the Mellanoxacquisition. Capital expenditures including principal payments on property and equipment were $204 million.
We paid quarterly cash dividends of $100 million in the second quarter.
We are working through the regulatory process for our pending acquisition of Arm Ltd. Although some Arm licensees haveexpressed concerns or objected to the transaction, and discussions with regulators are taking longer than initially thought, weare confident in the deal and that regulators should recognize the benefits of the acquisition to Arm, its licensees, and theindustry.
Third Quarter of Fiscal 2022 OutlookOur outlook for the third quarter of fiscal 2022 is as follows:
• Revenue is expected to be $6.80 billion, plus or minus 2 percent.
• GAAP and non-GAAP gross margins are expected to be 65.2 percent and 67.0 percent, respectively, plus or minus 50basis points.
• GAAP and non-GAAP operating expenses are expected to be approximately $1.96 billion and $1.37 billion, respectively.
• GAAP and non-GAAP other income and expense are both expected to be an expense of approximately $60 million,excluding gains and losses on equity securities.
• GAAP and non-GAAP tax rates are both expected to be 11 percent, plus or minus 1 percent, excluding any discrete itemssuch as excess tax benefits or deficiencies related to stock-based compensation.
• Capital expenditures are expected to be approximately $200 million to $225 million, including principal payments onproperty and equipment.
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For further information, contact:
Simona Jankowski Robert SherbinInvestor Relations Corporate CommunicationsNVIDIA Corporation NVIDIA [email protected] [email protected]
Non-GAAP MeasuresTo supplement NVIDIA’s condensed consolidated financial statements presented in accordance with GAAP, the company usesnon-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP grossprofit, 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 forNVIDIA’s investors to be better able to compare its current results with those of previous periods, the company has shown areconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures toexclude stock-based compensation expense, acquisition-related and other costs, IP-related costs, gains and losses from non-affiliated investments, mark to market adjustments of our publicly traded equity securities, interest expense related toamortization of debt discount, the associated tax impact of these items where applicable, and domestication tax benefit. Freecash flow is calculated as GAAP net cash provided by operating activities less both purchases of property and equipment andintangible assets and principal payments on property and equipment and intangible assets. NVIDIA believes the presentation ofits 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 forthe company’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures may be differentfrom 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 forapplications in the markets in which we specialize; the impact of our introduction of Low Hash Rate GeForce GPUs with limited Ethereum mining capability; thestatus, outcome and timing of the regulatory process for the pending acquisition of Arm Ltd.; our financial outlook for the third quarter of fiscal 2022; ourexpected tax rates for the third quarter of fiscal 2022; and our expected capital expenditures for the third quarter of fiscal 2022 are forward-looking statementsthat are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results todiffer materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact oftechnological development and competition; development of new products and technologies or enhancements to our existing product and technologies; marketacceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes inindustry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factorsdetailed 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 annualreport 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 fromNVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except asrequired by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
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© 2021 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, and GeForce are trademarks and/or registered trademarks of NVIDIA Corporation inthe 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 Six Months Ended August 1, May 2, July 26, August 1, July 26, 2021 2021 2020 2021 2020
GAAP gross profit $ 4,215 $ 3,629 $ 2,275 $ 7,844 $ 4,279 GAAP gross margin 64.8 % 64.1 % 58.8 % 64.5 % 61.6 %
Acquisition-related and other costs (A) 86 87 245 173 246 Stock-based compensation expense (B) 32 25 14 57 35 IP-related costs 4 5 17 9 17
Non-GAAP gross profit $ 4,337 $ 3,746 $ 2,551 $ 8,083 $ 4,577 Non-GAAP gross margin 66.7 % 66.2 % 66.0 % 66.4 % 65.9 %
GAAP operating expenses $ 1,771 $ 1,673 $ 1,624 $ 3,444 $ 2,652 Stock-based compensation expense (B) (433) (404) (360) (837) (563)Acquisition-related and other costs (A) (72) (80) (229) (152) (233)
Non-GAAP operating expenses $ 1,266 $ 1,189 $ 1,035 $ 2,455 $ 1,856
GAAP income from operations $ 2,444 $ 1,956 $ 651 $ 4,400 $ 1,627 Total impact of non-GAAP adjustments to incomefrom operations 627 601 865 1,228 1,094
Non-GAAP income from operations $ 3,071 $ 2,557 $ 1,516 $ 5,628 $ 2,721
GAAP other income (expense), net $ (50) $ 88 $ (42) $ 38 $ (36)(Gains) losses from non-affiliated investments — (134) 2 (133) 5 Interest expense related to amortization of debtdiscount 1 1 1 2 1
Non-GAAP other income (expense), net $ (49) $ (45) $ (39) $ (93) $ (30)
GAAP net income $ 2,374 $ 1,912 $ 622 $ 4,285 $ 1,539 Total pre-tax impact of non-GAAP adjustments 628 468 868 1,097 1,100 Income tax impact of non-GAAP adjustments (C) (127) (67) (124) (194) (153)Domestication tax benefit (252) — — (252) —
Non-GAAP net income $ 2,623 $ 2,313 $ 1,366 $ 4,936 $ 2,486
Three Months Ended Six Months EndedAugust 1, May 2, July 26, August 1, July 26,
2021 2021 2020 2021 2020Diluted net income per share (D)
GAAP $ 0.94 $ 0.76 $ 0.25 $ 1.69 $ 0.62 Non-GAAP $ 1.04 $ 0.91 $ 0.55 $ 1.95 $ 1.00
Weighted average shares used in diluted net income pershare computation (D) 2,532 2,528 2,504 2529 2496
GAAP net cash provided by operating activities $ 2,682 $ 1,874 $ 1,566 $ 4,556 $ 2,476 Purchases related to property and equipment andintangible assets (183) (298) (217) (481) (372)Principal payments on property and equipment (21) (19) — (40) —
Free cash flow $ 2,478 $ 1,557 $ 1,349 $ 4,035 $ 2,104
(A) Acquisition-related and other costs primarily include amortization of intangible assets, inventory step-up, transaction costs, and certaincompensation charges presented as follows:
Three Months Ended Six Months Ended August 1, May 2, July 26, August 1, July 26, 2021 2021 2020 2021 2020
Cost of revenue $ 86 $ 87 $ 245 $ 173 $ 246 Research and development $ 1 $ 1 $ 3 $ 4 $ 5 Sales, general and administrative $ 71 $ 79 $ 226 $ 148 $ 228
(B) Stock-based compensation consists of the following:Three Months Ended Six Months Ended
August 1, May 2, July 26, August 1, July 26,2021 2021 2020 2021 2020
Cost of revenue $ 32 $ 25 $ 14 $ 57 $ 35 Research and development $ 297 $ 276 $ 228 $ 573 $ 362 Sales, general and administrative $ 136 $ 128 $ 132 $ 264 $ 201
(C) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or deficiencies related to stock-basedcompensation under GAAP accounting standard (ASU 2016-09).
(D) Reflects a four-for-one stock split on July 19, 2021.
NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q3 FY2022 Outlook($ in millions)
GAAP gross margin 65.2 %Impact of stock-based compensation expense, acquisition-related costs, and other costs 1.8 %
Non-GAAP gross margin 67.0 %
GAAP operating expenses $ 1,960 Stock-based compensation expense, acquisition-related costs, and other costs (590)
Non-GAAP operating expenses $ 1,370
