NVIDIA CORPORATIONd18rn0p25nwr6d.cloudfront.net/CIK-0001045810/2fb25bc2-9943-4ae… · NVIDIA...

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): February 14, 2019

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))

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 o

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. o

Item 2.02 Results of Operations and Financial Condition.

On February 14, 2019 , NVIDIA Corporation, or the Company, issued a press release announcing its results for the quarter and fiscal year endedJanuary 27, 2019 . The press 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 and fiscal year ended January 27, 2019 , or the CFOCommentary. The CFO Commentary 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 February 14, 2019, entitled "NVIDIA Announces Financial Results for Fourth Quarter and Fiscal 2019"99.2 CFO Commentary on Fourth Quarter and Fiscal 2019 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: February 14, 2019 By: /s/ Colette M. Kress Colette M. Kress Executive Vice President and Chief Financial Officer

FOR IMMEDIATE RELEASE:

NVIDIA Announces Financial Results for Fourth Quarter and Fiscal 2019• Quarterly revenue of $2.21 billion, down 24 percent from a year ago• Record full-year revenue of $11.72 billion, up 21 percent from a year ago• Record full-year revenue from Gaming, Datacenter, Professional Visualization and Automotive

SANTA CLARA, Calif.-Feb. 14, 2019 -NVIDIA (NASDAQ: NVDA) today reported revenue for the fourth quarter ended Jan. 27,2019, of $2.21 billion, down 24 percent from $2.91 billion a year earlier, and down 31 percent from $3.18 billion in the previousquarter.

GAAP earnings per diluted share for the quarter were $0.92, down 48 percent from $1.78 a year ago and down 53 percent from$1.97 in the previous quarter. Non-GAAP earnings per diluted share were $0.80, down 53 percent from $1.72 a year earlier anddown 57 percent from $1.84 in the previous quarter.

For fiscal 2019, revenue was $11.72 billion, up 21 percent from $9.71 billion a year earlier. GAAP earnings per diluted sharewere $6.63, up 38 percent from $4.82 a year earlier. Non-GAAP earnings per diluted share were $6.64, up 35 percent from$4.92 a year earlier.

“This was a turbulent close to what had been a great year,” said Jensen Huang, founder and CEO of NVIDIA. “The combinationof post-crypto excess channel inventory and recent deteriorating end-market conditions drove a disappointing quarter.

“Despite this setback, NVIDIA’s fundamental position and the markets we serve are strong. The accelerated computing platformwe pioneered is central to some of world’s most important and fastest growing industries - from artificial intelligence toautonomous vehicles to robotics. We fully expect to return to sustained growth,” he said.

Capital ReturnIn fiscal 2019, NVIDIA returned $1.95 billion to shareholders through a combination of $1.58 billion in share repurchases and$371 million in quarterly cash dividends.

Of the $3.00 billion NVIDIA intends to return to shareholders by the end of fiscal 2020, $700 million in share repurchases werecompleted in the fourth quarter of fiscal 2019. The company intends to return the remaining $2.30 billion by the end of fiscal2020, through a combination of share repurchases and cash dividends.

NVIDIA will pay its next quarterly cash dividend of $0.16 per share on March 22, 2019, to all shareholders of record on March 1,2019.

Q4 Fiscal 2019 Summary

GAAP($ in millions except earnings pershare) Q4 FY19 Q3 FY19 Q4 FY18 Q/Q Y/Y

Revenue $2,205 $3,181 $2,911 Down 31% Down 24%Gross margin 54.7% 60.4% 61.9% Down 570 bps Down 720 bpsOperating expenses $913 $863 $728 Up 6% Up 25%Operating income $294 $1,058 $1,073 Down 72% Down 73%Net income $567 $1,230 $1,118 Down 54% Down 49%Diluted earnings per share $0.92 $1.97 $1.78 Down 53% Down 48%

Non-GAAP($ in millions except earnings pershare) Q4 FY19 Q3 FY19 Q4 FY18 Q/Q Y/Y


Fiscal 2019 Summary

GAAP($ in millions except earnings per share) FY19 FY18 Y/YRevenue $11,716 $9,714 Up 21%Gross margin 61.2% 59.9% Up 130 bpsOperating expenses $3,367 $2,612 Up 29%Operating income $3,804 $3,210 Up 19%Net income $4,141 $3,047 Up 36%Diluted earnings per share $6.63 $4.82 Up 38%

Non-GAAP($ in millions except earnings per share) FY19 FY18 Y/YRevenue $11,716 $9,714 Up 21%Gross margin 61.7% 60.2% Up 150 bpsOperating expenses $2,826 $2,227 Up 27%Operating income $4,407 $3,617 Up 22%Net income $4,143 $3,085 Up 34%Diluted earnings per share $6.64 $4.92 Up 35%

NVIDIA’s outlook for the first quarter of fiscal 2020 is as follows:

• Revenue is expected to be $2.20 billion, plus or minus 2 percent.

• GAAP and non-GAAP gross margins are expected to be 58.8 percent and 59.0 percent, respectively, plus or minus 50basis points.

• GAAP and non-GAAP operating expenses are expected to be approximately $930 million and $755 million, respectively.

• GAAP and non-GAAP other income and expense are both expected to be income of approximately $20 million.

• GAAP and non-GAAP tax rates are both expected to be 10 percent, plus or minus 1 percent, excluding any discreteitems. GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which areexpected to generate variability on a quarter by quarter basis.

For fiscal 2020, revenue is expected to be flat to down slightly.

Latest HighlightsSince the end of the third quarter, NVIDIA has achieved progress in these areas:

Datacenter• Announced that the NVIDIA® T4 GPU launched in public beta on Google Cloud Platform, with availability in the U.S.,

Europe, Brazil, India, Japan, and Singapore.

• Set six records in AI performance with the release of MLPerf, the industry’s first objective set of AI benchmarks.

• Announced with Google the integration of NVIDIA’s RAPIDS™ GPU-accelerated data science libraries with KubeflowPipelines, a Kubernetes-based platform for deploying and managing machine learning workloads in hyperscaledatacenters.

Gaming• Launched the GeForce RTX™ 2060 GPU, putting exceptional performance and graphics enhanced by ray tracing and AI

within reach of tens of millions of gamers.

• Unveiled a record 40+ new gaming laptops in over 100 configurations powered by NVIDIA GeForce RTX GPUs.

• Expanded its G-SYNC™ ecosystem with G-SYNC-compatible monitors, tested and driver-optimized by NVIDIA.

• Announced that Battlefield V, the first real-time ray tracing game, will add DLSS AI super-sampling technology; that thehighly anticipated game Anthem will integrate DLSS; and that Justice, one of China’s most popular MMO games, will addray tracing and DLSS.

Professional Visualization• Introduced Quadro RTX™ 4000, bringing real-time ray tracing to millions of midrange workstation users.

• Announced the NVIDIA CUDA®-accelerated REDCODE RAW decode SDK, in collaboration with RED Digital Cinema,enabling developers and studios to edit 8K video in real time without the need for additional video processors.

Automotive• Introduced NVIDIA DRIVE™ AutoPilot, the world’s first commercially available Level 2+ automated driving system, with

Tier 1 suppliers Continental and ZF announcing the availability of Level 2+ solutions based on NVIDIA DRIVE in 2020.

• Announced with Mercedes-Benz that it will create a centralized computing architecture for the automaker’s next-generation vehicles, enabling them to be software-defined AI cars.

Edge Computing• Launched the NVIDIA Jetson AGX Xavier™, a palm-sized module delivering 32 TOPS to help build the next generation

of autonomous machines.

• Opened its AI and Robotics Research Lab in Seattle.

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

Conference Call and Webcast InformationNVIDIA will conduct a conference call with analysts and investors to discuss its fourth quarter and fiscal 2019 financial resultsand current financial prospects today at 2:30 p.m. Pacific time (5:30 p.m. Eastern time). A live webcast (listen-only mode) of theconference call will be accessible at NVIDIA’s investor relations website, http://investor.nvidia.com. The webcast will be recordedand available for replay until NVIDIA’s conference call to discuss its financial results for its first quarter of fiscal 2020.

Non-GAAP MeasuresTo supplement NVIDIA’s Condensed Consolidated Statements of Income and Condensed Consolidated Balance Sheetspresented 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), non-GAAP income tax expense, non-GAAP net income,non-GAAP net income, or earnings, per diluted share, non-GAAP diluted shares, and free cash flow. In order 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, legal settlement costs, acquisition-related and other costs, gains from non-affiliated investments,interest expense related to amortization of debt discount, debt-related costs, the associated tax impact of these items, whereapplicable, and the tax benefit from income tax reform. Weighted average shares used in the non-GAAP diluted net income pershare computation includes the anti-dilution impact of our Note Hedge. Free cash flow is calculated as GAAP net cash providedby operating activities less purchases of property and equipment and intangible assets. NVIDIA believes the presentation of itsnon-GAAP financial measures enhances the user’s overall understanding of the company’s historical financial performance. Thepresentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as a substitute for thecompany’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures may be different fromnon-GAAP measures used by other companies.

About NVIDIANVIDIA’s (NASDAQ: NVDA) invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined moderncomputer graphics and revolutionized parallel computing. More recently, GPU deep learning ignited modern AI - the next era ofcomputing - with the GPU acting as the brain of computers, robots and self-driving cars that can perceive and understand theworld. More information at http://nvidianews.nvidia.com/.

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For further information, contact:

Simona Jankowski Hector MarinezInvestor Relations Corporate CommunicationsNVIDIA Corporation NVIDIA [email protected] [email protected]

Certain statements in this press release including, but not limited to, statements as to: the turbulent close to our year and the causes of a disappointing quarter,including post-crypto excess channel inventory and recent deteriorating end-market conditions; NVIDIA’s fundamental position and the markets we serve beingstrong; NVIDIA’s accelerated computing platform being central to some of the world’s most important and fastest-growing industries; our expectation to return tosustained growth; NVIDIA’s intended capital return through the end of fiscal 2020; NVIDIA’s next quarterly cash dividend; NVIDIA’s financial outlook for the firstquarter of fiscal 2020; NVIDIA’s financial outlook for fiscal 2020; NVIDIA’s expected tax rates for the first quarter of fiscal 2020; our expectation to generatevariability from excess tax benefits or deficiencies related to stock-based compensation; the launch and availability of NVIDIA T4 GPUs; GeForce RTX 2060giving tens of millions of gamers performance and graphics enhanced by ray tracing and AI; the number of laptops and configurations powered by GeForce RTXGPUs; the expansion of the G-SYNC ecosystem; Battlefield V, Anthem and Justice integrating DLSS; Quadro RTX 4000 bringing real-time ray tracing to millionsof midrange workstation users; the performance, benefits and abilities of RAPIDS, GeForce RTX 2060, NVIDIA CUDA-accelerated REDCODE RAW decodeSDK, NVIDIA Jetson AGX Xavier and NVIDIA DRIVE AutoPilot; the availability of Level 2+ solutions based on NVIDIA DRIVE from Tier 1 suppliers; and ourwork with Mercedes-Benz to create a centralized computing architecture for its vehicles are forward-looking statements that are subject to risks and uncertaintiesthat could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: global economicconditions; 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; unexpectedloss 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 reportsNVIDIA 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 Form10-Q. Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge. These forward-lookingstatements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation toupdate these forward-looking statements to reflect future events or circumstances.

© 2019 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Quadro, CUDA, GeForce RTX, G-SYNC, Jetson AGX Xavier, NVIDIADRIVE, Quadro RTX and RAPIDS are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company andproduct names may be trademarks of the respective companies with which they are associated. Features, pricing, availability, and specifications are subject tochange without notice.

NVIDIA CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)(Unaudited)

Three Months Ended Twelve Months Ended January 27, January 28, January 27, January 28, 2019 2018 2019 2018

Revenue $ 2,205 $ 2,911 $ 11,716 $ 9,714Cost of revenue 998 1,110 4,545 3,892Gross profit 1,207 1,801 7,171 5,822Operating expenses

Research and development 647 508 2,376 1,797Sales, general and administrative 266 220 991 815

Total operating expenses 913 728 3,367 2,612Income from operations 294 1,073 3,804 3,210

Interest income 42 20 136 69Interest expense (14) (15) (58) (61)Other, net 2 — 14 (22)Total other income (expense) 30 5 92 (14)

Income before income tax 324 1,078 3,896 3,196Income tax expense (benefit) (243) (40) (245) 149Net income $ 567 $ 1,118 $ 4,141 $ 3,047

Net income per share:

Basic $ 0.93 $ 1.84 $ 6.81 $ 5.09

Diluted $ 0.92 $ 1.78 $ 6.63 $ 4.82

Weighted average shares used in per sharecomputation:

Basic 609 606 608 599Diluted 619 628 625 632

NVIDIA CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)(Unaudited)

January 27, January 28, 2019 2018ASSETS

Current assets:

Cash, cash equivalents and marketable securities $ 7,422 $ 7,108 Accounts receivable, net 1,424 1,265 Inventories 1,575 796 Prepaid expenses and other current assets 136 86 Total current assets 10,557 9,255

Property and equipment, net 1,404 997Goodwill 618 618Intangible assets, net 45 52Other assets 668 319 Total assets $ 13,292 $ 11,241

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 511 $ 596 Accrued and other current liabilities 818 542 Convertible short-term debt — 15 Total current liabilities 1,329 1,153

Long-term debt 1,988 1,985Other long-term liabilities 633 632 Total liabilities 3,950 3,770

Shareholders' equity 9,342 7,471 Total liabilities and shareholders' equity $ 13,292 $ 11,241

NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except per share data) (Unaudited)

Three Months Ended Twelve Months Ended January 27, October 28, January 28, January 27, January 28, 2019 2018 2018 2019 2018 GAAP gross profit $ 1,207 $ 1,921 $ 1,801 $ 7,171 $ 5,822

GAAP gross margin 54.7% 60.4% 61.9% 61.2% 59.9%Stock-based compensation expense (A) 6 5 7 27 21Legal settlement costs 21 14 1 35 1

Non-GAAP gross profit $ 1,234 $ 1,940 $ 1,809 $ 7,233 $ 5,844Non-GAAP gross margin 56.0% 61.0% 62.1% 61.7% 60.2%

GAAP operating expenses $ 913 $ 863 $ 728 $ 3,367 $ 2,612Stock-based compensation expense (A) (150) (135) (119) (530) (370)Acquisition-related and other costs (1) 3 (2) (2) (15)Legal settlement costs (7) (1) — (9) —

Non-GAAP operating expenses $ 755 $ 730 $ 607 $ 2,826 $ 2,227

GAAP income from operations $ 294 $ 1,058 $ 1,073 $ 3,804 $ 3,210Total impact of non-GAAP adjustments toincome from operations 185 152 129 603 407

Non-GAAP income from operations $ 479 $ 1,210 $ 1,202 $ 4,407 $ 3,617

GAAP other income (expense) $ 30 $ 23 $ 5 $ 92 $ (14)Gains from non-affiliated investments (1) (2) (2) (12) (2)Interest expense related to amortization ofdebt discount — — — 2 3Debt-related costs — — 2 — 20

Non-GAAP other income (expense) $ 29 $ 21 $ 5 $ 82 $ 7

GAAP net income $ 567 $ 1,230 $ 1,118 $ 4,141 $ 3,047Total pre-tax impact of non-GAAPadjustments 184 150 129 593 428Income tax impact of non-GAAP adjustments(B) (25) (91) (33) (223) (257)Tax benefit from income tax reform (230) (138) (133) (368) (133)

Non-GAAP net income $ 496 $ 1,151 $ 1,081 $ 4,143 $ 3,085

Three Months Ended Twelve Months Ended January 27, October 28, January 28, January 27, January 28, 2019 2018 2018 2019 2018Diluted net income per share

GAAP $ 0.92 $ 1.97 $ 1.78 $ 6.63 $ 4.82Non-GAAP $ 0.80 $ 1.84 $ 1.72 $ 6.64 $ 4.92

Weighted average shares used in diluted netincome per share computation

GAAP 619 625 628 625 632Anti-dilution impact from note hedge — — (1) (1) (5)Non-GAAP 619 625 627 624 627

GAAP net cash provided by operating activities $ 898 $ 487 $ 1,358 $ 3,743 $ 3,502Purchase of property and equipment andintangible assets (203) (150) (416) (600) (593)

Free cash flow $ 695 $ 337 $ 942 $ 3,143 $ 2,909

(A) Stock-based compensation consists of the following: Three Months Ended Twelve Months Ended January 27, October 28, January 28, January 27, January 28, 2019 2018 2018 2019 2018

Cost of revenue $ 6 $ 5 $ 7 $ 27 $ 21Research and development $ 99 $ 88 $ 73 $ 336 $ 219Sales, general and administrative $ 51 $ 47 $ 46 $ 194 $ 151

(B) 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).

NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK

Q1 FY2020 Outlook GAAP gross margin 58.8% Impact of stock-based compensation expense 0.2% Non-GAAP gross margin 59.0%

Q1 FY2020 Outlook (In millions)GAAP operating expenses $ 930 Stock-based compensation expense, acquisition-related costs, and other costs (175)Non-GAAP operating expenses $ 755

CFO Commentary on Fourth Quarter and Fiscal 2019 Results

Q4 Fiscal 2019 Summary

GAAP($ in millions except earnings pershare) Q4 FY19 Q3 FY19 Q4 FY18 Q/Q Y/Y


Non-GAAP($ in millions except earnings pershare) Q4 FY19 Q3 FY19 Q4 FY18 Q/Q Y/Y


Revenue by Reportable Segments($ in millions) Q4 FY19 Q3 FY19 Q4 FY18 Q/Q Y/YGPU Business $1,980 $2,774 $2,461 Down 29% Down 20%Tegra Processor Business 225 407 450 Down 45% Down 50%Total $2,205 $3,181 $2,911 Down 31% Down 24%

Revenue by Market Platform($ in millions) Q4 FY19 Q3 FY19 Q4 FY18 Q/Q Y/YGaming $954 $1,764 $1,739 Down 46% Down 45%Professional Visualization 293 305 254 Down 4% Up 15%Datacenter 679 792 606 Down 14% Up 12%Automotive 163 172 132 Down 5% Up 23%OEM and IP 116 148 180 Down 22% Down 36%Total $2,205 $3,181 $2,911 Down 31% Down 24%

Fiscal 2019 Summary

GAAP($ in millions except earnings per share) FY19 FY18 Y/YRevenue $11,716 $9,714 Up 21%Gross margin 61.2% 59.9% Up 130 bpsOperating expenses $3,367 $2,612 Up 29%Operating income $3,804 $3,210 Up 19%Net income $4,141 $3,047 Up 36%Diluted earnings per share $6.63 $4.82 Up 38%

Non-GAAP($ in millions except earnings per share) FY19 FY18 Y/YRevenue $11,716 $9,714 Up 21%Gross margin 61.7% 60.2% Up 150 bpsOperating expenses $2,826 $2,227 Up 27%Operating income $4,407 $3,617 Up 22%Net income $4,143 $3,085 Up 34%Diluted earnings per share $6.64 $4.92 Up 35%

Revenue by Reportable Segments($ in millions) FY19 FY18 Y/YGPU $10,175 $8,137 Up 25%Tegra Processor 1,541 1,534 FlatOther -- 43 Down 100%Total $11,716 $9,714 Up 21%

Revenue by Market Platform($ in millions) FY19 FY18 Y/YGaming $6,246 $5,513 Up 13%Professional Visualization 1,130 934 Up 21%Datacenter 2,932 1,932 Up 52%Automotive 641 558 Up 15%OEM and IP 767 777 Down 1%Total $11,716 $9,714 Up 21%

RevenueRevenue was $2.21 billion, down 24 percent year over year and down 31 percent sequentially, driven primarily by a decline inGaming. Full-year revenue was up 21 percent, reflecting growth in each of our market platforms - Gaming, ProfessionalVisualization, Datacenter, and Automotive.

GPU business revenue was $1.98 billion, down 20 percent from a year earlier and down 29 percent sequentially, primarilyreflecting declines in gaming GPUs.

Tegra Processor business revenue - which includes Automotive, SOC modules for gaming platforms, and embedded edge AIplatforms - was $225 million, down 50 percent from a year ago and down 45 percent sequentially, primarily reflecting a decline inshipments of SOC modules for gaming platforms.

Gaming revenue was $954 million, down 45 percent from a year ago and down 46 percent sequentially, driven by weakness ingaming GPUs and a decline in shipments of SOC modules for gaming platforms.

Professional Visualization revenue was $293 million, up 15 percent from a year earlier and down 4 percent sequentially. Theyear-on-year increase reflects strength across both desktop and mobile workstation products.

Datacenter revenue was $679 million, up 12 percent from a year ago and down 14 percent sequentially. The year-on-yearincrease primarily reflects growth in sales of Volta architecture products, including NVIDIA Tesla V100 and DGX systems. Thesequential decline reflects a broad-based slowdown across our customers.

Automotive revenue was $163 million, up 23 percent from a year earlier and down 5 percent sequentially. The year-on-yearincrease reflects growth in infotainment modules, production DRIVE platforms, and development agreements with automotivecompanies.

OEM and IP revenue was $116 million, down 36 percent from a year ago and down 22 percent sequentially. The year-on-yeardecrease is primarily due to the absence of crypto-currency mining GPU sales. The sequential decrease reflects a decline inshipments of legacy notebook products.

Fiscal 2019 revenue grew 21 percent to $11.72 billion, reflecting broad-based growth and records in each of our marketplatforms -- Gaming, Professional Visualization, Datacenter, and Automotive. GPU business revenue was $10.17 billion, up 25percent from a year earlier, and Tegra business revenue was $1.54 billion, up slightly from a year ago.

Gross MarginGAAP gross margin for the fourth quarter was 54.7 percent and non-GAAP gross margin was 56.0 percent. Gross marginsdecreased year-on-year and sequentially, reflecting the impact of approximately $128 million in charges for excess DRAM,boards, and other components associated with our lower-than-expected fourth quarter revenue and current market conditions.

For fiscal 2019, GAAP gross margin was 61.2 percent and non-GAAP gross margin was 61.7 percent. Gross margins increasedover fiscal 2018, reflecting our continued shift toward higher-value platforms, which more than offset the impact of the chargeswe recorded in the second half of the year.

ExpensesGAAP operating expenses for the fourth quarter were $913 million, including $158 million in stock-based compensation andother charges, up 25 percent from a year earlier and up 6 percent sequentially. Non-GAAP operating expenses were $755million, up 24 percent from a year earlier and up 3 percent sequentially.

For fiscal 2019, GAAP operating expenses were $3.37 billion, including $541 million in stock-based compensation and othercharges, and up 29 percent from fiscal 2018. Non-GAAP operating expenses were $2.83 billion, up 27 percent from fiscal 2018.These primarily reflect employee additions and increases in employee compensation and other related costs, includinginfrastructure costs.

Operating IncomeGAAP operating income was $294 million in the fourth quarter, down 73 percent from a year earlier and down 72 percentsequentially. Non-GAAP operating income was $479 million in the fourth quarter, down 60 percent from a year earlier andsequentially. For fiscal 2019, GAAP operating income was a record $3.80 billion and non-GAAP operating income was $4.41billion.

Other Income & Expense and Income Tax

GAAP($ in millions) Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18Interest income $42 $37 $20 $136 $69Interest expense (14) (15) (15) (58) (61)Other, net 2 1 -- 14 (22)Total $30 $23 $5 $92 $(14)

Non-GAAP($ in millions) Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18Interest income $42 $37 $20 $136 $69Interest expense (14) (15) (15) (56) (58)Other, net 1 (1) -- 2 (4)Total $29 $21 $5 $82 $7

Other income and expense, or OI&E, includes interest earned on cash and investments, interest expense associated withcorporate bonds, and other gains and losses. GAAP OI&E includes interest expense associated with corporate bonds, interestincome from our investment portfolio, and gains or losses from investments. Non-GAAP OI&E excludes the portion of interestexpense from the amortization of the debt discount and the gains or losses from certain investments.

Our fourth-quarter GAAP effective tax rate was a benefit of 75 percent, which includes $230 million of U.S. tax reform benefit, aswell as excess tax benefits related to stock-based compensation.

Our fourth-quarter non-GAAP effective tax rate was 2 percent, which excludes the U.S. tax reform benefit and excess taxbenefits related to stock-based compensation.

For fiscal 2019, our GAAP effective tax rate was a benefit of 6 percent, reflecting a U.S. tax reform benefit of $368 million andexcess tax benefits related to stock-based compensation. Our non-GAAP effective tax rate was 8 percent.

Net Income and EPSFourth-quarter GAAP net income was $567 million and earnings per diluted share were $0.92, down 49 percent and 48 percent,respectively, from a year earlier. Non-GAAP net income was $496 million and earnings per diluted share were $0.80, down 54percent and 53 percent, respectively, from a year earlier, due to lower revenue and gross margin.

For fiscal 2019, GAAP net income was a record $4.14 billion and earnings per diluted share were $6.63, up 36 percent and 38percent, respectively, from a year ago. Non-GAAP net income was $4.14 billion and earnings per diluted share were $6.64, up34 percent and 35 percent, respectively, from a year ago.

Capital Return

Capital Return(in millions) FY13 FY14 FY15 FY16 FY17 FY18 FY19

Dividends $47 $181 $186 $213 $261 $341 $371Share repurchases:

$ $100 $887 $814 $587 $739 $909 $1,578 Shares 8 62 44 25 15 6 9

In fiscal 2019, we returned $1.95 billion to shareholders through a combination of $1.58 billion in share repurchases and $371million in quarterly cash dividends.

Of the $3.00 billion we intend to return to shareholders by the end of fiscal 2020, we returned $700 million through sharerepurchases during the fourth quarter of fiscal 2019. We intend to return the remaining $2.30 billion to shareholders by the end offiscal 2020, through a combination of share repurchases and cash dividends.

Since the restart of our capital return program in the fourth quarter of fiscal 2013, we have returned $10.64 billion toshareholders. This return represents 68 percent of our cumulative free cash flow for fiscal 2013 through fiscal 2019.

Balance Sheet and Cash FlowCash, cash equivalents and marketable securities at the end of the fourth quarter were $7.42 billion, down from $7.59 billion inthe prior quarter. This decrease was primarily related to stock repurchases, dividends and taxes paid related to restricted stockunits, partially offset by operating income and changes in working capital.

Accounts receivable at the end of the quarter was $1.42 billion compared with $2.22 billion in the prior quarter and $1.27 billion ayear earlier. DSO at quarter-end was 59 days, down from 63 days in the prior quarter and up from 40 days a year earlier.

Inventory at the end of the quarter was $1.57 billion, up from $1.42 billion in the prior quarter and up from $796 million a yearearlier. Outstanding inventory purchase obligations at the end of the quarter were $912 million, down from $1.56 billion in theprior quarter. DSI at quarter-end was 143 days, up from 102 days in the prior quarter and up from 65 days a year earlier.

Cash flow from operating activities was $898 million in the fourth quarter, up from $487 million in the prior quarter and down from$1.36 billion a year earlier, reflecting changes in net income and working capital. Cash flow from operating activities in fiscal2019 was $3.74 billion, up from $3.50 billion a year ago, reflecting an increase in full year net income, partially offset by changesin working capital.

Free cash flow was $695 million in the fourth quarter, compared with $337 million in the previous quarter and $942 million a yearearlier. For fiscal 2019, free cash flow was $3.14 billion, up from $2.91 billion a year ago.

Depreciation and amortization expense amounted to $78 million for the fourth quarter and $262 million for fiscal 2019. Capitalexpenditures were $203 million for the fourth quarter and $600 million for fiscal 2019.

First Quarter of Fiscal 2020 OutlookOur outlook for the first quarter of fiscal 2020 is as follows:

• Revenue is expected to be $2.20 billion, plus or minus two percent.

• GAAP and non-GAAP gross margins are expected to be 58.8 percent and 59.0 percent, respectively, plus or minus 50basis points.

• GAAP and non-GAAP operating expenses are expected to be approximately $930 million and $755 million, respectively.The sequential change in GAAP operating expenses reflects an increase in stock-based compensation.

• GAAP and non-GAAP other income and expense are both expected to be income of approximately $20 million.

• GAAP and non-GAAP tax rates are both expected to be 10 percent, plus or minus one percent, excluding any discreteitems. GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which areexpected to generate variability on a quarter by quarter basis.

• Capital expenditures are expected to be approximately $150 million to $170 million.

For fiscal 2020, revenue is expected to be flat to down slightly.

______________

For further information, contact:

Simona Jankowski Hector MarinezInvestor Relations Corporate CommunicationsNVIDIA Corporation NVIDIA [email protected] [email protected]

Non-GAAP MeasuresTo supplement NVIDIA’s Condensed Consolidated Statements of Income and Condensed Consolidated Balance Sheetspresented 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), non-GAAP income tax expense, non-GAAP net income,non-GAAP net income, or earnings, per diluted share, non-GAAP diluted shares, and free cash flow. In order 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, legal settlement costs, acquisition-related and other costs, gains from non-affiliated investments,interest expense related to amortization of debt discount, debt-related costs, the associated tax impact of these items, whereapplicable, and the tax benefit from income tax reform. Weighted average shares used in the non-GAAP diluted net income pershare computation includes the anti-dilution impact of our Note Hedge. Free cash flow is calculated as GAAP net cash providedby operating activities less purchases of property and equipment and intangible assets. NVIDIA believes the presentation of itsnon-GAAP financial measures enhances the user's overall understanding of the company’s historical financial performance. Thepresentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as a substitute for thecompany’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures may be different fromnon-GAAP measures used by other companies.

Certain statements in this CFO Commentary including, but not limited to, statements as to: our intended capital return by the end of fiscal 2020; our financialoutlook for the first quarter of fiscal 2020; the change in our operating expenses reflecting an increase in stock-based compensation; our expected tax rates forthe first quarter of fiscal 2020; NVIDIA’s financial outlook for fiscal 2020; variability from excess tax benefits or deficiencies related to stock-based compensation;and our expected capital expenditures for the first quarter of fiscal 2020 are forward-looking statements that are subject to risks and uncertainties that couldcause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: global economicconditions; 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; unexpectedloss 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 reportsNVIDIA 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 Form10-Q. Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge. These forward-lookingstatements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation toupdate these forward-looking statements to reflect future events or circumstances.

# # #

© 2019 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Tegra, Tesla, NVIDIA DGX and NVIDIA DRIVE are trademarks and/orregistered trademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respectivecompanies 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 Twelve Months Ended January 27, October 28, January 28, January 27, January 28, 2019 2018 2018 2019 2018 GAAP gross profit $ 1,207 $ 1,921 $ 1,801 $ 7,171 $ 5,822

GAAP gross margin 54.7% 60.4% 61.9% 61.2% 59.9%Stock-based compensation expense (A) 6 5 7 27 21Legal settlement costs 21 14 1 35 1

Non-GAAP gross profit $ 1,234 $ 1,940 $ 1,809 $ 7,233 $ 5,844Non-GAAP gross margin 56.0% 61.0% 62.1% 61.7% 60.2%

GAAP operating expenses $ 913 $ 863 $ 728 $ 3,367 $ 2,612Stock-based compensation expense (A) (150) (135) (119) (530) (370)Acquisition-related and other costs (1) 3 (2) (2) (15)Legal settlement costs (7) (1) — (9) —

Non-GAAP operating expenses $ 755 $ 730 $ 607 $ 2,826 $ 2,227

GAAP income from operations $ 294 $ 1,058 $ 1,073 $ 3,804 $ 3,210Total impact of non-GAAP adjustments toincome from operations 185 152 129 603 407

Non-GAAP income from operations $ 479 $ 1,210 $ 1,202 $ 4,407 $ 3,617

GAAP other income (expense) $ 30 $ 23 $ 5 $ 92 $ (14)Gains from non-affiliated investments (1) (2) (2) (12) (2)Interest expense related to amortization ofdebt discount — — — 2 3Debt-related costs — — 2 — 20

Non-GAAP other income (expense) $ 29 $ 21 $ 5 $ 82 $ 7

GAAP net income $ 567 $ 1,230 $ 1,118 $ 4,141 $ 3,047Total pre-tax impact of non-GAAPadjustments 184 150 129 593 428Income tax impact of non-GAAPadjustments (B) (25) (91) (33) (223) (257)Tax benefit from income tax reform (230) (138) (133) (368) (133)

Non-GAAP net income $ 496 $ 1,151 $ 1,081 $ 4,143 $ 3,085

Three Months Ended Twelve Months Ended January 27, October 28, January 28, January 27, January 28, 2019 2018 2018 2019 2018Diluted net income per share

GAAP $ 0.92 $ 1.97 $ 1.78 $ 6.63 $ 4.82Non-GAAP $ 0.80 $ 1.84 $ 1.72 $ 6.64 $ 4.92

Weighted average shares used in diluted netincome per share computation

GAAP 619 625 628 625 632Anti-dilution impact from note hedge — — (1) (1) (5)Non-GAAP 619 625 627 624 627

GAAP net cash provided by operating activities $ 898 $ 487 $ 1,358 $ 3,743 $ 3,502Purchase of property and equipment andintangible assets (203) (150) (416) (600) (593)

Free cash flow $ 695 $ 337 $ 942 $ 3,143 $ 2,909

(A) Stock-based compensation consists of the following: Three Months Ended Twelve Months Ended January 27, October 28, January 28, January 27, January 28, 2019 2018 2018 2019 2018

Cost of revenue $ 6 $ 5 $ 7 $ 27 $ 21Research and development $ 99 $ 88 $ 73 $ 336 $ 219Sales, general and administrative $ 51 $ 47 $ 46 $ 194 $ 151

(B) 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).

NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK

Q1 FY2020 Outlook GAAP gross margin 58.8% Impact of stock-based compensation expense 0.2% Non-GAAP gross margin 59.0%

Q1 FY2020 Outlook (In millions)GAAP operating expenses $ 930 Stock-based compensation expense, acquisition-related costs, and other costs (175)Non-GAAP operating expenses $ 755

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