Record revenue from Datacenter, Professional Visualization, Automotive platforms

Quarterly cash dividend raised 7 percent to $0.16 per share

Company intends to return an additional $3 billion to shareholders through fiscal 2020

NVIDIA today reported revenue for the third quarter ended Oct. 28, 2018, of $3.18 billion, up 21 percent from $2.64 billion a year earlier, and up 2 percent from $3.12 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $1.97, up 48 percent from $1.33 a year ago and up 12 percent from $1.76 in the previous quarter. Non-GAAP earnings per diluted share were $1.84, up 38 percent from $1.33 a year earlier and down 5 percent from $1.94 in the previous quarter.

“AI is advancing at an incredible pace across the world, driving record revenues for our datacenter platforms,” said Jensen Huang, founder and CEO of NVIDIA. “Our introduction of Turing GPUs is a giant leap for computer graphics and AI, bringing the magic of real-time ray tracing to games and the biggest generational performance improvements we have ever delivered.

“Our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected. Our market position and growth opportunities are stronger than ever. During the quarter, we launched new platforms to extend our architecture into new growth markets – RAPIDS for machine learning, RTX Server for film rendering, and the T4 Cloud GPU for hyperscale and cloud.”

Capital Return

During the first nine months of fiscal 2019, NVIDIA returned $1.13 billion to shareholders through a combination of $855 million in share repurchases and $273 million in quarterly cash dividends.

In November 2018, the board of directors authorized an additional $7 billion under the company’s share repurchase program for a total of $7.94 billion available through the end of December 2022.

NVIDIA announced a 7 percent increase in its quarterly cash dividend to $0.16 per share from $0.15 per share, to be paid with its next quarterly cash dividend on December 21, 2018, to all shareholders of record on November 30, 2018.

NVIDIA intends to return an additional $3 billion to shareholders by the end of fiscal 2020, which may begin in the fourth quarter of fiscal 2019.

Q3 Fiscal 2019 Summary

GAAP ($ in millions except earnings per share) Q3 FY19 Q2 FY19 Q3 FY18 Q/Q Y/Y Revenue $3,181 $3,123 $2,636 Up 2% Up 21% Gross margin 60.4% 63.3% 59.5% Down 290 bps Up 90 bps Operating expenses $863 $818 $674 Up 6% Up 28% Operating income $1,058 $1,157 $895 Down 9% Up 18% Net income $1,230 $1,101 $838 Up 12% Up 47% Diluted earnings per share $1.97 $1.76 $1.33 Up 12% Up 48%

Non-GAAP ($ in millions except earnings per share) Q3 FY19 Q2 FY19 Q3 FY18 Q/Q Y/Y Revenue $3,181 $3,123 $2,636 Up 2% Up 21% Gross margin 61.0% 63.5% 59.7% Down 250 bps Up 130 bps Operating expenses $730 $692 $570 Up 5% Up 28% Operating income $1,210 $1,290 $1,005 Down 6% Up 20% Net income $1,151 $1,210 $833 Down 5% Up 38% Diluted earnings per share $1.84 $1.94 $1.33 Down 5% Up 38%

NVIDIA’s outlook for the fourth quarter of fiscal 2019 is as follows:

Revenue is expected to be $2.70 billion, plus or minus 2 percent.



GAAP and non-GAAP gross margins are expected to be 62.3 percent and 62.5 percent, respectively, plus or minus 50 basis points.



GAAP and non-GAAP operating expenses are expected to be approximately $915 million and $755 million, respectively.



GAAP and non-GAAP other income and expense are both expected to be income of approximately $21 million.



GAAP and non-GAAP tax rates are both expected to be 8 percent, plus or minus 1 percent, excluding any discrete items. GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which are expected to generate variability on a quarter by quarter basis.

Third Quarter Fiscal 2019 Highlights

Since its second quarter earnings release, NVIDIA has achieved progress in these areas:

Company-wide

Launched the revolutionary NVIDIA Turing™ GPU architecture, with new RT Cores to accelerate ray tracing and new Tensor Cores for AI inferencing.

Drew nearly 13,000 attendees to GPU Technology Conferences in Munich, Tel Aviv, Tokyo and Washington, following events in San Jose and Taipei. The company expects 30,000 total GTC attendees this year, up more than 30 percent from 2017.

Datacenter

Announced that the new TOP500 list of the world’s fastest supercomputers shows a 48 percent jump over last year in the number of systems using NVIDIA GPU accelerators, climbing to 127, including the fastest in the world, No. 1 in the U.S., No. 1 in Europe and No. 1 in Japan.

Introduced RAPIDS™, an open-source GPU-acceleration platform for data science and machine learning, with broad adoption from industry leaders including Dell EMC, Hewlett Packard Enterprise, IBM, Oracle and SAP.

Launched the NVIDIA T4 Cloud GPU and NVIDIA TensorRT™ Hyperscale Inference Platform to deliver advanced acceleration for voice, video, image and recommendation services in hyperscale datacenters. Within the first two months of its launch, the T4 received the fastest adoption of any server GPU, featuring in 57 separate designs from leading computer makers, and availability on Google Cloud Platform.

Launched the NVIDIA RTX™ Server, opening a new market to GPUs for photo-real rendering in the datacenter.

Unveiled the NVIDIA Clara™ platform, which brings AI to the next generation of medical instruments as a powerful tool for early detection, diagnosis and treatment of disease.

Gaming

Released the GeForce RTX™ series, the first gaming GPUs based on the Turing architecture and the NVIDIA RTX platform, which fuses next-generation shaders with real-time ray tracing and new AI capabilities, including Deep Learning Super-Sampling anti-aliasing.

Professional Visualization

Unveiled the Quadro RTX ™ series , which is designed to revolutionize the workflow of millions of designers and artists on the desktop.

Automotive

Announced NVIDIA’s first Level-2 autopilot design wins with Toyota, Volvo Cars and Isuzu Motors.

Announced that Continental and Veoneer, leading tier-1 suppliers, have each selected DRIVE AGX Xavier to power self-driving solutions to be offered early in the 2020s.

Announced the start of production of Xavier™, the world’s first single-chip autopilot SOC, and started shipping the NVIDIA DRIVE AGX Xavier™ developer kit.

Published NVIDIA’s Self-Driving Safety Report, detailing the company’s development processes and four fundamental pillars of safe autonomous driving.

Edge AI

Announced global availability of the NVIDIA Jetson™ AGX Xavier™ developer kit, with leading Japanese companies among the first to adopt the platform.

Announced that Yamaha Motor Co. will use NVIDIA to power its upcoming lineup of autonomous machines.

CFO Commentary

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

Conference Call and Webcast Information

NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter fiscal 2019 financial results and current financial prospects today at 2:30 p.m. Pacific time (5:30 p.m. Eastern time). To listen to the conference call, dial (877) 223-3864 in the United States or (574) 990-1377 internationally, and provide the following conference ID: 5485625. A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, https://investor.nvidia.com/home/default.aspx , and at www.streetevents.com . The webcast will be recorded and available for replay until NVIDIA’s conference call to discuss its financial results for its fourth quarter and fiscal 2019.

Non-GAAP Measures

To supplement NVIDIA’s Condensed Consolidated Statements of Income and Condensed Consolidated Balance Sheets 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), 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’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 stock-based compensation expense, legal settlement costs, acquisition-related costs, restructuring and other, contributions, gains from non-affiliated investments, interest expense related to amortization of debt discount, debt-related costs, the associated tax impact of these items, where applicable, and the tax benefit from income tax reform. Weighted average shares used in the non-GAAP diluted net income per share computation includes the anti-dilution impact of our Note Hedge. Free cash flow is calculated as GAAP net cash provided by operating activities less purchases of 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.

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NVIDIA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data) (Unaudited) Three Months Ended Nine Months Ended October 28, October 29, October 28, October 29, 2018 2017 2018 2017 Revenue $ 3,181 $ 2,636 $ 9,511 $ 6,803 Cost of revenue 1,260 1,067 3,547 2,782 Gross profit 1,921 1,569 5,964 4,021 Operating expenses Research and development 605 462 1,729 1,290 Sales, general and administrative 258 212 725 594 Total operating expenses 863 674 2,454 1,884 Income from operations 1,058 895 3,510 2,137 Interest income 37 17 94 48 Interest expense (15 ) (15 ) (44 ) (46 ) Other, net 1 (1 ) 12 (22 ) Total other income (expense) 23 1 62 (20 ) Income before income tax 1,081 896 3,572 2,117 Income tax expense (benefit) (149 ) 58 (3 ) 189 Net income $ 1,230 $ 838 $ 3,575 $ 1,928 Net income per share: Basic $ 2.02 $ 1.39 $ 5.88 $ 3.23 Diluted $ 1.97 $ 1.33 $ 5.71 $ 3.05 Weighted average shares used in per share computation: Basic 609 603 608 597 Diluted 625 628 626 633

NVIDIA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) (Unaudited) October 28, January 28, 2018 2018 ASSETS Current assets: Cash, cash equivalents and marketable securities $ 7,591 $ 7,108 Accounts receivable, net 2,219 1,265 Inventories 1,417 796 Prepaid expenses and other current assets 159 86 Total current assets 11,386 9,255 Property and equipment, net 1,292 997 Goodwill 618 618 Intangible assets, net 49 52 Other assets 312 319 Total assets $ 13,657 $ 11,241 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 902 $ 596 Accrued and other current liabilities 703 542 Convertible short-term debt 3 15 Total current liabilities 1,608 1,153 Long-term debt 1,987 1,985 Other long-term liabilities 587 632 Total liabilities 4,182 3,770 Shareholders' equity 9,475 7,471 Total liabilities and shareholders' equity $ 13,657 $ 11,241

NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In millions, except per share data) (Unaudited) Three Months Ended Nine Months Ended October 28, July 29, October 29, October 28, October 29, 2018 2018 2017 2018 2017 GAAP gross profit $ 1,921 $ 1,975 $ 1,569 $ 5,964 $ 4,021 GAAP gross margin 60.4 % 63.3 % 59.5 % 62.7 % 59.1 % Stock-based compensation expense (A) 5 8 6 21 14 Legal settlement costs 14 - - 14 - Non-GAAP gross profit $ 1,940 $ 1,983 $ 1,575 $ 5,999 $ 4,035 Non-GAAP gross margin 61.0 % 63.5 % 59.7 % 63.1 % 59.3 % GAAP operating expenses $ 863 $ 818 $ 674 $ 2,454 $ 1,884 Stock-based compensation expense (A) (135 ) (124 ) (101 ) (379 ) (251 ) Acquisition-related costs (B) (1 ) (2 ) (3 ) (5 ) (11 ) Legal settlement costs (1 ) - - (3 ) - Restructuring and other 4 - - 4 - Contributions - - - - (2 ) Non-GAAP operating expenses $ 730 $ 692 $ 570 $ 2,071 $ 1,620 GAAP income from operations $ 1,058 $ 1,157 $ 895 $ 3,510 $ 2,137 Total impact of non-GAAP adjustments to income from operations 152 133 110 418 278 Non-GAAP income from operations $ 1,210 $ 1,290 $ 1,005 $ 3,928 $ 2,415 GAAP other income (expense) $ 23 $ 23 $ 1 $ 62 $ (20 ) Gains from non-affiliated investments (C) (2 ) (2 ) - (11 ) - Interest expense related to amortization of debt discount - - - 1 3 Debt-related costs (D) - - 1 - 19 Non-GAAP other income (expense) $ 21 $ 21 $ 2 $ 52 $ 2 GAAP net income $ 1,230 $ 1,101 $ 838 $ 3,575 $ 1,928 Total pre-tax impact of non-GAAP adjustments 150 131 111 409 300 Income tax impact of non-GAAP adjustments (E) (91 ) (22 ) (116 ) (199 ) (224 ) Tax benefit from income tax reform (138 ) - - (138 ) - Non-GAAP net income $ 1,151 $ 1,210 $ 833 $ 3,647 $ 2,004 Diluted net income per share GAAP $ 1.97 $ 1.76 $ 1.33 $ 5.71 $ 3.05 Non-GAAP $ 1.84 $ 1.94 $ 1.33 $ 5.83 $ 3.20 Weighted average shares used in diluted net income per share computation GAAP 625 626 628 626 633 Anti-dilution impact from note hedge (F) - (1 ) (2 ) - (7 ) Non-GAAP 625 625 626 626 626 GAAP net cash provided by operating activities $ 487 $ 913 $ 1,157 $ 2,845 $ 2,144 Purchase of property and equipment and intangible assets (150 ) (128 ) (69 ) (397 ) (178 ) Free cash flow $ 337 $ 785 $ 1,088 $ 2,448 $ 1,966 (A) Stock-based compensation consists of the following: Three Months Ended Nine Months Ended October 28, July 29, October 29, October 28, October 29, 2018 2018 2017 2018 2017 Cost of revenue $ 5 $ 8 $ 6 $ 21 $ 14 Research and development $ 88 $ 76 $ 61 $ 237 $ 146 Sales, general and administrative $ 47 $ 48 $ 40 $ 142 $ 105 (B) Consists of amortization of acquisition-related intangible assets and compensation charges. (C) Consists of unrealized gains from non-affiliated investments. (D) Consists of loss on early debt conversions. (E) 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). (F) Represents the number of shares that would be delivered upon conversion of the currently outstanding 1.00% Convertible Senior Notes Due 2018. Under GAAP, shares delivered in hedge transactions are not considered offsetting shares in the fully diluted share calculation until actually delivered.