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

NVIDIA 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 previous quarter.

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 and down 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 share were $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 combination of 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 platform we pioneered is central to some of the world’s most important and fastest growing industries – from artificial intelligence to autonomous vehicles to robotics. We fully expect to return to sustained growth,” he said.

Capital Return

In 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 were completed in the fourth quarter of fiscal 2019. The company intends to return the remaining $2.30 billion by the end of fiscal 2020, 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 per share) 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 bps Operating 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 per share) Q4 FY19 Q3 FY19 Q4 FY18 Q/Q Y/Y Revenue $2,205 $3,181 $2,911 Down 31% Down 24% Gross margin 56.0% 61.0% 62.1% Down 500 bps Down 610 bps Operating expenses $755 $730 $607 Up 3% Up 24% Operating income $479 $1,210 $1,202 Down 60% Down 60% Net income $496 $1,151 $1,081 Down 57% Down 54% Diluted earnings per share $0.80 $1.84 $1.72 Down 57% Down 53%

Fiscal 2019 Summary

GAAP ($ in millions except earnings per share) FY19 FY18 Y/Y Revenue $11,716 $9,714 Up 21% Gross margin 61.2% 59.9% Up 130 bps Operating 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/Y Revenue $11,716 $9,714 Up 21% Gross margin 61.7% 60.2% Up 150 bps Operating 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 50 basis 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 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.

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

Latest Highlights

Since 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 Kubeflow Pipelines, a Kubernetes-based platform for deploying and managing machine learning workloads in hyperscale datacenters.

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.

, 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 the highly anticipated game Anthem will integrate DLSS; and that Justice, one of China’s most popular MMO games, will add ray 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 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 fourth quarter and fiscal 2019 financial results and current financial prospects today at 2:30 p.m. Pacific time (5:30 p.m. Eastern time). 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 . The webcast will be recorded and available for replay until NVIDIA’s conference call to discuss its financial results for its first quarter of fiscal 2020.

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 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, 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.

NVIDIA CORPORATION CONDENSED 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 $ 9,714 Cost of revenue 998 1,110 4,545 3,892 Gross profit 1,207 1,801 7,171 5,822 Operating expenses Research and development 647 508 2,376 1,797 Sales, general and administrative 266 220 991 815 Total operating expenses 913 728 3,367 2,612 Income from operations 294 1,073 3,804 3,210 Interest income 42 20 136 69 Interest 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 3,196 Income tax expense (benefit) (243 ) (40 ) (245 ) 149 Net 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 share computation: Basic 609 606 608 599 Diluted 619 628 625 632

NVIDIA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) (Unaudited) January 27, January 28, 2019 2018 ASSETS 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 1,404 997 Goodwill 618 618 Intangible assets, net 45 52 Other 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 1,985 Other 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 21 Legal settlement costs 21 14 1 35 1 Non-GAAP gross profit $ 1,234 $ 1,940 $ 1,809 $ 7,233 $ 5,844 Non-GAAP gross margin 56.0 % 61.0 % 62.1 % 61.7 % 60.2 % GAAP operating expenses $ 913 $ 863 $ 728 $ 3,367 $ 2,612 Stock-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 $ 3,210 Total impact of non-GAAP adjustments to income 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 of debt discount - - - 2 3 Debt-related costs - - 2 - 20 Non-GAAP other income (expense) $ 29 $ 21 $ 5 $ 82 $ 7 GAAP net income $ 567 $ 1,230 $ 1,118 $ 4,141 $ 3,047 Total pre-tax impact of non-GAAP adjustments 184 150 129 593 428 Income 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 Diluted net income per share GAAP $ 0.92 $ 1.97 $ 1.78 $ 6.63 $ 4.82 Non-GAAP $ 0.80 $ 1.84 $ 1.72 $ 6.64 $ 4.92 Weighted average shares used in diluted net income per share computation GAAP 619 625 628 625 632 Anti-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 $ 3,502 Purchase of property and equipment and intangible 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 $ 21 Research and development $ 99 $ 88 $ 73 $ 336 $ 219 Sales, 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-based compensation under GAAP accounting standard (ASU 2016-09).