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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| | | | | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 27, 2024
OR
| | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 0-23985
NVIDIA CORPORATION
(Exact name of registrant as specified in its charter) | | | | | |
Delaware | 94-3177549 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
| |
2788 San Tomas Expressway, Santa Clara, California | 95051 |
(Address of principal executive offices) | (Zip Code) |
(408) 486-2000
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | 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 any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of common stock, $0.001 par value, outstanding as of November 15, 2024, was 24.49 billion.
NVIDIA Corporation
Form 10-Q
For the Quarter Ended October 27, 2024
Table of Contents | | | | | | | | |
| | Page |
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| | |
| Financial Statements (Unaudited) | |
| | |
| a) Condensed Consolidated Statements of Income for the three and nine months ended October 27, 2024 and October 29, 2023 | |
| | |
| b) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended October 27, 2024 and October 29, 2023 | |
| | |
| c) Condensed Consolidated Balance Sheets as of October 27, 2024 and January 28, 2024 | |
| | |
| d) Condensed Consolidated Statements of Shareholders' Equity for the three and nine months ended October 27, 2024 and October 29, 2023 | |
| | |
| e) Condensed Consolidated Statements of Cash Flows for the nine months ended October 27, 2024 and October 29, 2023 | |
| | |
| f) Notes to Condensed Consolidated Financial Statements | |
| | |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| | |
| Quantitative and Qualitative Disclosures About Market Risk | |
| | |
| Controls and Procedures | |
| | |
| | |
| | |
| Legal Proceedings | |
| | |
| Risk Factors | |
| | |
| Unregistered Sales of Equity Securities and Use of Proceeds | |
| | |
| Other Information | |
| | |
| Exhibits | |
| | |
| | |
Where You Can Find More Information
Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We also use the following social media channels as a means of disclosing information about the company, our products, our planned financial and other announcements and attendance at upcoming investor and industry conferences, and other matters, and for complying with our disclosure obligations under Regulation FD:
NVIDIA Corporate Blog (http://blogs.nvidia.com)
NVIDIA Technical Blog (http://developer.nvidia.com/blog/)
NVIDIA LinkedIn Page (http://www.linkedin.com/company/nvidia)
NVIDIA Facebook Page (https://www.facebook.com/nvidia)
NVIDIA Instagram Page (https://www.instagram.com/nvidia)
NVIDIA X Account (https://x.com/nvidia)
In addition, investors and others can view NVIDIA videos on YouTube (https://www.YouTube.com/nvidia).
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Part I. Financial Information
Item 1. Financial Statements (Unaudited)
NVIDIA Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(In millions, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| Oct 27, 2024 | | Oct 29, 2023 | | Oct 27, 2024 | | Oct 29, 2023 |
| | | | | | | |
Revenue | $ | 35,082 | | | $ | 18,120 | | | $ | 91,166 | | | $ | 38,819 | |
Cost of revenue | 8,926 | | | 4,720 | | | 22,031 | | | 11,309 | |
Gross profit | 26,156 | | | 13,400 | | | 69,135 | | | 27,510 | |
Operating expenses | | | | | | | |
Research and development | 3,390 | | | 2,294 | | | 9,200 | | | 6,210 | |
Sales, general and administrative | 897 | | | 689 | | | 2,516 | | | 1,942 | |
Total operating expenses | 4,287 | | | 2,983 | | | 11,716 | | | 8,152 | |
Operating income | 21,869 | | | 10,417 | | | 57,419 | | | 19,358 | |
Interest income | 472 | | | 234 | | | 1,275 | | | 572 | |
Interest expense | (61) | | | (63) | | | (186) | | | (194) | |
Other, net | 36 | | | (66) | | | 301 | | | (24) | |
Other income (expense), net | 447 | | | 105 | | | 1,390 | | | 354 | |
Income before income tax | 22,316 | | | 10,522 | | | 58,809 | | | 19,712 | |
Income tax expense | 3,007 | | | 1,279 | | | 8,020 | | | 2,237 | |
Net income | $ | 19,309 | | | $ | 9,243 | | | $ | 50,789 | | | $ | 17,475 | |
| | | | | | | |
Net income per share: | | | | | | | |
Basic | $ | 0.79 | | | $ | 0.37 | | | $ | 2.07 | | | $ | 0.71 | |
Diluted | $ | 0.78 | | | $ | 0.37 | | | $ | 2.04 | | | $ | 0.70 | |
| | | | | | | |
Weighted average shares used in per share computation: | | | | | | | |
Basic | 24,533 | | | 24,680 | | | 24,577 | | | 24,700 | |
Diluted | 24,774 | | | 24,940 | | | 24,837 | | | 24,940 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
NVIDIA Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(In millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| Oct 27, 2024 | | Oct 29, 2023 | | Oct 27, 2024 | | Oct 29, 2023 |
| | | | | | | |
Net income | $ | 19,309 | | | $ | 9,243 | | | $ | 50,789 | | | $ | 17,475 | |
Other comprehensive income (loss), net of tax | | | | | | | |
Available-for-sale securities: | | | | | | | |
Net change in unrealized gain | 49 | | | — | | | 71 | | | 7 | |
| | | | | | | |
| | | | | | | |
Cash flow hedges: | | | | | | | |
Net change in unrealized gain (loss) | — | | | (23) | | | 20 | | | (14) | |
Reclassification adjustments for net realized loss included in net income | (2) | | | (14) | | | (15) | | | (38) | |
Net change in unrealized gain (loss) | (2) | | | (37) | | | 5 | | | (52) | |
Other comprehensive income (loss), net of tax | 47 | | | (37) | | | 76 | | | (45) | |
Total comprehensive income | $ | 19,356 | | | $ | 9,206 | | | $ | 50,865 | | | $ | 17,430 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
NVIDIA Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
| | | | | | | | | | | |
| Oct 27, 2024 | | Jan 28, 2024 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 9,107 | | | $ | 7,280 | |
Marketable securities | 29,380 | | | 18,704 | |
Accounts receivable, net | 17,693 | | | 9,999 | |
Inventories | 7,654 | | | 5,282 | |
Prepaid expenses and other current assets | 3,806 | | | 3,080 | |
Total current assets | 67,640 | | | 44,345 | |
Property and equipment, net | 5,343 | | | 3,914 | |
Operating lease assets | 1,755 | | | 1,346 | |
Goodwill | 4,724 | | | 4,430 | |
Intangible assets, net | 838 | | | 1,112 | |
Deferred income tax assets | 10,276 | | | 6,081 | |
Other assets | 5,437 | | | 4,500 | |
Total assets | $ | 96,013 | | | $ | 65,728 | |
| | | |
Liabilities and Shareholders' Equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 5,353 | | | $ | 2,699 | |
Accrued and other current liabilities | 11,126 | | | 6,682 | |
Short-term debt | — | | | 1,250 | |
Total current liabilities | 16,479 | | | 10,631 | |
Long-term debt | 8,462 | | | 8,459 | |
Long-term operating lease liabilities | 1,490 | | | 1,119 | |
Other long-term liabilities | 3,683 | | | 2,541 | |
Total liabilities | 30,114 | | | 22,750 | |
Commitments and contingencies - see Note 12 | | | |
Shareholders’ equity: | | | |
Preferred stock | — | | | — | |
Common stock | 25 | | | 25 | |
Additional paid-in capital | 11,821 | | | 13,109 | |
| | | |
Accumulated other comprehensive income | 103 | | | 27 | |
Retained earnings | 53,950 | | | 29,817 | |
Total shareholders' equity | 65,899 | | | 42,978 | |
Total liabilities and shareholders' equity | $ | 96,013 | | | $ | 65,728 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
NVIDIA Corporation and Subsidiaries
Condensed Consolidated Statements of Shareholders' Equity
For the Three Months Ended October 27, 2024 and October 29, 2023
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock Outstanding | | Additional Paid-in Capital | | Accumulated Other Comprehensive Income (Loss) | | Retained Earnings | | Total Shareholders' Equity |
| Shares | | Amount | | | | |
(In millions, except per share data) | | | | | | | | | | | |
Balances, Jul 28, 2024 | 24,562 | | | $ | 25 | | | $ | 12,115 | | | $ | 56 | | | $ | 45,961 | | | $ | 58,157 | |
Net income | — | | | — | | | — | | | — | | | 19,309 | | | 19,309 | |
Other comprehensive income | — | | | — | | | — | | | 47 | | | — | | | 47 | |
Issuance of common stock from stock plans | 53 | | | — | | | 204 | | | — | | | — | | | 204 | |
Tax withholding related to vesting of restricted stock units | (15) | | | — | | | (1,680) | | | — | | | — | | | (1,680) | |
Shares repurchased | (92) | | | — | | | (71) | | | — | | | (11,075) | | | (11,146) | |
Cash dividends declared and paid ($0.01 per common share) | — | | | — | | | — | | | — | | | (245) | | | (245) | |
Stock-based compensation | — | | | — | | | 1,253 | | | — | | | — | | | 1,253 | |
Balances, Oct 27, 2024 | 24,508 | | | $ | 25 | | | $ | 11,821 | | | $ | 103 | | | $ | 53,950 | | | $ | 65,899 | |
Balances, Jul 30, 2023 | 24,692 | | | $ | 25 | | | $ | 12,606 | | | $ | (51) | | | $ | 14,921 | | | $ | 27,501 | |
Net income | — | | | — | | | — | | | — | | | 9,243 | | | 9,243 | |
Other comprehensive loss | — | | | — | | | — | | | (37) | | | — | | | (37) | |
Issuance of common stock from stock plans | 71 | | | — | | | 157 | | | — | | | — | | | 157 | |
Tax withholding related to vesting of restricted stock units | (18) | | | — | | | (764) | | | — | | | — | | | (764) | |
Shares repurchased | (83) | | | — | | | (14) | | | — | | | (3,705) | | | (3,719) | |
Cash dividends declared and paid ($0.004 per common share) | — | | | — | | | — | | | — | | | (99) | | | (99) | |
Stock-based compensation | — | | | — | | | 983 | | | — | | | — | | | 983 | |
Balances, Oct 29, 2023 | 24,662 | | | $ | 25 | | | $ | 12,968 | | | $ | (88) | | | $ | 20,360 | | | $ | 33,265 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
NVIDIA Corporation and Subsidiaries
Condensed Consolidated Statements of Shareholders' Equity
For the Nine Months Ended October 27, 2024 and October 29, 2023
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock Outstanding | | Additional Paid-in Capital | | Accumulated Other Comprehensive Income (Loss) | | Retained Earnings | | Total Shareholders' Equity |
| Shares | | Amount | | | | |
(In millions, except per share data) | | | | | | | | | | | |
Balances, Jan 28, 2024 | 24,643 | | | $ | 25 | | | $ | 13,109 | | | $ | 27 | | | $ | 29,817 | | | $ | 42,978 | |
Net income | — | | | — | | | — | | | — | | | 50,789 | | | 50,789 | |
Other comprehensive income | — | | | — | | | — | | | 76 | | | — | | | 76 | |
Issuance of common stock from stock plans | 165 | | | — | | | 489 | | | — | | | — | | | 489 | |
Tax withholding related to vesting of restricted stock units | (46) | | | — | | | (5,068) | | | — | | | — | | | (5,068) | |
Shares repurchased | (254) | | | — | | | (141) | | | — | | | (26,067) | | | (26,208) | |
Cash dividends declared and paid ($0.024 per common share) | — | | | — | | | — | | | — | | | (589) | | | (589) | |
Stock-based compensation | — | | | — | | | 3,432 | | | — | | | — | | | 3,432 | |
Balances, Oct 27, 2024 | 24,508 | | | $ | 25 | | | $ | 11,821 | | | $ | 103 | | | $ | 53,950 | | | $ | 65,899 | |
Balances, Jan 29, 2023 | 24,661 | | | $ | 25 | | | $ | 11,948 | | | $ | (43) | | | $ | 10,171 | | | $ | 22,101 | |
Net income | — | | | — | | | — | | | — | | | 17,475 | | | 17,475 | |
Other comprehensive loss | — | | | — | | | — | | | (45) | | | — | | | (45) | |
Issuance of common stock from stock plans | 214 | | | — | | | 403 | | | — | | | — | | | 403 | |
Tax withholding related to vesting of restricted stock units | (54) | | | — | | | (1,942) | | | — | | | — | | | (1,942) | |
Shares repurchased | (159) | | | — | | | (15) | | | — | | | (6,990) | | | (7,005) | |
Cash dividends declared and paid ($0.012 per common share) | — | | | — | | | — | | | — | | | (296) | | | (296) | |
Stock-based compensation | — | | | — | | | 2,574 | | | — | | | — | | | 2,574 | |
Balances, Oct 29, 2023 | 24,662 | | | $ | 25 | | | $ | 12,968 | | | $ | (88) | | | $ | 20,360 | | | $ | 33,265 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
NVIDIA Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended |
| Oct 27, 2024 | | Oct 29, 2023 |
Cash flows from operating activities: | | | |
Net income | $ | 50,789 | | | $ | 17,475 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Stock-based compensation expense | 3,416 | | | 2,555 | |
Depreciation and amortization | 1,321 | | | 1,121 | |
(Gains) losses on investments in non-affiliated entities and publicly-held equity securities, net | (302) | | | 24 | |
Deferred income taxes | (3,879) | | | (2,411) | |
Other | (365) | | | (170) | |
Changes in operating assets and liabilities, net of acquisitions: | | | |
Accounts receivable | (7,694) | | | (4,482) | |
Inventories | (2,357) | | | 405 | |
Prepaid expenses and other assets | (726) | | | (337) | |
Accounts payable | 2,490 | | | 1,250 | |
Accrued and other current liabilities | 3,918 | | | 953 | |
Other long-term liabilities | 849 | | | 208 | |
Net cash provided by operating activities | 47,460 | | | 16,591 | |
Cash flows from investing activities: | | | |
Proceeds from maturities of marketable securities | 9,485 | | | 8,001 | |
Proceeds from sales of marketable securities | 318 | | | — | |
Proceeds from sales of investments in non-affiliated entities | 171 | | | — | |
Purchases of marketable securities | (19,565) | | | (10,688) | |
Purchases related to property and equipment and intangible assets | (2,159) | | | (815) | |
Purchases of investments in non-affiliated entities | (1,008) | | | (897) | |
Acquisitions, net of cash acquired | (465) | | | (83) | |
Other | — | | | 25 | |
Net cash used in investing activities | (13,223) | | | (4,457) | |
Cash flows from financing activities: | | | |
Proceeds related to employee stock plans | 489 | | | 403 | |
Payments related to repurchases of common stock | (25,895) | | | (6,874) | |
Payments related to tax on restricted stock units | (5,068) | | | (1,942) | |
Repayment of debt | (1,250) | | | (1,250) | |
Dividends paid | (589) | | | (296) | |
Principal payments on property and equipment and intangible assets | (97) | | | (44) | |
Other | — | | | (1) | |
Net cash used in financing activities | (32,410) | | | (10,004) | |
Change in cash, cash equivalents, and restricted cash | 1,827 | | | 2,130 | |
Cash, cash equivalents, and restricted cash at beginning of period | 7,280 | | | 3,389 | |
Cash, cash equivalents, and restricted cash at end of period | $ | 9,107 | | | $ | 5,519 | |
| | | |
| | | |
| | | |
| | | |
Supplemental disclosure of cash flow information: | | | |
Cash paid for income taxes, net | $ | 10,989 | | | $ | 4,676 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, or SEC, Regulation S-X. The January 28, 2024 consolidated balance sheet was derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024, as filed with the SEC, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation of results of operations and financial position, have been included. The results for the interim periods presented are not necessarily indicative of the results expected for any future period. The following information should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024.
In May 2024, we announced a ten-for-one stock split, or the Stock Split, of our issued common stock, which was effected through the filing of an amendment to the Company's Restated Certificate of Incorporation, or the Amendment, with the Secretary of the State of Delaware. In June 2024, the Company filed the Amendment to effect the Stock Split and proportionately increased the number of shares of the Company’s authorized common stock from 8.0 billion to 80.0 billion. Shareholders of record at the close of market on June 6, 2024 received nine additional shares of common stock, distributed after the close of market on June 7, 2024. All share, equity award and per share amounts presented herein have been retrospectively adjusted to reflect the Stock Split.
Significant Accounting Policies
There have been no material changes to our significant accounting policies disclosed in Note 1 - Organization and Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024.
Fiscal Year
We operate on a 52- or 53-week year, ending on the last Sunday in January. Fiscal years 2025 and 2024 are both 52-week years. The third quarters of fiscal years 2025 and 2024 were both 13-week quarters.
Principles of Consolidation
Our condensed consolidated financial statements include the accounts of NVIDIA Corporation and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from our estimates. On an on-going basis, we evaluate our estimates, including those related to accounts receivable, cash equivalents and marketable securities, goodwill, income taxes, inventories and product purchase commitments, investigation and settlement costs, litigation, other contingencies, property, plant, and equipment, revenue recognition, and stock-based compensation. These estimates are based on historical facts and other assumptions that we believe are reasonable.
Recently Issued Accounting Pronouncements
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board, or FASB, issued a new accounting standard requiring disclosures of significant expenses in operating segments. We expect to adopt this standard in our fiscal year 2025 annual report. We are currently evaluating the impact of this standard on our Consolidated Financial Statements.
In December 2023, the FASB issued a new accounting standard which includes new and updated income tax disclosures, including disaggregation of rate reconciliation and income taxes paid. We expect to adopt this standard in our fiscal year 2026 annual report. We are currently evaluating the impact of this standard on our Consolidated Financial Statements.
In November 2024, the FASB issued a new accounting standard requiring disclosures of certain additional expense information on an annual and interim basis, including, among other items, the amounts of purchases of inventory,
NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
employee compensation, depreciation and intangible asset amortization included within each income statement expense caption, as applicable. We expect to adopt this standard in our fiscal year 2028 annual report. We are currently evaluating the impact of this standard on our Consolidated Financial Statements.
Note 2 - Leases
Our lease obligations primarily consist of operating leases for our headquarters' campus and domestic and international offices and data centers, with lease periods expiring between fiscal years 2025 and 2036.
Future minimum lease obligations under our non-cancelable lease agreements as of October 27, 2024 were as follows:
| | | | | |
| Operating Lease Obligations |
| (In millions) |
Fiscal Year: | |
2025 (excluding the first nine months of fiscal year 2025) | $ | 78 | |
2026 | 336 | |
2027 | 340 | |
2028 | 320 | |
2029 | 288 | |
2030 and thereafter | 667 | |
Total | 2,029 | |
Less imputed interest | 266 | |
Present value of net future minimum lease payments | 1,763 | |
Less short-term operating lease liabilities | 273 | |
Long-term operating lease liabilities | $ | 1,490 | |
Between the fourth quarter of fiscal year 2025 and fiscal year 2027, we expect to commence leases with future obligations of $4.2 billion primarily of data center and office operating leases, with lease terms of 1.5 to 15.5 years.
Operating lease expenses were $92 million and $69 million for the third quarter, and $258 million and $195 million for the first nine months, of fiscal years 2025 and 2024, respectively. Short-term and variable lease expenses for the third quarter and first nine months of fiscal years 2025 and 2024 were not significant.
Other information related to leases was as follows:
| | | | | | | | | | | |
| Nine Months Ended |
| Oct 27, 2024 | | Oct 29, 2023 |
| | | |
| (In millions) |
Supplemental cash flows information | | | |
Operating cash flow used for operating leases | $ | 227 | | | $ | 200 | |
Operating lease assets obtained in exchange for lease obligations | $ | 679 | | | $ | 439 | |
As of October 27, 2024, our operating leases have a weighted average remaining lease term of 6.5 years and a weighted average discount rate of 4.15%. As of January 28, 2024, our operating leases had a weighted average remaining lease term of 6.1 years and a weighted average discount rate of 3.76%.
Note 3 - Stock-Based Compensation
Stock-based compensation expense is associated with restricted stock units, or RSUs, performance stock units, or PSUs, that are based on our corporate financial performance targets, market-based PSUs that are performance stock units based on our performance compared to market performance, and the employee stock purchase plan, or ESPP.
Condensed Consolidated Statements of Income include stock-based compensation expense, net of amounts capitalized into inventory and subsequently recognized to cost of revenue, as follows:
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| Oct 27, 2024 | | Oct 29, 2023 | | Oct 27, 2024 | | Oct 29, 2023 |
| | | | | | | |
| (In millions) |
Cost of revenue | $ | 50 | | | $ | 38 | | | $ | 125 | | | $ | 96 | |
Research and development | 910 | | | 701 | | | 2,469 | | | 1,826 | |
Sales, general and administrative | 292 | | | 240 | | | 822 | | | 633 | |
Total | $ | 1,252 | | | $ | 979 | | | $ | 3,416 | | | $ | 2,555 | |
Equity Award Activity
The following is a summary of our equity award transactions under our equity incentive plans:
| | | | | | | | | | | | | | | |
| RSUs, PSUs, and Market-based PSUs Outstanding | | |
| Number of Shares | | Weighted Average Grant-Date Fair Value Per Share | | | | |
| | | | | | | |
| (In millions, except per share data) |
Balance as of Jan 28, 2024 | 367 | | | $ | 24.59 | | | | | |
Granted | 84 | | | $ | 84.70 | | | | | |
| | | | | | | |
Vested | (135) | | | $ | 23.03 | | | | | |
Canceled and forfeited | (8) | | | $ | 31.23 | | | | | |
Balance as of Oct 27, 2024 | 308 | | | $ | 41.45 | | | | | |
As of October 27, 2024, aggregate unearned stock-based compensation expense was $12.4 billion, which is expected to be recognized over a weighted average period of 2.3 years for RSUs, PSUs, and market-based PSUs, and one year for ESPP.
Note 4 - Net Income Per Share
The following is a reconciliation of the denominator of the basic and diluted net income per share computations for the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| Oct 27, 2024 | | Oct 29, 2023 | | Oct 27, 2024 | | Oct 29, 2023 |
| | | | | | | |
| (In millions, except per share data) |
Numerator: | | | | | | | |
Net income | $ | 19,309 | | | $ | 9,243 | | | $ | 50,789 | | | $ | 17,475 | |
Denominator: | | | | | | | |
Basic weighted average shares | 24,533 | | | 24,680 | | | 24,577 | | | 24,700 | |
Dilutive impact of outstanding equity awards | 241 | | | 260 | | | 260 | | | 240 | |
| | | | | | | |
| | | | | | | |
Diluted weighted average shares | 24,774 | | | 24,940 | | | 24,837 | | | 24,940 | |
Net income per share: | | | | | | | |
Basic (1) | $ | 0.79 | | | $ | 0.37 | | | $ | 2.07 | | | $ | 0.71 | |
Diluted (2) | $ | 0.78 | | | $ | 0.37 | | | $ | 2.04 | | | $ | 0.70 | |
Anti-dilutive equity awards excluded from diluted net income per share | 9 | | | 10 | | | 72 | | | 140 | |
(1) Net income divided by basic weighted average shares.
(2) Net income divided by diluted weighted average shares.
Diluted net income per share was computed using the weighted average number of common and potentially dilutive shares outstanding during the period, using the treasury stock method.
Note 5 - Income Taxes
Income tax expense was $3.0 billion and $1.3 billion for the third quarter, and $8.0 billion and $2.2 billion for the first nine months, of fiscal years 2025 and 2024, respectively. The income tax expense as a percentage of income before income
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
tax was 13.5% and 12.2% for the third quarter, and 13.6% and 11.3% for the first nine months, of fiscal years 2025 and 2024, respectively.
The effective tax rate increased primarily due to a lower percentage of tax benefits from the foreign-derived intangible income deduction relative to the increase in income before income tax and a discrete benefit in fiscal year 2024 due to an IRS audit resolution.
Effective tax rates for the first nine months of fiscal years 2025 and 2024 were lower than the U.S. federal statutory rate of 21% due to tax benefits from the foreign-derived intangible income deduction, stock-based compensation, the U.S. federal research tax credit, and income earned in jurisdictions that are subject to taxes lower than the U.S. federal statutory tax rate.
Given our current and possible future earnings, we believe that we may release the valuation allowance associated with certain state deferred tax assets in the near term, which would decrease our income tax expense for the period the release is recorded. The timing and amount of the valuation allowance release could vary based on our assessment of all available information.
While we believe that we have adequately provided for all uncertain tax positions, or tax positions where we believe it is not more-likely-than-not that the position will be sustained upon review, amounts asserted by tax authorities could be greater or less than our accrued position. Accordingly, our provisions on federal, state and foreign tax related matters to be recorded in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved with the respective tax authorities. As of October 27, 2024, we do not believe that our estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next 12 months.
Note 6 - Cash Equivalents and Marketable Securities
The following is a summary of cash equivalents and marketable securities:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Oct 27, 2024 |
| Amortized Cost | | Unrealized Gain | | Unrealized Loss | | Estimated Fair Value | | Reported as |
| | | | | Cash Equivalents | | Marketable Securities |
| | | | | | | | | | | |
| (In millions) |
Debt securities issued by the U.S. Treasury | $ | 14,629 | | | $ | 72 | | | $ | (12) | | | $ | 14,689 | | | $ | 1,795 | | | $ | 12,894 | |
Corporate debt securities | 14,221 | | | 74 | | | (17) | | | 14,278 | | | 1,154 | | | 13,124 | |
Money market funds | 5,147 | | | — | | | — | | | 5,147 | | | 5,147 | | | — | |
Debt securities issued by U.S. government agencies | 3,542 | | | 11 | | | (4) | | | 3,549 | | | 759 | | | 2,790 | |
Certificates of deposit | 142 | | | — | | | — | | | 142 | | | 42 | | | 100 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total debt securities with fair value adjustments recorded in other comprehensive income | 37,681 | | | 157 | | | (33) | | | 37,805 | | | 8,897 | | | 28,908 | |
Publicly-held equity securities (1) | | | | | | | 472 | | | — | | | 472 | |
Total | $ | 37,681 | | | $ | 157 | | | $ | (33) | | | $ | 38,277 | | | $ | 8,897 | | | $ | 29,380 | |
(1) Fair value adjustments on publicly-held equity securities are recorded in net income. Beginning in the second quarter of fiscal year 2025, publicly-held equity securities from investments in non-affiliated entities were classified in marketable securities on our Condensed Consolidated Balance Sheets.
Net unrealized gains on investments in publicly-held equity securities were not significant and $195 million for the third quarter and first nine months of fiscal year 2025, respectively. Net unrealized gains on investments in publicly-held equity securities were not significant for the third quarter and first nine months of fiscal year 2024.
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Jan 28, 2024 |
| Amortized Cost | | Unrealized Gain | | Unrealized Loss | | Estimated Fair Value | | Reported as |
| | | | | Cash Equivalents | | Marketable Securities |
| | | | | | | | | | | |
| (In millions) |
Corporate debt securities | $ | 10,126 | | | $ | 31 | | | $ | (5) | | | $ | 10,152 | | | $ | 2,231 | | | $ | 7,921 | |
Debt securities issued by the U.S. Treasury | 9,517 | | | 17 | | | (10) | | | 9,524 | | | 1,315 | | | 8,209 | |
Money market funds | 3,031 | | | — | | | — | | | 3,031 | | | 3,031 | | | — | |
Debt securities issued by U.S. government agencies | 2,326 | | | 8 | | | (1) | | | 2,333 | | | 89 | | | 2,244 | |
Certificates of deposit | 510 | | | — | | | — | | | 510 | | | 294 | | | 216 | |
Foreign government bonds | 174 | | | — | | | — | | | 174 | | | 60 | | | 114 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total debt securities with fair value changes recorded in other comprehensive income | $ | 25,684 | | | $ | 56 | | | $ | (16) | | | $ | 25,724 | | | $ | 7,020 | | | $ | 18,704 | |
The following tables provide the breakdown of unrealized losses, aggregated by investment category and length of time that individual debt securities have been in a continuous loss position:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Oct 27, 2024 |
| Less than 12 Months | | 12 Months or Greater | | Total |
| Estimated Fair Value | | Gross Unrealized Loss | | Estimated Fair Value | | Gross Unrealized Loss | | Estimated Fair Value | | Gross Unrealized Loss |
| | | | | | | | | | | |
| (In millions) |
Corporate debt securities | $ | 2,967 | | | $ | (17) | | | $ | 105 | | | $ | — | | | $ | 3,072 | | | $ | (17) | |
Debt securities issued by the U.S. Treasury | 2,562 | | | (12) | | | 532 | | | — | | | 3,094 | | | (12) | |
Debt securities issued by U.S. government agencies | 1,134 | | | (4) | | | 21 | | | — | | | 1,155 | | | (4) | |
Total | $ | 6,663 | | | $ | (33) | | | $ | 658 | | | $ | — | | | $ | 7,321 | | | $ | (33) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Jan 28, 2024 |
| Less than 12 Months | | 12 Months or Greater | | Total |
| Estimated Fair Value | | Gross Unrealized Loss | | Estimated Fair Value | | Gross Unrealized Loss | | Estimated Fair Value | | Gross Unrealized Loss |
| | | | | | | | | | | |
| (In millions) |
Debt securities issued by the U.S. Treasury | $ | 3,343 | | | $ | (5) | | | $ | 1,078 | | | $ | (5) | | | $ | 4,421 | | | $ | (10) | |
Corporate debt securities | 1,306 | | | (3) | | | 618 | | | (2) | | | 1,924 | | | (5) | |
Debt securities issued by U.S. government agencies | 670 | | | (1) | | | — | | | — | | | 670 | | | (1) | |
Total | $ | 5,319 | | | $ | (9) | | | $ | 1,696 | | | $ | (7) | | | $ | 7,015 | | | $ | (16) | |
Gross unrealized losses are related to fixed income securities, driven primarily by changes in interest rates.
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The amortized cost and estimated fair value of debt securities included in cash equivalents and marketable securities are shown below by contractual maturity.
| | | | | | | | | | | | | | | | | | | | | | | |
| Oct 27, 2024 | | Jan 28, 2024 |
| Amortized Cost | | Estimated Fair Value | | Amortized Cost | | Estimated Fair Value |
| | | | | | | |
| (In millions) |
Less than one year | $ | 17,695 | | | $ | 17,715 | | | $ | 16,336 | | | $ | 16,329 | |
Due in 1 - 5 years | 19,986 | | | 20,090 | | | 9,348 | | | 9,395 | |
| | | | | | | |
Total | $ | 37,681 | | | $ | 37,805 | | | $ | 25,684 | | | $ | 25,724 | |
Note 7 - Fair Value of Financial Assets and Liabilities and Investments in Non-Affiliated Entities
The fair values of our financial assets and liabilities are determined using quoted market prices of identical assets or market prices of similar assets from active markets. We review fair value classification on a quarterly basis.
| | | | | | | | | | | | | | | | | |
| Pricing Category | | Fair Value at |
| | Oct 27, 2024 | | Jan 28, 2024 |
| | | | | |
| | | (In millions) |
Assets | | | | | |
Cash equivalents and marketable securities: | | | | | |
Money market funds | Level 1 | | $ | 5,147 | | | $ | 3,031 | |
Publicly-held equity securities | Level 1 | | $ | 472 | | | $ | — | |
Debt securities issued by the U.S. Treasury | Level 2 | | $ | 14,689 | | | $ | 9,524 | |
Corporate debt securities | Level 2 | | $ | 14,278 | | | $ | 10,152 | |
Debt securities issued by U.S. government agencies | Level 2 | | $ | 3,549 | | | $ | 2,333 | |
Certificates of deposit | Level 2 | | $ | 142 | | | $ | 510 | |
Foreign government bonds | Level 2 | | $ | — | | | $ | 174 | |
| | | | | |
| | | | | |
Other assets (Investments in non-affiliated entities): | | | | | |
Publicly-held equity securities | Level 1 | | $ | — | | | $ | 225 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Liabilities (1) | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
0.584% Notes Due 2024 | Level 2 | | $ | — | | | $ | 1,228 | |
3.20% Notes Due 2026 | Level 2 | | $ | 982 | | | $ | 970 | |
1.55% Notes Due 2028 | Level 2 | | $ | 1,139 | | | $ | 1,115 | |
2.85% Notes Due 2030 | Level 2 | | $ | 1,391 | | | $ | 1,367 | |
2.00% Notes Due 2031 | Level 2 | | $ | 1,079 | | | $ | 1,057 | |
3.50% Notes Due 2040 | Level 2 | | $ | 847 | | | $ | 851 | |
3.50% Notes Due 2050 | Level 2 | | $ | 1,556 | | | $ | 1,604 | |
3.70% Notes Due 2060 | Level 2 | | $ | 388 | | | $ | 403 | |
(1) Liabilities are carried on our Condensed Consolidated Balance Sheets at their original issuance value, net of unamortized debt discount and issuance costs.
Investments in Non-Affiliated Entities
Our investments in non-affiliated entities include non-marketable equity securities, which are primarily investments in privately held companies. Beginning in the second quarter of fiscal year 2025, publicly-held equity securities from investments in non-affiliated entities were classified in marketable securities on our Condensed Consolidated Balance Sheets.
Our non-marketable equity securities are recorded in long-term other assets on our Condensed Consolidated Balance Sheets and valued under the measurement alternative. Gains and losses on these investments, realized and unrealized, are recognized in Other income and expense, net on our Condensed Consolidated Statements of Income.
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Adjustments to the carrying value of our non-marketable equity securities during the third quarter and first nine months of fiscal years 2025 and 2024 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| Oct 27, 2024 | | Oct 29, 2023 | | Oct 27, 2024 | | Oct 29, 2023 |
| | | | | | | |
| (In millions) |
Balance at beginning of period | $ | 1,819 | | | $ | 676 | | | $ | 1,321 | | | $ | 288 | |
Adjustments related to non-marketable equity securities: | | | | | | | |
Net additions | 409 | | | 341 | | | 830 | | | 743 | |
Unrealized gains | 23 | | | 3 | | | 115 | | | 3 | |
Impairments and unrealized losses | (14) | | | (1) | | | (29) | | | (15) | |
Balance at end of period | $ | 2,237 | | | $ | 1,019 | | | $ | 2,237 | | | $ | 1,019 | |
Non-marketable equity securities had cumulative gross unrealized gains of $374 million and cumulative gross losses and impairments of $74 million as of October 27, 2024.
Note 8 - Amortizable Intangible Assets and Goodwill
The components of our amortizable intangible assets are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Oct 27, 2024 | | Jan 28, 2024 |
| Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
| | | | | | | | | | | |
| (In millions) |
Acquisition-related intangible assets | $ | 2,785 | | | $ | (2,117) | | | $ | 668 | | | $ | 2,642 | | | $ | (1,720) | | | $ | 922 | |
Patents and licensed technology | 444 | | | (274) | | | 170 | | | 449 | | | (259) | | | 190 | |
Total intangible assets | $ | 3,229 | | | $ | (2,391) | | | $ | 838 | | | $ | 3,091 | | | $ | (1,979) | | | $ | 1,112 | |
Amortization expense associated with intangible assets was $149 million and $144 million for the third quarter, and $438 million and $471 million for the first nine months, of fiscal years 2025 and 2024, respectively.
The following table outlines the estimated amortization expense related to the net carrying amount of intangible assets as of October 27, 2024:
| | | | | |
| Future Amortization Expense |
| (In millions) |
Fiscal Year: | |
2025 (excluding the first nine months of fiscal year 2025) | $ | 150 | |
2026 | 317 | |
2027 | 203 | |
2028 | 57 | |
2029 | 10 | |
2030 and thereafter | 101 | |
Total | $ | 838 | |
In the first nine months of fiscal year 2025, goodwill increased by $294 million from business combinations assigned to our Compute & Networking reporting unit.
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 9 - Balance Sheet Components
We refer to customers who purchase products directly from NVIDIA as direct customers, such as add-in board manufacturers, distributors, original device manufacturers, or ODMs, original equipment manufacturers, or OEMs, and system integrators. Four direct customers accounted for 18%, 13%, 11% and 11% of our accounts receivable balance as of October 27, 2024. Two direct customers accounted for 24% and 11% of our accounts receivable balance as of January 28, 2024.
Certain balance sheet components are as follows:
| | | | | | | | | | | |
| Oct 27, 2024 | | Jan 28, 2024 |
| | | |
Inventories: | (In millions) |
Raw materials | $ | 1,846 | | | $ | 1,719 | |
Work in process | 2,881 | | | 1,505 | |
Finished goods | 2,927 | | | 2,058 | |
Total inventories (1) | $ | 7,654 | | | $ | 5,282 | |
(1) We recorded an inventory provision of $322 million and $208 million for the third quarter, and $876 million and $657 million for the first nine months, of fiscal years 2025 and 2024, respectively, in cost of revenue.
| | | | | | | | | | | |
| Oct 27, 2024 | | Jan 28, 2024 |
| | | |
Other Assets (Long Term): | (In millions) |
Investments in non-affiliated entities | $ | 2,237 | | | $ | 1,546 | |
Prepaid supply and capacity agreements (1) | 2,041 | | | 2,458 | |
Income tax receivable | 568 | | | — | |
Prepaid royalties | 346 | | | 364 | |
| | | |
| | | |
Other | 245 | | | 132 | |
Total other assets | $ | 5,437 | | | $ | 4,500 | |
(1) Prepaid supply and capacity agreements of $3.2 billion and $2.5 billion were included in Prepaid expenses and other current assets as of October 27, 2024 and January 28, 2024, respectively.
| | | | | | | | | | | |
| Oct 27, 2024 | | Jan 28, 2024 |
| | | |
Accrued and Other Current Liabilities: | (In millions) |
Customer program accruals | $ | 4,740 | | | $ | 2,081 | |
Excess inventory purchase obligations (1) | 1,728 | | | 1,655 | |
Taxes payable | 1,356 | | | 296 | |
Product warranty and return provisions | 1,107 | | | 415 | |
Deferred revenue (2) | 752 | | | 764 | |
Accrued payroll and related expenses | 677 | | | 675 | |
Operating leases | 273 | | | 228 | |
Unsettled share repurchases | 180 | | | 187 | |
Licenses and royalties | 148 | | | 182 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Other | 165 | | | 199 | |
Total accrued and other current liabilities | $ | 11,126 | | | $ | 6,682 | |
(1) We recorded $543 million and $473 million for the third quarter, and $1.3 billion and $734 million for the first nine months, of fiscal years 2025 and 2024, respectively, in cost of revenue.
(2) Includes customer advances and unearned revenue related to hardware support, software support, cloud services, and license and development arrangements. The balance as of October 27, 2024 and January 28, 2024 included $101 million and $233 million of customer advances, respectively.
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
| | | | | | | | | | | |
| Oct 27, 2024 | | Jan 28, 2024 |
| | | |
Other Long-Term Liabilities: | (In millions) |
Income tax payable (1) | $ | 1,945 | | | $ | 1,361 | |
Deferred revenue (2) | 833 | | | 573 | |
Deferred income tax | 790 | | | 462 | |
| | | |
| | | |
| | | |
Other | 115 | | | 145 | |
Total other long-term liabilities | $ | 3,683 | | | $ | 2,541 | |
(1) Income tax payable is comprised of the long-term portion of the one-time transition tax payable, unrecognized tax benefits, and related interest and penalties.
(2) Includes unearned revenue related to hardware support, software support and cloud services.
Deferred Revenue
The following table shows the changes in short- and long-term deferred revenue during the first nine months of fiscal years 2025 and 2024:
| | | | | | | | | | | |
| Nine Months Ended |
| Oct 27, 2024 | | Oct 29, 2023 |
| | | |
| (In millions) |
Balance at beginning of period | $ | 1,337 | | | $ | 572 | |
Deferred revenue additions | 2,115 | | | 1,269 | |
Revenue recognized | (1,867) | | | (903) | |
Balance at end of period | $ | 1,585 | | | $ | 938 | |
We recognized revenue of $585 million and $256 million in the first nine months of fiscal years 2025 and 2024, respectively, that were included in the prior year end deferred revenue balances.
As of October 27, 2024, revenue related to remaining performance obligations from contracts greater than one year in length was $1.6 billion, which includes $1.4 billion from deferred revenue and $187 million which has not yet been billed nor recognized as revenue. Approximately 37% of revenue from contracts greater than one year in length will be recognized over the next twelve months.
Note 10 - Derivative Financial Instruments
We utilize foreign currency forward contracts to mitigate the impact of foreign currency exchange rate movements on our operating expenses. The foreign currency forward contracts for operating expenses are designated as cash flow hedges. Gains or losses on the contracts are recorded in accumulated other comprehensive income or loss and reclassified to operating expense when the related operating expenses are recognized in earnings or ineffectiveness should occur.
We also entered into foreign currency forward contracts mitigating the impact of foreign currency movements on monetary assets and liabilities. For our foreign currency contracts for assets and liabilities, the change in fair value of these non-designated contracts was recorded in other income or expense and offsets the change in fair value of the hedged foreign currency denominated monetary assets and liabilities, which was also recorded in other income or expense.
The table below presents the notional value of our foreign currency contracts outstanding:
| | | | | | | | | | | |
| Oct 27, 2024 | | Jan 28, 2024 |
| | | |
| (In millions) |
Designated as cash flow hedges | $ | 1,360 | | | $ | 1,168 | |
Non-designated hedges | $ | 728 | | | $ | 597 | |
The unrealized gains and losses or fair value of our foreign currency contracts were not significant as of October 27, 2024 and January 28, 2024.
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
As of October 27, 2024, all designated foreign currency contracts mature within 18 months and any unrealized gains and losses were not significant.
During the first nine months of fiscal years 2025 and 2024, the impact of derivative financial instruments designated for cash flow hedges was not significant and the instruments were determined to be highly effective.
Note 11 - Debt
Long-Term Debt
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Expected Remaining Term (years) | | Effective Interest Rate | | Carrying Value at |
| | | | Oct 27, 2024 | | Jan 28, 2024 |
| | | | | | | | |
| | | | | | (In millions) |
| | | | | | | | |
| | | | | | | | |
0.584% Notes Due 2024 (1) | | — | | 0.66% | | $ | — | | | $ | 1,250 | |
3.20% Notes Due 2026 | | 1.9 | | 3.31% | | 1,000 | | | 1,000 | |
1.55% Notes Due 2028 | | 3.6 | | 1.64% | | 1,250 | | | 1,250 | |
2.85% Notes Due 2030 | | 5.4 | | 2.93% | | 1,500 | | | 1,500 | |
2.00% Notes Due 2031 | | 6.6 | | 2.09% | | 1,250 | | | 1,250 | |
3.50% Notes Due 2040 | | 15.4 | | 3.54% | | 1,000 | | | 1,000 | |
3.50% Notes Due 2050 | | 25.4 | | 3.54% | | 2,000 | | | 2,000 | |
3.70% Notes Due 2060 | | 35.4 | | 3.73% | | 500 | | | 500 | |
Unamortized debt discount and issuance costs | | | | | | (38) | | | (41) | |
Net carrying amount | | | | | | 8,462 | | | 9,709 | |
Less short-term portion | | | | | | — | | | (1,250) | |
Total long-term portion | | | | | | $ | 8,462 | | | $ | 8,459 | |
(1) We repaid the 0.584% Notes Due 2024 in the second quarter of fiscal year 2025.
Our notes are unsecured senior obligations. Existing and future liabilities of our subsidiaries will be effectively senior to the notes. Our notes pay interest semi-annually. We may redeem each of our notes prior to maturity, as defined in the applicable form of note. The maturity of the notes is calendar year.
As of October 27, 2024, we complied with the required covenants, which are non-financial in nature, under the outstanding notes.
Commercial Paper
We have a $575 million commercial paper program to support general corporate purposes. As of October 27, 2024, we had no commercial paper outstanding.
Note 12 - Commitments and Contingencies
Purchase Obligations
Our purchase obligations reflect our commitment to purchase components used to manufacture our products, including long-term supply and capacity agreements, certain software and technology licenses, other goods and services and long-lived assets.
As of October 27, 2024, we had outstanding inventory purchase and long-term supply and capacity obligations totaling $28.9 billion, an increase from the prior year primarily due to commitments for Blackwell capacity and components. We enter into agreements with contract manufacturers that allow them to procure inventory based upon our defined criteria, and in certain instances, these agreements are cancellable, able to be rescheduled, or adjustable for our business needs prior to placing firm orders. Though, changes to these agreements may result in additional costs. Other non-inventory purchase obligations were $13.2 billion, including $11.3 billion of multi-year cloud service agreements. We expect our cloud service agreements to primarily be used to support our research and development efforts, as well as our DGX Cloud offerings.
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Total future purchase commitments as of October 27, 2024 are as follows:
| | | | | |
| Commitments |
| (In millions) |
Fiscal Year: | |
2025 (excluding the first nine months of fiscal year 2025) | $ | 14,178 | |
2026 | 18,895 | |
2027 | 3,381 | |
2028 | 2,979 | |
2029 | 1,990 | |
2030 and thereafter | 621 | |
Total | $ | 42,044 | |
Accrual for Product Warranty Liabilities
The estimated amount of product warranty liabilities was $1.0 billion and $306 million as of October 27, 2024 and January 28, 2024, respectively. The estimated product returns and product warranty activity consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| Oct 27, 2024 | | Oct 29, 2023 | | Oct 27, 2024 | | Oct 29, 2023 |
| (In millions) |
Balance at beginning of period | $ | 741 | | | $ | 115 | | | $ | 306 | | | $ | 82 | |
Additions | 304 | | | 50 | | | 775 | | | 105 | |
Utilization | (36) | | | (23) | | | (72) | | | (45) | |
Balance at end of period | $ | 1,009 | | | $ | 142 | | | $ | 1,009 | | | $ | 142 | |
We have provided indemnities for matters such as tax, product, and employee liabilities. We have included intellectual property indemnification provisions in our technology-related agreements with third parties. Maximum potential future payments cannot be estimated because many of these agreements do not have a maximum stated liability. We have not recorded any liability in our Condensed Consolidated Financial Statements for such indemnifications.
Litigation
Securities Class Action and Derivative Lawsuits
The plaintiffs in the putative securities class action lawsuit, captioned 4:18-cv-07669-HSG, initially filed on December 21, 2018 in the United States District Court for the Northern District of California, and titled In Re NVIDIA Corporation Securities Litigation, filed an amended complaint on May 13, 2020. The amended complaint asserted that NVIDIA and certain NVIDIA executives violated Section 10(b) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and SEC Rule 10b-5, by making materially false or misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand between May 10, 2017 and November 14, 2018. Plaintiffs also alleged that the NVIDIA executives who they named as defendants violated Section 20(a) of the Exchange Act. Plaintiffs sought class certification, an award of unspecified compensatory damages, an award of reasonable costs and expenses, including attorneys’ fees and expert fees, and further relief as the Court may deem just and proper. On March 2, 2021, the district court granted NVIDIA’s motion to dismiss the complaint without leave to amend, entered judgment in favor of NVIDIA and closed the case. On March 30, 2021, plaintiffs filed an appeal from judgment in the United States Court of Appeals for the Ninth Circuit, case number 21-15604. On August 25, 2023, a majority of a three-judge Ninth Circuit panel affirmed in part and reversed in part the district court’s dismissal of the case, with a third judge dissenting on the basis that the district court did not err in dismissing the case. On November 15, 2023, the Ninth Circuit denied NVIDIA’s petition for rehearing en banc of the Ninth Circuit panel’s majority decision to reverse in part the dismissal of the case, which NVIDIA had filed on October 10, 2023. On November 21, 2023, NVIDIA filed a motion with the Ninth Circuit for a stay of the mandate pending NVIDIA’s petition for a writ of certiorari in the Supreme Court of the United States and the Supreme Court’s resolution of the matter. On December 5, 2023, the Ninth Circuit granted NVIDIA’s motion to stay the mandate. NVIDIA filed a petition for a writ of certiorari on March 4, 2024. On June 17, 2024, the Supreme Court of the United States granted NVIDIA’s petition for a writ of certiorari. Briefing concluded on October 25, 2024 and the Supreme Court heard oral arguments on November 13, 2024.
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The putative derivative lawsuit pending in the United States District Court for the Northern District of California, captioned 4:19-cv-00341-HSG, initially filed January 18, 2019 and titled In re NVIDIA Corporation Consolidated Derivative Litigation, was stayed pending resolution of the plaintiffs’ appeal in the In Re NVIDIA Corporation Securities Litigation action. On February 22, 2022, the court administratively closed the case, but stated that it would reopen the case once the appeal in the In Re NVIDIA Corporation Securities Litigation action is resolved. The stay remains in place. The lawsuit asserts claims, purportedly on behalf of us, against certain officers and directors of the Company for breach of fiduciary duty, unjust enrichment, waste of corporate assets, and violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act based on the dissemination of allegedly false and misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand. The plaintiffs are seeking unspecified damages and other relief, including reforms and improvements to NVIDIA’s corporate governance and internal procedures.
The putative derivative actions initially filed September 24, 2019 and pending in the United States District Court for the District of Delaware, Lipchitz v. Huang, et al. (Case No. 1:19-cv-01795-UNA) and Nelson v. Huang, et. al. (Case No. 1:19-cv-01798- UNA), remain stayed pending resolution of the plaintiffs’ appeal in the In Re NVIDIA Corporation Securities Litigation action. The lawsuits assert claims, purportedly on behalf of us, against certain officers and directors of the Company for breach of fiduciary duty, unjust enrichment, insider trading, misappropriation of information, corporate waste and violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act based on the dissemination of allegedly false, and misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand. The plaintiffs seek unspecified damages and other relief, including disgorgement of profits from the sale of NVIDIA stock and unspecified corporate governance measures.
Another putative derivative action was filed on October 30, 2023 in the Court of Chancery of the State of Delaware, captioned Horanic v. Huang, et al. (Case No. 2023-1096-KSJM). This lawsuit asserts claims, purportedly on behalf of us, against certain officers and directors of the Company for breach of fiduciary duty and insider trading based on the dissemination of allegedly false and misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand. The plaintiffs seek unspecified damages and other relief, including disgorgement of profits from the sale of NVIDIA stock and reform of unspecified corporate governance measures. This derivative matter is stayed pending the final resolution of In Re NVIDIA Corporation Securities Litigation action.
Accounting for Loss Contingencies
As of October 27, 2024, there are no accrued contingent liabilities associated with the legal proceedings described above based on our belief that liabilities, while possible, are not probable. Further, except as described above, any possible loss or range of loss in these matters cannot be reasonably estimated at this time. We are engaged in legal actions not described above arising in the ordinary course of business and, while there can be no assurance of favorable outcomes, we believe that the ultimate outcome of these actions will not have a material adverse effect on our operating results, liquidity or financial position.
Note 13 - Shareholders’ Equity
Capital Return Program
We repurchased 92 million and 83 million shares of our common stock for $11.1 billion and $3.7 billion during the third quarter, and 254 million and 159 million shares of our common stock for $26.2 billion and $7 billion during the first nine months, of fiscal years 2025 and 2024, respectively. On August 26, 2024, our Board of Directors approved an additional $50 billion to our share repurchase authorization, without expiration. As of October 27, 2024, we were authorized, subject to certain specifications, to repurchase up to $46.4 billion of our common stock. Our share repurchase program aims to offset dilution from shares issued to employees while maintaining adequate liquidity to meet our operating requirements. We may pursue additional share repurchases as we weigh market factors and other investment opportunities.
From October 28, 2024 through November 15, 2024, we repurchased 19 million shares for $2.7 billion pursuant to a pre-established trading plan.
We paid cash dividends to our shareholders of $245 million and $99 million during the third quarter, and $589 million and $296 million during the first nine months, of fiscal years 2025 and 2024, respectively. Our cash dividend program and the payment of future cash dividends under that program are subject to our Board of Directors' continuing determination that the dividend program and the declaration of dividends thereunder are in the best interests of our shareholders.
Note 14 - Segment Information
Our Chief Executive Officer is our chief operating decision maker, or CODM, and reviews financial information presented on an operating segment basis for purposes of making decisions and assessing financial performance.
NVIDIA Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The Compute & Networking segment includes our Data Center accelerated computing platforms and artificial intelligence, or AI, solutions and software; networking; automotive platforms and autonomous and electric vehicle solutions; Jetson for robotics and other embedded platforms; and DGX Cloud computing services.
The Graphics segment includes GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse Enterprise software for building and operating 3D internet applications.
Operating results by segment include costs or expenses directly attributable to each segment, and costs or expenses that are leveraged across our unified architecture and therefore allocated between our two segments.
The “All Other” category includes the expenses that our CODM does not assign to either Compute & Networking or Graphics for purposes of making operating decisions or assessing financial performance. The expenses include stock-based compensation expense, corporate infrastructure and support costs, acquisition-related and other costs, and other non-recurring charges and benefits that our CODM deems to be enterprise in nature.
Our CODM does not review any information regarding total assets on a reportable segment basis. Depreciation and amortization expenses directly attributable to each reportable segment are included in operating results for each segment. However, our CODM does not review depreciation and amortization expense by operating segment and, therefore, it is not separately presented. The accounting policies for segment reporting are the same as for our consolidated financial statements. The table below presents details of our reportable segments and the “All Other” category.
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