NVIDIA Announces Financial Results for Second Quarter Fiscal 2019

NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)

		Three Months Ended									Six Months Ended
		July 29,			April 29,			July 30,			July 29,			July 30,
			2018			2018			2017			2018			2017

GAAP gross profit		$	1,975		$	2,068		$	1,302		$	4,043		$	2,452
GAAP gross margin			63.3	%		64.5	%		58.4	%		63.9	%		58.8	%
	Stock-based compensation expense (A)		8			8			4			16			8
Non-GAAP gross profit		$	1,983		$	2,076		$	1,306		$	4,059		$	2,460
Non-GAAP gross margin			63.5	%		64.7	%		58.6	%		64.1	%		59.0	%

GAAP operating expenses		$	818		$	773		$	614		$	1,591		$	1,210
	Stock-based compensation expense (A)		(124	)		(121	)		(77	)		(246	)		(150	)
	Acquisition-related costs (B)		(2	)		(2	)		(4	)		(4	)		(8	)
	Legal settlement costs		-			(2	)		-			-			-
	Contributions		-			-			-			-			(2	)
Non-GAAP operating expenses		$	692		$	648		$	533		$	1,341		$	1,050

GAAP income from operations		$	1,157		$	1,295		$	688		$	2,452		$	1,242
	Total impact of non-GAAP adjustments to income from operations		133			133			85			266			168
Non-GAAP income from operations		$	1,290		$	1,428		$	773		$	2,718		$	1,410

GAAP other income (expense)		$	23		$	16		$	(4	)	$	39		$	(21	)
	Gains from non-affiliated investments (C)		(2	)		(6	)		-			(8	)		-
	Interest expense related to amortization of debt discount		-			1			1			1			3
	Debt-related costs (D)		-			-			3			-			17
Non-GAAP other income (expense)		$	21		$	11		$	-		$	32		$	(1	)

GAAP net income		$	1,101		$	1,244		$	583		$	2,345		$	1,091
	Total pre-tax impact of non-GAAP adjustments		131			128			89			259			188
	Income tax impact of non-GAAP adjustments (E)		(22	)		(87	)		(34	)		(109	)		(108	)
Non-GAAP net income		$	1,210		$	1,285		$	638		$	2,495		$	1,171

Diluted net income per share
	GAAP	$	1.76		$	1.98		$	0.92		$	3.74		$	1.71
	Non-GAAP	$	1.94		$	2.05		$	1.01		$	3.99		$	1.87

Weighted average shares used in diluted net income per share computation
	GAAP		626			627			633			627			637
	Anti-dilution impact from note hedge (F)		(1	)		(1	)		(4	)		(1	)		(10	)
	Non-GAAP		625			626			629			626			627

GAAP net cash provided by operating activities		$	913		$	1,445		$	705		$	2,358		$	987
	Purchase of property and equipment and intangible assets		(128	)		(118	)		(55	)		(247	)		(108	)
Free cash flow		$	785		$	1,327		$	650		$	2,111		$	879



(A) Stock-based compensation consists of the following:		Three Months Ended									Six Months Ended
		July 29,			April 29,			July 30,			July 29,			July 30,
			2018			2018			2017			2018			2017
	Cost of revenue	$	8		$	8		$	4		$	16		$	8
	Research and development	$	76		$	74		$	44		$	150		$	85
	Sales, general and administrative	$	48		$	47		$	33		$	96		$	65

(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 and termination of interest rate swap.

(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.

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