NVIDIA Financial Results for First Quarter Fiscal 2015

CFO Commentary

Commentary on the quarter by Colette Kress, NVIDIA chief financial officer, is available at http://investor.nvidia.com/.

Conference Call and Webcast Information
NVIDIA will conduct a conference call with analysts and investors to discuss its first quarter fiscal 2015 financial results and current financial prospects today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen to the conference call, dial (303) 223-2684; no password is required. A live webcast (listen-only mode) of the conference call will be accessible at the NVIDIA investor relations web site http://investor.nvidia.com/ and at www.streetevents.com. The webcast will be recorded and available for replay until the company's conference call to discuss its financial results for its second quarter fiscal 2015.

Non-GAAP Measures

To supplement NVIDIA's Condensed Consolidated Statements of Operations 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 other income and expense, non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per share, 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, legal settlements, a credit related to a weak die/packaging material set, acquisition-related costs, other expenses, a gain on sale of a non-affiliated investment, interest expense related to the amortization of debt discount, and the associated tax impact of these items, where applicable. 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 our 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 thousands, except per share data)                   
                                 (Unaudited)                                
                                                                            
                                                                            
                                                       Three Months Ended   
                                                    ------------------------
                                                     April 27,    April 28, 
                                                        2014         2013   
                                                    -----------  -----------
                                                                            
Revenue                                             $ 1,102,787  $   954,739
Cost of revenue                                         498,585      436,171
                                                    -----------  -----------
Gross profit                                            604,202         518,568
Operating  expenses                                                                                                                    
    Research  and  development                                                            334,263            327,161
    Sales,  general  and  administrative                                          118,580            108,626
                                                                                                        -----------    -----------
        Total  operating  expenses                                                        452,843            435,787
                                                                                                        -----------    -----------
Operating  income                                                                                151,359              82,781
    Interest  income                                                                                  5,710                5,076
    Interest  expense                                                                              11,471                    853
    Other  income,  net                                                                            17,684                1,058
                                                                                                        -----------    -----------
Income  before  income  tax  expense                                                163,282              88,062
Income  tax  expense                                                                              26,766              10,171
                                                                                                        -----------    -----------
Net  income                                                                                    $      136,516    $        77,891
                                                                                                        ===========    ===========
                                                                                                                                                        
Net  income  per  share:                                                                                                              
    Basic                                                                                          $            0.24    $            0.13
                                                                                                        ===========    ===========
    Diluted                                                                                      $            0.24    $            0.13
                                                                                                        ===========    ===========
                                                                                                                                                        
Weighted  average  shares  used  in  per  share                                                                      
  computation:                                                                                                                              
    Basic                                                                                                  559,092            616,872
    Diluted                                                                                              570,422            619,302
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS                                      
                                                              (In  thousands)                                                              
                                                                  (Unaudited)                                                                
                                                                                                                                                        
                                                                                                                                                        
                                                                                                    April  27,          January  26,  
                                                                                                          2014                      2014        
                                                                                                -------------    -------------
ASSETS                                                                                                                                            
                                                                                                                                                        
Current  assets:                                                                                                                          
    Cash,  cash  equivalents  and  marketable                                                                          
      securities                                                                      $      4,347,817    $      4,671,810
    Accounts  receivable,  net                                                        396,438                426,357
    Inventories                                                                                  393,280                387,765
    Prepaid  expenses  and  other  current  assets                      136,263                138,779
                                                                                                -------------    -------------
        Total  current  assets                                                        5,273,798            5,624,711
                                                                                                                                                        
Property  and  equipment,  net                                                      570,802                582,740
Goodwill                                                                                            643,179                643,179
Intangible  assets,  net                                                                277,530                296,012
Other  assets                                                                                      99,354                104,252
                                                                                                -------------    -------------
        Total  assets                                                                $      6,864,663    $      7,250,894
                                                                                                =============    =============
                                                                                                                                                        
LIABILITIES  AND  STOCKHOLDERS'  EQUITY                                                                                
                                                                                                                                                        
Current  liabilities:                                                                                                                
    Accounts  payable                                                            $          309,008    $          324,391
    Accrued  liabilities  and  other  current                                                                          
      liabilities                                                                                588,937                621,105
                                                                                                -------------    -------------
        Total  current  liabilities                                                  897,945                945,496
                                                                                                                                                        
Long-term  debt                                                                            1,363,276            1,356,375
Other  long-term  liabilities                                                      419,774                475,125
Capital  lease  obligations,  long-term                                      16,683                  17,500
Stockholders'  equity                                                                4,166,985            4,456,398
                                                                                                -------------    -------------
                                                                                                                                                        
        Total  liabilities  and  stockholders'  equity    $      6,864,663    $      7,250,894
                                                                                                =============    =============
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                      RECONCILIATION  OF  GAAP  TO  NON-GAAP  FINANCIAL  MEASURES                        
                                      (In  thousands,  except  per  share  data)                                        
                                                                (Unaudited)                                                                  
                                                                                                                                                        
                                                                                          Three  Months  Ended                          
                                                                -------------------------------------------  
                                                                    April  27,          January  26,          April  28,      
                                                                          2014                      2014                      2013          
                                                                -------------    -------------    -------------  
                                                                                                                                                        
GAAP  gross  profit                              $          604,202    $          619,242    $          518,568  
    GAAP  gross  margin                                            54.8%                    54.1%                    54.3%
                                                                                                                                                        
        Stock-based  compensation                                                                                                
          expense  included  in  cost                                                                                              
          of  revenue  (A)                                          2,919                    2,777                    2,653  
        Legal  settlement                                                -                    1,450                            -  
        Credit  from  a  weak                                                                                                            
          die/packaging  material  set                                                                                          
          (B)                                                                        -                  (7,782)                          -  
                                                                -------------    -------------    -------------  
Non-GAAP  gross  profit                      $          607,121    $          615,687    $          521,221  
                                                                =============    =============    =============  
    Non-GAAP  gross  margin                                    55.1%                    53.8%                    54.6%
                                                                                                                                                        
GAAP  operating  expenses                  $          452,843    $          452,318    $          435,787  
        Stock-based  compensation                                                                                                
          expense  included  in                                                                                                        
          operating  expense  (A)                        (32,602)              (33,427)              (30,744)
        Acquisition-related  costs                                                                                              
          (C)                                                              (9,441)                (9,250)                (8,861)
        Other  expense  (D)                                              -                  (1,845)                          -  
                                                                -------------    -------------    -------------  
Non-GAAP  operating  expenses          $          410,800    $          407,796    $          396,182  
                                                                =============    =============    =============  
                                                                                                                                                        
GAAP  other  income  and  expense      $            11,923    $              1,964    $              5,281  
        Gain  on  sale  of  non-                                                                                                        
          affiliated  investments                      (16,982)                (3,074)                          -  
        Interest  expense  related  to                                                                                          
          amortization  of  debt                                                                                                      
          discount                                                      6,901                    4,600                            -  
                                                                -------------    -------------    -------------  
Non-GAAP  other  income  and                                                                                                      
  expense                                                $              1,842    $              3,490    $              5,281  
                                                                =============    =============    =============  
                                                                                                                                                        
GAAP  net  income                                  $          136,516    $          146,917    $            77,891  
        Total  pre-tax  impact  of                                                                                                  
          non-GAAP  adjustments                            34,881                  42,493                  42,258  
        Income  tax  impact  of  non-                                                                                              
          GAAP  adjustments                                    (5,342)                (1,924)                (6,348)
                                                                -------------    -------------    -------------  
Non-GAAP  net  income                          $          166,055    $          187,486    $          113,801  
                                                                =============    =============    =============  
                                                                                                                                                        
Diluted  net  income  per  share                                                                                                
        GAAP                                                $                0.24    $                0.25    $                0.13  
                                                                =============    =============    =============  
        Non-GAAP                                        $                0.29    $                0.32    $                0.18  
                                                                =============    =============    =============  
                                                                                                                                                        
Shares  used  in  diluted  net                                                                                                    
  income  per  share  computation                  570,422                577,356                619,302  
                                                                                                                                                        
Metrics:                                                                                                                                        
        GAAP  net  cash  flow  provided                                                                                          
          by  operating  activities        $          151,022    $          400,712    $          175,650  
        Purchase  of  property  and                                                                                                
          equipment  and  intangible                                                                                              
          assets                                                      (29,068)              (66,374)              (65,667)
                                                                -------------    -------------    -------------  
        Free  cash  flow                            $          121,954    $          334,338    $          109,983  
                                                                =============    =============    =============  
                                                                                                                                                        
----------------------------------------------------------------------------
                                                                                                                                                        
                                                                                                                                                        
(A)  Excludes  stock-based                                                                                                        
  compensation  as  follows:                                        Three  Months  Ended                          
                                                                -------------------------------------------  
                                                                    April  27,          January  26,          April  28,      
                                                                          2014                      2014                      2013          
                                                                -------------    -------------    -------------  
        Cost  of  revenue                          $              2,919    $              2,777    $              2,653  
        Research  and  development        $            20,494    $            21,548    $            21,935  
        Sales,  general  and                                                                                                            
          administrative                          $            12,108    $            11,879    $              8,809  
                                                                                                                                                        
(B)  Release  of  the  remaining  warranty  reserve  related  to  a  weak                          
  die/packaging  material  set,  as  of  January  26,  2014.                                                
                                                                                                                                                        
(C)  Consists  of  amortization  of  acquisition-related  intangible  assets,            
  transaction  costs,  compensation  charges,  and  other  credits  related  to            
  acquisitions.                                                                                                                            
                                                                                                                                                        
(D)  Includes  intangible  asset  write-off  and  legal  settlement  costs,  net  of    
  credits.                                                                                                                                      
                                                                                                                                                        
                                                                                                                                                        
----------------------------------------------------------------------------
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                                  RECONCILIATION  OF  GAAP  TO  NON-GAAP  OUTLOOK                                  
                                                                                                                                                        
                                                                                                                    Q2  FY2015  Outlook  
                                                                                                                    -----------------  
                                                                                                                                                        
GAAP  gross  margin                                                                                                            53.7%
    Impact  of  stock-based  compensation                                                                        0.3%
                                                                                                                    -----------------  
Non-GAAP  gross  margin                                                                                                    54.0%
                                                                                                                    =================  
                                                                                                                                                        
                                                                                                                    Q2  FY2015  Outlook  
                                                                                                                    -----------------  
                                                                                                                        (In  millions)      
                                                                                                                                                        
GAAP  operating  expenses                                                                      $                          457  
    Stock-based  compensation  expense  and  acquisition-                                                  
      related  costs                                                                                                                (43)
                                                                                                                    -----------------  
Non-GAAP  operating  expenses                                                              $                          414  
                                                                                                                    =================  
                                                                                                                                                        
                                                                                                                                                        
 




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