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Simona Jankowski, March 19, 2019 WELCOME
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Simona Jankowski, March 19, 2019
WELCOME
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2
SAFE HARBORForward-Looking Statements Except for the historical information contained herein, certain matters in this presentation including, but not limited to, statements as to: our growth and growth drivers; our market opportunities, drivers and TAM; customer opportunities, projections and growth; channel inventory; our investments; the benefits, impact, performance and availability of our products, technologies, services and programs, including autonomous vehicles, datacenter and gaming laptops; accelerated computing being the path forward; expanding our go-to-market partnerships; every vehicle being autonomous; the world of autonomous vehicles being bigger than ever; our production roadmap and schedules; our intended capital return; projected revenues; our strategies; market trends; benefits and impact of the proposed Mellanox acquisition and its expected closing and approval process; future financial results, estimates and forecasts; and other predictions and estimates are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and any other forward-looking statements that go beyond historical facts that are made in this presentation are subject to risks and uncertainties that may cause actual results to differ materially. Important factors that could cause actual results to differ materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact of technological development and competition; development of new products and technologies or enhancements to our existing products and technologies; market acceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences and demands; changes in industry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on the company's website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
Financial MeasuresThis presentation contains historical revenue amounts for certain of our market platforms and businesses which provides investors with additional information to supplement the segment reporting information contained in our Form 10-K for the fiscal year ended January 27, 2019. In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. See our website for a reconciliation between each non-GAAP measure and the most comparable GAAP measure. Where we present non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating expense, non-GAAP operating income, non-GAAP operating margin, non-GAAP EPS, and free cash flow. We generally exclude stock-based compensation, legal settlement costs, acquisition-related and other costs, restructuring and other charges, product warranty charge, gains from non-affiliated investment, the associated tax impact, tax benefit from tax reform, and other expense, where applicable.
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2019
AGENDA
Jensen Huang
Jeff Fisher
Jay Puri
Rob Csongor
Colette Kress
Jensen & Colette
Strategy
Gaming
Datacenter
Automotive
Financials
Q&A
Questions? Please email [email protected]
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Jensen Huang, March 19, 2019
STRATEGY
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2019
PRogrammable
Acceleration
Domains
Architecture
ACCELERATED COMPUTING —THE PATH FORWARD
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2019
RTX | OMNIVERSE | 5G GFN ALLIANCES
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2019
DATA SCIENCE — THE NEW HPC CHALLENGE
NVIDIA DGX-2AI Supercomputer Appliance
16x V100 | 2 PF | 512GB HBM28x MLNX IB
Data Science Server4x T4 | 260 TF FP16 | 64GB GDDR6
MLNX or BRCM EN
COM
PUTE
REQ
UIR
EMEN
T 1T PF
1B PF
1M PF
1K PF
1PF
1TF
1K 1M 1B
#CCU
SUPERCOMPUTER
HYPERSCALE
DATA SCIENCE
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2019
DATA SCIENCE —THE NEW HPC | CUDA-X ECOSYSTEM
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2019
JETSON NANO | ISAACCONSTELLATION | TOYOTA
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Jeff D. Fisher
GAMING
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2019
RECORD YEAR IN GAMING
$0B
$1B
$2B
$3B
$4B
$5B
$6B
$7B
FY17 FY18 FY19
RECORD YEAR IN GAMING
RTX Launched — Biggest Leap in 15 Years
MAX-Q Laptops — Thinner, more powerful
Turing from $219 — Millions more Gamers
Crypto Hangover — Channel inventory on track to clear in Q1
$6.25B
36%
13%
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2019
GAMING FUNDAMENTALS STRONG
Source: Newzoo: Esports Audience Source: Newzoo: Core Gamers
ESPORTS MOMENTUM MORE PC GAMERS
-
100M
200M
300M
400M
500M
600M
2016 2018 2020
West China Emerging
0M
100M
200M
300M
400M
2016 2018 2020
West China Emerging
1X
5X
2X
3X
4X
Source: NVIDIA
AAA GAME PRODUCTION VALUE 5X in 5 YEARS
2014 2015 2016 2017 2018
GPU
Per
form
ance
Req
uire
d
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2019
GAMING LAPTOP YoY
GAMING GPU REVENUE ~3X in 4 YEARS
GEFORCE GAMING GPU
ASP +21%
UNITS +32%
REV +59%$0B
$1B
$2B
$3B
$4B
$5B
$6B
FY15 FY16 FY17 FY18 FY19
18%
5-YEAR CAGR
ASP 14%
UNITS 14%
REV 29%
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2019
$299+ LAUNCH SELL THRU INSTALLED BASE READY
RTX ‘ON’ TO A GREAT START
Source NVIDIA, First 8 Weeks of Pascal DT vs Turing DT (est) Source NVIDIA, DT + NB Gaming GPU Installed Base (est)
Pascal Turing
Desk
top
Reve
nue
45%
Turing Pascal Older
90%Below
GTX1660TiPerf
Source NVIDIA, DT Turing (est)
50%48%
2%
MAJORITY BUYING UP
2080
2070
$699
$499
$399
$249
2080Ti$999
Turing
2060
90%‘80
‘70
‘80TI
Titan
‘60
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2019
ESPORTS REQUIRES FPS MORE FPS = MORE WINS ESPORTS PROS LEVEL UP
42%
37%
12%
9%
ESPORTS GAMERS WANT FAST RESPONSE
2060
2070
2080/TI
98%GEFORCE
Other
Prosettings.net | RTX or Equivalent Perf
ESPORTS
120-240+ FPS
Frames per Second
Win
/Los
s Ra
tio
Incr
ease
0X
1X
2X
3X
0 60 120 180 240 300
Imag
e Q
ualit
y
Frames Per SecondResponse Time
Source: NVIDIA
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2019
ESPORTS GAMERS WANT FAST RESPONSE
ESPORTS REQUIRES FPS
ESPORTS
120-240+ FPS
Imag
e Q
ualit
y
TURING DELIVERS 120FPS+ IN ESPORTS
60
120
180
240
300
GTX 1660Ti RTX2060 RTX2070 RTX2080 RTX2080Ti
Source NVIDIA: 1080p, High Settings
Frames Per SecondResponse Time
Fram
es p
er S
econ
d
RTX 2060 RTX 2070 RTX 2080 RTX 2080TiGTX 1660Ti
Apex Fortnite
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2019
0.0
30.0
60.0
90.0
120.0
RTX 2060 RTX 2070 RTX 2080 RTX 2080TI
AAA GAMERS WANT HIGH IMAGE QUALITY
CINEMATIC GAMES REQUIRE IQ
ESPORTS
120-240+ FPS
Imag
e Q
ualit
y
TURING DELIVERS 45 FPS + IN AAA
Fram
es p
er S
econ
dSource NVIDIA: RT/DLSS 1440p, ULTRA Settings
AAAGAMES
45-90 FPS
Frames Per SecondResponse Time Metro BFV
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2019
NEXT-GEN GAMING REQUIRES GEFORCE RTX
Fram
es p
er S
econ
d
0
10
20
30
40
50
60
70
80
Pascal
3X
RAY TRACING — THE NEXT ERA BEGINS
Turing+RT Core
Turing+DLSS
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2019
MAX-Q — THINNER, LIGHTER 2X MODELS
GAMING LAPTOP — 10X IN 5 YEARS
$0B
$2B
$4B
$6B
$8B
$10B
$12B
$14B
2013 2014 2015 2016 2017 2018
WW
Gam
ing
Lapt
op S
ales
($B
)
Source: NVIDIA, Gaming Laptop Market Rev (est)
2018 2019
4519
RTX — THE FASTEST LAPTOPS EVER
“ Behold: I carry a laptop more powerful than any of your gaming computers, and it weighs less than five pounds! Grovel before me.”
PC Mag
GAMING LAPTOPS:THE FASTEST-GROWING GAME CONSOLE
Source: NVIDIA, X60 Class & Higher
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2019
GEFORCE NOW: A BILLION-GAMER OPPORTUNITY
1MUSERS
ON WAITLIST
300KMONTHLY
ACTIVE USERS
A GeForce Gaming PC in the Cloud
Fully Interactive Gaming and VR
Simple Game Launch from Desktop
Publisher/Store Direct to Gamer200M
GeForce 1B Gamer Opportunity
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2019
GFN ALLIANCE:SCALING OUT THROUGH PARTNERSHIPS
6M Fixed Broadband
30M Mobile
4M Fixed Broadband
4M Cable Broadband
13M Mobile
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2019
GeForce RTX Off to a Great Start: +45% over Pascal
GeForce Laptops Fastest Growing Console: Turing + MAX-Q
GeForce Now Reaches Next 1B PC Gamers
SUMMARY
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Jay Puri, March 2019
DATACENTER
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2019
DATACENTER REVENUE
A RECORD YEARFiscal 2019 Recap
HIGHLIGHTS
FY17 FY18 FY19
$1,932M
$2,932M
$830M
133%
52%
Developers up 50%
#1 in Deep Learning
Significant traction in inference
Sources: NVIDIA, MLPerf, Top500.org
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2019
THE NEW HPC MARKET
RESEARCHENERGYHIGHER ED
MEDIAE-COMMERCE
INTERNET COMPANIESCLOUD SERVICE PROVIDERS
FINANCIAL SERVICESRETAIL
TELECOMAUTOMOTIVE
HYPERSCALE
SCIENTIFICCOMPUTING
ENTERPRISE
2018$37B HPC SERVER MARKET
Sources: IDC, Hyperion, NVIDIAHyperscale server TAM includes workloads that can benefit from GPU acceleration, such as inference or graphics. Enterprise server TAM includes data analytics, data management, security and systems management workloads.
COMMON WORKLOADS
Scientific Computing
Data Analytics
Artificial Intelligence
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2019
DATACENTER ADDRESSABLE MARKETData Science Will Increase the Opportunity
Sources: IDC, Hyperion, NVIDIAHyperscale server TAM includes workloads that can benefit from GPU acceleration, such as inference or graphics. Enterprise server TAM includes data analytics, data management, security and systems management workloads.
2018$37B HPC SERVER MARKET
2023HPC SERVER MARKET
NVIDIA TAM $50B NVIDIA TAM
SCIENTIFICCOMPUTING
HYPERSCALE
ENTERPRISE
HYPERSCALE
SCIENTIFICCOMPUTING
ENTERPRISEHPC + AI
DL + ML
DL + ML + DA
DL HPC
DL
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2019
#1 PLATFORM FOR ACCELERATING AI & HPC
THRIVING DEVELOPMENT COMMUNITY AWARD-WINNING PERFORMANCEBROAD APPLICATION COVERAGE
13M
1.2M
CUDA Downloads
Developers
ALL MAJOR AI FRAMEWORKS
600+ HPC APPLICATIONS
Six AI Performance Records
Sources: NVIDIA, MLPerf
Sustained PerformanceScalability & Time-to-Solution
Gordon Bell Prize 2018
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2019
NVIDIA VALUE
WORKLOAD BASELINECPU-Only
HPC(Amber, LAMMPS,
NAMD, VASP)
AI TRAINING(Caffe2, MXNet,
TensorFlow)
AI INFERENCE (Image, Speech,
Translation)
MACHINE LEARNING
SPEED UP 1X 25X >100X 50X 10X
SERVERS 5,000 200 <50 100 500
CAPEX $45M $9M $6M $2M $10M
3 YEAR OPEX(POWER + COOLING) $19.5M $2M $1M $0.5M $2.5M
TCO SAVINGS N/A 83% 89% 96% 81%
NEW!
Note(s): CPU Baselined to 5000 Servers for each workload | Capex Costs: CPU node with 2x Skylake CPU’s ~$9K; GPU node with 4x V100 GPU’s ~$45K; DGX-1 - $120K; T4 Node with 4x T4 ~$20K | Opex Costs: Power & cooling is $180/kW/month | Power: CPU server + n/w = 0.6 KW; GPU server + n/w = 1.6 KW; DGX-1V/HGX-1 Server = 3.2KW | 4xT4 Server = 0.9KW HPC: GPU node with 4xV100 compared to 2xCPU Server | AI Training: DGX-1V compared to a 2xCPU server | AI Inference: T4 Server (4xT4) Compared to 2x CPU Server |numbers rounded to nearest $0.5M | Machine Learning: T4 Server (4xT4) Compared to 2x CPU Server.
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2019
BUSINESS MODEL AND PRODUCTS
T4 V100 HGX-2 QUADRO
NGC SOFTWARE HUB
DGX STATION DGX-2
DGX-1
OEM PARTNERS
CSP PARTNERS
DIRECT & CHANNEL
REFERENCE ARCHITECTURE PARTNERS
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2019
GO-TO-MARKET STRATEGY
MARKET CREATION
+Vertical Industry Expertise
Targeted Domain Engagement
Application Acceleration
Deep Learning Institute
NVIDIA ACCELERATED COMPUTING PLATFORM
NGC
GPU + CUDA
ADOPTION ACCELERATION
Easy to deploy
Reference Architecture
Direct Sales, Partners
Enablement
CUDA-X
Scientific Computing Deep Learning Machine Learning Data Analytics
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2019
SCIENTIFIC COMPUTINGGrowing the Addressable Market
#1 WW SUMMIT ORNL
#1 EUROPE CSCS
#1 JAPAN ABCI25X
2018 2019
AMBERCHROMAGTCLAMMPSMILCNAMDQUANTUM ESPSPECFEM3D
40X
MORE PERFORMANCE SAME GPU
ENERGYPRECISION MEDICINE CLIMATE / WEATHER
600+
2014 2019
MORE ACCELERATED APPS
127+48% YoY
MARKET LEADERSHIP ACCELERATING APPS
TOP500 NVIDIA ACCELERATED SYSTEMS INFUSING HPC WITH AI
250
Sources: NVIDIA, Top500.org
2010 2018201620142011 2012 2013 2015 2017
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2019
HYPERSCALEGrowth & Leadership in DL Training
2014 2015 2016 2017 2018
cuDNN DOWNLOADS
NETWORK COMPLEXITY IS DRIVING THE MARKET NVIDIA LEADS IN DL TRAINING
0.00001
0.00010
0.00100
0.01000
0.10000
1.00000
10.00000
100.00000
1,000.00000
2012 2013 2014 2015 2016 2017 2018 2019 2020
AlexNet
Dropout
Visualizing and Understanding Conv Nets
GoogleNet
DQN
VGG Seq2Seq
DeepSpeech2
ResNets
Wave2Letter
XceptionGNMT
Neural Architecture Search
WaveNet-Tacotron
BERT
WaveGlow
Jasper
GPT2
Petaflops/Day (Training)
Sources: OpenAI and NVIDIA for image, speech, and NLP models
#1 in First Industry DL Training Benchmark
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2019
HYPERSCALEExpanding Footprint in Inference & Machine Learning
2017 2018
50K
300K
6X TRT downloads
Video
MapsImage
NLP
Speech
Search
SAGEMAKER
CLOUD ML
AZURE ML
NVIDIA INFERENCE USE CASES MACHINE LEARNING IN THE CLOUDGROWING INFERENCE ADOPTION
BingVisual Search &
Intelligent Answers
TencentNatural Language
Processing
iFlyTekSpeech
Recognition
LinkedInRecommendation
Engine
PinterestVisual Search
SnapRecommendation
TwitterVideo
Analytics
PayPalFraud Detection
BytedanceVideo Moderation
Sources: NVIDIA
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2019
ENTERPRISEHigh Performance Workloads Moving to Accelerated Computing
DEEP LEARNING SCALE UP & SCALE OUTMACHINE LEARNING
3.5x DGX Revenue Growth YoY
100,000 Developers Trained
~3M Data Scientists
RAPIDS / CUDA-X
T4DGX-2
PANDASSCIKITLEARN
DASK ARROW
1,000+ DGX Customers
Sources: KDnuggets, 451, IDC, NVIDIA
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2019
NGC: EASY TO ADOPT
Simplify Deployments | Innovate Faster | Deploy Anywhere
GPU-Optimized Software Hub | Simplifying DL, ML & HPC Workflows
Model Training ScriptsNLP, Image Classification, Object Detection & more
Industry WorkflowsMedical Imaging, Intelligent Video Analytics
50+ ContainersDL, ML, HPC
Pre-trained ModelsLP, Classification, Object Detection
& more
NGC
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2019
T4 OEM VOLUME SERVER PARTNERS CSPs AS A CHANNEL FOR HPC, DL & ML
EASY TO BUY, EASY TO DEPLOYExpanding Our Go-to-Market Partnerships
REFERENCE ARCHITECTURE & PARTNERS DGX READY DATA CENTER
NEW!
+ NGC READY CERTIFICATION + SUPPORT
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2019
SUMMARY
Accelerated Computing is the path forward.
It’s all about the software acceleration stack.
Data Science is the next big HPC opportunity.
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Rob Csongor, March 2019
AUTOMOTIVE
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2019
REVENUE DRIVE PARTNERS NEW XAVIER AVs
AUTOMOTIVE GROWTH
0
100
200
300
400
500
600
700
FY15 FY16 FY17 FY18 FY19
Mill
ions
$641M
15%
KomatsuEarthmover
ZF Forklift
JD.ComLast Mile Delivery
Toyota Volvo
46
1722
38
20
37
95
0
10
20
30
40
50
60
70
80
90
100
Axi
s Ti
tle
Over 80+ partners now developing on DRIVE AGX (Xavier) since launch last year
Cars Trucks Tier 1s Robotaxis
Mapping Sensors Software
Daimler Robotaxi
(Chart shows primary DRIVE partner categories, does not include higher education, research, HIVs, and other such categories of partners)
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2019
WORLD OF AUTONOMOUS VEHICLES IS BIGGEREvery Vehicle Will Be Autonomous — Not Just Cars & Trucks
Cars Trucks Mobility Services(Buses, Taxis, Robotaxis, Shuttles)
New Autonomous Vehicles(Earthmovers, forklifts, delivery bots,
tractors, firetrucks, & more)1.5B vehicles in world today
(1B Cars, 0.5B Commercial Vehicles)2B vehicles by 2035 *
* Source: OICA, Statista 2018
Projected Autonomous Vehicle Shipments by 2025**
30K Heavy Trucks750K Agriculture Vehicles2.4M Commercial Robots
1.1M UAVs
** Source: ABI Research 2018
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2019
VALIDATIONTRAINING / DEV
3 GROWTH OPPORTUNITIES$30B by 2025
Lanes Lights
Path
Signs
PedestriansCars
DRIVE AP2X L2+ AutoPilot, L3/L4, Robotaxis2 Computer Opportunities – AV & Cockpit
$25B TAM by 2025L2+ AutoPilot (35M cars, 2 systems, $17B)
L3/L4 (5M cars = $5B)Robotaxis (1M cars =$3B)
Millions of images per DNN10+ DNNs per car
$3B TAM by 2025Collecting DataTraining Models
MappingAnalyzing Data
Alternative solution to 100s of billions of driving miles for 100s of years
$2B TAM by 2025Simulation/HIL
Resimulation/SIL
Lanes Lights
Path
Signs
PedestriansCars
DRIVING
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2019
VALIDATION
Tesla Model 3 becomes best-selling premium car in U.S. ***
Tesla AutoPilot (L2+) attach rate for Model 3 over 70% **** generating an estimated $1.4B in incremental revenue
$110B Automotive R&D Budget Shifting from HW to Computers & SW *Today, 90% of the value of a car relates to HW – engine, chassis, powertrain, interior
Within a few years, the computing, software, & application layers will account for 60% of the value of a self-driving car.**
“ Only the Model 3 AutoPilotstayed within the lane on all 18 trials.”- IIHS L2 Performance
Test, 2018
Training Data Analysis
* Source: PWC Global Innovation 1000, ** Source: Morgan Stanley Automotive Report *** Source: CNBC **** Electrek
Data Collection Labeling
TRAINING / DEVDRIVING
MARKET DRIVERS
“ How NVIDIA, Google and Others Will Make Autonomous Driving a Reality.”
“ Simulation is the key to accelerating the safety and arrival of autonomous driving.”
(October, 2018)
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2019
PRODUCTS / STRATEGIES
DRIVE AGXOpen computing platform for the software defined AI car from L2+
to robotaxis
End-to-End, Open Platform for Carmakers to Make Autonomous Vehicles
SDK / Tools / Hyperion Test Cars
370+ Partner EcosystemCarmakers, truck makers, auto suppliers, mapping,
sensors, software, research Component Level SILFaster than Real Time
DRIVE ConstellationHIL Sim for AV & IX
Open platform leveraging sim ecosystem for
sensors, traffic, vehicle,
environment, mapping, scenarios
On road testingReal world coverage
0
10
20
30
40
50
60
70
FY2017 FY2019
25 Carmakers, 15 Tier 1s,
Truck makers,Mobility Service
ProvidersMapping
CompaniesStartups
GROWTH IN AUTOMOTIVE COMPANIES USING DGX
AUTOMOTIVE DGXCUSTOMERS
DRIVING TRAINING / DEV VALIDATION
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2019
PROGRESS — KEY ANNOUNCEMENTSEnd-to-End, Open Platform for Carmakers to Make Autonomous Vehicles
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2019
PARTNERS/ECOSYSTEM
CONSTELLATION SAFETY FORCE FIELD DRIVE AP2X
MYROUTE 50-MILE LOOP PEGASUS
SURROUND VIZ HYPERION DRIVE SIM
TUV SUD CHINA AV LICENSE GLOBAL MAPPING
TOYOTA
MERCEDES-BENZ
VOLVO ZF
DAIMLER/BOSCH YAMAHA XPENG SINGULATO
FAW / FTA TUSIMPLE ISUZU NURO
KOMATSU CONTINENTAL AUTOX VEONEER/ZENUITY
MERCEDES-BENZ
INNOVATION & MILESTONES
PROGRESS — KEY ANNOUNCEMENTSEnd-to-End, Open Platform for Carmakers to Make Autonomous Vehicles
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2019
AUTOGROWTH
TAKEAWAYS
NVIDIA is the only company that is delivering an end-to-end, open platform for building autonomous vehicles
DRIVINGThe world of AV is bigger than ever. Not just cars & trucks
$25B opportunity by 2025
NVIDIA’s Key Strategies — End to end system, open platform, AI, AP2X, Hyperion test cars, are game changers for car makers
TRAINING / DEVELOPMENTCollecting, training, & analyzing data are essential for AVs. Over 60 auto companies today using DGX, we’re just getting started
VALIDATIONDRIVE Constellation simulation system now available
Open sim platform with leading ecosystem partners
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Colette Kress, March 2019
FINANCIALS
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2019
GROSS MARGINREVENUE OPERATING INCOME EPS
RECORDS
$9.7B
$11.7B
FY 2018 FY 2019
21% $3.6B
$4.4B
FY 2018 FY 2019
60.2 %61.7 %
FY 2018 FY 2019
150 BPS 22%
$4.92
$6.64
FY 2018 FY 2019
35%
Gross Margin, Operating Income and EPS are Non-GAAP measures.
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2019
PRO VISUALIZATION3-YEAR CAGR 15%
$ M
illio
ns
$750 $835 $934
$0
$200
$400
$600
$800
$1,000
$1,200
$1,130
21%
FY 2016 FY 2018 FY 2019FY 2017
DATACENTER3-YEAR CAGR 105%
$ M
illio
ns
$339$830
$1,932
$2,932
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,00052%
FY 2016 FY 2018 FY 2019FY 2017
$ M
illio
ns
$320 $487 $558 $641
$0
$200
$400
$600
$800
15%
FY 2016 FY 2018 FY 2019FY 2017
AUTO3-YEAR CAGR 26%
$ Bi
llion
s
$2.8$4.1
$5.5 $6.2
$0.0
$2.0
$4.0
$6.0
$8.0
13%
GAMING3-YEAR CAGR 30%
FY 2016 FY 2017 FY 2018 FY 2019
MARKET PLATFORMS
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2019
GROSS MARGIN EXPANSIONValue Added Platforms Expand Margins
52%
54%
56%
58%
60%
62%
64%
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
FY 2016 FY 2017 FY 2018 FY 2019
61.7%
60.2%
59.2%
56.8%
Gro
ss P
rofi
t, $
Bill
ions
Gross Margin is a Non-GAAP measure.
GM% Value Added Platforms All OtherIP
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2019
GROSS PROFIT BY PLATFORMS
GM%
61.7%*
Gross Profit
100%
$7.2B
AUTO OTHER DATACENTER GPU GAMINGPRO VIS
Gross Profit is a Non-GAAP measure. Other primarily includes OEM, Switch and Shield. *Non GAAP Gross Profit includes the impact of ~$128M in charges for excess DRAM & other components we recorded in Q419 and a charge of ~$57M related to prior architecture components and chips we recorded in Q319.
Blended GM% Company GM%Margin Range
61.7%*
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2019
$1.7 $1.9 $2.2$2.8
$3.1
10%
20%
30%
40%
$0.0
$1.0
$2.0
$3.0
FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
24%
OPERATING EXPENSESOperating Expenses Operating Expenses as a % of Revenue
23%
34%
27%
YoY Investments Focused on Gaming, AI, and Auto. 3-Year CAGR 18%
$ Bi
llion
s
Operating Expenses and Operating Expenses as a % of Revenue are Non-GAAP measures.
Operating Expenses Outlook
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2019
OUR LEVERAGED MODELENGINEERS
HardwareSoftware
BY PLATFORM
Graphics | AI | Auto~25%
Software ~35%
GPU Architecture ~40%
FY 2019
FY 2019
FY 2013
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2019
$1.1
$2.2
$3.6$4.4
5%
15%
25%
35%
45%
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
FY 2016 FY 2017 FY 2018 FY 2019
OPERATING MARGIN EXPANSIONOperating Income Operating Margin
37%38%
22%
32%
$ Bi
llion
s
Operating Income and Operating Margin are Non-GAAP measures.
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2019
$1.1$1.5
$2.9 $3.1
Free Cash Flow Total Cash
CASH FLOW AND CASHFree Cash Flow Increased 185%+
FY 2017 FY 2019FY 2016 FY 2018
$7.4
FY 2019$0.0
$2.0
$4.0
$6.0
$8.0
$ Bi
llion
s
Free Cash Flow is a Non-GAAP measure. Total Cash = Cash, Cash Equivalents + Marketable Securities.
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2019
CAPITAL RETURNSince FY 2013: $7B+, 68% FCF
$.0
$1.0
$2.0
$3.0
FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
$1.25
Intended Return
$1.0
Share Repurchase Dividend
$0.8
$1.95
$2.3
$ Bi
llion
s
Free Cash Flow is a Non-GAAP measure.
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2019
USES OF CASHFY 2019 FY 2020 OUTLOOK
OPEX is a Non-GAAP measure. FY20 Outlook for OPEX & CAPEX does not account for Mellanox closing.
$ Bi
llion
s
OPEX CAPITAL RETURN
CAPEX
$2.8
$0.6$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$1.95
M&A
$ Bi
llion
s
OPEX CAPITAL RETURN
CAPEX
$3.1
$0.6$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$2.3
$6.9
M&A
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2019
IN $ MILLIONS Q1FY20 QoQ FY20 YoY
REVENUE $2,200 Flat Flat to slightly down
GM % 59.0% +300 bps
OPERATING EXPENSES $755 Flat High single digit percent
Gross Margin and Operating Expenses are Non-GAAP measures. FY20 Outlook does not account for Mellanox closing.
OUTLOOK UNCHANGED
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2019
NVIDIA | MELLANOXTransaction Summary
TRANSACTION CONSIDERATION $125 per share in cash$6.9B in enterprise value
FINANCIAL IMPACT
Expected to be accretive to non-GAAP gross margin, non-GAAP EPS and free cash flow, immediately after closeIntend to fund the acquisition through balance sheet cashNo change to NVIDIA’s previously announced capital return program
APPROVAL PROCESSApproved by NVIDIA and Mellanox Boards of DirectorsSubject to approval by Mellanox shareholdersSubject to regulatory approvals
EXPECTED CLOSING Expected to close by end of 2019Customary closing conditions
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2019
Q & A
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2019
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES
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2019
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES
GROSS MARGIN ($ IN MILLIONS & MARGIN PERCENTAGE)
NON-GAAP STOCK-BASED COMPENSATION (A)
PRODUCT WARRANTY (B)
OTHER (C) GAAP
FY 2016$2,846 (15) (20) — $2,811
56.8% (0.3) (0.4) — 56.1%
FY 2017$4,088 (15) — (10) $4,063
59.2% (0.2) — (0.2) 58.8%
FY 2018$5,844 (21) — (1) $5,822
60.2% (0.3) — — 59.9%
FY 2019$7,233 (27) — (35) $7,171
61.7% (0.2) — (0.3) 61.2%
A. Stock-based compensation charge was allocated to cost of goods sold.B. Consists of warranty charge associated with a product recall.C. Consists of legal settlement costs.
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2019
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES (CONTD.)
OPERATING EXPENSES ($ IN MILLIONS & % OF REVENUE)
NON-GAAP STOCK-BASED COMPENSATION (A)
ACQUISITION-RELATED AND OTHER COSTS (B)
OTHER (C) GAAP
FY 2016$1,721 190 22 131 $2,064
34% 4 — 3 41%
FY 2017$1,867 233 16 13 $2,129
27% 4 — — 31%
FY 2018$2,227 370 13 2 $2,612
23% 4 — — 27%
FY 2019$2,826 530 2 9 $3,367
24% 5 — — 29%
A. Stock-based compensation charge was allocated to research and development expense, and sales, general and administrative expense.B. Consists of amortization of acquisition-related intangible assets, transaction costs, compensation charges, other credits related to acquisitions, and other costs.C. Comprises of legal settlement costs, contributions, and restructuring and other charges.
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2019
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES (CONTD.)
OPERATING MARGIN ($ IN MILLIONS &MARGIN PERCENTAGE)
NON-GAAPSTOCK-BASED
COMPENSATION (A)
PRODUCT WARRANTY
(B)
ACQUISITION-RELATED AND
OTHER COSTS (C)
OTHER (C) GAAP
FY 2016$1,125 (205) (20) (22) (131) $747
22% (4) — — (3) 15%
FY 2017$2,221 (248) — (16) (23) $1,934
32% (4) — — — 28%
FY 2018$3,617 (391) — (13) (3) $3,210
37% (4) — — — 33%
FY 2019$4,407 (557) — (2) (44) $3,804
38% (6) — — — 32%
A. Stock-based compensation charge was allocated to cost of goods sold, research and development expense, and sales, general and administrative expense.B. Consists of warranty charge associated with a product recall.C. Consists of amortization of acquisition-related intangible assets, transaction costs, compensation charges, other credits related to acquisitions, and other costs. D. Comprises of legal settlement costs, contributions, and restructuring and other charges.
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2019
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES (CONTD.)
($ IN MILLIONS, EXCEPT SHARES & EPS)
NON-GAAP STOCK-BASED COMPENSATION (A)
ACQUISITION-RELATED ITEMS AND
OTHER COSTS (B)
OTHER (C)
TAX IMPACT OF ADJUSTMENTS
TAX BENEFIT FROM INCOME TAX REFORM
GAAP
FY 2018
Net income $3,085 (391) (13) (24) 257 133 $3,047Shares used in diluted per share calculation
627 — — 5 — — 632
Diluted EPS $4.92 — — — — — $4.82
FY 2019
Net income $4,143 (557) (2) (34) 223 368 $4,141
Shares used in diluted per share calculation
624 — — 1 — — 625
Diluted EPS $6.64 — — — — — $6.63
A. Stock-based compensation charge was allocated to cost of goods sold, research and development expense, and sales, general and administrative expense.B. Consists of amortization of acquisition-related intangible assets, transaction costs, compensation charges, other credits related to acquisitions, and other costs.C. Other comprises of legal settlements, contributions, gains from non-affiliated investments, interest expense related to amortization of debt discount and debt-related costs. Other also comprises anti-dilution impact from note hedge that
is excluded from GAAP weighted average diluted share calculation.
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2019
($ IN MILLIONS) FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY2018 FY2019
GAAP net cash flow provided by operating activities $824 $835 $905 $1,175 $1,672 $3,502 $3,743
Purchase of property and equipment and intangible assets (183) (255) (122) (86) (176) (593) (600)
Free cash flow $641 $580 $783 $1,089 $1,496 $2,909 $3,143
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES (CONTD.)
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2019
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES
($ IN MILLIONS) Q1FY20 OUTLOOK
FY2020OUTLOOK
Non-GAAP Gross Margin 59.0%
Impact of stock-based compensation expense (0.2%)
GAAP Gross Margin 58.8%
Non-GAAP Operating Expenses $755 $3,090
Stock-based compensation expense, acquisition-related costs, and other costs 175 865
GAAP Operating Expenses $930 $3,955
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