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FOR IMMEDIATE RELEASE:

NVIDIA Reports Financial Results for Third Quarter Fiscal Year 2010

• Revenue up 16 percent quarter-on-quarter to $903.2 million
• GAAP net income of $107.6 million, or $0.19 cents per diluted share
• GAAP gross margin of 43.4 percent; non-GAAP gross margin of 41.0 percent
• Cash flow from operating activities of $141.3 million; free cash flow of $124.7 million

SANTA CLARA, Calif.—Nov. 5, 2009— NVIDIA Corp. (Nasdaq: NVDA) today reported revenue of $903.2 million for the third quarter of fiscal 2010 ended Oct. 25, 2009, up 16 percent from the previous quarter and up slightly from $897.7 million reported in the same period a year earlier.

On a GAAP basis, the company recorded net income of $107.6 million, or $0.19 per diluted share, compared with net income of $61.7 million, or $0.11 per diluted share a year ago. Third quarter GAAP results included a benefit to operating income of $25.1 million related to insurance reimbursements received during the quarter. On a non-GAAP basis – excluding the insurance reimbursements and stock-based compensation, as well as their associated tax impact − net income was $110.3 million, or $0.19 per diluted share, compared with $111.4 million, or $0.20 per diluted share, a year earlier.

"We continued to make progress in the third quarter with healthy market demand across the board," said Jen-Hsun Huang, president and chief executive officer, NVIDIA. "Revenue was up from a year ago, with improvement in each of our PC, professional solutions and consumer businesses. It’s great to see us shipping orders with our Tegra mobile-computing solution, and growing enthusiasm for our Tesla platform for parallel computing in the server and cloud-computing markets."

Gross margin, on a GAAP basis, increased to 43.4 percent from 20.2 percent in the previous quarter and 41.0 percent a year earlier. On a non-GAAP basis, gross margin was 41.0 percent, up 4.7 points from the 36.3 percent reported in the previous quarter but slightly off from 41.9 percent a year earlier.

GAAP net loss for the nine months ended Oct. 25, 2009 was $199.1 million, or $0.36 per share, compared to a net income of $117.6 million, or $0.20 per diluted share for the nine months ended Oct. 26, 2008. Non-GAAP net income for the nine months ended Oct. 25, 2009, which excludes a $93.9 million net charge related to the weak die/packaging material set that was used in certain versions of our previous generation chips, a non-recurring charge of $140.2 million in connection with a cash tender offer to purchase employee stock options, stock-based compensation charges, and their associated tax impact, was $101.4 million, or $0.18 per diluted share, compared to a net income of $397.7 million, or $0.68 per diluted share for the nine months ended Oct. 26, 2008.

Outlook
The outlook for the fourth quarter of fiscal 2010 is as follows:

• Revenue is expected to be up slightly, approximately 2 percent, from the third quarter.
• GAAP gross margin is expected to be in the range of 40 to 42 percent.
• GAAP operating expenses are expected to be approximately $305 million.

Third Quarter Fiscal 2010 and Recent Highlights:

• First major Tegra™ devices shipped: Microsoft’s Zune HD and the Samsung M1.
• Held first ever GPU Technology Conference, which was 50% oversubscribed, with 1,500 attendees from 40 countries. More than 200 technical sessions were conducted, and presentations were made by 60 emerging companies that utilize the graphics processing unit (GPU).
• Introduced the next generation CUDA™ GPU architecture, codenamed "Fermi." The Fermi architecture is the foundation for the world’s first computational GPUs, delivering breakthroughs in both graphics and parallel computing.
• Oak Ridge National Laboratory announced plans to use Fermi to build a new supercomputer, which is designed to be the world’s fastest.
• Launched the industry’s first development environment for massively parallel computing. The tool, code-named "Nexus", is integrated into Microsoft Visual Studio, so that developers will be able to use Visual Studio and C++ to write applications that leverage Fermi GPUs.
• Launched NVIDIA® RealityServer®, a powerful combination of GPUs and software that streams interactive, photorealistic 3D applications to any web connected PC, laptop, netbook or smart phone.
• Adobe’s new Flash Player 10.1 will be accelerated by GeForce®, NVIDIA ION™ and Tegra™ products, helping to bring uncompromised browsing of rich Web content to netbooks, smartphones and smartbooks.

Conference Call and Web Cast Information
NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter fiscal 2010 financial results and current financial prospects today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen to the call, please dial (212) 231-2900. A live Web cast (listen-only mode) of the conference call will be held at the NVIDIA investor relations Web site www.nvidia.com/ir and at www.streetevents.com. The Web cast will be recorded and available for replay until the company's conference call to discuss its financial results for its fourth quarter fiscal 2010.

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 cost of revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income, non-GAAP net income per share, free cash flow and days sales in inventory. 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 a charge related to the weak die/packaging material set that was used in certain versions of NVIDIA’s previous generation chips, net of insurance reimbursements, a non-recurring charge related to a tender offer purchase, a non-recurring charge against cost of revenue related to a royalty dispute, a non-recurring restructuring charge against operating expenses, recurring stock-based compensation charges, 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. Days sales in inventory is computed using GAAP ending inventory multiply by the number of days in the period divided by the non-GAAP cost of revenue. 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.

About NVIDIA
NVIDIA (Nasdaq: NVDA) awakened the world to the power of computer graphics when it invented the graphics processing unit (GPU) in 1999. Since then, it has consistently set new standards in visual computing with breathtaking, interactive graphics. Expertise in programmable GPUs has led to breakthroughs in parallel processing which make supercomputing inexpensive and widely accessible. Fortune magazine has ranked NVIDIA #1 in innovation in the semiconductor industry for two years in a row. For more information, see www.nvidia.com.

Certain statements in this press release including, but not limited to, statements as to: the benefits and impact of, and demand and enthusiasm for, NVIDIA’s products and technologies; and NVIDIA’s revenue outlook for the fourth quarter of fiscal 2010; are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: global economic conditions; development of faster or more efficient technology; the impact of technological development and competition; design, manufacturing or software defects; changes in consumer preferences or 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 reports NVIDIA files with the Securities and Exchange Commission, or SEC, including its Form 10-Q for the fiscal period ended July 26, 2009. Copies of reports filed with the SEC are posted on NVIDIA’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.

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