NVIDIA C O RP O R A NVIDIA CORPORATION T ION 2013 AnnUAL REviEW, | NoticE OF AnnUAL MEEtinG, | 2013 2013 ProXY StatEMEnt and Form 10-K A NN U A L R E VI E W Since 1993, NVIDIA has pioneered the art and science of visual computing. The company’s technologies are transforming a world of displays into a world of interactive discovery— for everyone from gamers to scientists, and consumers to enterprise customers. More information at www.nvidia.com DEAR FELLOW STAKEHOLDERS, NVIDIA did ITS BEST WORK in OUR 20-YEAR HisTORY. Revenue grew 7 percent in fiscal year 2013 to a record We showed off our first fully integrated products. $4.28 billion at a time when much of the PC industry NVIDIA SHIELD, the runaway hit of the 2013 International contracted. We exceeded our previous peak of $4.10 Consumer Electronics Show, is an Android-based gaming billion five years ago, when $710 million came from device that highlights our Tegra processor. And NVIDIA chipsets, a business we have exited. GRID, by bringing GPUs to the cloud, will do for graphics- rich applications what Netflix does for movies. GPU revenue grew for a second straight year, up 2 percent overall and up 8 percent excluding chipsets. Our gross margin increased to 52.0 percent, up 0.6 percentage point from the prior year. Diluted earnings Tegra revenue related to phones and tablets grew declined 4 percent to $0.90 a share, reflecting increased 50 percent, driven by marquee wins for Tegra 3 in the investment to secure future growth. We achieved a record explosive tablet market. Building on this momentum, level of cash, at $3.73 billion, and gave back $147 million to we introduced Tegra 4 near the year’s end and the our shareholders through share buybacks and a newly following month unveiled Tegra 4i, our first chip to launched dividend program. combine an application processor with an LTE modem. These achievements came against a background that Gross margins and cash hit record levels, even as we offered plenty of difficulties. Continued hard-disk shortages invested for future growth. related to lingering floods in Thailand weakened the PC industry. There were supply shortages for 28nm silicon early in the year. And demand in Europe stayed soft. Kepler GPUs (left) have moved across our product line, proving revolutionary for gamers, designers, visual artists, researchers and scientists. Tegra 4 (right) is the world’s fastest mobile processor. NVIDIA CORPORATION 2013 ANNUAL REVIEW 1 A VisuAL WORLD Computer graphics is a unique and powerful medium. be 5 billion HD displays in the world. As the leader in visual It has transformed the PC from a tool for productivity into a computing, we aim to light every pixel on each of those platform for creative expression, entertainment, design, screens through our range of offerings. even scientific discovery. PROPELLING COMputER GRAPHICS FROM Through computer graphics we can create and enjoy A TECHNOLOGY INTO AN INDUSTRY immersive games and imaginative movies. We can design Our first strategic priority is to extend our technology and build super cars…or energy efficient cars…even cars leadership in visual computing. We are 20 years into this that drive themselves. We can visualize a virus at the business and have created an innovation engine that has atomic level to save lives, and simulate the collision of resulted in thousands of patented inventions, technologies, galaxies to better understand the beginning of life. industry relationships and a powerful brand. As the reach of computing grows to smartphones, tablets, and beyond, visual computing is more important than ever. We believe IN A WORLD incREAsingLY fiLLED our assets in this field of computing are unmatched. And WITH visuAL dispLAYS, COMpuTER we are not standing still. GRAPHics ENABLE OUR cusTOMERS By remaining focused on visual computing, and by providing TO inTERACT WITH THE VAST SEA the world’s best minds in this field an environment to do OF digiTAL idEAS, infORMATION And their best work, we will continue to invent breakthrough ENTERTAinMENT. THEY CAN EngAGE technologies. WITH CONTENT WITH A FREEDOM We take our innovations to market in three ways. First, we THAT NO OTHER MEdiuM ALLOWS. design and build industry leading GPU and Tegra processors. Second, we create fully integrated system products, like SHIELD and GRID, for markets where we can add distinct, We are seeing the “computerization” of all electronic unique value. Third, we license our technology to partners devices around us. The force that transformed the phone to integrate into their proprietary products. into a smartphone is now sweeping through TVs, cars, and in the near future, watches, glasses, and household This year we made remarkable strides across these areas. appliances. In just a few years, analysts predict, there will Tegra powers highly innovative tablets like Microsoft’s Surface RT (left) and the Nexus 7 from Google™ (right). It also drives Tesla’s Model S’s instrument cluster and infotainment system. (opposite page). NVIDIA CORPORATION 2 2013 ANNUAL REVIEW AscENT OF TEGRA In just a short time, we’ve become a growing force in We’re thrilled to have just launched Tegra 4i, our first mobile computing. Tegra 3, the world’s first quad core mobile processor with an integrated LTE modem, based mobile processor, won its way into some of the year’s on technology from our mid-2011 acquisition of Icera. most innovative tablets, including the Nexus 7, Google’s By bringing a super phone experience to the mainstream, first tablet, as well as the Surface RT, Microsoft’s first Tegra 4i gives us entry to the LTE market, which is computer. Tegra 3 also powered the HTC One X super projected to reach 150 million units in 2013 and growing phone, as well as phones from Fujitsu, LG and ZTE. at 50 percent annually. The TegraZone mobile game store, the first of its kind, exceeded 6 million downloads. Mobile computing is not just about tablets and smartphones. Powerful mobile processors will increasingly find their way Along with these milestones, the Tegra family grew into all kinds of devices, including our cars. All of the major richer. The recently launched Tegra 4 is the world’s car manufacturers are working on the next big thing in the fastest mobile processor, with 72 GPU cores and the auto industry—interactive visual displays and systems that only ARM Cortex-A15 four-plus-one architecture. With enhance our driving experience while improving safety. Tegra 4, we also introduced the world’s first “always-on HDR” camera—our initial step in bringing the promising Today, NVIDIA technology powers the digital instrument field of computational photography to mobile computing. clusters and infotainment systems of more than 20 brands and 100 models, including vehicles from Audi, BMW, Lamborghini and VW, as well as the Tesla Model S, which won Motor Trend’s “Car of the Year” for 2013. NVIDIA CORPORATION 2013 ANNUAL REVIEW 3 KEPLER: A REVOLUTIONARY GPU FOR GAMing, SciENCE And DEsign We rolled out the first Kepler-based processors to the Kepler GPUs are proving revolutionary for researchers company’s first customers, gamers. And they were thrilled. and scientists. Oak Ridge National Laboratory launched Our flagship Kepler-based GeForce GPU, the GTX690, was Titan with 18,688 Kepler-based Tesla GPUs, and it took lauded as “a card to cherish” by PC Magazine. As we drove the No. 1 spot on the Top500 supercomputer list. This Kepler throughout the GeForce product lineup—from the milestone capped a year in which GPU-accelerated $99 segment right through to our top-end $999 card— computing hit a tipping point, with 50 of the top 500 positive reviews poured in. supercomputers powered by NVIDIA GPUs. To date, CUDA has been downloaded 1.7 million times, OuR NEW KEPLER GPU and the latest version, CUDA 5, has been downloaded once a minute, on average, since its launch last year. ARCHITECTURE SOLidifiED It is being taught in more than 600 universities. A new NVIDIA’S LEADERSHip ACROss initiative to teach parallel programming through online classes from Udacity and Coursera is reaching tens of OUR CORE MARKETS. thousands of students worldwide. And Tesla revenue grew 37 percent. The era of GPU-accelerated computing We finished the year with overall GPU market share rising has arrived. to 65 percent from 56 percent the previous year, and notebook share climbing to 63 percent from 48 percent. For professional designers and visual effects artists, we began shipping Kepler-based Quadro GPUs at the NVIDIA GPUs are now general purpose processors, thanks start of fiscal year 2014. We expect to build on our strong to the breakthrough invention of CUDA several years ago. lead in this market, from manufacturing to media and Built around a dense fabric of processors, NVIDIA’s most entertainment. For the fourth year running, all of the powerful version of the Kepler GPU consists of over 2,000 films nominated for the Best Visual Effects Oscar were processors working tightly in parallel. Now, NVIDIA GPUs powered by Quadro. can not only process pixels for computer imagery, they can simulate particles for fluid dynamics and molecules for drug discovery. NVIDIA CORPORATION 4 2013 ANNUAL REVIEW OuR FIRST INTEGRATED PROducTS While we achieved many great things this year, I am Just as SHIELD is a device built around Tegra, GRID is a especially proud of the work we did to introduce our first-of-its-kind visual computing appliance built around first fully integrated system products—SHIELD and GRID. the GPU. GRID will allow gamers to play titles stored in the cloud and streamed to any screen, design professionals SHIELD is an NVIDIA-developed Android gaming device, to utilize graphics-intensive apps via the cloud, and large powered by Tegra 4.