AMD Reports Second Quarter 2020 Financial Results

 
Reve­nue grows 26 per­cent year-over-year dri­ven by Ryzen™ and EPYC™ pro­ces­sor sales

SANTA CLARA, Calif., July 28, 2020 (GLOBE NEWSWIRE) — AMD (NASDAQ:AMD) today announ­ced reve­nue for the second quar­ter of 2020 of $1.93 bil­li­on, ope­ra­ting inco­me of $173 mil­li­on, net inco­me of $157 mil­li­on and dilu­t­ed ear­nings per share of $0.13. On a non-GAAP* basis, ope­ra­ting inco­me was $233 mil­li­on, net inco­me was $216 mil­li­on and dilu­t­ed ear­nings per share was $0.18.

GAAP Quar­ter­ly Finan­cial Results

  Q2 2020
  Q2 2019
  Y/Y Q1 2020
  Q/Q
Reve­nue ($B) $1.93   $1.53   Up 26% $1.79   Up 8%
Gross mar­gin 44%   41%   Up 3pp 46%   Down 2pp
Ope­ra­ting expen­ses ($M) $675   $562   Up $113 $641   Up $34
Ope­ra­ting inco­me ($M) $173   $59   Up $114 $177   Down $4
Net inco­me ($M) $157   $35   Up $122 $162   Down $5
Ear­nings per share $0.13   $0.03   Up $0.10 $0.14   Down $0.01

Non-GAAP* Quar­ter­ly Finan­cial Results

  Q2 2020 Q2 2019 Y/Y Q1 2020 Q/Q
Reve­nue ($B) $1.93   $1.53   Up 26% $1.79   Up 8%
Gross mar­gin 44%   41%   Up 3pp 46%   Down 2pp
Ope­ra­ting expen­ses ($M) $617   $512   Up $105 $584   Up $33
Ope­ra­ting inco­me ($M) $233   $111   Up $122 $236   Down $3
Net inco­me ($M) $216   $92   Up $124 $222   Down $6
Ear­nings per share $0.18   $0.08   Up $0.10 $0.18   Flat
           

We deli­ve­r­ed strong second quar­ter results, led by record note­book and ser­ver pro­ces­sor sales as Ryzen and EPYC reve­nue more than dou­bled from a year ago,” said Dr. Lisa Su, AMD pre­si­dent and CEO. “Des­pi­te some macroeco­no­mic uncer­tain­ty, we are rai­sing our full-year reve­nue out­look as we enter our next pha­se of growth dri­ven by the acce­le­ra­ti­on of our busi­ness in mul­ti­ple mar­kets.”

Q2 2020 Results

  • Reve­nue was $1.93 bil­li­on, up 26 per­cent year-over-year pri­ma­ri­ly dri­ven by hig­her Com­pu­ting and Gra­phics seg­ment reve­nue. Reve­nue was up 8 per­cent quar­ter-over-quar­ter pri­ma­ri­ly dri­ven by hig­her Enter­pri­se, Embed­ded and Semi-Cus­tom seg­ment reve­nue.
  • Gross mar­gin was 44 per­cent, up 3 per­cen­ta­ge points year-over-year and down 2 per­cen­ta­ge points quar­ter-over-quar­ter. The year-over-year incre­a­se was pri­ma­ri­ly dri­ven by Ryzen™ and EPYC™ pro­ces­sor sales. The quar­ter-over-quar­ter decre­a­se was due to incre­a­sed semi-cus­tom pro­duct sales.
  • Ope­ra­ting inco­me was $173 mil­li­on com­pa­red to ope­ra­ting inco­me of $59 mil­li­on a year ago and $177 mil­li­on in the pri­or quar­ter. Non-GAAP ope­ra­ting inco­me was $233 mil­li­on com­pa­red to ope­ra­ting inco­me of $111 mil­li­on a year ago and $236 mil­li­on in the pri­or quar­ter. Ope­ra­ting inco­me impro­ved year-over-year pri­ma­ri­ly dri­ven by reve­nue growth and a grea­ter per­cen­ta­ge of Ryzen and EPYC pro­ces­sor sales.
  • Net inco­me was $157 mil­li­on com­pa­red to net inco­me of $35 mil­li­on a year ago and $162 mil­li­on in the pri­or quar­ter. Non-GAAP net inco­me was $216 mil­li­on com­pa­red to net inco­me of $92 mil­li­on a year ago and $222 mil­li­on in the pri­or quar­ter.
  • Dilu­t­ed ear­nings per share was $0.13 com­pa­red to dilu­t­ed ear­nings per share of $0.03 a year ago and $0.14 in the pri­or quar­ter. Non-GAAP dilu­t­ed ear­nings per share was $0.18 com­pa­red to dilu­t­ed ear­nings per share of $0.08 a year ago and $0.18 in the pri­or quar­ter.
  • Cash and cash equi­va­lents were $1.78 bil­li­on at the end of the quar­ter.

Quar­ter­ly Finan­cial Seg­ment Sum­ma­ry

  • Com­pu­ting and Gra­phics seg­ment reve­nue was $1.37 bil­li­on, up 45 per­cent year-over-year and down 5 per­cent quar­ter-over-quar­ter. Reve­nue was hig­her year-over-year dri­ven by strong Ryzen pro­ces­sor sales. The quar­ter-over-quar­ter decli­ne was due to lower gra­phics pro­ces­sor sales.
    • Cli­ent pro­ces­sor average sel­ling pri­ce (ASP) was up year-over-year dri­ven by Ryzen pro­ces­sor sales. Cli­ent pro­ces­sor ASP was down quar­ter-over-quar­ter due to a hig­her per­cen­ta­ge of Ryzen mobi­le pro­ces­sor sales.
    • GPU ASP was lower year-over-year and quar­ter-over-quar­ter due to lower chan­nel sales. 
    • Ope­ra­ting inco­me was $200 mil­li­on com­pa­red to $22 mil­li­on a year ago and $262 mil­li­on in the pri­or quar­ter. The year-over-year incre­a­se was dri­ven by hig­her reve­nue. The quar­ter-over-quar­ter decli­ne was due to hig­her ope­ra­ting expen­ses and lower reve­nue.
  • Enter­pri­se, Embed­ded and Semi-Cus­tom seg­ment reve­nue was $565 mil­li­on, down 4 per­cent year-over-year and up 62 per­cent quar­ter-over-quar­ter. Reve­nue was lower year-over-year due to lower semi-cus­tom pro­duct sales lar­ge­ly off­set by hig­her EPYC pro­ces­sor sales. The quar­ter-over-quar­ter incre­a­se was dri­ven by hig­her EPYC pro­ces­sor and semi-cus­tom pro­duct sales. 
    • Ope­ra­ting inco­me was $33 mil­li­on com­pa­red to $89 mil­li­on a year ago and an ope­ra­ting loss of $26 mil­li­on in the pri­or quar­ter. The year-over-year decli­ne was due to hig­her ope­ra­ting expen­ses and lower reve­nue. The quar­ter-over-quar­ter incre­a­se was dri­ven by hig­her reve­nue.
  • All Other ope­ra­ting loss was $60 mil­li­on com­pa­red to ope­ra­ting los­ses of $52 mil­li­on a year ago and $59 mil­li­on in the pri­or quar­ter.

Recent PR High­lights

  • Data cen­ter adop­ti­on of 2nd Gen AMD EPYC pro­ces­sors con­ti­nued to acce­le­ra­te with uni­que cloud, enter­pri­se and high-per­for­mance com­pu­ting (HPC) wins.
    • Goog­le announ­ced new Con­fi­den­ti­al Vir­tu­al Machi­nes for Goog­le Com­pu­te Engi­ne powe­red exclu­si­ve­ly by AMD EPYC pro­ces­sors fea­turing AMD Secu­re Encryp­ted Vir­tua­liz­a­ti­on. The­se Con­fi­den­ti­al VMs pro­vi­de cus­to­mers with data secu­ri­ty and high-per­for­mance cloud com­pu­ting enab­led by advan­ced secu­ri­ty fea­tures on AMD EPYC pro­ces­sors.
    • Ama­zon Web Ser­vices (AWSadded its sixth AMD EPYC pro­ces­sor-powe­red cloud instance fami­ly, the new Ama­zon EC2 C5a instan­ces for cus­to­mers run­ning com­pu­te inten­si­ve workloads.
    • Ora­cle and AMD announ­ced that AMD EPYC pro­ces­sors are brin­ging class-lea­ding memo­ry band­width and core count to the new Ora­cle Cloud Infra­st­ruc­tu­re Com­pu­te E3 plat­form for gene­ral pur­po­se and high band­width workloads.
    • Dell Tech­no­lo­gies, HPE, IBM Cloud, Nuta­nix, Super­mi­cro, VMware and others announ­ced offe­rings powe­red by the new AMD EPYC 7Fx2 pro­ces­sor fami­ly that bring high-fre­quen­cy pro­ces­sing power and per-core per­for­mance lea­ders­hip to enter­pri­se workloads.
    • Dell Tech­no­lo­gies announ­ced its first hyper­con­ver­ged infra­st­ruc­tu­re sys­tem, the VxRail E Seri­es, based on AMD EPYC pro­ces­sors.
    • The new Nvi­dia DGX A100 sys­tem harnes­ses the per­for­mance, core count and PCIe® 4 sup­port of AMD EPYC pro­ces­sors to acce­le­ra­te diver­se AI workloads such as data ana­ly­tics, trai­ning and infe­rence.
  • Com­mer­cial momen­tum for AMD cli­ent pro­ces­sors is gro­wing, dri­ven by Ryzen PRO per­for­mance, secu­ri­ty fea­tures and seam­less manage­ment for the most deman­ding busi­ness envi­ron­ments.
    • Leno­vo and AMD announ­ced the Leno­vo Think­Sta­ti­on P620 powe­red by AMD Ryzen Thre­ad­rip­per™ PRO pro­ces­sors, inclu­ding a 64-core pro­fes­sio­nal work­sta­tion CPU. The new AMD Ryzen Thre­ad­rip­per PRO pro­ces­sor fami­ly fea­tures lea­ders­hip per­for­mance, unri­val­led band­width and AMD PRO tech­no­lo­gies which inclu­de enter­pri­se-gra­de secu­ri­ty and mana­gea­bi­li­ty fea­tures.
    • AMD announ­ced the AMD Ryzen PRO 4000 Seri­es mobi­le pro­ces­sors, brin­ging ulti­ma­te per­for­mance, work any­whe­re fle­xi­bi­li­ty, secu­ri­ty fea­tures and seam­less mana­gea­bi­li­ty for modern IT infra­st­ruc­tures. Enter­pri­se note­books powe­red by the AMD Ryzen PRO 4000 Seri­es are avail­ab­le now from HP and Leno­vo.
  • AMD expan­ded its desk­top pro­ces­sor port­fo­lio with the 3rd Gen AMD Ryzen 3000XT seri­es desk­top pro­ces­sors, fea­turing hig­her boost fre­quen­ci­es that deli­ver eli­te per­for­mance in gaming and con­tent crea­ti­on com­pa­red to pri­or genera­ti­on.
  • Apple announ­ced the latest 16-inch Mac­Book Pro fea­turing the AMD Rade­on™ Pro 5600M mobi­le GPU, brin­ging desk­top-class gra­phics per­for­mance to users on the go.
  • AMD announ­ced the AMD Rade­on™ Pro VII work­sta­tion gra­phics card with AMD Infi­ni­ty Fab­ric™ Link tech­no­lo­gy, deli­vering excep­tio­nal gra­phics and com­pu­ting per­for­mance for broad­cast and engi­nee­ring pro­fes­sio­nals.
  • AMD announ­ced it is con­tri­bu­ting cloud-based super­com­pu­ting sys­tems powe­red by AMD EPYC pro­ces­sors and AMD Rade­on Instinct acce­le­ra­tors as part of the AMD HPC Fund for COVID-19 rese­arch. The sys­tems will be deli­ve­r­ed to New York Uni­ver­si­ty (NYU), Mas­sa­chu­setts Insti­tu­te of Tech­no­lo­gy (MIT) and Rice Uni­ver­si­ty in part­ners­hip with Pen­gu­in Com­pu­ting to pro­vi­de remo­te super­com­pu­ting capa­bi­li­ties for selec­ted rese­ar­chers around the world.

Cur­rent Out­look

AMD’s out­look state­ments are based on cur­rent expec­ta­ti­ons and con­tem­pla­te the cur­rent COVID-19 envi­ron­ment, glo­bal eco­no­mic back­drop and cus­to­mer demand signals. The fol­lowing state­ments are for­ward-loo­king, and actu­al results could dif­fer mate­ri­al­ly depen­ding on mar­ket con­di­ti­ons, COVID-19 fac­tors and the fac­tors set forth under “Cau­tio­na­ry State­ment” below.

For the third quar­ter of 2020, AMD expects reve­nue to be appro­xi­mate­ly $2.55 bil­li­on, plus or minus $100 mil­li­on, an incre­a­se of appro­xi­mate­ly 42 per­cent year-over-year and 32 per­cent sequen­ti­al­ly. The year-over-year and sequen­ti­al incre­a­ses are expec­ted to be pri­ma­ri­ly dri­ven by Ryzen and EPYC pro­ces­sor sales and next genera­ti­on semi-cus­tom pro­ducts. AMD expects non-GAAP gross mar­gin to be appro­xi­mate­ly 44 per­cent in the third quar­ter of 2020. Gross mar­gin is expec­ted to incre­a­se year-over-year pri­ma­ri­ly dri­ven by Ryzen and EPYC pro­ces­sor sales.

AMD now expects 2020 reve­nue to grow by appro­xi­mate­ly 32 per­cent com­pa­red to 2019 dri­ven by strength in PC, gaming and data cen­ter pro­ducts. Non-GAAP gross mar­gin is expec­ted to be appro­xi­mate­ly 45 per­cent.

AMD Telecon­fe­rence

AMD will hold a con­fe­rence call for the finan­cial com­mu­ni­ty at 2:00 p.m. PT (5:00 p.m. ET) today to dis­cuss its second quar­ter 2020 finan­cial results. AMD will pro­vi­de a real-time audio broad­cast of the telecon­fe­rence on the Inves­tor Rela­ti­ons page of its web­site at www.amd.com. The web­cast will be avail­ab­le for 12 mon­ths after the con­fe­rence call.

               
  RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES            
  (In mil­li­ons, except per share data) (Unau­di­ted)                      
    Three Mon­ths Ended        
    June 27,
2020
  March 28,
2020
  June 29,
2019
           
  GAAP gross mar­gin $   848     $   818     $   621              
  GAAP gross mar­gin %   44%       46%       41%              
  Stock-based com­pen­sa­ti­on   2       2       2              
  Non-GAAP gross mar­gin $   850     $   820     $   623              
  Non-GAAP gross mar­gin %   44%       46%       41%              
                         
  GAAP ope­ra­ting expen­ses $   675     $   641     $   562              
  GAAP ope­ra­ting expenses/revenue %   35%       36%       37%              
  Stock-based com­pen­sa­ti­on   58       57       43              
  Loss con­tin­gen­cy on legal mat­ter   -       -       7              
  Non-GAAP ope­ra­ting expen­ses $   617     $   584     $   512              
  Non-GAAP ope­ra­ting expenses/revenue%   32%       33%       33%              
                         
  GAAP ope­ra­ting inco­me $   173     $   177     $   59              
  GAAP ope­ra­ting mar­gin %   9%       10%       4%              
  Stock-based com­pen­sa­ti­on   60       59       45              
  Loss con­tin­gen­cy on legal mat­ter   -       -       7              
  Non-GAAP ope­ra­ting inco­me $   233     $   236     $   111              
  Non-GAAP ope­ra­ting mar­gin %   12%       13%       7%              
                         
    Three Mon­ths Ended
    June 27,
2020
  March 28,
2020
  June 29,
2019
  GAAP net inco­me / ear­nings per share $   157     $   0.13     $   162     $   0.14   $   35     $   0.03
  Non-cash inte­rest expen­se rela­ted to con­ver­ti­ble debt   2       -       2       -     6       -
  Stock-based com­pen­sa­ti­on   60       0.05       59       0.04     45       0.04
  Equi­ty inco­me in inves­tee   (1 )     -       -       -     -       -
  Loss con­tin­gen­cy on legal mat­ter   -       -       -       -     7       0.01
  Inco­me tax pro­vi­si­on   (2 )     -       (1 )     -     (1 )     -
  Non-GAAP net inco­me / ear­nings per share $   216     $   0.18     $   222     $   0.18   $   92     $   0.08
                         
  Shares used and net inco­me adjus­t­ment in
ear­nings per share cal­cu­la­ti­on (1)
                     
  Shares used in per share cal­cu­la­ti­on (GAAP)   1,227       1,224     1,109
  Inte­rest expen­se add-back to GAAP net inco­me $ 3     $ 4   $ -
  Shares used in per share cal­cu­la­ti­on (Non-GAAP)   1,227       1,224     1,210
  Inte­rest expen­se add-back to Non-GAAP net inco­me $ 1     $ 2   $ 5
                         
                         
(1 ) For the three mon­ths ended June 27, 2020 and March 28, 2020, GAAP dilu­t­ed EPS cal­cu­la­ti­ons inclu­de 31 mil­li­on shares rela­ted to the Company’s 2026 Con­ver­ti­ble Notes and the asso­cia­ted $3 mil­li­on and $4 mil­li­on inte­rest expen­se, respec­tively, add-back to net inco­me under the “if con­ver­ted” method.
     
    For the three mon­ths ended June 29, 2019, the 100.6 mil­li­on shares rela­ted to the Company’s 2026 Con­ver­ti­ble Notes were not inclu­ded in the GAAP dilu­t­ed EPS cal­cu­la­ti­ons as their inclu­si­on would have been anti-dilu­ti­ve.
     
    For the three mon­ths ended June 27, 2020,  March 28, 2020 and June 29, 2019, Non-GAAP dilu­t­ed EPS cal­cu­la­ti­ons inclu­de 31 mil­li­on, 31 mil­li­on and 100.6 mil­li­on shares, respec­tively, rela­ted to the Company’s 2026 Con­ver­ti­ble Notes and the asso­cia­ted $1 mil­li­on, $2 mil­li­on and $5 mil­li­on inte­rest expen­se, respec­tively, add-back to net inco­me under the “if con­ver­ted” method.
     

About AMD

For 50 years, AMD has dri­ven inno­va­ti­on in high-per­for­mance com­pu­ting, gra­phics and visua­liz­a­ti­on tech­no­lo­gies – the buil­ding blocks for gaming, immer­si­ve plat­forms and the data cen­ter. Hund­reds of mil­li­ons of con­su­mers, lea­ding For­tu­ne 500 busi­nes­ses and cut­ting-edge sci­en­ti­fic rese­arch faci­li­ties around the world rely on AMD tech­no­lo­gy dai­ly to impro­ve how they live, work and play. AMD employees around the world are focu­sed on buil­ding gre­at pro­ducts that push the bounda­ries of what is pos­si­ble. For more infor­ma­ti­on about how AMD is enab­ling today and inspi­ring tomor­row, visit the AMD (NASDAQ: AMDweb­siteblogFace­book and Twit­ter pages.

Cau­tio­na­ry State­ment

This press release con­tains for­ward-loo­king state­ments con­cer­ning Advan­ced Micro Devices, Inc. (AMD) such as AMD’s expec­ta­ti­ons regar­ding its next pha­se of growth; the fea­tures, func­tio­n­a­li­ty, per­for­mance, avai­la­bi­li­ty, timing and expec­ted bene­fits of AMD pro­ducts; and AMD’s expec­ted third quar­ter of 2020 out­look inclu­ding, reve­nue and non-GAAP gross mar­gin and the expec­ted dri­vers and AMD’s expec­ted fis­cal 2020 finan­cial out­look, inclu­ding reve­nue and non-GAAP gross mar­gin and expec­ted dri­vers, based on cur­rent expec­ta­ti­ons and con­tem­pla­ted cur­rent COVID-19 envi­ron­ment, glo­bal eco­no­mic back­drop and cus­to­mer demand signals, which are made pur­suant to the Safe Har­bor pro­vi­si­ons of the Pri­va­te Secu­ri­ties Liti­ga­ti­on Reform Act of 1995. For­ward loo­king state­ments are com­mon­ly iden­ti­fied by words such as “would,” “may,” “expects,” “belie­ves,” “plans,” “intends,” “pro­jects” and other terms with simi­lar mea­ning. Inves­tors are cau­tio­ned that the for­ward-loo­king state­ments in this press release are based on cur­rent beliefs, assump­ti­ons and expec­ta­ti­ons, speak only as of the date of this press release and invol­ve risks and uncer­tain­ties that could cau­se actu­al results to dif­fer mate­ri­al­ly from cur­rent expec­ta­ti­ons. Such state­ments are sub­ject to cer­tain known and unknown risks and uncer­tain­ties, many of which are dif­fi­cult to pre­dict and gene­ral­ly bey­ond AMD’s con­trol, that could cau­se actu­al results and other future events to dif­fer mate­ri­al­ly from tho­se expres­sed in, or implied or pro­jec­ted by, the for­ward-loo­king infor­ma­ti­on and state­ments. Mate­ri­al fac­tors that could cau­se actu­al results to dif­fer mate­ri­al­ly from cur­rent expec­ta­ti­ons inclu­de, without limi­ta­ti­on, the fol­lowing: Intel Corporation’s domi­nan­ce of the micro­pro­ces­sor mar­ket and its aggres­si­ve busi­ness prac­ti­ces; the abi­li­ty of third par­ty manu­fac­tu­rers to manu­fac­tu­re AMD’s pro­ducts on a time­ly basis in suf­fi­ci­ent quan­ti­ties and using com­pe­ti­ti­ve tech­no­lo­gies; expec­ted manu­fac­tu­ring yiel­ds for AMD’s pro­ducts; AMD’s abi­li­ty to intro­du­ce pro­ducts on a time­ly basis with fea­tures and per­for­mance levels that pro­vi­de value to its cus­to­mers; AMD’s abi­li­ty to gene­ra­te suf­fi­ci­ent reve­nue and ope­ra­ting cash flow or obtain exter­nal finan­cing for rese­arch and deve­lo­p­ment or other stra­te­gic invest­ments; the loss of a signi­fi­cant cus­to­mer; AMD’s abi­li­ty to gene­ra­te reve­nue from its semi-cus­tom SoC pro­ducts; glo­bal eco­no­mic uncer­tain­ty; the impact of the COVID-19 pan­de­mic on AMD’s busi­ness, finan­cial con­di­ti­on and results of ope­ra­ti­ons; poli­ti­cal, legal, eco­no­mic risks and natu­ral dis­as­ters; the impact of government actions and regu­la­ti­ons such as export admi­nis­tra­ti­on regu­la­ti­ons, tariffs and tra­de pro­tec­tion mea­su­res; poten­ti­al secu­ri­ty vul­nera­bi­li­ties; poten­ti­al IT outa­ges, data loss, data breaches and cyber-attacks; uncer­tain­ties invol­ving the orde­ring and ship­ment of AMD’s pro­ducts; quar­ter­ly and sea­so­nal sales pat­terns; the restric­tions impo­sed by agree­ments gover­ning AMD’s notes and the secu­red credit faci­li­ty; the com­pe­ti­ti­ve mar­kets in which AMD’s pro­ducts are sold; the poten­ti­al dilu­ti­ve effect if the 2.125% Con­ver­ti­ble Seni­or Notes due 2026 are con­ver­ted; mar­ket con­di­ti­ons of the indus­tries in which AMD pro­ducts are sold; AMD’s reli­an­ce on third-par­ty intel­lec­tu­al pro­per­ty to design and intro­du­ce new pro­ducts in a time­ly man­ner; AMD’s reli­an­ce on third-par­ty com­pa­nies for the design, manu­fac­tu­re and sup­ply of mother­boards, soft­ware and other com­pu­ter plat­form com­pon­ents; AMD’s reli­an­ce on Micro­soft Cor­po­ra­ti­on and other soft­ware ven­dors’ sup­port to design and deve­lop soft­ware to run on AMD’s pro­ducts; AMD’s reli­an­ce on third-par­ty dis­tri­bu­tors and add-in-board part­ners; future impairments of good­will and tech­no­lo­gy licen­se purcha­ses; AMD’s abi­li­ty to attract and retain qua­li­fied per­son­nel; AMD’s indeb­ted­ness; AMD’s abi­li­ty to gene­ra­te suf­fi­ci­ent cash to ser­vice its debt obli­ga­ti­ons or meet its working capi­tal requi­re­ments; AMD’s abi­li­ty to repurcha­se its out­stan­ding debt in the event of a chan­ge of con­trol; the cycli­cal natu­re of the semi­con­duc­tor indus­try; the impact of acqui­si­ti­ons, joint ven­tures and/or invest­ments on AMD’s busi­ness; the impact of modi­fi­ca­ti­on or inter­rup­ti­on of AMD’s inter­nal busi­ness pro­ces­ses and infor­ma­ti­on sys­tems; the avai­la­bi­li­ty of essen­ti­al equip­ment, mate­ri­als or manu­fac­tu­ring pro­ces­ses; com­pa­ti­bi­li­ty of AMD’s pro­ducts with some or all indus­try-stan­dard soft­ware and hard­ware; cos­ts rela­ted to defec­ti­ve pro­ducts; the effi­ci­en­cy of AMD’s sup­ply chain; AMD’s abi­li­ty to rely on third par­ty sup­ply-chain logistics func­tions; AMD’s stock pri­ce vola­ti­li­ty; world­wi­de poli­ti­cal con­di­ti­ons; unfa­vor­able cur­ren­cy exchan­ge rate fluc­tua­tions; AMD’s abi­li­ty to effec­tively con­trol the sales of its pro­ducts on the gray mar­ket; AMD’s abi­li­ty to ade­qua­te­ly pro­tect its tech­no­lo­gy or other intel­lec­tu­al pro­per­ty; cur­rent and future claims and liti­ga­ti­on; poten­ti­al tax lia­bi­li­ties; and the impact of envi­ron­men­tal laws, con­flict mine­rals-rela­ted pro­vi­si­ons and other laws or regu­la­ti­ons. Inves­tors are urged to review in detail the risks and uncer­tain­ties in AMD’s Secu­ri­ties and Exchan­ge Com­mis­si­on filings, inclu­ding but not limi­ted to AMD’s Quar­ter­ly Report on Form 10‑Q for the quar­ter ended March 28, 2020.

*   In this ear­nings press release, in addi­ti­on to GAAP finan­cial results, AMD has pro­vi­ded non-GAAP finan­cial mea­su­res inclu­ding non-GAAP gross mar­gin, non-GAAP ope­ra­ting expen­ses, non-GAAP ope­ra­ting inco­me, non-GAAP net inco­me and non-GAAP ear­nings per share. The­se non-GAAP finan­cial mea­su­res reflect cer­tain adjus­t­ments as pre­sen­ted in the tables in this ear­nings press release. AMD uses a nor­ma­li­zed tax rate in its com­pu­ta­ti­on of the non-GAAP inco­me tax pro­vi­si­on to pro­vi­de bet­ter con­sis­ten­cy across the repor­ting peri­ods. For fis­cal 2020, AMD uses a pro­jec­ted non-GAAP tax rate, which exclu­des the direct tax impacts of pre-tax non-GAAP adjus­t­ments, of appro­xi­mate­ly 3%, reflec­ting cur­r­ent­ly avail­ab­le infor­ma­ti­on. AMD has also pro­vi­ded adjus­ted EBITDA and free cash flow as sup­ple­men­tal non-GAAP mea­su­res of its per­for­mance. The­se items are defi­ned in the foot­no­tes to the selec­ted cor­po­ra­te data tables pro­vi­ded at the end of this ear­nings press release. AMD is pro­vi­ding the­se finan­cial mea­su­res becau­se it belie­ves this non-GAAP pre­sen­ta­ti­on makes it easier for inves­tors to com­pa­re its ope­ra­ting results for cur­rent and his­to­ri­cal peri­ods and also becau­se AMD belie­ves it assists inves­tors in com­pa­ring AMD’s per­for­mance across repor­ting peri­ods on a con­sis­tent basis by exclu­ding items that it does not belie­ve are indi­ca­ti­ve of its core ope­ra­ting per­for­mance and for the other rea­sons descri­bed in the foot­no­tes to the selec­ted data tables. Refer to the data tables at the end of this ear­nings press release.  
       

AMD, the AMD Arrow logo, EPYC, Rade­on, Ryzen, Ath­lon and com­bi­na­ti­ons the­re­of, are trade­marks of Advan­ced Micro Devices, Inc.
Other names are for infor­ma­tio­nal pur­po­ses only, used to iden­ti­fy com­pa­nies and pro­ducts and may be trade­marks of their owner.

                 
  ADVANCED MICRO DEVICES, INC.              
  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS          
  (Mil­li­ons except per share amounts and per­cen­ta­ges) (Unau­di­ted)        
    Three Mon­ths Ended   Six Mon­ths Ended  
    June 27,
2020
March 28,
2020
June 29,
2019
  June 27,
2020
June 29,
2019
 
  Net reve­nue $ 1,932   $ 1,786   $ 1,531     $ 3,718   $ 2,803    
  Cost of sales   1,084     968     910       2,052     1,661    
  Gross mar­gin   848     818     621       1,666     1,142    
  Gross mar­gin %   44%     46%     41%       45%     41%    
  Rese­arch and deve­lo­p­ment   460     442     373       902     746    
  Mar­ke­ting, gene­ral and admi­nis­tra­ti­ve   215     199     189       414     359    
  Licen­sing gain   -     -     -       -     (60 )  
  Ope­ra­ting inco­me   173     177     59       350     97    
  Inte­rest expen­se   (14 )   (13 )   (25 )     (27 )   (52 )  
  Other inco­me (expen­se), net   1     4     3       5     (4 )  
  Inco­me befo­re inco­me taxes and equi­ty inco­me (loss)   160     168     37       328     41    
  Inco­me tax pro­vi­si­on (bene­fit)   4     6     2       10     (11 )  
  Equi­ty inco­me (loss) in inves­tee   1     -     -       1     (1 )  
  Net Inco­me $ 157   $ 162   $ 35     $ 319   $ 51    
  Ear­nings per share              
  Basic $ 0.13   $ 0.14   $ 0.03     $ 0.27   $ 0.05    
  Dilu­t­ed $ 0.13   $ 0.14   $ 0.03     $ 0.27   $ 0.05    
  Shares used in per share cal­cu­la­ti­on              
  Basic   1,174     1,170     1,084       1,172     1,064    
  Dilu­t­ed   1,227     1,224     1,109       1,225     1,102    
                 
  ADVANCED MICRO DEVICES, INC.        
  CONDENSED CONSOLIDATED BALANCE SHEETS        
  (Mil­li­ons)        
           
    June 27,
2020
  Decem­ber 28,
2019
 
    (Unau­di­ted)      
  Assets        
  Cur­rent assets:        
  Cash and cash equi­va­lents $ 1,775     $ 1,466    
  Mar­ket­a­ble secu­ri­ties   -       37    
  Accounts receiva­ble, net   1,789       1,859    
  Invent­ories   1,324       982    
  Receiva­bles from rela­ted par­ties   10       20    
  Pre­paid expen­ses and other cur­rent assets   211       233    
  Total cur­rent assets   5,109       4,597    
  Pro­per­ty and equip­ment, net   585       500    
  Ope­ra­ting lea­se right-of use assets   215       205    
  Good­will   289       289    
  Invest­ment: equi­ty method   59       58    
  Other non-cur­rent assets   326       379    
  Total Assets $ 6,583     $ 6,028    
           
  Lia­bi­li­ties and Stock­hol­ders’ Equi­ty        
  Cur­rent lia­bi­li­ties:        
  Short-term debt $ 200     $ -    
  Accounts paya­ble   802       988    
  Paya­bles to rela­ted par­ties   192       213    
  Accrued lia­bi­li­ties   1,172       1,084    
  Other cur­rent lia­bi­li­ties   68       74    
  Total cur­rent lia­bi­li­ties   2,434       2,359    
  Long-term debt, net   490       486    
  Long-term ope­ra­ting lea­se lia­bi­li­ties   204       199    
  Other long-term lia­bi­li­ties   150       157    
           
  Stock­hol­ders’ equi­ty:        
  Capi­tal stock:        
  Com­mon stock, par value   12       12    
  Addi­tio­nal paid-in capi­tal   10,127       9,963    
  Tre­a­su­ry stock, at cost   (54 )     (53 )  
  Accu­mu­la­ted defi­cit   (6,776 )     (7,095 )  
  Accu­mu­la­ted other com­pre­hen­si­ve loss   (4 )     -    
  Total stock­hol­ders’ equi­ty $ 3,305     $ 2,827    
  Total Lia­bi­li­ties and Stock­hol­ders’ Equi­ty $ 6,583     $ 6,028    
           
ADVANCED MICRO DEVICES, INC.            
SELECTED CASH FLOW INFORMATION            
(Mil­li­ons) (Unau­di­ted)            
  Three Mon­ths Ended   Six Mon­ths Ended  
  June 27,
2020
June 29,
2019
  June 27,
2020
June 29,
2019
 
Net cash pro­vi­ded by (used in)            
Ope­ra­ting acti­vi­ties $ 243   $ 30     $ 178   $ (183 )  
Inves­ting acti­vi­ties $ (36 ) $ (7 )   $ (109 ) $ (180 )  
Finan­cing acti­vi­ties $ 238   $ (38 )   $ 240   $ 248    
             
ADVANCED MICRO DEVICES, INC.                
SELECTED CORPORATE DATA                
(Mil­li­ons) (Unau­di­ted)                
    Three Mon­ths Ended   Six Mon­ths Ended  
Seg­ment and Cate­go­ry Infor­ma­ti­on   June 27,
2020
March 28,
2020
June 29,
2019
  June 27,
2020
June 29,
2019
 
                 
Com­pu­ting and Gra­phics (1)                
Net reve­nue   $ 1,367   $ 1,438   $ 940     $ 2,805   $ 1,771    
Ope­ra­ting inco­me   $ 200   $ 262   $ 22     $ 462   $ 38    
Enter­pri­se, Embed­ded and Semi-Cus­tom (2)                
Net reve­nue   $ 565   $ 348   $ 591     $ 913   $ 1,032    
Ope­ra­ting inco­me (loss)   $ 33   $ (26 ) $ 89     $ 7   $ 157    
All Other (3)                
Net reve­nue     -     -     -       -     -    
Ope­ra­ting loss   $ (60 ) $ (59 ) $ (52 )   $ (119 ) $ (98 )  
Total                
Net reve­nue   $ 1,932   $ 1,786   $ 1,531     $ 3,718   $ 2,803    
Ope­ra­ting inco­me   $ 173   $ 177   $ 59     $ 350   $ 97    
                 
                 
Other Data                
Capi­tal expen­dit­ures   $ 91   $ 55   $ 58     $ 146   $ 120    
Adjus­ted EBITDA (4)   $ 305   $ 304   $ 163     $ 609   $ 293    
Cash, cash equi­va­lents and mar­ket­a­ble secu­ri­ties   $ 1,775   $ 1,385   $ 1,128     $ 1,775   $ 1,128    
Free cash flow (5)   $ 152   $ (120 ) $ (28 )   $ 32   $ (303 )  
Total assets   $ 6,583   $ 5,864   $ 5,102     $ 6,583   $ 5,102    
Total debt   $ 690   $ 488   $ 1,031     $ 690   $ 1,031    
                 
  (1) The Com­pu­ting and Gra­phics seg­ment pri­ma­ri­ly inclu­des desk­top and note­book pro­ces­sors and chip­sets, dis­cre­te and inte­gra­ted gra­phics pro­ces­sing units (GPUs), data cen­ter and pro­fes­sio­nal GPUs, and deve­lo­p­ment ser­vices. The Com­pa­ny also licen­ses por­ti­ons of its intel­lec­tu­al pro­per­ty port­fo­lio.  
  (2) The Enter­pri­se, Embed­ded and Semi-Cus­tom seg­ment pri­ma­ri­ly inclu­des ser­ver and embed­ded pro­ces­sors, semi-cus­tom Sys­tem-on-Chip (SoC) pro­ducts, deve­lo­p­ment ser­vices and tech­no­lo­gy for game con­so­les. The Com­pa­ny also licen­ses por­ti­ons of its intel­lec­tu­al pro­per­ty port­fo­lio.  
  (3) All Other cate­go­ry pri­ma­ri­ly inclu­des cer­tain expen­ses and credits that are not allo­ca­ted to any of the ope­ra­ting seg­ments. Also inclu­ded in this cate­go­ry is stock-based com­pen­sa­ti­on expen­se.  
  (4) Recon­ci­lia­ti­on of GAAP Net Inco­me to Adjus­ted EBITDA*      
             
      Three Mon­ths Ended   Six Mon­ths Ended  
      June 27,
2020
March 28,
2020
June 29,
2019
  June 27,
2020
June 29,
2019
 
    GAAP net inco­me $ 157   $ 162   $ 35     $ 319   $ 51    
    Inte­rest expen­se   14     13     25       27     52    
    Other (inco­me) expen­se, net   (1 )   (4 )   (3 )     (5 )   4    
    Inco­me tax pro­vi­si­on (bene­fit)   4     6     2       10     (11 )  
    Equi­ty (inco­me) loss in inves­tee   (1 )   -     -       (1 )   1    
    Stock-based com­pen­sa­ti­on   60     59     45       119     86    
    Depre­cia­ti­on and amor­tiz­a­ti­on   72     68     52       140     98    
    Loss con­tin­gen­cy on legal mat­ter   -     -     7       -     12    
    Adjus­ted EBITDA $ 305   $ 304   $ 163     $ 609   $ 293    
                   
  (5) Free Cash Flow Recon­ci­lia­ti­on**              
      Three Mon­ths Ended   Six Mon­ths Ended  
      June 27,
2020
March 28,
2020
June 29,
2019
  June 27,
2020
June 29,
2019
 
    GAAP net cash pro­vi­ded by (used in) ope­ra­ting acti­vi­ties $ 243   $ (65 ) $ 30     $ 178   $ (183 )  
    Purcha­ses of pro­per­ty and equip­ment   (91 )   (55 )   (58 )     (146 )   (120 )  
    Free cash flow $ 152   $ (120 ) $ (28 )   $ 32   $ (303 )  
                   
                   
  * The Com­pa­ny pres­ents “Adjus­ted EBITDA” as a sup­ple­men­tal mea­su­re of its per­for­mance. Adjus­ted EBITDA for the Com­pa­ny is deter­mi­ned by adjus­ting GAAP net inco­me for inte­rest expen­se, other inco­me (expen­se), net, inco­me tax pro­vi­si­on (bene­fit), equi­ty inco­me (loss) on inves­tee, stock-based com­pen­sa­ti­on, and depre­cia­ti­on and amor­tiz­a­ti­on expen­se. The Com­pa­ny also inclu­ded a loss con­tin­gen­cy on legal mat­ter in the three and six mon­ths ended June 29, 2019. The Com­pa­ny cal­cu­la­tes and pres­ents Adjus­ted EBITDA becau­se manage­ment belie­ves it is of impor­t­ance to inves­tors and len­ders in rela­ti­on to its over­all capi­tal struc­tu­re and its abi­li­ty to bor­row addi­tio­nal funds. In addi­ti­on, the Com­pa­ny pres­ents Adjus­ted EBITDA becau­se it belie­ves this mea­su­re assists inves­tors in com­pa­ring its per­for­mance across repor­ting peri­ods on a con­sis­tent basis by exclu­ding items that the Com­pa­ny does not belie­ve are indi­ca­ti­ve of its core ope­ra­ting per­for­mance. The Company’s cal­cu­la­ti­on of Adjus­ted EBITDA may or may not be con­sis­tent with the cal­cu­la­ti­on of this mea­su­re by other com­pa­nies in the same indus­try. Inves­tors should not view Adjus­ted EBITDA as an alter­na­ti­ve to the GAAP ope­ra­ting mea­su­re of inco­me or GAAP liqui­di­ty mea­su­res of cash flows from ope­ra­ting, inves­ting and finan­cing acti­vi­ties. In addi­ti­on, Adjus­ted EBITDA does not take into account chan­ges in cer­tain assets and lia­bi­li­ties that can affect cash flows.  
                   
  ** The Com­pa­ny also pres­ents free cash flow as a sup­ple­men­tal Non-GAAP mea­su­re of its per­for­mance. Free cash flow is deter­mi­ned by adjus­ting GAAP net cash pro­vi­ded by (used in) ope­ra­ting acti­vi­ties for capi­tal expen­dit­ures. The Com­pa­ny cal­cu­la­tes and com­mu­ni­ca­tes free cash flow in the finan­cial ear­nings press release becau­se manage­ment belie­ves it is of impor­t­ance to inves­tors to under­stand the natu­re of the­se cash flows. The Company’s cal­cu­la­ti­on of free cash flow may or may not be con­sis­tent with the cal­cu­la­ti­on of this mea­su­re by other com­pa­nies in the same indus­try. Inves­tors should not view free cash flow as an alter­na­ti­ve to GAAP liqui­di­ty mea­su­res of cash flows from ope­ra­ting acti­vi­ties.  
                   
    The Com­pa­ny has pro­vi­ded recon­ci­lia­ti­ons wit­hin the ear­nings press release of the­se Non-GAAP finan­cial mea­su­res to the most direct­ly com­pa­ra­ble GAAP finan­cial mea­su­res.