AMD Reports Third Quarter 2020 Financial Results

― Record reve­nue gre56 per­cent and net inco­me and EPS more than dou­bled year-over-year 

SANTA CLARA, Calif., Oct. 27, 2020 (GLOBE NEWSWIRE) — AMD (NASDAQ: AMD) today announ­ced record reve­nue for the third quar­ter of 2020 of $2.80 bil­li­on, ope­ra­ting inco­me of $449 mil­li­on, net inco­me of $390 mil­li­on and dilu­t­ed ear­nings per share of $0.32. On a non-GAAP* basis, ope­ra­ting inco­me was $525 mil­li­on, net inco­me was $501 mil­li­on and dilu­t­ed ear­nings per share was $0.41.

GAAP Quar­ter­ly Finan­cial Results

  Q3 2020 Q3 2019 Y/Y Q2 2020 Q/Q
Reve­nue ($M) $2,801 $1,801 Up 56% $1,932 Up 45%
Gross pro­fit ($M) $1,230 $777 Up 58% $848 Up 45%
Gross mar­gin 44% 43% Up 1pp 44% Flat
Ope­ra­ting expen­ses ($M) $781 $591 Up 32% $675 Up 16%
Ope­ra­ting inco­me ($M) $449 $186 Up 141% $173 Up 160%
Net inco­me ($M) $390 $120 Up 225% $157 Up 148%
Ear­nings per share $0.32 $0.11 Up 191% $0.13 Up 146%

Non-GAAP* Quar­ter­ly Finan­cial Results

  Q3 2020 Q3 2019 Y/Y Q2 2020 Q/Q
Reve­nue ($M) $2,801 $1,801 Up 56% $1,932 Up 45%
Gross pro­fit ($M) $1,231 $779 Up 58% $850 Up 45%
Gross mar­gin 44% 43% Up 1pp 44% Flat
Ope­ra­ting expen­ses ($M) $706 $539 Up 31% $617 Up 14%
Ope­ra­ting inco­me ($M) $525 $240 Up 119% $233 Up 125%
Net inco­me ($M) $501 $219 Up 129% $216 Up 132%
Ear­nings per share $0.41 $0.18 Up 128% $0.18 Up 128%

Our busi­ness acce­le­ra­ted in the third quar­ter as strong demand for our PC, gaming and data cen­ter pro­ducts dro­ve record quar­ter­ly reve­nue,” said Dr. Lisa Su, AMD pre­si­dent and CEO. “We repor­ted our fourth strai­ght quar­ter with grea­ter than 25 per­cent year-over-year reve­nue growth, high­ligh­t­ing our signi­fi­cant cus­to­mer momen­tum. We are well posi­tio­ned to con­ti­nue deli­vering best-in-class growth as we fur­ther extend our lea­ders­hip pro­duct port­fo­lio with the laun­ches of our next genera­ti­on Ryzen, Rade­on and EPYC processors.”

Q3 2020 Results

  • Reve­nue was $2.80 bil­li­on, up 56 per­cent year-over-year and 45 per­cent quar­ter-over-quar­ter dri­ven by hig­her reve­nue in both the Enter­pri­se, Embed­ded and Semi-Cus­tom and Com­pu­ting and Gra­phics segments.
  • Gross mar­gin was 44 per­cent, up 1 per­cen­ta­ge point year-over-year and flat quar­ter-over-quar­ter. The year-over-year incre­a­se was pri­ma­ri­ly dri­ven by EPYC and Ryzen pro­ces­sor sales. Gross mar­gin was flat quar­ter-over-quar­ter as an incre­a­se of Ryzen and EPYC pro­ces­sor sales was off­set by a hig­her per­cen­ta­ge of semi-cus­tom revenue.
  • Ope­ra­ting inco­me was $449 mil­li­on com­pa­red to $186 mil­li­on a year ago and $173 mil­li­on in the pri­or quar­ter. Non-GAAP ope­ra­ting inco­me was $525 mil­li­on com­pa­red to $240 mil­li­on a year ago and $233 mil­li­on in the pri­or quar­ter. Ope­ra­ting inco­me impro­ve­ments were pri­ma­ri­ly dri­ven by reve­nue growth, inclu­ding an incre­a­se in Ryzen and EPYC pro­ces­sor sales and semi-cus­tom pro­duct sales.
  • Net inco­me was $390 mil­li­on com­pa­red to $120 mil­li­on a year ago and $157 mil­li­on in the pri­or quar­ter. Non-GAAP net inco­me was $501 mil­li­on com­pa­red to $219 mil­li­on a year ago and $216 mil­li­on in the pri­or quarter.
  • Dilu­t­ed ear­nings per share was $0.32 com­pa­red to $0.11 a year ago and $0.13 in the pri­or quar­ter. Non-GAAP dilu­t­ed ear­nings per share was $0.41 com­pa­red to $0.18 a year ago and $0.18 in the pri­or quarter.
  • Cash, cash equi­va­lents and short-term invest­ments were $1.77 bil­li­on at the end of the quarter.

Quar­ter­ly Finan­cial Seg­ment Summary

  • Com­pu­ting and Gra­phics seg­ment reve­nue was $1.67 bil­li­on, up 31 per­cent year-over-year and 22 per­cent quar­ter-over-quar­ter. Reve­nue was hig­her year-over-year dri­ven by a signi­fi­cant incre­a­se in Ryzen pro­ces­sor sales par­ti­al­ly off­set by lower gra­phics reve­nue. Reve­nue was hig­her quar­ter-over-quar­ter dri­ven by a signi­fi­cant incre­a­se in Ryzen pro­ces­sor sales and an incre­a­se in gra­phics revenue. 
    • Cli­ent pro­ces­sor average sel­ling pri­ce (ASP) was lower year-over-year due to a hig­her mix of mobi­le pro­ces­sor sales. Cli­ent pro­ces­sor ASP was hig­her quar­ter-over-quar­ter dri­ven by hig­her desk­top and mobi­le pro­ces­sor ASPs.
    • GPU ASP was lower year-over-year due to pro­duct cycle timing and hig­her quar­ter-over-quar­ter due to pro­duct mix.
    • Ope­ra­ting inco­me was $384 mil­li­on com­pa­red to $179 mil­li­on a year ago and $200 mil­li­on in the pri­or quar­ter. The year-over-year and quar­ter-over-quar­ter incre­a­ses were dri­ven by hig­her Ryzen revenue.
  • Enter­pri­se, Embed­ded and Semi-Cus­tom seg­ment reve­nue was $1.13 bil­li­on, up 116 per­cent year-over-year and 101 per­cent quar­ter-over-quar­ter. Reve­nue was hig­her year-over-year and quar­ter-over-quar­ter due to hig­her semi-cus­tom pro­duct sales and incre­a­sed EPYC pro­ces­sor sales. 
    • Ope­ra­ting inco­me was $141 mil­li­on com­pa­red to $61 mil­li­on a year ago and $33 mil­li­on in the pri­or quar­ter. The year-over-year and quar­ter-over-quar­ter incre­a­ses were pri­ma­ri­ly dri­ven by hig­her revenue.
  • All Other ope­ra­ting loss was $76 mil­li­on com­pa­red to ope­ra­ting los­ses of $54 mil­li­on a year ago and $60 mil­li­on in the pri­or quarter.

Recent PR Highlights

  • AMD intro­du­ced the AMD Ryzen 5000 Seri­es desk­top pro­ces­sors, exten­ding AMD lea­ders­hip across gaming, sin­gle-threa­ded, and mul­ti-threa­ded per­for­mance as well as power effi­ci­en­cy. Powe­red by the new “Zen 3” core archi­tec­tu­re, the new pro­ces­sors deli­ver a 19 per­cent genera­tio­nal incre­a­se in inst­ruc­tions per cycle (IPC), the lar­gest sin­ce the intro­duc­tion of “Zen” pro­ces­sors in 2017.
  • AMD EPYC pro­ces­sor adop­ti­on con­ti­nues to grow as data cen­ter cus­to­mers harness our dif­fe­ren­tia­ted per­for­mance and fea­tures for cloud com­pu­ting, high-per­for­mance com­pu­ting (HPC), hyper­con­ver­ged infra­st­ruc­tu­re (HCI), vir­tua­liz­a­ti­on and more. 
    • AMD EPYC pro­ces­sors are now being used by the Azu­re Data Explo­rer data ana­ly­tics plat­form to impro­ve real-time ana­ly­sis on lar­ge volu­mes of data strea­ming from app­li­ca­ti­ons, web­sites, IoT devices and more.
    • Ora­cle announ­ced plans to offer cloud instan­ces based on next-genera­ti­on AMD EPYC pro­ces­sors, code­n­a­med “Milan.”
    • Cloud ser­vice pro­vi­ders con­ti­nued to announ­ce the avai­la­bi­li­ty of new instan­ces based on AMD EPYC pro­ces­sors, inclu­ding AWS C5ad instan­ces for com­pu­te inten­si­ve workloads, Goog­le Cloud Con­fi­den­ti­al VMs fea­turing AMD Secu­re Encryp­ted Vir­tua­liz­a­ti­on, and Micro­soft Azu­re VMs which use AMD EPYC pro­ces­sors to power Office 365 applications.
    • AMD announ­ced gro­wing eco­sys­tem sup­port for vir­tua­liz­a­ti­on solu­ti­ons based on VMware® and Nuta­nix soft­ware from Dell, HPE and Leno­vo.
    • VMware announ­ced sup­port for AMD Secu­re Encryp­ted Vir­tua­liz­a­ti­on – Encryp­ted Sta­te tech­no­lo­gy in its latest ver­si­on of vSphere®.
    • Nort­hern Data is lever­aging AMD EPYC and AMD Rade­on Instinct pro­ces­sors for one of the world’s lar­gest GPU-based dis­tri­bu­t­ed com­pu­ting clus­ters for HPC app­li­ca­ti­ons at sites across Nor­way, Swe­den and Canada.
  • AMD expan­ded its posi­ti­on in the con­su­mer and com­mer­cial cli­ent mar­kets with new pro­ducts and gro­wing adop­ti­on of AMD Ryzen pro­ces­sors by lea­ding OEMs. 
    • OEM part­ners con­ti­nued to launch new AMD-powe­red note­books, desk­tops and Chrome­books, inclu­ding new HP and Leno­vo note­books and desk­tops for the com­mer­cialcon­su­mer and gaming mar­kets and the first “Zen”-based Chrome­books.
    • AMD announ­ced new AMD Ryzen 4000 Seri­es Desk­top Pro­ces­sors with Rade­on Gra­phics and AMD Ath­lon 3000 Seri­es Desk­top Pro­ces­sors with Rade­on Gra­phics for the con­su­mer mar­ket, as well as the new AMD Ryzen PRO 4000 Seri­es and AMD Ath­lon PRO 3000 Seri­es Desk­top Pro­ces­sors for the com­mer­cial market.
  • AMD and Apple announ­ced the avai­la­bi­li­ty of new AMD Rade­on Pro 5000 seri­es GPUs for the updated 27-inch iMac, brin­ging com­pu­te per­for­mance, ener­gy effi­ci­en­cy and fea­tures to a wide varie­ty of gra­phi­cal­ly inten­si­ve app­li­ca­ti­ons and workloads.
  • AMD announ­ced addi­tio­nal high-per­for­mance tech­no­lo­gy con­tri­bu­ti­ons to assist in the glo­bal fight against the COVID-19 pan­de­mic, inclu­ding high-per­for­mance com­pu­ting sys­tems or access to cloud-based clus­ters powe­red by 2nd Gen AMD EPYC and AMD Rade­on Instinct pro­ces­sors for 21 insti­tu­ti­ons and rese­arch faci­li­ties around the world.
  • AMD announ­ced its annu­al cor­po­ra­te respon­si­bi­li­ty update, high­ligh­t­ing how AMD and its tech­no­lo­gies are addres­sing sus­tainab­le tech­no­lo­gi­cal and sci­en­ti­fic advan­ce­ment, envi­ron­men­tal and sup­ply chain respon­si­bi­li­ty, work­place inclu­si­on and com­mu­ni­ty support.

Cur­rent Outlook
AMD’s out­look state­ments are based on cur­rent expec­ta­ti­ons. The fol­lowing state­ments are for­ward-loo­king, and actu­al results could dif­fer mate­ri­al­ly depen­ding on mar­ket con­di­ti­ons and the fac­tors set forth under “Cau­tio­na­ry State­ment” below.

For the fourth quar­ter of 2020, AMD expects reve­nue to be appro­xi­mate­ly $3.0 bil­li­on, plus or minus $100 mil­li­on, an incre­a­se of appro­xi­mate­ly 41 per­cent year-over-year and 7 per­cent sequen­ti­al­ly. The year-over-year incre­a­se is expec­ted to be pri­ma­ri­ly dri­ven by the ramp of new Ryzen, EPYC and semi-cus­tom pro­ducts and gro­wing cus­to­mer momen­tum. AMD expects non-GAAP gross mar­gin to be appro­xi­mate­ly 45 per­cent in the fourth quar­ter of 2020.

AMD now expects 2020 reve­nue to grow by appro­xi­mate­ly 41 per­cent com­pa­red to 2019, up from pri­or gui­d­ance of 32 per­cent. Non-GAAP gross mar­gin is expec­ted to be appro­xi­mate­ly 45 per­cent, con­sis­tent with pri­or guidance.

AMD Telecon­fe­rence
AMD will hold a con­fe­rence call for the finan­cial com­mu­ni­ty at 8:00 a.m. ET (5:00 a.m. PT) today to dis­cuss its third 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)   Three Mon­ths Ended
    Sep­tem­ber 26,
2020
  June 27,
2020
  Sep­tem­ber 28,
2019
GAAP gross profit   $ 1,230     $ 848     $ 777  
GAAP gross margin %   44 %   44 %   43 %
Stock-based com­pen­sa­ti­on   1     2     2  
Non-GAAP gross profit   $ 1,231     $ 850     $ 779  
Non-GAAP gross margin %   44 %   44 %   43 %
             
GAAP ope­ra­ting expenses   $ 781     $ 675     $ 591  
GAAP ope­ra­ting expenses/revenue %   28 %   35 %   33 %
Stock-based com­pen­sa­ti­on   75     58     52  
Non-GAAP ope­ra­ting expenses   $ 706     $ 617     $ 539  
Non-GAAP ope­ra­ting expenses/revenue %   25 %   32 %   30 %
             
GAAP ope­ra­ting income   $ 449     $ 173     $ 186  
GAAP ope­ra­ting margin %   16 %   9 %   10 %
Stock-based com­pen­sa­ti­on   76     60     54  
Non-GAAP ope­ra­ting income   $ 525     $ 233     $ 240  
Non-GAAP ope­ra­ting margin %   19 %   12 %   13 %
             

 

    Three Mon­ths Ended
    Sep­tem­ber 26,
2020
  June 27,
2020
  Sep­tem­ber 28,
2019
GAAP net inco­me / ear­nings per share   $ 390     $ 0.32   $ 157     $ 0.13     $ 120     $ 0.11
Loss on debt redemption/conversion   38     0.03           40     0.03
Non-cash inte­rest expen­se rela­ted to con­ver­ti­ble debt   2       2         6    
Stock-based com­pen­sa­ti­on   76     0.06   60     0.05     54     0.04
Equi­ty inco­me in investee   (1 )     (1 )       (1 )  
Inco­me tax provision   (4 )     (2 )          
Non-GAAP net inco­me / ear­nings per share   $ 501     $ 0.41   $ 216     $ 0.18     $ 219     $ 0.18
                         
Shares used and net inco­me adjus­t­ment in
ear­nings per share cal­cu­la­ti­on (1)
                       
Shares used in per share cal­cu­la­ti­on (GAAP)   1,215   1,227     1,117
Inte­rest expen­se add-back to GAAP net income   $ 1   $ 3     $
Shares used in per share cal­cu­la­ti­on (Non-GAAP)   1,230   1,227     1,212
Inte­rest expen­se add-back to Non-GAAP net income   $ 1   $ 1     $ 4

 

(1 )   For the three mon­ths ended Sep­tem­ber 26, 2020 and June 27, 2020, GAAP dilu­t­ed EPS cal­cu­la­ti­ons inclu­de 11 mil­li­on and 31 mil­li­on shares, respec­tively, rela­ted to the assu­med con­ver­si­on of the Company’s 2026 Con­ver­ti­ble Notes and the asso­cia­ted $1 mil­li­on and $3 mil­li­on inte­rest expen­se, respec­tively, add-back to net inco­me under the “if con­ver­ted” method. For the three mon­ths ended Sep­tem­ber 26, 2020, 15 mil­li­on shares rela­ted to the assu­med con­ver­si­on of 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 Sep­tem­ber 28, 2019, 95 mil­li­on shares rela­ted to the assu­med con­ver­si­on of 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 Sep­tem­ber 26, 2020, June 27, 2020 and Sep­tem­ber 28, 2019, Non-GAAP dilu­t­ed EPS cal­cu­la­ti­ons inclu­de 26 mil­li­on, 31 mil­li­on and 95 mil­li­on shares, respec­tively, rela­ted to the assu­med con­ver­si­on of the Company’s 2026 Con­ver­ti­ble Notes and the asso­cia­ted $1 mil­li­on, $1 mil­li­on and $4 mil­li­on inte­rest expen­se, respec­tively, add-back to net inco­me under the “if con­ver­ted” method.

 

About AMD
For more than 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 abi­li­ty to con­ti­nue to deli­ver best-in-class growth and extend its lea­ders­hip pro­duct port­fo­lio; the fea­tures, func­tio­n­a­li­ty, per­for­mance, avai­la­bi­li­ty, timing and expec­ted bene­fits of AMD pro­ducts; and AMD’s expec­ted fourth quar­ter of 2020 out­look inclu­ding, reve­nue and non-GAAP gross mar­gin and expec­ted dri­vers, based on cur­rent expec­ta­ti­ons, 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; glo­bal eco­no­mic uncer­tain­ty; the loss of a signi­fi­cant cus­to­mer; AMD’s abi­li­ty to gene­ra­te reve­nue from its semi-cus­tom SoC pro­ducts;  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; AMD’s abi­li­ty to gene­ra­te suf­fi­ci­ent reve­nue and ope­ra­ting cash flow or obtain exter­nal finan­cing for rese­arch and deve­lo­p­ment or other stra­te­gic invest­ments; 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 June 27, 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. 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. The non-GAAP finan­cial mea­su­res dis­c­lo­sed in this ear­nings press release should be view­ed in addi­ti­on to and not as a sub­sti­tu­te for or supe­ri­or to AMD’s repor­ted results pre­pa­red in accordance with GAAP and should be read only in con­junc­tion with AMD’s Con­so­li­da­ted Finan­cial State­ments pre­pa­red in accordance with GAAP. The­se non-GAAP finan­cial mea­su­res refe­ren­ced are recon­ci­led to their most direct­ly com­pa­ra­ble GAAP finan­cial mea­su­res in the tables in this ear­nings press release. Refer to the data tables at the end of this ear­nings press release. This ear­nings press release also con­tains for­ward-loo­king non-GAAP gross mar­gin con­cer­ning AMD’s finan­cial out­look, which is based on cur­rent expec­ta­ti­ons as of Octo­ber 27, 2020 and assump­ti­ons and beliefs that invol­ve nume­rous risks and uncer­tain­ties. AMD under­ta­kes no intent or obli­ga­ti­on to publicly update or revi­se its out­look state­ments as a result of new infor­ma­ti­on, future events or other­wi­se, except as may be requi­red by law.

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   Nine Mon­ths Ended
    Sep­tem­ber 26,
2020
  June 27,
2020
  Sep­tem­ber 28,
2019
  Sep­tem­ber 26,
2020
  Sep­tem­ber 28,
2019
Net reve­nue   $ 2,801     $ 1,932     $ 1,801     $ 6,519     $ 4,604  
Cost of sales   1,571     1,084     1,024     3,623     2,685  
Gross pro­fit   1,230     848     777     2,896     1,919  
Gross mar­gin   44 %   44 %   43 %   44 %   42 %
Rese­arch and development   508     460     406     1,410     1,152  
Mar­ke­ting, gene­ral and administrative   273     215     185     687     544  
Licen­sing gain                   (60 )
Ope­ra­ting income   449     173     186     799     283  
Inte­rest expense   (11 )   (14 )   (24 )   (38 )   (76 )
Other inco­me (expen­se), net   (37 )   1     (36 )   (32 )   (40 )
Inco­me befo­re inco­me taxes and equi­ty income   401     160     126     729     167  
Inco­me tax pro­vi­si­on (bene­fit)   12     4     7     22     (4 )
Equi­ty inco­me in investee   1     1     1     2      
Net Inco­me   $ 390     $ 157     $ 120     $ 709     $ 171  
Ear­nings per share                    
Basic   $ 0.33     $ 0.13     $ 0.11     $ 0.60     $ 0.16  
Dilu­t­ed   $ 0.32     $ 0.13     $ 0.11     $ 0.59     $ 0.15  
Shares used in per share calculation                    
Basic   1,184     1,174     1,097     1,176     1,075  
Dilu­t­ed   1,215     1,227     1,117     1,208     1,107  

 

 

ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Mil­li­ons)

    Sep­tem­ber 26,
2020
  Decem­ber 28,
2019
     (Unau­di­ted)    
ASSETS        
Cur­rent assets:        
Cash and cash equivalents   $ 1,296     $ 1,466  
Short-term invest­ments   475     37  
Accounts receiva­ble, net   2,134     1,859  
Invent­ories   1,292     982  
Receiva­bles from rela­ted parties   4     20  
Pre­paid expen­ses and other cur­rent assets   299     233  
Total cur­rent assets   5,500     4,597  
Pro­per­ty and equip­ment, net   595     500  
Ope­ra­ting lea­se right-of use assets   215     205  
Good­will   289     289  
Invest­ment: equi­ty method   60     58  
Other non-cur­rent assets   364     379  
Total Assets   $ 7,023     $ 6,028  
         
LIABILITIES AND STOCKHOLDERSEQUITY        
Cur­rent liabilities:        
Accounts paya­ble   $ 752     $ 988  
Paya­bles to rela­ted parties   115     213  
Accrued lia­bi­li­ties   1,478     1,084  
Other cur­rent liabilities   72     74  
Total cur­rent liabilities   2,417     2,359  
Long-term debt, net   373     486  
Long-term ope­ra­ting lea­se liabilities   205     199  
Other long-term liabilities   161     157  
         
Stock­hol­ders’ equity:        
Capi­tal stock:        
Com­mon stock, par value   12     12  
Addi­tio­nal paid-in capital   10,362     9,963  
Tre­a­su­ry stock, at cost   (126 )   (53 )
Accu­mu­la­ted deficit   (6,386 )   (7,095 )
Accu­mu­la­ted other com­pre­hen­si­ve income   5      
Total stock­hol­ders’ equity   $ 3,867     $ 2,827  
Total Lia­bi­li­ties and Stock­hol­ders’ Equity   $ 7,023     $ 6,028  

 

 

ADVANCED MICRO DEVICES, INC.
SELECTED CASH FLOW INFORMATION
(Mil­li­ons) (Unau­di­ted)

    Three Mon­ths Ended   Nine Mon­ths Ended
    Sep­tem­ber 26, 2020   June 27,
2020
  Sep­tem­ber 28, 2019   Sep­tem­ber 26, 2020   Sep­tem­ber 28, 2019
Net cash pro­vi­ded by (used in)                    
Ope­ra­ting activities   $ 339     $ 243     $ 234     $ 517     $ 51  
Inves­ting activities   $ (549 )   $ (36 )   $ 57     $ (658 )   $ (123 )
Finan­cing activities   $ (269 )   $ 238     $ (98 )   $ (29 )   $ 150  

 

 

SELECTED CORPORATE DATA
(Mil­li­ons) (Unau­di­ted)

    Three Mon­ths Ended   Nine Mon­ths Ended
    Sep­tem­ber 26,
2020
  June 27,
2020
  Sep­tem­ber 28,
2019
  Sep­tem­ber 26,
2020
  Sep­tem­ber 28,
2019
Seg­ment and Cate­go­ry Information                    
Com­pu­ting and Gra­phics (1)                    
Net reve­nue   $ 1,667     $ 1,367     $ 1,276     $ 4,472     $ 3,047  
Ope­ra­ting income   $ 384     $ 200     $ 179     $ 846     $ 217  
Enter­pri­se, Embed­ded and Semi-Cus­tom (2)                    
Net reve­nue   $ 1,134     $ 565     $ 525     $ 2,047     $ 1,557  
Ope­ra­ting income   $ 141     $ 33     $ 61     $ 148     $ 218  
All Other (3)                    
Net reve­nue   $     $     $     $     $  
Ope­ra­ting loss   $ (76 )   $ (60 )   $ (54 )   $ (195 )   $ (152 )
Total                    
Net reve­nue   $ 2,801     $ 1,932     $ 1,801     $ 6,519     $ 4,604  
Ope­ra­ting income   $ 449     $ 173     $ 186     $ 799     $ 283  
                     
                     
Other Data                    
Capi­tal expenditures   $ 74     $ 91     $ 55     $ 220     $ 175  
Adjus­ted EBITDA (4)   $ 607     $ 305     $ 300     $ 1,216     $ 593  
Cash, cash equi­va­lents and short-term investments   $ 1,771     $ 1,775     $ 1,209     $ 1,771     $ 1,209  
Free cash flow (5)   $ 265     $ 152     $ 179     $ 297     $ (124 )
Total assets   $ 7,023     $ 6,583     $ 5,253     $ 7,023     $ 5,253  
Total debt   $ 373     $ 690     $ 872     $ 373     $ 872  

 

(1 )   The Com­pu­ting and Gra­phics seg­ment, which pri­ma­ri­ly inclu­des desk­top and note­book pro­ces­sors and chip­sets, dis­cre­te and inte­gra­ted gra­phics pro­ces­sing units (GPUs), data cen­ter and pro­fes­sio­nal GPUs and deve­lo­p­ment ser­vices. From time to time, the Com­pa­ny may also sell or licen­se por­ti­ons of its IP portfolio.
     
(2 )   The Enter­pri­se, Embed­ded and Semi-Cus­tom seg­ment, which pri­ma­ri­ly inclu­des ser­ver and embed­ded pro­ces­sors, semi-cus­tom Sys­tem-on-Chip (SoC) pro­ducts, deve­lo­p­ment ser­vices and tech­no­lo­gy for game con­so­les. From time to time, the Com­pa­ny may also sell or licen­se por­ti­ons of its IP 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   Nine Mon­ths Ended
    Sep­tem­ber 26,
2020
  June 27,
2020
  Sep­tem­ber 28,
2019
  Sep­tem­ber 26,
2020
  Sep­tem­ber 28,
2019
GAAP net income   $ 390     $ 157     $ 120     $ 709     $ 171  
Inte­rest expense   11     14     24     38     76  
Other (inco­me) expen­se, net   37     (1 )   36     32     40  
Inco­me tax pro­vi­si­on (bene­fit)   12     4     7     22     (4 )
Equi­ty inco­me in investee   (1 )   (1 )   (1 )   (2 )    
Stock-based com­pen­sa­ti­on   76     60     54     195     140  
Depre­cia­ti­on and amortization   82     72     60     222     158  
Loss con­tin­gen­cy on legal matter                   12  
Adjus­ted EBITDA   $ 607     $ 305     $ 300     $ 1,216     $ 593  

 

(5 )   Recon­ci­lia­ti­on of GAAP Net Cash Pro­vi­ded by Ope­ra­ting Acti­vi­ties to Free Cash Flow**

 

    Three Mon­ths Ended   Nine Mon­ths Ended
    Sep­tem­ber 26,
2020
  June 27,
2020
  Sep­tem­ber 28,
2019
  Sep­tem­ber 26,
2020
  Sep­tem­ber 28,
2019
GAAP net cash pro­vi­ded by ope­ra­ting activities   $ 339     $ 243     $ 234     $ 517     $ 51  
Purcha­ses of pro­per­ty and equipment   (74 )   (91 )   (55 )   (220 )   (175 )
Free cash flow   $ 265     $ 152     $ 179     $ 297     $ (124 )

 

*   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 on inves­tee, stock-based com­pen­sa­ti­on, and depre­cia­ti­on and amor­tiz­a­ti­on expen­se. The Com­pa­ny also inclu­ded a loss con­tin­gen­cy on legal mat­ter in the nine mon­ths ended Sep­tem­ber 28, 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 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.
     

 

 

Media Con­ta­ct:
Drew Prai­rie
AMD Communications
512–602-4425
drew.prairie@amd.com

Inves­tor Contact:
Lau­ra Graves
AMD Inves­tor Relations
408–749-5467
laura.graves@amd.com

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