AMD Reports Fourth Quarter and Full Year 2020 Financial Results

― Quar­ter­ly reve­nue of $3.24B up 53% year-over-year; Full year reve­nue of $9.76B up 45%; quar­ter­ly and full year net inco­me more than dou­bled from pri­or year ―

SANTA CLARA, Calif., Jan. 26, 2021 (GLOBE NEWSWIRE) — AMD (NASDAQ:AMD) today announ­ced reve­nue for the fourth quar­ter of 2020 of $3.24 bil­li­on, ope­ra­ting inco­me of $570 mil­li­on, net inco­me of $1.78 bil­li­on and dilu­t­ed ear­nings per share of $1.45. Fourth quar­ter net inco­me inclu­ded an inco­me tax bene­fit of $1.30 bil­li­on asso­cia­ted with a valua­ti­on allo­wan­ce release, which con­tri­bu­t­ed $1.06 to EPS. On a non-GAAP(*) basis, ope­ra­ting inco­me was $663 mil­li­on, net inco­me was $636 mil­li­on and dilu­t­ed ear­nings per share was $0.52.

For full year 2020, the com­pa­ny repor­ted reve­nue of $9.76 bil­li­on, ope­ra­ting inco­me of $1.37 bil­li­on, net inco­me of $2.49 bil­li­on and dilu­t­ed ear­nings per share of $2.06. Full year results inclu­ded a fourth quar­ter inco­me tax bene­fit of $1.30 bil­li­on asso­cia­ted with a valua­ti­on allo­wan­ce release, which con­tri­bu­t­ed $1.07 to annu­al EPS. On a non-GAAP(*) basis, ope­ra­ting inco­me was $1.66 bil­li­on, net inco­me was $1.58 bil­li­on and dilu­t­ed ear­nings per share was $1.29.

GAAP Quar­ter­ly Finan­cial Results

  Q4 2020 Q4 2019 Y/Y Q3 2020 Q/Q
Reve­nue ($M) $3,244 $2,127 Up 53% $2,801 Up 16%
Gross pro­fit ($M) $1,451 $949 Up 53% $1,230 Up 18%
Gross mar­gin 45% 45% Flat 44% Up 1pp
Ope­ra­ting expen­ses ($M) $881 $601 Up 47% $781 Up 13%
Ope­ra­ting inco­me ($M) $570 $348 Up 64% $449 Up 27%
Tax Valua­ti­on Allo­wan­ce Release Bene­fit ($M) $1,301
Net inco­me ($M) $1,781 $170 Up 948% $390 Up 357%
Ear­nings per share $1.45 $0.15 Up 867% $0.32 Up 353%

Non-GAAP(*) Quar­ter­ly Finan­cial Results

  Q4 2020 Q4 2019 Y/Y Q3 2020 Q/Q
Reve­nue ($M) $3,244 $2,127 Up 53% $2,801 Up 16%
Gross pro­fit ($M) $1,452 $950 Up 53% $1,231 Up 18%
Gross mar­gin 45% 45% Flat 44% Up 1pp
Ope­ra­ting expen­ses ($M) $789 $545 Up 45% $706 Up 12%
Ope­ra­ting inco­me ($M) $663 $405 Up 64% $525 Up 26%
Net inco­me ($M) $636 $383 Up 66% $501 Up 27%
Ear­nings per share $0.52 $0.32 Up 63% $0.41 Up 27%

Annu­al Finan­cial Results

  GAAP Non-GAAP(*)
  2020 2019 Y/Y 2020 2019 Y/Y
Reve­nue ($M) $9,763 $6,731 Up 45% $9,763 $6,731 Up 45%
Gross pro­fit ($M) $4,347 $2,868 Up 52% $4,353 $2,874 Up 51%
Gross mar­gin 45% 43% Up 2pp 45% 43% Up 2pp
Ope­ra­ting expen­ses ($M) $2,978 $2,297 Up 30% $2,696 $2,094 Up 29%
Ope­ra­ting inco­me ($M) $1,369 $631 Up 117% $1,657 $840 Up 97%
Tax Valua­ti­on Allo­wan­ce Release Bene­fit ($M) $1,301
Net inco­me ($M) $2,490 $341 Up 630% $1,575 $756 Up 108%
Ear­nings per share $2.06 $0.30 Up 587% $1.29 $0.64 Up 102%

We signi­fi­cant­ly acce­le­ra­ted our busi­ness in 2020, deli­vering record annu­al reve­nue while expan­ding gross mar­gin and more than doub­ling net inco­me from 2019,” said Dr. Lisa Su, AMD pre­si­dent and CEO. “Our 2021 finan­cial out­look high­lights the strength of our pro­duct port­fo­lio and robust demand for high-per­for­mance com­pu­ting across the PC, gaming and data cen­ter mar­kets. We are exci­ted about the oppor­tu­nities ahead and very con­fi­dent in our long-term stra­te­gy as we con­ti­nue exe­cu­ting our lea­ders­hip pro­duct roadmaps.”

Q4 2020 Results

  • Reve­nue of $3.24 bil­li­on was up 53 per­cent year-over-year and 16 per­cent quar­ter-over-quar­ter dri­ven by both the Com­pu­ting and Gra­phics seg­ment and the Enter­pri­se, Embed­ded and Semi-Cus­tom segment.
  • Gross mar­gin was 45 per­cent, flat year-over-year and up 1 per­cen­ta­ge point quarter-over-quarter.
  • Ope­ra­ting inco­me was $570 mil­li­on com­pa­red to $348 mil­li­on a year ago and ope­ra­ting inco­me of $449 mil­li­on in the pri­or quar­ter. Non-GAAP ope­ra­ting inco­me was $663 mil­li­on com­pa­red to $405 mil­li­on a year ago and $525 mil­li­on in the pri­or quar­ter. Ope­ra­ting inco­me impro­ve­ments were pri­ma­ri­ly dri­ven by reve­nue growth.
  • Net inco­me was $1.78 bil­li­on, inclu­ding an inco­me tax bene­fit of $1.30 bil­li­on asso­cia­ted with a valua­ti­on allo­wan­ce release, as com­pa­red to $170 mil­li­on a year ago and $390 mil­li­on in the pri­or quar­ter. Non-GAAP net inco­me was $636 mil­li­on com­pa­red to $383 mil­li­on a year ago and $501 mil­li­on in the pri­or quarter.
  • Dilu­t­ed ear­nings per share was $1.45, inclu­ding an inco­me tax bene­fit that con­tri­bu­t­ed $1.06 to ear­nings per share, as com­pa­red to $0.15 a year ago and $0.32 in the pri­or quar­ter. Non-GAAP dilu­t­ed ear­nings per share was $0.52 com­pa­red to $0.32 a year ago and $0.41 in the pri­or quarter.
  • Cash, cash equi­va­lents and short-term invest­ments were $2.29 bil­li­on at the end of the quarter.
  • Ope­ra­ting cash flow was $554 mil­li­on in the quar­ter com­pa­red to $442 mil­li­on a year ago and $339 mil­li­on in the pri­or quar­ter. Free cash flow was $480 mil­li­on in the quar­ter com­pa­red to $400 mil­li­on a year ago and $265 mil­li­on in the pri­or quarter.

Quar­ter­ly Finan­cial Seg­ment Summary

  • Com­pu­ting and Gra­phics seg­ment reve­nue was $1.96 bil­li­on, up 18 per­cent year-over-year and quar­ter-over-quar­ter pri­ma­ri­ly dri­ven by strong sales of Ryzen™ processors. 
    • Cli­ent pro­ces­sor average sel­ling pri­ce (ASP) was lower year-over-year due to a hig­her mix of Ryzen mobi­le pro­ces­sor sales. Cli­ent pro­ces­sor ASP was hig­her quar­ter-over-quar­ter dri­ven by Ryzen desk­top pro­ces­sor sales.
    • Rade­on™ gra­phics pro­duct ASPs were hig­her year-over-year and quarter-over-quarter.
    • Ope­ra­ting inco­me was $420 mil­li­on com­pa­red to $360 mil­li­on a year ago and $384 mil­li­on in the pri­or quar­ter. The year-over-year and quar­ter-over-quar­ter incre­a­ses were pri­ma­ri­ly dri­ven by hig­her Ryzen pro­ces­sor sales.
  • Enter­pri­se, Embed­ded and Semi-Cus­tom seg­ment reve­nue was $1.28 bil­li­on, up 176 per­cent year-over-year and 13 per­cent quar­ter-over-quar­ter dri­ven by hig­her semi-cus­tom and EPYC™ pro­ces­sor sales. 
    • Ope­ra­ting inco­me was $243 mil­li­on com­pa­red to $45 mil­li­on a year ago and $141 mil­li­on in the pri­or quar­ter. Ope­ra­ting inco­me impro­ve­ments were pri­ma­ri­ly dri­ven by hig­her revenue.
  • All Other ope­ra­ting loss was $93 mil­li­on, inclu­ding $14 mil­li­on acqui­si­ti­on-rela­ted cos­ts, as com­pa­red to ope­ra­ting los­ses of $57 mil­li­on a year ago and $76 mil­li­on in the pri­or quarter.

2020 Annu­al Results

  • Reve­nue of $9.76 bil­li­on was up 45 per­cent over 2019 dri­ven by signi­fi­cant­ly hig­her reve­nue in both the Com­pu­ting and Gra­phics seg­ment and the Enter­pri­se, Embed­ded and Semi-Cus­tom segment.
  • Gross mar­gin was 45 per­cent, up 2 per­cen­ta­ge points over 2019. Gross mar­gin expan­si­on was pri­ma­ri­ly dri­ven by Ryzen and EPYC pro­ces­sor sales.
  • Ope­ra­ting inco­me was $1.37 bil­li­on com­pa­red to $631 mil­li­on in the pri­or year. Non-GAAP ope­ra­ting inco­me was $1.66 bil­li­on com­pa­red to $840 mil­li­on in the pri­or year. The ope­ra­ting inco­me impro­ve­ment was pri­ma­ri­ly dri­ven by hig­her reve­nue and gross mar­gin expansion.
  • Net inco­me was $2.49 bil­li­on, inclu­ding a $1.30 bil­li­on inco­me tax bene­fit recor­ded in the fourth quar­ter, as com­pa­red to $341 mil­li­on in the pri­or year. Non-GAAP net inco­me was $1.58 bil­li­on com­pa­red to $756 mil­li­on in the pri­or year.
  • Dilu­t­ed ear­nings per share was $2.06, inclu­ding an inco­me tax bene­fit con­tri­bu­ti­on of $1.07 per share, as com­pa­red to $0.30 in the pri­or year. Non-GAAP dilu­t­ed ear­nings per share was $1.29 com­pa­red to $0.64 in the pri­or year.
  • Ope­ra­ting cash flow was $1.07 bil­li­on for the year com­pa­red to $493 mil­li­on in the pri­or year. Free cash flow was $777 mil­li­on for the year com­pa­red to $276 mil­li­on in the pri­or year.

Recent PR Highlights

  • At CES 2021, AMD announ­ced the world’s best pro­ces­sors for lap­tops, the AMD Ryzen 5000 Seri­es Mobi­le Pro­ces­sors. With the “Zen 3” core archi­tec­tu­re, AMD Ryzen 5000 Seri­es Mobi­le Pro­ces­sors pro­vi­de unpre­ce­den­ted per­for­mance and bat­te­ry life. AMD also announ­ced the AMD Ryzen PRO 5000 Seri­es Mobi­le pro­ces­sors for enter­pri­se, expec­ted to be avail­ab­le in the first half of 2021.
  • AMD laun­ched the AMD Rade­on RX 6000 Seri­es of GPUs for next-genera­ti­on PC gaming, inclu­ding the fas­test AMD gaming gra­phics card ever, the AMD Rade­on RX 6900 XT GPU. The new gra­phics cards are built upon the ground­brea­king AMD RDNA™ 2 gaming archi­tec­tu­re, which deli­vers up to 2x hig­her per­for­mance and up to 54 per­cent hig­her per­for­mance-per-watt com­pa­red to Rade­on gra­phics cards built on AMD RDNA architecture.
  • AMD publicly demons­tra­ted the 3rd Genera­ti­on AMD EPYC pro­ces­sors, code­n­a­med “Milan,” for the first time at CES 2021. Run­ning WRF, a tool for cli­ma­te rese­arch and wea­ther fore­cas­ting, the 3rd Gen AMD EPYC pro­ces­sor-powe­red ser­ver com­ple­ted the fore­cast appro­xi­mate­ly 68 per­cent fas­ter than the competition.
  • Ama­zon Web Ser­vices (AWSexpan­ded its AMD-powe­red cloud offe­rings with the new Ama­zon Elastic Com­pu­te Cloud (EC2) G4ad instan­ces for gra­phics-opti­mi­zed workloads. Using 2nd Gen AMD EPYC CPUs and AMD Rade­on Pro V520 GPUs, the instan­ces deli­ver up to 40 per­cent bet­ter gra­phics per­for­mance com­pa­red to exis­ting AWS GPU offerings.
  • Micro­soft Azu­re is using 2nd Gen AMD EPYC pro­ces­sors to power its HBv2 vir­tu­al machi­nes (VMs) for high per­for­mance com­pu­ting (HPC) workloads and announ­ced plans to uti­li­ze the upco­m­ing 3rd genera­ti­on AMD EPYC pro­ces­sors for future HB-seri­es VM pro­ducts for HPC.
  • HPE, CSC Fin­land and EuroHPC intro­du­ced the upco­m­ing pre-exas­ca­le LUMI super­com­pu­ter in Fin­land, which will be powe­red by AMD EPYC CPUs and AMD Instinct™ acce­le­ra­tors. LUMI is expec­ted to deli­ver 551 peta­flops of per­for­mance when it comes online in 2021. 
  • AMD announ­ced the AMD Instinct MI100 acce­le­ra­tor, built on the all-new AMD CDNA archi­tec­tu­re. The MI100 is the world’s fas­test HPC GPU for sci­en­ti­fic rese­arch and is sup­por­ted by new acce­le­ra­ted com­pu­te plat­forms from Dell, GIGABYTEHPE and Supermicro. 
  • IBM and AMD announ­ced a mul­ti-year joint deve­lo­p­ment agree­ment to dri­ve con­fi­den­ti­al com­pu­ting in hybrid cloud envi­ron­ments through open source soft­ware, open stan­dards and open sys­tem architectures. 

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 first quar­ter of 2021, AMD expects reve­nue to be appro­xi­mate­ly $3.2 bil­li­on, plus or minus $100 mil­li­on, an incre­a­se of appro­xi­mate­ly 79 per­cent year-over-year and down 1 per­cent sequen­ti­al­ly. The year-over-year incre­a­se is expec­ted to be dri­ven by growth in all busi­nes­ses. AMD expects non-GAAP gross mar­gin to be appro­xi­mate­ly 46 per­cent in the first quar­ter of 2021.

For the full year 2021, AMD expects reve­nue growth of appro­xi­mate­ly 37 per­cent over 2020 dri­ven by growth in all busi­nes­ses. AMD expects non-GAAP gross mar­gin to be appro­xi­mate­ly 47 per­cent for 2021.

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 fourth quar­ter and full year 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   Year Ended
    Decem­ber 26,
2020
  Sep­tem­ber 26,
2020
  Decem­ber 28,
2019
  Decem­ber 26,
2020
  Decem­ber 28,
2019
GAAP gross profit   $ 1,451      $ 1,230      $ 949      $ 4,347      $ 2,868   
GAAP gross margin %   45  %   44  %   45  %   45  %   43  %
Stock-based com­pen­sa­ti­on   1     1     1     6     6  
Non-GAAP gross profit   $ 1,452      $ 1,231      $ 950      $ 4,353      $ 2,874   
Non-GAAP gross margin %   45  %   44  %   45  %   45  %   43  %
                     
GAAP ope­ra­ting expenses   $ 881      $ 781      $ 601      $ 2,978      $ 2,297   
GAAP ope­ra­ting expenses/revenue %   27  %   28  %   28  %   31  %   34  %
Stock-based com­pen­sa­ti­on   78     75     56     268     191  
Loss con­tin­gen­cy on legal matter                   12  
Acqui­si­ti­on-rela­ted costs   14             14      
Non-GAAP ope­ra­ting expenses   $ 789      $ 706      $ 545      $ 2,696      $ 2,094   
Non-GAAP ope­ra­ting expenses/revenue%   24  %   25  %   26  %   28  %   31  %
                     
GAAP ope­ra­ting income   $ 570      $ 449      $ 348      $ 1,369      $ 631   
GAAP ope­ra­ting margin %   18  %   16  %   16  %   14  %   %
Stock-based com­pen­sa­ti­on   79     76     57     274     197  
Loss con­tin­gen­cy on legal matter                   12  
Acqui­si­ti­on-rela­ted costs   14             14      
Non-GAAP ope­ra­ting income   $ 663      $ 525      $ 405      $ 1,657      $ 840   
Non-GAAP ope­ra­ting margin %   20  %   19  %   19  %   17  %   12  %
                               
    Three Mon­ths Ended   Year Ended
    Decem­ber 26,
2020
  Sep­tem­ber 26,
2020
  Decem­ber 28,
2019
  Decem­ber 26,
2020
  Decem­ber 28,
2019
GAAP net inco­me / ear­nings per share   $ 1,781      $ 1.45      $ 390      $ 0.32      $ 170      $ 0.15      $ 2,490      $ 2.06      $ 341      $ 0.30   
Loss on debt redemption/conversion   16     0.01     38     0.03     128     0.10     54     0.04     176     0.15  
Non-cash inte­rest expen­se rela­ted to con­ver­ti­ble debt           2         4         6         22     0.02  
Stock-based com­pen­sa­ti­on   79     0.06     76     0.06     57     0.05     274     0.22     197     0.16  
Equi­ty inco­me in investee   (3 )       (1 )               (5 )            
Loss con­tin­gen­cy on legal matter                                   12     0.01  
Acqui­si­ti­on-rela­ted costs   14     0.01                     14     0.01          
Release of valua­ti­on allo­wan­ce on defer­red tax assets   (1,301 )   (1.06 )                   (1,301 )   (1.07 )        
Inco­me tax pro­vi­si­on (bene­fit)   50     0.05     (4 )       24     0.02     43     0.03     8      
Non-GAAP net inco­me / ear­nings per share   $ 636      $ 0.52      $ 501      $ 0.41      $ 383      $ 0.32      $ 1,575      $ 1.29      $ 756      $ 0.64   
                                                                                 
Shares used and net inco­me adjus­t­ment in ear­nings per share cal­cu­la­ti­on (1)                                                                                
Shares used in per share cal­cu­la­ti­on (GAAP)     1,226       1,215       1,188       1,207       1,120  
Inte­rest expen­se add-back to GAAP net income   $     $ 1     $ 4     $ 1     $  
Shares used in per share cal­cu­la­ti­on (Non-GAAP)     1,232       1,230       1,216       1,228       1,209  
Inte­rest expen­se add-back to Non-GAAP net income   $     $ 1     $ 2     $ 4     $ 16  
(1) For the three mon­ths ended Decem­ber 26, 2020, Sep­tem­ber 26, 2020 and Decem­ber 28, 2019, GAAP dilu­t­ed EPS cal­cu­la­ti­ons inclu­de 3 mil­li­on, 11 mil­li­on and 31 mil­li­on shares, respec­tively, rela­ted to the assu­med con­ver­si­on of the Company’s 2026 Con­ver­ti­ble Notes and the asso­cia­ted $0 mil­li­on, $1 mil­li­on and $4 mil­li­on inte­rest expen­se, respec­tively, add-back to net inco­me under the “if con­ver­ted” method.
   
  For the year ended Decem­ber 26, 2020, GAAP dilu­t­ed EPS cal­cu­la­ti­ons inclu­de 3 mil­li­on shares rela­ted to the assu­med con­ver­si­on of the Company’s 2026 Con­ver­ti­ble Notes and the asso­cia­ted $1 mil­li­on inte­rest expen­se add-back to net inco­me under the “if con­ver­ted” method. For the year ended Decem­ber 28, 2019, 89 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 Decem­ber 26, 2020, Sep­tem­ber 26, 2020 and Decem­ber 28, 2019, Non-GAAP dilu­t­ed EPS cal­cu­la­ti­ons inclu­de 9 mil­li­on, 26 mil­li­on and 59 mil­li­on shares, respec­tively, rela­ted to the assu­med con­ver­si­on of the Company’s 2026 Con­ver­ti­ble Notes and the asso­cia­ted $0 mil­li­on, $1 mil­li­on and $2 mil­li­on inte­rest expen­se, respec­tively, add-back to net inco­me under the “if con­ver­ted” method.
   
  For the year ended Decem­ber 26, 2020 and Decem­ber 28, 2019, Non-GAAP dilu­t­ed EPS cal­cu­la­ti­ons inclu­de 24 mil­li­on and 89 mil­li­on shares, respec­tively, rela­ted to the assu­med con­ver­si­on of the Company’s 2026 Con­ver­ti­ble Notes and the asso­cia­ted $4 mil­li­on and $16 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 strong growth oppor­tu­nities; the fea­tures, func­tio­n­a­li­ty, per­for­mance, avai­la­bi­li­ty, timing and expec­ted bene­fits of AMD pro­ducts; and AMD’s expec­ted first quar­ter 2021 and fis­cal 2021 finan­cial out­look, inclu­ding reve­nue and non-GAAP gross mar­gin and expec­ted dri­vers based on cur­rent expec­ta­ti­ons 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; the avai­la­bi­li­ty of essen­ti­al equip­ment, mate­ri­als or manu­fac­tu­ring pro­ces­ses; 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; the impact of acqui­si­ti­ons, joint ven­tures and/or invest­ments on AMD’s busi­ness, inclu­ding the announ­ced acqui­si­ti­on of Xilinx, Inc. (Xilinx), and the fail­u­re to inte­gra­te acqui­red busi­nes­ses; AMD’s abi­li­ty to com­ple­te the Xilinx mer­ger; the impact of the announ­ce­ment and pen­den­cy of the Xilinx mer­ger on AMD’s busi­ness; 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 revol­ving credit faci­li­ty; the com­pe­ti­ti­ve mar­kets in which AMD’s pro­ducts are sold; 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; the poten­ti­al dilu­ti­ve effect if the 2.125% Con­ver­ti­ble Seni­or Notes due 2026 are con­ver­ted; future impairments of good­will and tech­no­lo­gy licen­se purcha­ses; AMD’s abi­li­ty to attract and retain qua­li­fied per­son­nel; AMD’s abi­li­ty to gene­ra­te suf­fi­ci­ent reve­nue and ope­ra­ting cash flow or obtain exter­nal finan­cing for rese­arch and deve­lo­p­ment or other stra­te­gic invest­ments; 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 modi­fi­ca­ti­on or inter­rup­ti­on of AMD’s inter­nal busi­ness pro­ces­ses and infor­ma­ti­on sys­tems; 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 Sep­tem­ber 26, 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 full year 2020, AMD uses a non-GAAP tax rate of 3%, which exclu­des the direct tax impacts of pre-tax non-GAAP adjus­t­ments. AMD 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 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 Janu­a­ry 26, 2021 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, Instinct, Thre­ad­rip­per and com­bi­na­ti­ons the­re­of, are trade­marks of Advan­ced Micro Devices, Inc. Other names are for infor­ma­tio­nal pur­po­ses only and used to iden­ti­fy com­pa­nies and pro­ducts and may be trade­marks of their respec­ti­ve owner.

ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Mil­li­ons except per share amounts and per­cen­ta­ges) (Unau­di­ted)
 
    Three Mon­ths Ended   Year Ended
    Decem­ber 26,
2020
  Sep­tem­ber 26,
2020
  Decem­ber 28,
2019
  Decem­ber 26,
2020
  Decem­ber 28,
2019
Net reve­nue   $ 3,244        $ 2,801        $ 2,127        $ 9,763        $ 6,731     
Cost of sales   1,793        1,571        1,178        5,416        3,863     
Gross pro­fit   1,451        1,230        949        4,347        2,868     
Gross mar­gin %   45    %   44    %   45    %   45    %   43    %
Rese­arch and development   573        508        395        1,983        1,547     
Mar­ke­ting, gene­ral and administrative   308        273        206        995        750     
Licen­sing gain   —        —        —        —        (60 )  
Ope­ra­ting income   570        449        348        1,369        631     
Inte­rest expense   (9 )     (11 )     (18 )     (47 )     (94 )  
Other expen­se, net   (15 )     (37 )     (125 )     (47 )     (165 )  
Inco­me befo­re inco­me taxes and equi­ty income   546        401        205        1,275        372     
Inco­me tax pro­vi­si­on (bene­fit)   (1,232 )     12        35        (1,210 )     31     
Equi­ty inco­me in investee               —              —     
Net Inco­me   $ 1,781        $ 390        $ 170        $ 2,490        $ 341     
Ear­nings per share                    
Basic   $ 1.48        $ 0.33        $ 0.15        $ 2.10        $ 0.31     
Dilu­t­ed   $ 1.45        $ 0.32        $ 0.15        $ 2.06        $ 0.30     
Shares used in per share calculation                    
Basic   1,205        1,184        1,140        1,184        1,091     
Dilu­t­ed   1,226        1,215        1,188        1,207        1,120     
                                         
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Mil­li­ons) (Unau­di­ted)
                 
    Decem­ber 26,
2020
  Decem­ber 28,
2019
ASSETS        
Cur­rent assets:        
Cash and cash equivalents   $ 1,595     $ 1,466  
Short-term invest­ments   695     37  
Accounts receiva­ble, net   2,066     1,859  
Invent­ories   1,399     982  
Receiva­bles from rela­ted parties   10     20  
Pre­paid expen­ses and other cur­rent assets   378     233  
Total cur­rent assets   6,143     4,597  
Pro­per­ty and equip­ment, net   641     500  
Ope­ra­ting lea­se right-of-use assets   208     205  
Good­will   289     289  
Invest­ment: equi­ty method   63     58  
Defer­red tax assets   1,245     22  
Other non-cur­rent assets   373     357  
Total Assets   $ 8,962     $ 6,028  
         
LIABILITIES AND STOCKHOLDERSEQUITY        
Cur­rent liabilities:        
Accounts paya­ble   468     988  
Paya­bles to rela­ted parties   78     213  
Accrued lia­bi­li­ties   1,796     1,084  
Other cur­rent liabilities   75     74  
Total cur­rent liabilities   2,417     2,359  
Long-term debt, net   330     486  
Long-term ope­ra­ting lea­se liabilities   201     199  
Other long-term liabilities   177     157  
         
Stock­hol­ders’ equity:        
Capi­tal stock:        
Com­mon stock, par value   12     12  
Addi­tio­nal paid-in capital   10,544     9,963  
Tre­a­su­ry stock, at cost   (131 )   (53 )
Accu­mu­la­ted deficit   (4,605 )   (7,095 )
Accu­mu­la­ted other com­pre­hen­si­ve income   17      
Total stock­hol­ders’ equity   $ 5,837     $ 2,827  
Total Lia­bi­li­ties and Stock­hol­ders’ equity   $ 8,962     $ 6,028  
                 
ADVANCED MICRO DEVICES, INC.
SELECTED CASH FLOW INFORMATION
(Mil­li­ons) (Unau­di­ted)
 
    Three Mon­ths Ended   Year Ended
    Decem­ber 26,
2020
  Sep­tem­ber 26,
2020
  Decem­ber 28,
2019
  Decem­ber 26,
2020
  Decem­ber 28,
2019
Net cash pro­vi­ded by (used in)                    
Ope­ra­ting activities   $ 554     $ 339     $ 442     $ 1,071     $ 493  
Inves­ting activities   $ (294 )   $ (549 )   $ (26 )   $ (952 )   $ (149 )
Finan­cing activities   $ 35     $ (269 )   $ (107 )   $ 6     $ 43  
                                         
SELECTED CORPORATE DATA
(Mil­li­ons) (Unau­di­ted)
 
    Three Mon­ths Ended   Year Ended
    Decem­ber 26,
2020
  Sep­tem­ber 26,
2020
  Decem­ber 28,
2019
  Decem­ber 26,
2020
  Decem­ber 28,
2019
Seg­ment and Cate­go­ry Information                    
Com­pu­ting and Gra­phics(1)                    
Net reve­nue   $ 1,960     $ 1,667     $ 1,662     $ 6,432     $ 4,709  
Ope­ra­ting income   $ 420     $ 384     $ 360     $ 1,266     $ 577  
Enter­pri­se, Embed­ded and Semi-Cus­tom(2)                    
Net reve­nue   $ 1,284     $ 1,134     $ 465     $ 3,331     $ 2,022  
Ope­ra­ting income   $ 243     $ 141     $ 45     $ 391     $ 263  
All Other(3)                    
Net reve­nue   $     $     $     $     $  
Ope­ra­ting loss   $ (93 )   $ (76 )   $ (57 )   $ (288 )   $ (209 )
Total                    
Net reve­nue   $ 3,244      $ 2,801      $ 2,127      $ 9,763      $ 6,731   
Ope­ra­ting income   $ 570      $ 449      $ 348      $ 1,369      $ 631   
                                         
                                         
Other Data                                        
Capi­tal expenditures   $ 74     $ 74     $ 42     $ 294     $ 217  
Adjus­ted EBITDA(4)   $ 753     $ 607     $ 469     $ 1,969     $ 1,062  
Cash, cash equi­va­lents and short-term investments   $ 2,290     $ 1,771     $ 1,503     $ 2,290     $ 1,503  
Free cash flow(5)   $ 480     $ 265     $ 400     $ 777     $ 276  
Total assets   $ 8,962     $ 7,023     $ 6,028     $ 8,962     $ 6,028  
Total debt   $ 330     $ 373     $ 486     $ 330     $ 486  
(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 and acqui­si­ti­on-rela­ted costs.
   
(4) Recon­ci­lia­ti­on of GAAP Net Inco­me to Adjus­ted EBITDA*
    Three Mon­ths Ended   Year Ended
    Decem­ber 26,
2020
  Sep­tem­ber 26,
2020
  Decem­ber 28,
2019
  Decem­ber 26,
2020
  Decem­ber 28,
2019
GAAP net income   $ 1,781     $ 390     $ 170     $ 2,490     $ 341  
Inte­rest expense   9     11     18     47     94  
Other expen­se, net   15     37     125     47     165  
Inco­me tax pro­vi­si­on (bene­fit)   (1,232 )   12     35     (1,210 )   31  
Equi­ty inco­me in investee   (3 )   (1 )       (5 )    
Stock-based com­pen­sa­ti­on   79     76     57     274     197  
Depre­cia­ti­on and amortization   90     82     64     312     222  
Acqui­si­ti­on-rela­ted costs   14             14      
Loss con­tin­gen­cy on legal matter                   12  
Adjus­ted EBITDA   $ 753     $ 607     $ 469     $ 1,969     $ 1,062  
                                         

(5) Free Cash Flow Reconciliation**

    Three Mon­ths Ended   Year Ended
    Decem­ber 26,
2020
  Sep­tem­ber 26,
2020
  Decem­ber 28,
2019
  Decem­ber 26,
2020
  Decem­ber 28,
2019
GAAP net cash pro­vi­ded by ope­ra­ting activities   $ 554     $ 339     $ 442     $ 1,071     $ 493  
Purcha­ses of pro­per­ty and equipment   (74 )   (74 )   (42 )   (294 )   (217 )
Free cash flow   $ 480     $ 265     $ 400     $ 777     $ 276  
* 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 expen­se, net, inco­me tax pro­vi­si­on (bene­fit), equi­ty inco­me on inves­tee, stock-based com­pen­sa­ti­on, and depre­cia­ti­on and amor­tiz­a­ti­on expen­se. The Com­pa­ny also inclu­ded acqui­si­ti­on-rela­ted cos­ts for the quar­ter and the year ended Decem­ber 26, 2020, and a loss con­tin­gen­cy on legal mat­ter for the year ended Decem­ber 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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