AMD Reports First Quarter 2022 Financial Results

― Record quar­ter­ly reve­nue of $5.9 bil­li­on grew 71% year-over-year; Gross mar­gin grew 2 per­cen­ta­ge points and non-GAAP gross mar­gin grew 7 per­cen­ta­ge points year-over-year 

SANTA CLARA, Calif., May 03, 2022 (GLOBE NEWSWIRE) — AMD (NASDAQ:AMD) today announ­ced reve­nue for the first quar­ter of 2022 of $5.9 bil­li­on, gross mar­gin of 48%, ope­ra­ting inco­me of $951 mil­li­on, ope­ra­ting mar­gin of 16%, net inco­me of $786 mil­li­on and dilu­t­ed ear­nings per share of $0.56. On a non-GAAP(*) basis, gross mar­gin was 53%, ope­ra­ting inco­me was $1.8 bil­li­on, net inco­me was $1.6 bil­li­on and dilu­t­ed ear­nings per share was $1.13. First quar­ter 2022 results inclu­de par­ti­al quar­ter finan­cial results from the recent­ly com­ple­ted acqui­si­ti­on of Xilinx which clo­sed Febru­a­ry 14, 2022.

Exclu­ding Xilinx, AMD had record quar­ter­ly reve­nue of $5.3 bil­li­on, non-GAAP gross mar­gin of 51% and non-GAAP ope­ra­ting mar­gin of 30%. 
“The first quar­ter mar­ked a signi­fi­cant inflec­tion point in our jour­ney to sca­le and trans­form AMD as we deli­ve­r­ed record reve­nue and clo­sed our stra­te­gic acqui­si­ti­on of Xilinx,” said AMD Chair and CEO Dr. Lisa Su. “Each of our busi­nes­ses grew by a signi­fi­cant dou­ble digit per­cen­ta­ge year-over-year, led by EPYC ser­ver pro­ces­sor reve­nue more than doub­ling for the third strai­ght quar­ter. Demand remains strong for our lea­ders­hip pro­ducts, with our incre­a­sed full-year gui­d­ance reflec­ting hig­her AMD orga­nic growth and the addi­ti­on of the gro­wing Xilinx business.”

GAAP Quar­ter­ly Finan­cial Results

  Q1 2022 Q1 2021 Y/Y Q4 2021 Q/Q
Reve­nue ($M) $5,887 $3,445 Up 71% $4,826 Up 22%
Gross pro­fit ($M) $2,818 $1,587 Up 78% $2,426 Up 16%
Gross mar­gin % 48% 46% Up 190 bps 50% Down 240 bps
Ope­ra­ting expen­ses ($M) $1,950 $929 Up 110% $1,223 Up 59%
Ope­ra­ting inco­me ($M) $951 $662 Up 44% $1,207 Down 21%
Ope­ra­ting margin % 16% 19% Down 3pp 25% Down 9pp
Net inco­me ($M) $786 $555 Up 42% $974 Down 19%
Ear­nings per share $0.56 $0.45 Up 24% $0.80 Down 30%

 

Non-GAAP(*) Quar­ter­ly Finan­cial Results

  Q1 2022 Q1 2021 Y/Y Q4 2021 Q/Q
Reve­nue ($M) $5,887 $3,445 Up 71% $4,826 Up 22%
Gross pro­fit ($M) $3,100 $1,588 Up 95% $2,427 Up 28%
Gross mar­gin % 53% 46% Up 660 bps 50% Up 240 bps
Ope­ra­ting expen­ses ($M) $1,346 $830 Up 62% $1,103 Up 22%
Ope­ra­ting inco­me ($M) $1,837 $762 Up 141% $1,328 Up 38%
Ope­ra­ting margin % 31% 22% Up 9pp 27% Up 4pp
Net inco­me ($M) $1,589 $642 Up 148% $1,122 Up 42%
Ear­nings per share $1.13 $0.52 Up 117% $0.92 Up 23%

 

Non-GAAP(*) Quar­ter­ly Finan­cial Results (Exclu­ding Xilinx)

  Q1 2022 Q1 2021 Y/Y Q4 2021 Q/Q
Reve­nue ($M) $5,328 $3,445 Up 55% $4,826 Up 10%
Gross pro­fit ($M) $2,712 $1,588 Up 71% $2,427 Up 12%
Gross mar­gin % 51% 46% Up 480 bps 50% Up 60 bps
Ope­ra­ting inco­me ($M) $1,604 $762 Up 110% $1,328 Up 21%
Ope­ra­ting margin % 30% 22% Up 8pp 27% Up 3pp

 

Q1 2022 Results

  • Reve­nue of $5.9 bil­li­on was up 71% year-over-year and 22% quar­ter-over-quar­ter dri­ven by hig­her reve­nue in the Com­pu­ting and Gra­phics and Enter­pri­se, Embed­ded and Semi-Cus­tom seg­ments and the inclu­si­on of Xilinx revenue.
  • Gross mar­gin was 48%, an incre­a­se of 2 per­cen­ta­ge points year-over-year and a decre­a­se of 2 per­cen­ta­ge points quar­ter-over-quar­ter. The year-over-year incre­a­se was pri­ma­ri­ly dri­ven by hig­her ser­ver pro­ces­sor reve­nue and high mar­gin Xilinx reve­nue, par­ti­al­ly off­set by amor­tiz­a­ti­on of intan­gi­ble assets and acqui­si­ti­on-rela­ted cos­ts. The quar­ter-over-quar­ter decre­a­se was pri­ma­ri­ly due to amor­tiz­a­ti­on of intan­gi­ble assets and acqui­si­ti­on-rela­ted costs.
  • Non-GAAP gross mar­gin was 53%, an incre­a­se of 7 per­cen­ta­ge points year-over-year and 3 per­cen­ta­ge points quar­ter-over-quar­ter. The year-over-year incre­a­se was pri­ma­ri­ly dri­ven by hig­her ser­ver pro­ces­sor reve­nue and high mar­gin Xilinx reve­nue. The quar­ter-over-quar­ter incre­a­se was pri­ma­ri­ly dri­ven by high mar­gin Xilinx reve­nue, hig­her ser­ver pro­ces­sor reve­nue and richer cli­ent pro­duct mix. 
  • Ope­ra­ting inco­me was $951 mil­li­on com­pa­red to $662 mil­li­on a year ago and $1.2 bil­li­on in the pri­or quar­ter. The year-over-year incre­a­se was pri­ma­ri­ly dri­ven by hig­her reve­nue and gross pro­fit, par­ti­al­ly off­set by amor­tiz­a­ti­on of intan­gi­ble assets and acqui­si­ti­on-rela­ted cos­ts. The quar­ter-over-quar­ter decre­a­se was pri­ma­ri­ly due to amor­tiz­a­ti­on of intan­gi­ble assets and acqui­si­ti­on-rela­ted costs.
  • Record non-GAAP ope­ra­ting inco­me was $1.8 bil­li­on com­pa­red to $762 mil­li­on a year ago and $1.3 bil­li­on in the pri­or quar­ter. The year-over-year and quar­ter-over-quar­ter incre­a­ses were pri­ma­ri­ly dri­ven by hig­her gross profit.
  • Net inco­me was $786 mil­li­on com­pa­red to $555 mil­li­on a year ago and $974 mil­li­on in the pri­or quar­ter. The year-over-year incre­a­se was pri­ma­ri­ly dri­ven by hig­her ope­ra­ting inco­me. The quar­ter-over-quar­ter decre­a­se was pri­ma­ri­ly due to lower ope­ra­ting inco­me rela­ted to amor­tiz­a­ti­on of intan­gi­ble assets and acqui­si­ti­on-rela­ted costs.
  • Record non-GAAP net inco­me was $1.6 bil­li­on com­pa­red to $642 mil­li­on a year ago and $1.1 bil­li­on in the pri­or quar­ter. The year-over-year and quar­ter-over-quar­ter incre­a­ses were pri­ma­ri­ly dri­ven by hig­her ope­ra­ting income.
  • Dilu­t­ed ear­nings per share was $0.56 com­pa­red to $0.45 a year ago and $0.80 in the pri­or quar­ter. Record non-GAAP dilu­t­ed ear­nings per share was $1.13 com­pa­red to $0.52 a year ago and $0.92 in the pri­or quarter.
  • Cash, cash equi­va­lents and short-term invest­ments were $6.5 bil­li­on at the end of the quar­ter. The com­pa­ny repurcha­sed $1.9 bil­li­on of com­mon stock during the quarter.
  • Record cash from ope­ra­ti­ons was $995 mil­li­on in the quar­ter com­pa­red to $898 mil­li­on a year ago and $822 mil­li­on in the pri­or quar­ter. Record free cash flow was $924 mil­li­on in the quar­ter com­pa­red to $832 mil­li­on a year ago and $736 mil­li­on in the pri­or quarter.
  • AMD’s balan­ce sheet reflects $49.6 bil­li­on of good­will and acqui­si­ti­on-rela­ted intan­gi­ble assets asso­cia­ted with the acqui­si­ti­on of Xilinx.

Quar­ter­ly Finan­cial Seg­ment Summary

  • Record Com­pu­ting and Gra­phics seg­ment reve­nue was $2.8 bil­li­on, up 33% year-over-year and 8% quar­ter-over-quar­ter. The year-over-year incre­a­se was dri­ven by Ryzen™ and Rade­on™ pro­ces­sor sales. The quar­ter-over-quar­ter incre­a­se was dri­ven by Ryzen™ pro­ces­sor sales. 
    • Cli­ent pro­ces­sor average sel­ling pri­ce (ASP) incre­a­sed year-over-year and quar­ter-over-quar­ter dri­ven by a richer mix of Ryzen pro­ces­sor sales.
    • GPU ASP incre­a­sed year-over-year dri­ven by high end Rade­on pro­ces­sor sales and decre­a­sed quar­ter-over-quar­ter due to a lower mix of data cen­ter GPU revenue.
    • Record ope­ra­ting inco­me was $723 mil­li­on com­pa­red to $485 mil­li­on a year ago and $566 mil­li­on in the pri­or quar­ter. Ope­ra­ting inco­me impro­ve­ments were pri­ma­ri­ly dri­ven by hig­her reve­nue, par­ti­al­ly off­set by hig­her ope­ra­ting expenses.
  • Record Enter­pri­se, Embed­ded and Semi-Cus­tom seg­ment reve­nue was $2.5 bil­li­on, up 88% year-over-year and 13% quar­ter-over-quar­ter dri­ven by hig­her EPYC™ pro­ces­sor reve­nue, semi-cus­tom and embed­ded pro­duct sales. 
    • Record ope­ra­ting inco­me was $881 mil­li­on com­pa­red to $277 mil­li­on a year ago and $762 mil­li­on in the pri­or quar­ter. Ope­ra­ting inco­me impro­ve­ments were pri­ma­ri­ly dri­ven by hig­her reve­nue and an $83 mil­li­on licen­sing gain.
  • Xilinx par­ti­al quar­ter reve­nue was $559 mil­li­on with ope­ra­ting inco­me of $233 mil­li­on. On a pro-for­ma basis for the full quar­ter, Xilinx gene­ra­ted over $1 bil­li­on of reve­nue, up 22% year-over-year, dri­ven by growth across all Xilinx major end mar­ket categories.
  • All Other ope­ra­ting loss was $886 mil­li­on as com­pa­red to ope­ra­ting los­ses of $100 mil­li­on a year ago and $121 mil­li­on in the pri­or quar­ter. Hig­her ope­ra­ting loss was pri­ma­ri­ly due to amor­tiz­a­ti­on of intan­gi­ble assets and acqui­si­ti­on-rela­ted costs.

Recent PR Highlights

  • AMD com­ple­ted the lar­gest acqui­si­ti­on in the histo­ry of the semi­con­duc­tor indus­try by acqui­ring Xilinx to crea­te the industry’s high-per­for­mance and adap­ti­ve com­pu­ting lea­der with signi­fi­cant­ly expan­ded sca­le and the stron­gest port­fo­lio of lea­ders­hip com­pu­ting, gra­phics and adap­ti­ve SoC products.
  • AMD announ­ced a defi­ni­ti­ve agree­ment to acqui­re Pen­san­do for appro­xi­mate­ly $1.9 bil­li­on befo­re working capi­tal and other adjus­t­ments. Pensando’s dis­tri­bu­t­ed ser­vices plat­form will expand AMD’s data cen­ter pro­duct port­fo­lio with a high-per­for­mance data cen­ter pro­ces­sing unit (DPU) and soft­ware stack that are alrea­dy deploy­ed at sca­le across cloud and enter­pri­se cus­to­mers inclu­ding Gold­man Sachs, IBM Cloud, Micro­soft Azu­re and Ora­cle Cloud.
  • AMD announ­ced the gene­ral avai­la­bi­li­ty of 3rd Gen AMD EPYC pro­ces­sors with AMD 3D V‑Cache™ tech­no­lo­gy, deli­vering lea­ders­hip per­for­mance in tech­ni­cal com­pu­ting workloads, the industry’s lar­gest L3 cache and modern secu­ri­ty features.
  • Cloud cus­to­mers con­ti­nued to expand their AMD EPYC pro­ces­sor-powe­red offe­rings, with 465 cloud instan­ces now deli­vering power­ful per­for­mance for today’s most important workloads. 
  • AMD expan­ded its lin­eup of high-per­for­mance AMD Ryzen desk­top pro­ces­sors for gamers and creators. 
    • AMD announ­ced the Ryzen 7 5800X3D pro­ces­sor, the first Ryzen pro­ces­sor to fea­ture AMD 3D V‑Cache tech­no­lo­gy and the industry’s first x86 PC pro­ces­sor with 3D sta­cked chip­lets. The Ryzen 7 5800X3D pro­ces­sor deli­vers lea­ders­hip gaming per­for­mance in select tit­les com­pa­red to the com­pe­ti­ti­ve pro­ces­sor without sta­cked cache technology.
    • Leno­vo expan­ded its line of Think­Sta­ti­on P620 work­sta­tions with the new Ryzen Thre­ad­rip­per™ PRO 5000 WX-Seri­es pro­ces­sors, which bring domi­nant, full-spec­trum per­for­mance lea­ders­hip for the most deman­ding pro­fes­sio­nal workloads.
    • AMD also expan­ded the Ryzen desk­top pro­ces­sor port­fo­lio with six new “Zen 3” and “Zen 2” pro­ces­sors, giving PC enthu­si­asts even more opti­ons to crea­te a cus­to­mi­zed gaming experience.
  • AMD expan­ded the Ver­sal pro­duct lin­eup with first cus­to­mer ship­ments of the flagship Ver­sal HBM adap­ti­ve SoC with inte­gra­ted HBM2e memo­ry and Ver­sal Pre­mi­um pro­duct seri­es with AI Engi­nes opti­mi­zed for signal pro­ces­sing-inten­si­ve app­li­ca­ti­ons like next-genera­ti­on radar and wire­less sys­tem and device testing.
  • AMD announ­ced that its board of direc­tors appro­ved a new $8 bil­li­on share repurcha­se pro­gram. This pro­gram is in addi­ti­on to the $4 bil­li­on share repurcha­se pro­gram announ­ced last year.
  • AMD ent­e­red into a $3 bil­li­on sus­taina­bi­li­ty-lin­ked credit faci­li­ty to replace its exis­ting $500 mil­li­on revol­ving credit faci­li­ty and rein­for­ces com­mit­ment to the company’s envi­ron­men­tal, social and gover­nan­ce (ESG) goals.
  • AMD announ­ced that its board of direc­tors elec­ted Pre­si­dent and CEO Dr. Lisa Su as the chair of the board and John E. Cald­well as lead inde­pen­dent direc­tor. For­mer Xilinx board mem­bers Jon Olson and Eliza­beth Van­ders­li­ce also joi­ned the AMD board in con­junc­tion with the acqui­si­ti­on of Xilinx.

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 second quar­ter of 2022, AMD expects reve­nue to be appro­xi­mate­ly $6.5 bil­li­on, plus or minus $200 mil­li­on, an incre­a­se of appro­xi­mate­ly 69% year-over-year and appro­xi­mate­ly 10% quar­ter-over-quar­ter. The year-over-year incre­a­se is expec­ted to be dri­ven by the addi­ti­on of Xilinx and hig­her ser­ver, semi-cus­tom and cli­ent reve­nue. The quar­ter-over-quar­ter incre­a­se is expec­ted to be pri­ma­ri­ly dri­ven by Xilinx and hig­her ser­ver reve­nue. AMD expects non-GAAP gross mar­gin to be appro­xi­mate­ly 54% in the second quar­ter of 2022.

For the full year 2022, AMD now expects reve­nue to be appro­xi­mate­ly $26.3 bil­li­on, an incre­a­se of appro­xi­mate­ly 60% over 2021, up from pri­or gui­d­ance of appro­xi­mate­ly 31%, dri­ven by the addi­ti­on of Xilinx and hig­her ser­ver and semi-cus­tom reve­nue. AMD expects non-GAAP gross mar­gin to be appro­xi­mate­ly 54% for 2022, up from pri­or gui­d­ance of appro­xi­mate­ly 51%.

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 first quar­ter 2022 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.

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in mil­li­ons, except per share data) (Unau­di­ted)    
    Three Mon­ths Ended
    March 26,
2022
  Decem­ber 25,
2021
  March 27,
2021
GAAP gross profit   $ 2,818     $ 2,426     $ 1,587  
GAAP gross margin %     48 %     50 %     46 %
Stock-based com­pen­sa­ti­on     4       1       1  
Acqui­si­ti­on-rela­ted cos­ts (1)     92              
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets     186              
Non-GAAP gross profit   $ 3,100     $ 2,427     $ 1,588  
Non-GAAP gross margin %     53 %     50 %     46 %
             
GAAP ope­ra­ting expenses   $ 1,950     $ 1,223     $ 929  
GAAP ope­ra­ting expenses/revenue %     33 %     25 %     27 %
Stock-based com­pen­sa­ti­on     170       111       84  
Acqui­si­ti­on-rela­ted cos­ts (1)     141       9       15  
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets     293              
Non-GAAP ope­ra­ting expenses   $ 1,346     $ 1,103     $ 830  
Non-GAAP ope­ra­ting expenses/revenue %     23 %     23 %     24 %
             
GAAP ope­ra­ting income   $ 951     $ 1,207     $ 662  
GAAP ope­ra­ting margin %     16 %     25 %     19 %
Stock-based com­pen­sa­ti­on     174       112       85  
Acqui­si­ti­on-rela­ted cos­ts (1)     233       9       15  
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets     479              
Non-GAAP ope­ra­ting income   $ 1,837     $ 1,328     $ 762  
Non-GAAP ope­ra­ting margin %     31 %     27 %     22 %

 

    Three Mon­ths Ended
    March 26,
2022
  Decem­ber 25,
2021
  March 27,
2021
GAAP net inco­me / ear­nings per share   $ 786     $ 0.56     $ 974     $ 0.80   $ 555     $ 0.45  
Loss on debt redemption/conversion                           6       0.01  
(Gains) los­ses on equi­ty invest­ments, net     44       0.03       (4 )         8       0.01  
Stock-based com­pen­sa­ti­on     174       0.12       112       0.09     85       0.07  
Equi­ty inco­me in investee     (3 )                     (2 )      
Acqui­si­ti­on-rela­ted cos­ts (1)     233       0.17       9           15       0.01  
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets     479       0.34                        
Inco­me tax provision     (124 )     (0.09 )     31       0.03     (25 )     (0.03 )
Non-GAAP net inco­me / ear­nings per share   $ 1,589     $ 1.13     $ 1,122     $ 0.92   $ 642     $ 0.52  
                         

 

(1 )   Acqui­si­ti­on-rela­ted cos­ts pri­ma­ri­ly com­pri­sed of tran­sac­tion cos­ts, purcha­se pri­ce adjus­t­ments for inven­to­ry and cer­tain com­pen­sa­ti­on charges

 

RECONCILIATION OF AMD GAAP TO AMD NON-GAAP EXCLUDING XILINX
(in mil­li­ons) (Unau­di­ted)

  Three Mon­ths Ended March 26, 2022
  Reve­nue   Gross
Pro­fit
Gross
Mar­gin %
  Ope­ra­ting
Inco­me
Ope­ra­ting
Mar­gin %
AMD GAAP $         5,887           $         2,818         48%   $         951         16%
Stock-based com­pen­sa­ti­on           —                     4                174   
Acqui­si­ti­on-rela­ted cos­ts (1)           —                     92                233   
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets           —                     186                479   
AMD Non-GAAP           5,887                     3,100         53%             1,837         31%
Xilinx seg­ment           559              388                233   
AMD Non-GAAP Exclu­ding Xilinx $         5,328           $         2,712         51%   $         1,604         30%

 

        (1 )   Acqui­si­ti­on-rela­ted cos­ts pri­ma­ri­ly com­pri­sed of tran­sac­tion cos­ts, purcha­se pri­ce adjus­t­ments for inven­to­ry and cer­tain com­pen­sa­ti­on charges

 

RECONCILIATION OF XILINX SEGMENT REVENUE TO XILINX PRO FORMA REVENUE
(in mil­li­ons) (Unau­di­ted)

  Three Mon­ths Ended
March 26, 2022
  Reve­nue
Xilinx Seg­ment (1) $ 559
Xilinx Pre-Acqui­si­ti­on (2)   477
Xilinx Pro For­ma (3) $ 1,036

 

        (1 )   Repres­ents unau­di­ted Xilinx reve­nue from the date of acqui­si­ti­on, Febru­a­ry 14, 2022, through March 26, 2022
        (2 )   Repres­ents unau­di­ted Xilinx reve­nue from Janu­a­ry 2, 2022 to Febru­a­ry 13, 2022
        (3 )   The unau­di­ted Xilinx pro for­ma reve­nue repres­ents the three-mon­th peri­od begin­ning Janu­a­ry 2, 2022 through March 26, 2022. The pro for­ma reve­nue is pre­sen­ted for infor­ma­tio­nal pur­po­ses only.
       

About AMD
For more than 50 years AMD has dri­ven inno­va­ti­on in high-per­for­mance com­pu­ting, gra­phics and visua­liz­a­ti­on tech­no­lo­gies. AMD employees are focu­sed on buil­ding lea­ders­hip high-per­for­mance and adap­ti­ve pro­ducts that push the bounda­ries of what is pos­si­ble. Bil­li­ons of peop­le, lea­ding For­tu­ne 500 busi­nes­ses and cut­ting-edge sci­en­ti­fic rese­arch insti­tu­ti­ons around the world rely on AMD tech­no­lo­gy dai­ly to impro­ve how they live, work and play. 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 demand for its pro­ducts, AMD orga­nic growth and Xilinx busi­ness growth; the fea­tures, func­tio­n­a­li­ty, per­for­mance, avai­la­bi­li­ty, timing and expec­ted bene­fits of AMD pro­ducts; AMD’s plan­ned acqui­si­ti­on of Pen­san­do Sys­tems Inc. and the anti­ci­pa­ted bene­fits from the acqui­si­ti­on; AMD’s expec­ted second quar­ter 2022 and fis­cal 2022 finan­cial out­look, inclu­ding reve­nue and non-GAAP gross mar­gin and expec­ted dri­vers based on cur­rent expec­ta­ti­ons; and expec­ted growth in 2022, 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; glo­bal eco­no­mic uncer­tain­ty; loss of a signi­fi­cant cus­to­mer; impact of the COVID-19 pan­de­mic on AMD’s busi­ness, finan­cial con­di­ti­on and results of ope­ra­ti­ons; com­pe­ti­ti­ve mar­kets in which AMD’s pro­ducts are sold; mar­ket con­di­ti­ons of the indus­tries in which AMD pro­ducts are sold; cycli­cal natu­re of the semi­con­duc­tor indus­try; quar­ter­ly and sea­so­nal sales pat­terns; AMD’s abi­li­ty to ade­qua­te­ly pro­tect its tech­no­lo­gy or other intel­lec­tu­al pro­per­ty; unfa­vor­able cur­ren­cy exchan­ge rate fluc­tua­tions; abi­li­ty of third par­ty manu­fac­tu­rers to manu­fac­tu­re AMD’s pro­ducts on a time­ly basis in suf­fi­ci­ent quan­ti­ties and using com­pe­ti­ti­ve tech­no­lo­gies; avai­la­bi­li­ty of essen­ti­al equip­ment, mate­ri­als, sub­stra­tes or manu­fac­tu­ring pro­ces­ses; abi­li­ty to achie­ve expec­ted manu­fac­tu­ring yiel­ds for AMD’s pro­ducts; AMD’s abi­li­ty to intro­du­ce pro­ducts on a time­ly basis with expec­ted fea­tures and per­for­mance levels; AMD’s abi­li­ty to gene­ra­te reve­nue from its semi-cus­tom SoC pro­ducts; poten­ti­al secu­ri­ty vul­nera­bi­li­ties; poten­ti­al secu­ri­ty inci­dents inclu­ding IT outa­ges, data loss, data breaches and cyber-attacks; uncer­tain­ties invol­ving the orde­ring and ship­ment of AMD’s pro­ducts; 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 design, manu­fac­tu­re and sup­ply of mother­boards, soft­ware and other com­pu­ter plat­form com­pon­ents; AMD’s reli­an­ce on Micro­soft 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; 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; effi­ci­en­cy of AMD’s sup­ply chain; AMD’s abi­li­ty to rely on third par­ty sup­ply-chain logistics func­tions; AMD’s abi­li­ty to effec­tively con­trol sales of its pro­ducts on the gray mar­ket; impact of government actions and regu­la­ti­ons such as export admi­nis­tra­ti­on regu­la­ti­ons, tariffs and tra­de pro­tec­tion mea­su­res; AMD’s abi­li­ty to rea­li­ze its defer­red tax assets; poten­ti­al tax lia­bi­li­ties; cur­rent and future claims and liti­ga­ti­on; impact of envi­ron­men­tal laws, con­flict mine­rals-rela­ted pro­vi­si­ons and other laws or regu­la­ti­ons; impact of acqui­si­ti­ons, joint ven­tures and/or invest­ments on AMD’s busi­ness, and abi­li­ty of AMD to inte­gra­te acqui­red busi­nes­ses, such as Xilinx; impact of any impairment of the com­bi­ned company’s assets on the com­bi­ned company’s finan­cial posi­ti­on and results of ope­ra­ti­on; restric­tions impo­sed by agree­ments gover­ning AMD’s notes, the gua­ran­tees of Xilinx’s notes and the revol­ving credit faci­li­ty; AMD’s indeb­ted­ness; AMD’s abi­li­ty to gene­ra­te suf­fi­ci­ent cash to meet its working capi­tal requi­re­ments or gene­ra­te suf­fi­ci­ent reve­nue and ope­ra­ting cash flow to make all of its plan­ned R&D or stra­te­gic invest­ments; poli­ti­cal, legal, eco­no­mic risks and natu­ral dis­as­ters; future impairments of good­will and tech­no­lo­gy licen­se purcha­ses; AMD’s abi­li­ty to attract and retain qua­li­fied per­son­nel; AMD’s stock pri­ce vola­ti­li­ty; and world­wi­de poli­ti­cal con­di­ti­ons. 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 most recent reports on Forms 10‑K and 10‑Q.

(*)   In this ear­nings press release, in addi­ti­on to GAAP finan­cial results, AMD has pro­vi­ded non-GAAP finan­cial mea­su­res inclu­ding non-GAAP gross pro­fit, non-GAAP ope­ra­ting expen­ses, non-GAAP ope­ra­ting inco­me, non-GAAP net inco­me, 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 2022, AMD uses a pro­jec­ted non-GAAP tax rate of 13%, which exclu­des the tax impact of pre-tax non-GAAP adjus­t­ments, reflec­ting cur­r­ent­ly avail­ab­le infor­ma­ti­on. 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. In addi­ti­on, AMD pro­vi­ded non-GAAP finan­cial mea­su­res exclu­ding Xilinx, inclu­ding reve­nue, gross pro­fit and ope­ra­ting inco­me, and Xilinx pro for­ma reve­nue for the three mon­ths ended March 26, 2022 as sup­ple­men­tal infor­ma­ti­on. 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 May 3, 2022 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, Thre­ad­rip­per, Ver­sal 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  
    March 26,
2022
  Decem­ber 25,
2021
  March 27,
2021
 
Net reve­nue   $ 5,887     $ 4,826     $ 3,445    
Cost of sales     2,883       2,400       1,858    
Amor­tiz­a­ti­on of acqui­si­ti­on-rela­ted intangibles     186                
Total cost of sales     3,069       2,400       1,858    
Gross pro­fit     2,818       2,426       1,587    
Gross mar­gin %     48 %     50 %     46 %  
Rese­arch and development     1,060       811       610    
Mar­ke­ting, gene­ral and administrative     597       412       319    
Amor­tiz­a­ti­on of acqui­si­ti­on-rela­ted intangibles     293                
Licen­sing gain     (83 )     (4 )     (4 )  
Ope­ra­ting income     951       1,207       662    
Inte­rest expense     (13 )     (8 )     (9 )  
Other inco­me (expen­se), net     (42 )     4       (11 )  
Inco­me befo­re inco­me taxes and equi­ty income     896       1,203       642    
Inco­me tax provision     113       229       89    
Equi­ty inco­me in investee     3             2    
Net inco­me   $ 786     $ 974     $ 555    
Ear­nings per share              
Basic   $ 0.56     $ 0.81     $ 0.46    
Dilu­t­ed   $ 0.56     $ 0.80     $ 0.45    
Shares used in per share calculation              
Basic     1,393       1,208       1,213    
Dilu­t­ed     1,410       1,222       1,231    


ADVANCED MICRO DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Mil­li­ons)

    March 26,
2022
  Decem­ber 25,
2021
    (Unau­di­ted)    
ASSETS        
Cur­rent assets:        
Cash and cash equivalents   $ 4,740     $ 2,535  
Short-term invest­ments     1,792       1,073  
Accounts receiva­ble, net     3,677       2,706  
Invent­ories     2,431       1,955  
Receiva­bles from rela­ted parties     4       2  
Pre­paid expen­ses and other cur­rent assets     725       312  
Total cur­rent assets     13,369       8,583  
Pro­per­ty and equip­ment, net     1,406       702  
Ope­ra­ting lea­se right-of use assets     416       367  
Good­will     23,083       289  
Acqui­si­ti­on-rela­ted intan­gi­bles, net     26,832        
Invest­ment: equi­ty method     72       69  
Defer­red tax assets     32       931  
Other non-cur­rent assets     1,705       1,478  
Total Assets   $ 66,915     $ 12,419  
         
LIABILITIES AND STOCKHOLDERSEQUITY        
Cur­rent liabilities:        
Accounts paya­ble   $ 1,476     $ 1,321  
Paya­bles to rela­ted parties     205       85  
Accrued lia­bi­li­ties     3,070       2,424  
Short-term debt     312       312  
Other cur­rent liabilities     518       98  
Total cur­rent liabilities     5,581       4,240  
Long-term debt, net     1,475       1  
Long-term ope­ra­ting lea­se liabilities     370       348  
Defer­red tax liabilities     3,109        
Other long-term liabilities     1,047       333  
         
Stock­hol­ders’ equity:        
Capi­tal stock:        
Com­mon stock, par value     16       12  
Addi­tio­nal paid-in capital     56,925       11,069  
Tre­a­su­ry stock, at cost     (941 )     (2,130 )
Accu­mu­la­ted defi­cit (1)     (665 )     (1,451 )
Accu­mu­la­ted other com­pre­hen­si­ve income     (2 )     (3 )
Total stock­hol­ders’ equity   $ 55,333     $ 7,497  
Total Lia­bi­li­ties and Stock­hol­ders’ Equity   $ 66,915     $ 12,419  

 

(1)     During the first quar­ter of 2021, the Com­pa­ny adop­ted ASU 2019-12, Inco­me Taxes (Topic 740): Sim­pli­fy­ing the Accoun­ting for Inco­me Taxes, using the modi­fied retro­spec­ti­ve adop­ti­on method, which resul­ted in $8 mil­li­on of defer­red tax lia­bi­li­ty asso­cia­ted with book-tax dif­fe­ren­ces in a for­eign equi­ty method invest­ment reco­gni­zed in Accu­mu­la­ted deficit.

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

    Three Mon­ths Ended  
    March 26,
2022
  Decem­ber 25,
2021
  March 27,
2021
 
Net cash pro­vi­ded by (used in)              
Ope­ra­ting activities   $ 995     $ 822     $ 898    
Inves­ting activities   $ 3,158     $     $ (722 )  
Finan­cing activities   $ (1,948 )   $ (727 )   $ (8 )  


SELECTED CORPORATE DATA
(Mil­li­ons) (Unau­di­ted)

    Three Mon­ths Ended  
    March 26,
2022
  Decem­ber 25,
2021
  March 27,
2021
 
Seg­ment and Cate­go­ry Infor­ma­ti­on (1)              
Com­pu­ting and Graphics              
Net reve­nue   $ 2,802     $ 2,584     $ 2,100    
Ope­ra­ting income   $ 723     $ 566     $ 485    
Enter­pri­se, Embed­ded and Semi-Custom              
Net reve­nue   $ 2,526     $ 2,242     $ 1,345    
Ope­ra­ting income   $ 881     $ 762     $ 277    
Xilinx              
Net reve­nue   $ 559     $     $    
Ope­ra­ting income   $ 233     $     $    
All Other              
Net reve­nue   $     $     $    
Ope­ra­ting loss   $ (886 )   $ (121 )   $ (100 )  
Total              
Net reve­nue   $ 5,887     $ 4,826     $ 3,445    
Ope­ra­ting income   $ 951     $ 1,207     $ 662    
               
               
Other Data              
Capi­tal expenditures   $ 71     $ 86     $ 66    
Adjus­ted EBITDA (2)   $ 1,967     $ 1,446     $ 857    
Cash, cash equi­va­lents and short-term investments   $ 6,532     $ 3,608     $ 3,116    
Free cash flow (3)   $ 924     $ 736     $ 832    
Total assets   $ 66,915     $ 12,419     $ 10,047    
Total debt   $ 1,787     $ 313     $ 313    

 

(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 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 Xilinx seg­ment pri­ma­ri­ly inclu­des Field Pro­gramm­a­ble Gate Arrays (FPGAs), adap­ti­ve Sys­tem-on-Chips (SoCs), and Adap­ti­ve Com­pu­te Acce­le­ra­ti­on Plat­form (ACAP) products.
     
    From time to time, the Com­pa­ny may also sell or licen­se por­ti­ons of its IP portfolio.
     
    All Other cate­go­ry pri­ma­ri­ly inclu­des cer­tain expen­ses and credits that are not allo­ca­ted to any of the ope­ra­ting seg­ments. Also inclu­ded in this cate­go­ry are acqui­si­ti­on-rela­ted intan­gi­ble asset amor­tiz­a­ti­on expen­se, stock-based com­pen­sa­ti­on expen­se and acqui­si­ti­on-rela­ted costs.
(2)     Recon­ci­lia­ti­on of GAAP Net Inco­me to Adjus­ted EBITDA

 

    Three Mon­ths Ended  
    March 26,
2022
  Decem­ber 25,
2021
  March 27,
2021
 
GAAP net income   $ 786     $ 974     $ 555    
Inte­rest expense     13       8       9    
Other (inco­me) expen­se, net     42       (4 )     11    
Inco­me tax provision     113       229       89    
Equi­ty inco­me in investee     (3 )           (2 )  
Stock-based com­pen­sa­ti­on     174       112       85    
Depre­cia­ti­on and amortization     130       118       95    
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets     479                
Acqui­si­ti­on-rela­ted costs     233       9       15    
Adjus­ted EBITDA   $ 1,967     $ 1,446     $ 857    

 

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, equi­ty inco­me in inves­tee, stock-based com­pen­sa­ti­on, depre­cia­ti­on and amor­tiz­a­ti­on expen­se and acqui­si­ti­on-rela­ted cos­ts. The Com­pa­ny also inclu­ded amor­tiz­a­ti­on of acqui­red intan­gi­ble assets for the three mon­ths ended March 26, 2022. 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 has pro­vi­ded recon­ci­lia­ti­ons wit­hin the ear­nings press release of the­se Non-GAAP finan­cial mea­su­res to the most direct­ly com­pa­ra­ble GAAP finan­cial measures.

 

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

 

    Three Mon­ths Ended  
    March 26,
2022
  Decem­ber 25,
2021
  March 27,
2021
 
GAAP net cash pro­vi­ded by ope­ra­ting activities   $ 995     $ 822     $ 898    
Ope­ra­ting cash flow margin %     17 %     17 %     26 %  
Purcha­ses of pro­per­ty and equipment     (71 )     (86 )     (66 )  
Free cash flow   $ 924     $ 736     $ 832    
Free cash flow margin %     16 %     15 %     24 %  

 

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.