AMD Reports Second Quarter 2022 Financial Results

 Record quar­ter­ly reve­nue of $6.6 bil­li­on grew 70% year-over-year;
Record quar­ter­ly ope­ra­ting cash flow excee­ded $1 billion ―

SANTA CLARA, Calif., Aug. 02, 2022 (GLOBE NEWSWIRE) — AMD (NASDAQ:AMD) today announ­ced reve­nue for the second quar­ter of 2022 of $6.6 bil­li­on, gross mar­gin of 46%, ope­ra­ting inco­me of $526 mil­li­on, ope­ra­ting mar­gin of 8%, net inco­me of $447 mil­li­on and dilu­t­ed ear­nings per share of $0.27. On a non-GAAP(*) basis, gross mar­gin was 54%, ope­ra­ting inco­me was $2.0 bil­li­on, ope­ra­ting mar­gin was 30%, net inco­me was $1.7 bil­li­on and dilu­t­ed ear­nings per share was $1.05.

GAAP Quar­ter­ly Finan­cial Results

  Q2 2022 Q2 2021 Y/Y
Reve­nue ($M) $6,550 $3,850 Up 70%
Gross pro­fit ($M) $3,028 $1,830 Up 65%
Gross mar­gin % 46% 48% Down 140 bps
Ope­ra­ting expen­ses ($M) $2,508 $1,000 Up 151%
Ope­ra­ting inco­me ($M) $526 $831 Down 37%
Ope­ra­ting margin % 8% 22% Down 14 pp
Net inco­me ($M) $447 $710 Down 37%
Ear­nings per share $0.27 $0.58 Down 53%

Non-GAAP(*) Quar­ter­ly Finan­cial Results

  Q2 2022 Q2 2021 Y/Y
Reve­nue ($M) $6,550 $3,850 Up 70%
Gross pro­fit ($M) $3,538 $1,832 Up 93%
Gross mar­gin % 54% 48% Up 640 bps
Ope­ra­ting expen­ses ($M) $1,562 $909 Up 72%
Ope­ra­ting inco­me ($M) $1,982 $924 Up 115%
Ope­ra­ting margin % 30% 24% Up 6 pp
Net inco­me ($M) $1,707 $778 Up 119%
Ear­nings per share $1.05 $0.63 Up 67%

We deli­ve­r­ed our eighth strai­ght quar­ter of record reve­nue based on our strong exe­cu­ti­on and expan­ded pro­duct port­fo­lio,” said AMD Chair and CEO Dr. Lisa Su. “Each of our seg­ments grew signi­fi­cant­ly year-over-year, led by hig­her sales of our data cen­ter and embed­ded pro­ducts. We see con­ti­nued growth in the back half of the year high­ligh­ted by our next genera­ti­on 5nm pro­duct ship­ments and sup­por­ted by our diver­si­fied busi­ness model.”

Q2 2022 Finan­cial Summary

  • Reve­nue of $6.6 bil­li­on incre­a­sed 70% year-over-year dri­ven by growth across all seg­ments and the inclu­si­on of Xilinx revenue.
  • Gross mar­gin was 46%, a decre­a­se of 2 per­cen­ta­ge points year-over-year, pri­ma­ri­ly due to amor­tiz­a­ti­on of intan­gi­ble assets asso­cia­ted with the Xilinx acqui­si­ti­on. Non-GAAP gross mar­gin was 54%, an incre­a­se of 6 per­cen­ta­ge points year-over-year, pri­ma­ri­ly dri­ven by hig­her Data Cen­ter and Embed­ded seg­ment revenue.
  • Ope­ra­ting inco­me was $526 mil­li­on, or 8% of reve­nue, com­pa­red to $831 mil­li­on or 22% a year ago pri­ma­ri­ly due to amor­tiz­a­ti­on of intan­gi­ble assets asso­cia­ted with the Xilinx acqui­si­ti­on. Record non-GAAP ope­ra­ting inco­me was $2.0 bil­li­on, or 30% of reve­nue, up from $924 mil­li­on or 24% a year ago pri­ma­ri­ly dri­ven by hig­her reve­nue and gross profit.
  • Net inco­me was $447 mil­li­on com­pa­red to $710 mil­li­on a year ago pri­ma­ri­ly due to lower ope­ra­ting inco­me. Record non-GAAP net inco­me was $1.7 bil­li­on, up from $778 mil­li­on a year ago pri­ma­ri­ly dri­ven by hig­her ope­ra­ting income.
  • Dilu­t­ed ear­nings per share was $0.27 com­pa­red to $0.58 a year ago pri­ma­ri­ly due to lower net inco­me and a hig­her share count as a result of the Xilinx acqui­si­ti­on. Non-GAAP dilu­t­ed ear­nings per share was $1.05 com­pa­red to $0.63 a year ago pri­ma­ri­ly dri­ven by hig­her net income.
  • Cash, cash equi­va­lents and short-term invest­ments were $6.0 bil­li­on at the end of the quar­ter and debt was $2.8 bil­li­on. AMD repurcha­sed $920 mil­li­on of com­mon stock during the quarter.
  • Cash from ope­ra­ti­ons was a record $1.04 bil­li­on in the quar­ter, com­pa­red to $952 mil­li­on a year ago. Free cash flow was $906 mil­li­on in the quar­ter com­pa­red to $888 mil­li­on a year ago.
  • Good­will and acqui­si­ti­on-rela­ted intan­gi­ble assets asso­cia­ted with the acqui­si­ti­ons of Xilinx and Pen­san­do were $50.4 billion.

Quar­ter­ly Seg­ment Finan­cial Summary

  • AMD pre­vious­ly announ­ced new seg­ments begin­ning the second quar­ter to align finan­cial repor­ting with the way AMD now mana­ges its busi­ness in stra­te­gic end markets. 
    • Data Cen­ter seg­ment inclu­des ser­ver CPUs, data cen­ter GPUs, Pen­san­do and Xilinx data cen­ter products.
    • Cli­ent seg­ment inclu­des desk­top and note­book PC pro­ces­sors and chipsets.
    • Gaming seg­ment inclu­des dis­cre­te gra­phics pro­ces­sors and semi-cus­tom game con­so­le products.
    • Embed­ded seg­ment inclu­des AMD and Xilinx embed­ded products.
  • Pri­or peri­od results have been con­for­med to the new repor­ting seg­ments for com­pa­ri­son purposes. 
  • Data Cen­ter seg­ment reve­nue was $1.5 bil­li­on, up 83% year-over-year dri­ven by strong sales of EPYC™ ser­ver pro­ces­sors. Ope­ra­ting inco­me was $472 mil­li­on, or 32% of reve­nue, com­pa­red to $204 mil­li­on or 25% a year ago. Ope­ra­ting inco­me impro­ve­ment was pri­ma­ri­ly dri­ven by hig­her reve­nue, par­ti­al­ly off­set by hig­her ope­ra­ting expenses.
  • Cli­ent seg­ment reve­nue was $2.2 bil­li­on, up 25% year-over-year dri­ven by Ryzen™ mobi­le pro­ces­sor sales. Cli­ent pro­ces­sor ASP incre­a­sed year-over-year dri­ven by a richer mix of Ryzen mobi­le pro­ces­sor sales. Ope­ra­ting inco­me was $676 mil­li­on, or 32% of reve­nue, com­pa­red to $538 mil­li­on or 31% a year ago. Ope­ra­ting inco­me impro­ve­ment was pri­ma­ri­ly dri­ven by hig­her reve­nue, par­ti­al­ly off­set by hig­her ope­ra­ting expenses.
  • Gaming seg­ment reve­nue was $1.7 bil­li­on, up 32% year-over-year dri­ven by hig­her semi-cus­tom pro­duct sales, par­ti­al­ly off­set by a decli­ne in gaming gra­phics reve­nue. Ope­ra­ting inco­me was $187 mil­li­on, or 11% of reve­nue, com­pa­red to $175 mil­li­on or 14% a year ago. Ope­ra­ting inco­me impro­ve­ment was pri­ma­ri­ly dri­ven by hig­her reve­nue, par­ti­al­ly off­set by hig­her ope­ra­ting expen­ses. Ope­ra­ting mar­gin was lower pri­ma­ri­ly due to lower gra­phics reve­nue and hig­her ope­ra­ting expenses.
  • Embed­ded seg­ment reve­nue was $1.3 bil­li­on, up 2,228% year-over-year dri­ven by the inclu­si­on of Xilinx embed­ded reve­nue. Ope­ra­ting inco­me was $641 mil­li­on, or 51% of reve­nue, com­pa­red to $6 mil­li­on or 11% a year ago. Ope­ra­ting inco­me and mar­gin impro­ve­ment was pri­ma­ri­ly dri­ven by the inclu­si­on of Xilinx revenue.
  • All Other ope­ra­ting loss was $1.5 bil­li­on as com­pa­red to $92 mil­li­on a year ago due to amor­tiz­a­ti­on of intan­gi­ble assets lar­ge­ly asso­cia­ted with the Xilinx acquisition.

Recent PR Highlights

  • At its Finan­cial Ana­lyst Day, AMD detail­ed lea­ders­hip road­maps and an expan­ded pro­duct port­fo­lio to deli­ver its next pha­se of growth across the esti­ma­ted $300 bil­li­on mar­ket for high-per­for­mance and adap­ti­ve com­pu­ting solu­ti­ons, including: 
    • New details on the “Zen 4” core archi­tec­tu­re, expec­ted to deli­ver signi­fi­cant per­for­mance and power effi­ci­en­cy impro­ve­ments over the pre­vious generation. 
    • The “Zen 5” core plan­ned for 2024, which is built from the ground up to extend per­for­mance and effi­ci­en­cy lea­ders­hip across a broad ran­ge of workloads.
    • AMD CDNA™ 3 gra­phics archi­tec­tu­re fea­turing 3D die stacking, 4th genera­ti­on Infi­ni­ty Archi­tec­tu­re, next-genera­ti­on AMD Infi­ni­ty Cache™ tech­no­lo­gy and HBM memo­ry in a sin­gle packa­ge to power what are expec­ted to be the world’s first data cen­ter APUs, AMD Instinct™ MI300 accelerators.
    • AMD RDNA 3 next genera­ti­on gra­phics archi­tec­tu­re expec­ted to deli­ver more than 50% grea­ter per­for­mance-per-watt com­pa­red to the pri­or generation.
    • AMD XDNA tech­no­lo­gy, the foun­da­tio­nal archi­tec­tu­re IP from Xilinx that con­sists of key tech­no­lo­gies inclu­ding the FPGA fab­ric and AI Engi­ne (AIE), which is plan­ned to be inte­gra­ted across the AMD pro­duct lin­eup star­ting with the “Zen 4”-architecture based “Phoe­nix Point” mobi­le pro­ces­sors plan­ned for 2023.
    • An expan­ded data cen­ter CPU port­fo­lio, inclu­ding the first AMD EPYC pro­ces­sor opti­mi­zed for intel­li­gent edge and com­mu­ni­ca­ti­ons deploy­ments, code­n­a­med “Sie­na,” and the “Ber­ga­mo” pro­ces­sors, expec­ted to be the hig­hest per­for­mance ser­ver pro­ces­sors for cloud nati­ve com­pu­ting at their launch plan­ned for the first half of 2023.
  • AMD com­ple­ted the acqui­si­ti­on of Pen­san­do Sys­tems in a tran­sac­tion valued at appro­xi­mate­ly $1.9 bil­li­on to expand AMD’s data cen­ter pro­duct port­fo­lio with a high-per­for­mance data pro­ces­sing unit (DPU) and soft­ware stack. Pen­san­do DPUs are alrea­dy deploy­ed at sca­le across cloud and enter­pri­se cus­to­mers inclu­ding Gold­man Sachs, IBM Cloud, Micro­soft Azu­re and Ora­cle Cloud.
  • The Fron­tier super­com­pu­ter, powe­red by AMD EPYC CPUs and AMD Instinct Acce­le­ra­tors, achie­ved num­ber one spots on the latest TOP500, GREEN500 and HPL-AI per­for­mance lists, an indus­try first, and was the first super­com­pu­ter to sur­pass the exa­flop barrier.
  • The HPC indus­try con­ti­nues to show rapidly gro­wing pre­fe­rence for AMD solu­ti­ons, with a 95% year-over-year incre­a­se in the num­ber of AMD-powe­red sys­tems on the TOP500 list.
  • The cloud com­pu­ting indus­try con­ti­nues to show gro­wing pre­fe­rence for AMD products. 
    • Goog­le Cloud N2D and C2D vir­tu­al machi­nes (VMs) are enab­ling enhan­ced secu­ri­ty offe­rings with 3rd Gen AMD EPYC processors
    • As part of the Ora­cle Cloud VMware®  solu­ti­on pro­duct offe­ring, new Ora­cle Cloud Infra­st­ruc­tu­re E4 Den­se instan­ces leverage AMD EPYC pro­ces­sors to deli­ver ide­al per­for­mance for hybrid cloud environments
    • Micro­soft Azu­re is the first public cloud pro­vi­der to deploy AMD Instinct MI200 acce­le­ra­tors for lar­ge sca­le AI training.
  • Canon selec­ted the Ver­sal™ AI Core seri­es for the Canon Free View­point Video Sys­tem to power real-time AI pro­ces­sing at the edge, trans­forming live sports broadcasts.
  • AMD intro­du­ced the Ver­sal Pre­mi­um seri­es with AI Engi­nes, opti­mi­zed for signal pro­ces­sing-inten­si­ve app­li­ca­ti­ons in the aero­space and defen­se and test and mea­su­re­ment markets.
  • AMD announ­ced that its Xilinx® Zynq® UltraS­ca­le+™ RFSoC is enab­ling 4G/5G radio access net­work solu­ti­ons to sup­port the Meta Con­nec­ti­vi­ty Even­star Program.
  • At COMPUTEX 2022, AMD pro­vi­ded new details on the new Ryzen 7000 Seri­es desk­top pro­ces­sors, based on the 5nm “Zen 4” archi­tec­tu­re, expec­ted to launch this fall; the AMD Socket AM5 plat­form, pro­vi­ding advan­ced con­nec­ti­vi­ty for the most deman­ding enthu­si­asts and gamers; and new “Men­do­ci­no” pro­ces­sors brin­ging tog­e­ther “Zen 2” cores and AMD RDNA 2 archi­tec­tu­re-based gra­phics to deli­ver gre­at ever­y­day per­for­mance in note­books, avail­ab­le from OEM part­ners star­ting in Q4 2022.
  • AMD announ­ced the Rade­on™ RX 6950 XT, RX 6750 XT and RX 6650 XT gra­phics cards, fea­turing fas­ter game clocks, fas­ter GDDR6 memo­ry and enhan­ced soft­ware and firm­ware com­pa­red to pre­vious-genera­ti­on products.

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 third quar­ter of 2022, AMD expects reve­nue to be appro­xi­mate­ly $6.7 bil­li­on, plus or minus $200 mil­li­on, an incre­a­se of appro­xi­mate­ly 55% year-over-year led by growth in the Data Cen­ter and Embed­ded seg­ments. AMD expects non-GAAP gross mar­gin to be appro­xi­mate­ly 54% in the third quar­ter of 2022.

For the full year 2022, AMD con­ti­nues to expect reve­nue to be appro­xi­mate­ly $26.3 bil­li­on, plus or minus $300 mil­li­on, an incre­a­se of appro­xi­mate­ly 60% over 2021 led by growth in the Data Cen­ter and Embed­ded seg­ments. AMD con­ti­nues to expect non-GAAP gross mar­gin to be appro­xi­mate­ly 54% for 2022.

AMD Telecon­fe­rence

AMD will hold a con­fe­rence call for the finan­cial com­mu­ni­ty at 2:00 p.m. PT (5:00 p.m. ET) today to dis­cuss its second quar­ter 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
    June 25,
2022
  June 26,
2021
 
GAAP gross profit   $ 3,028     $ 1,830    
GAAP gross margin %     46 %     48 %  
Stock-based com­pen­sa­ti­on     8       2    
Acqui­si­ti­on-rela­ted cos­ts (1)     95          
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets     407          
Non-GAAP gross profit   $ 3,538     $ 1,832    
Non-GAAP gross margin %     54 %     48 %  
           
GAAP ope­ra­ting expenses   $ 2,508     $ 1,000    
GAAP ope­ra­ting expenses/revenue %     38 %     26 %  
Stock-based com­pen­sa­ti­on     251       81    
Acqui­si­ti­on-rela­ted cos­ts (1)     79       10    
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets     616          
Non-GAAP ope­ra­ting expenses   $ 1,562     $ 909    
Non-GAAP ope­ra­ting expenses/revenue %     24 %     24 %  
           
GAAP ope­ra­ting income   $ 526     $ 831    
GAAP ope­ra­ting margin %     8 %     22 %  
Stock-based com­pen­sa­ti­on     259       83    
Acqui­si­ti­on-rela­ted cos­ts (1)     174       10    
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets     1,023          
Non-GAAP ope­ra­ting income   $ 1,982     $ 924    
Non-GAAP ope­ra­ting margin %     30 %     24 %  
    Three Mon­ths Ended
    June 25,
2022
  June 26,
2021
 
GAAP net inco­me / ear­nings per share   $ 447     $ 0.27     $ 710     $ 0.58    
Loss on debt redemption/conversion                 1          
(Gains) los­ses on equi­ty invest­ments, net     10                      
Stock-based com­pen­sa­ti­on     259       0.16       83       0.06    
Equi­ty inco­me in investee     (4 )           (2 )        
Acqui­si­ti­on-rela­ted cos­ts (1)     174       0.11       10       0.01    
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets     1,023       0.63                
Inco­me tax provision     (202 )     (0.12 )     (24 )     (0.02 )  
Non-GAAP net inco­me / ear­nings per share   $ 1,707     $ 1.05     $ 778     $ 0.63    
                   
(1 )   Acqui­si­ti­on-rela­ted cos­ts pri­ma­ri­ly com­pri­sed of tran­sac­tion cos­ts, purcha­se pri­ce adjus­t­ments for inven­to­ry and cer­tain com­pen­sa­ti­on charges   

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 expec­ted growth in the back half of the year; the fea­tures, func­tio­n­a­li­ty, per­for­mance, avai­la­bi­li­ty, timing and expec­ted bene­fits of AMD pro­ducts; the esti­ma­ted mar­ket for high-per­for­mance and adap­ti­ve com­pu­ting solu­ti­ons; and AMD’s expec­ted third quar­ter 2022 and fis­cal  2022 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; 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 to inte­gra­te acqui­red busi­nes­ses, such as Xilinx and Pen­san­do;  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. 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 August 2, 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   Six Mon­ths Ended  
    June 25,
2022
  June 26,
2021
  June 25,
2022
  June 26,
2021
 
Net reve­nue   $ 6,550     $ 3,850     $ 12,437     $ 7,295    
Cost of sales     3,115       2,020       5,998       3,878    
Amor­tiz­a­ti­on of acqui­si­ti­on-rela­ted intangibles     407             593          
Total cost of sales     3,522       2,020       6,591       3,878    
Gross pro­fit     3,028       1,830       5,846       3,417    
Gross mar­gin %     46 %     48 %     47 %     47 %  
Rese­arch and development     1,300       659       2,360       1,269    
Mar­ke­ting, gene­ral and administrative     592       341       1,189       660    
Amor­tiz­a­ti­on of acqui­si­ti­on-rela­ted intangibles     616             909          
Licen­sing gain     (6 )     (1 )     (89 )     (5 )  
Ope­ra­ting income     526       831       1,477       1,493    
Inte­rest expense     (25 )     (10 )     (38 )     (19 )  
Other inco­me (expen­se), net     (4 )           (46 )     (11 )  
Inco­me befo­re inco­me taxes and equi­ty income     497       821       1,393       1,463    
Inco­me tax provision     54       113       167       202    
Equi­ty inco­me in investee     4       2       7       4    
Net inco­me   $ 447     $ 710     $ 1,233     $ 1,265    
Ear­nings per share                  
Basic   $ 0.28     $ 0.58     $ 0.82     $ 1.04    
Dilu­t­ed   $ 0.27     $ 0.58     $ 0.81     $ 1.03    
Shares used in per share calculation                  
Basic     1,618       1,216       1,506       1,214    
Dilu­t­ed     1,632       1,232       1,521       1,231    

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

    June 25,
2022
  Decem­ber 25,
2021
    (Unau­di­ted)    
ASSETS        
Cur­rent assets:        
Cash and cash equivalents   $ 4,964     $ 2,535  
Short-term invest­ments     1,028       1,073  
Accounts receiva­ble, net     4,050       2,706  
Invent­ories     2,648       1,955  
Receiva­bles from rela­ted parties     3       2  
Pre­paid expen­ses and other cur­rent assets     769       312  
Total cur­rent assets     13,462       8,583  
Pro­per­ty and equip­ment, net     1,441       702  
Ope­ra­ting lea­se right-of use assets     482       367  
Good­will     24,193       289  
Acqui­si­ti­on-rela­ted intan­gi­bles, net     26,159        
Invest­ment: equi­ty method     76       69  
Defer­red tax assets     32       931  
Other non-cur­rent assets     1,657       1,478  
Total Assets   $ 67,502     $ 12,419  
         
LIABILITIES AND STOCKHOLDERSEQUITY        
Cur­rent liabilities:        
Accounts paya­ble   $ 1,518     $ 1,321  
Paya­bles to rela­ted parties     361       85  
Accrued lia­bi­li­ties     3,074       2,424  
Short-term debt     312       312  
Other cur­rent liabilities     258       98  
Total cur­rent liabilities     5,523       4,240  
Long-term debt, net     2,465       1  
Long-term ope­ra­ting lea­se liabilities     422       348  
Defer­red tax liabilities     2,805        
Other long-term liabilities     1,118       333  
         
Stock­hol­ders’ equity:        
Capi­tal stock:        
Com­mon stock, par value     16       12  
Addi­tio­nal paid-in capital     57,297       11,069  
Tre­a­su­ry stock, at cost     (1,893 )     (2,130 )
Accu­mu­la­ted deficit     (218 )     (1,451 )
Accu­mu­la­ted other com­pre­hen­si­ve income     (33 )     (3 )
Total stock­hol­ders’ equity   $ 55,169     $ 7,497  
Total Lia­bi­li­ties and Stock­hol­ders’ Equity   $ 67,502     $ 12,419  

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

    Three Mon­ths Ended   Six Mon­ths Ended  
    June 25,
2022
  June 26,
2021
  June 25,
2022
  June 26,
2021
 
Net cash pro­vi­ded by (used in)                  
Ope­ra­ting activities   $ 1,038     $ 952     $ 2,033     $ 1,850    
Inves­ting activities   $ (928 )   $ 119     $ 2,230     $ (603 )  
Finan­cing activities   $ 114     $ (211 )   $ (1,834 )   $ (219 )  

SELECTED CORPORATE DATA
(Mil­li­ons) (Unau­di­ted)

    Three Mon­ths Ended   Six Mon­ths Ended  
    June 25,
2022
  June 26,
2021
  June 25,
2022
  June 26,
2021
 
Seg­ment and Cate­go­ry Infor­ma­ti­on(1)                  
Data Cen­ter                  
Net reve­nue   $ 1,486     $ 813     $ 2,779     $ 1,423    
Ope­ra­ting income   $ 472     $ 204     $ 899     $ 314    
Cli­ent                  
Net reve­nue   $ 2,152     $ 1,728     $ 4,276     $ 3,366    
Ope­ra­ting income   $ 676     $ 538     $ 1,368     $ 1,068    
Gaming                  
Net reve­nue   $ 1,655     $ 1,255     $ 3,530     $ 2,410    
Ope­ra­ting income   $ 187     $ 175     $ 545     $ 296    
Embed­ded                  
Net reve­nue   $ 1,257     $ 54     $ 1,852     $ 96    
Ope­ra­ting income   $ 641     $ 6     $ 918     $ 3    
All Other                  
Net reve­nue   $     $     $     $    
Ope­ra­ting loss   $ (1,450 )   $ (92 )   $ (2,253 )   $ (188 )  
Total                  
Net reve­nue   $ 6,550     $ 3,850     $ 12,437     $ 7,295    
Ope­ra­ting income   $ 526     $ 831     $ 1,477     $ 1,493    
                   
Other Data                  
Capi­tal expenditures   $ 132     $ 64     $ 203     $ 130    
Adjus­ted EBITDA (2)   $ 2,139     $ 1,021     $ 4,106     $ 1,878    
Cash, cash equi­va­lents and short-term investments   $ 5,992     $ 3,793     $ 5,992     $ 3,793    
Free cash flow (3)   $ 906     $ 888     $ 1,830     $ 1,720    
Total assets   $ 67,502     $ 10,691     $ 67,502     $ 10,691    
Total debt   $ 2,777     $ 313     $ 2,777     $ 313    
(1 )   The Data Cen­ter seg­ment pri­ma­ri­ly inclu­des ser­ver micro­pro­ces­sors, GPUs, data pro­ces­sing units (DPUs), Field Pro­gramm­a­ble Gate Arrays (FPGAs) and adap­ti­ve SoC pro­ducts for data centers.
    The Cli­ent seg­ment pri­ma­ri­ly inclu­des micro­pro­ces­sors, acce­le­ra­ted pro­ces­sing units (APUs) that inte­gra­te micro­pro­ces­sors and gra­phics, and chip­sets for desk­top and note­book per­so­nal computers.
    The Gaming seg­ment pri­ma­ri­ly inclu­des dis­cre­te gra­phics pro­ces­sing units (GPUs), semi-cus­tom Sys­tem-on-Chip (SoC) pro­ducts and deve­lo­p­ment services.
    The Embed­ded seg­ment pri­ma­ri­ly inclu­des embed­ded micro­pro­ces­sors, GPUs, FPGAs, adap­ti­ve SoC pro­ducts, 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, acqui­si­ti­on-rela­ted cos­ts and licen­sing gain.
     
(2 )   Recon­ci­lia­ti­on of GAAP Net Inco­me to Adjus­ted EBITDA
    Three Mon­ths Ended   Six Mon­ths Ended  
    June 25,
2022
  June 26,
2021
  June 25,
2022
  June 26,
2021
 
GAAP net income   $ 447     $ 710     $ 1,233     $ 1,265    
Inte­rest expense     25       10       38       19    
Other (inco­me) expen­se, net     4             46       11    
Inco­me tax provision     54       113       167       202    
Equi­ty inco­me in investee     (4 )     (2 )     (7 )     (4 )  
Stock-based com­pen­sa­ti­on     259       83       433       168    
Depre­cia­ti­on and amortization     157       97       287       192    
Amor­tiz­a­ti­on of acqui­red intan­gi­ble assets     1,023             1,502          
Acqui­si­ti­on-rela­ted costs     174       10       407       25    
Adjus­ted EBITDA   $ 2,139     $ 1,021     $ 4,106     $ 1,878    
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 and six mon­ths ended June 25, 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.
(3 )   Recon­ci­lia­ti­on of GAAP Net Cash Pro­vi­ded by Ope­ra­ting Acti­vi­ties to Free Cash Flow
    Three Mon­ths Ended   Six Mon­ths Ended  
    June 25, 2022   June 26, 2021   June 25, 2022   June 26, 2021  
GAAP net cash pro­vi­ded by ope­ra­ting activities   $ 1,038     $ 952     $ 2,033     $ 1,850    
Ope­ra­ting cash flow margin %     16 %     25 %     16 %     25 %  
Purcha­ses of pro­per­ty and equipment   $ (132 )   $ (64 )   $ (203 )   $ (130 )  
Free cash flow   $ 906     $ 888     $ 1,830     $ 1,720    
Free cash flow margin %     14 %     23 %     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.