AMD Reports Third Quarter 2022 Financial Results

Data Cen짯ter, Gam짯ing and Embedded seg짯ments each grew signi짯fi짯cant짯ly year-over-year and Cli짯ent seg짯ment reve짯nue was lower than expected 

Cash and ope짯ra짯ting cash flow increased year-over-year 

SANTA CLARA, Calif., Nov. 01, 2022 (GLOBE NEWSWIRE)  AMD (NASDAQ:AMD) today announ짯ced reve짯nue for the third quar짯ter of 2022 of $5.6 bil짯li짯on, gross mar짯gin of 42%, ope짯ra짯ting loss of $64 mil짯li짯on, net inco짯me of $66 mil짯li짯on and diluted ear짯nings per share of $0.04. On a non-GAAP(*) basis, gross mar짯gin was 50%, ope짯ra짯ting inco짯me was $1.3 bil짯li짯on, net inco짯me was $1.1 bil짯li짯on and diluted ear짯nings per share was $0.67.

GAAP Quar짯ter짯ly Finan짯cial Results

  Q3 2022 Q3 2021 Y/Y
Reve짯nue ($M) $ 5,565   $ 4,313   Up 29%
Gross pro짯fit ($M) $ 2,354   $ 2,086   Up 13%
Gross mar짯gin %   42 %   48 % Down 610 bps
Ope짯ra짯ting expen짯ses ($M) $ 2,426   $ 1,141   Up 113%
Ope짯ra짯ting inco짯me (loss) ($M) $ (64 ) $ 948   Down 107%
Ope짯ra짯ting margin %   (1 )%   22 % Down 23pp
Net inco짯me ($M) $ 66   $ 923   Down 93%
Ear짯nings per share $ 0.04   $ 0.75   Down 95%

Non-GAAP(*) Quar짯ter짯ly Finan짯cial Results

  Q3 2022 Q3 2021 Y/Y
Reve짯nue ($M) $ 5,565   $ 4,313   Up 29%
Gross pro짯fit ($M) $ 2,776   $ 2,087   Up 33%
Gross mar짯gin %   50 %   48 % Up 150 bps
Ope짯ra짯ting expen짯ses ($M) $ 1,520   $ 1,035   Up 47%
Ope짯ra짯ting inco짯me ($M) $ 1,264   $ 1,055   Up 20%
Ope짯ra짯ting margin %   23 %   24 % Down 1pp
Net inco짯me ($M) $ 1,095   $ 893   Up 23%
Ear짯nings per share $ 0.67   $ 0.73   Down 8%

Third quar짯ter results came in below our expec짯ta짯ti짯ons due to the sof짯tening PC mar짯ket and sub짯stan짯ti짯al inven짯to짯ry reduc짯tion actions across the PC sup짯p짯ly chain, said AMD Chair and CEO Dr. Lisa Su. 쏡espi짯te the chal짯len짯ging macro envi짯ron짯ment, we grew reve짯nue 29% year-over-year dri짯ven by increased sales of our data cen짯ter, embedded and game con짯so짯le pro짯ducts. We are con짯fi짯dent that our lea짯der짯ship pro짯duct port짯fo짯lio, strong balan짯ce sheet, and ongo짯ing growth oppor짯tu짯ni짯ties in our data cen짯ter and embedded busi짯nesses posi짯ti짯on us well to navi짯ga짯te the cur짯rent mar짯ket dynamics.

Q3 2022 Finan짯cial Summary

  • Reve짯nue of $5.6 bil짯li짯on increased 29% year-over-year dri짯ven by growth across the Data Cen짯ter, Gam짯ing and Embedded segments.
  • Gross mar짯gin was 42%, a decrease of 6 per짯cen짯ta짯ge points year-over-year, pri짯ma짯ri짯ly due to amor짯tiza짯ti짯on of intan짯gi짯ble assets asso짯cia짯ted with the Xilinx acqui짯si짯ti짯on. Non-GAAP gross mar짯gin was 50%, an increase of 2 per짯cen짯ta짯ge points year-over-year, pri짯ma짯ri짯ly dri짯ven by hig짯her Embedded and Data Cen짯ter seg짯ment reve짯nue. Gross mar짯gin and non-GAAP gross mar짯gin include $160 mil짯li짯on of char짯ges for inven짯to짯ry, pri짯cing, and rela짯ted reser짯ves in the gra짯phics and cli짯ent businesses.
  • Ope짯ra짯ting loss was $64 mil짯li짯on, com짯pared to ope짯ra짯ting inco짯me of $948 mil짯li짯on, or 22% of reve짯nue, a year ago. The loss was pri짯ma짯ri짯ly due to the amor짯tiza짯ti짯on of intan짯gi짯ble assets asso짯cia짯ted with the Xilinx acqui짯si짯ti짯on and increased R&D invest짯ments. Non-GAAP ope짯ra짯ting inco짯me was $1.3 bil짯li짯on, or 23% of reve짯nue, up from $1.1 bil짯li짯on or 24% a year ago pri짯ma짯ri짯ly dri짯ven by hig짯her reve짯nue and gross mar짯gin par짯ti짯al짯ly off짯set by hig짯her ope짯ra짯ting expenses.
  • Net inco짯me was $66 mil짯li짯on com짯pared to $923 mil짯li짯on a year ago pri짯ma짯ri짯ly due to the amor짯tiza짯ti짯on of intan짯gi짯ble assets asso짯cia짯ted with the Xilinx acqui짯si짯ti짯on and increased R&D invest짯ments, par짯ti짯al짯ly off짯set by a $135 mil짯li짯on tax bene짯fit in the quar짯ter. Non-GAAP net inco짯me was $1.1 bil짯li짯on, up from $893 mil짯li짯on a year ago pri짯ma짯ri짯ly dri짯ven by hig짯her reve짯nue and gross mar짯gin, par짯ti짯al짯ly off짯set by hig짯her ope짯ra짯ting expenses. 
  • Diluted ear짯nings per share was $0.04 com짯pared to $0.75 a year ago pri짯ma짯ri짯ly due to lower net inco짯me. Non-GAAP diluted ear짯nings per share was $0.67 com짯pared to $0.73 a year ago pri짯ma짯ri짯ly due to lower Cli짯ent seg짯ment revenue.
  • Cash, cash equi짯va짯lents and short-term invest짯ments were $5.6 bil짯li짯on at the end of the quar짯ter. The com짯pa짯ny repaid the $312 mil짯li짯on 7.50% Seni짯or Notes that matu짯red in August and repurcha짯sed $617 mil짯li짯on of com짯mon stock during the quarter.
  • Cash from ope짯ra짯ti짯ons was $965 mil짯li짯on in the quar짯ter, com짯pared to $849 mil짯li짯on a year ago. Free cash flow was $842 mil짯li짯on in the quar짯ter com짯pared to $764 mil짯li짯on a year ago.
  • Good짯will and acqui짯si짯ti짯on-rela짯ted intan짯gi짯ble assets asso짯cia짯ted with the acqui짯si짯ti짯ons of Xilinx and Pen짯san짯do were $49.3 billion.

Quar짯ter짯ly Seg짯ment Finan짯cial Summary

  • Pri짯or peri짯od results have been con짯for짯med to the cur짯rent report짯ing seg짯ments for com짯pa짯ri짯son purposes. 
  • Data Cen짯ter seg짯ment reve짯nue was $1.6 bil짯li짯on, up 45% year-over-year dri짯ven by strong sales of EPYC꽓 ser짯ver pro짯ces짯sors. Ope짯ra짯ting inco짯me was $505 mil짯li짯on, or 31% of reve짯nue, com짯pared to $308 mil짯li짯on or 28% a year ago. The ope짯ra짯ting inco짯me and mar짯gin increa짯ses were pri짯ma짯ri짯ly dri짯ven by hig짯her reve짯nue, par짯ti짯al짯ly off짯set by hig짯her ope짯ra짯ting expenses.
  • Cli짯ent seg짯ment reve짯nue was $1.0 bil짯li짯on, down 40% year-over-year due to redu짯ced pro짯ces짯sor ship짯ments resul짯ting from a weak PC mar짯ket and a signi짯fi짯cant inven짯to짯ry cor짯rec짯tion across the PC sup짯p짯ly chain. Cli짯ent pro짯ces짯sor ASP increased year-over-year dri짯ven pri짯ma짯ri짯ly by a richer mix of Ryzen꽓 desk짯top pro짯ces짯sor sales. Ope짯ra짯ting loss was $26 mil짯li짯on, com짯pared to ope짯ra짯ting inco짯me of $490 mil짯li짯on or 29% a year ago. The decrease was pri짯ma짯ri짯ly due to lower revenue.
  • Gam짯ing seg짯ment reve짯nue was $1.6 bil짯li짯on, up 14% year-over-year dri짯ven by hig짯her semi-cus짯tom pro짯duct sales par짯ti짯al짯ly off짯set by lower gra짯phics reve짯nue. Ope짯ra짯ting inco짯me was $142 mil짯li짯on, or 9% of reve짯nue, com짯pared to $231 mil짯li짯on or 16% a year ago. The decrease was pri짯ma짯ri짯ly due to lower gra짯phics reve짯nue and inven짯to짯ry, pri짯cing and rela짯ted char짯ges in the gra짯phics busi짯ness. Ope짯ra짯ting mar짯gin was lower pri짯ma짯ri짯ly due to lower gra짯phics reve짯nue and hig짯her ope짯ra짯ting expenses.
  • Embedded seg짯ment reve짯nue was $1.3 bil짯li짯on, up 1,549% year-over-year dri짯ven pri짯ma짯ri짯ly by the inclu짯si짯on of Xilinx embedded pro짯duct reve짯nue. Ope짯ra짯ting inco짯me was $635 mil짯li짯on, or 49% of reve짯nue, com짯pared to $23 mil짯li짯on or 30% a year ago. Ope짯ra짯ting inco짯me and mar짯gin increa짯ses were pri짯ma짯ri짯ly dri짯ven by hig짯her revenue.
  • All Other ope짯ra짯ting loss was $1.3 bil짯li짯on as com짯pared to $104 mil짯li짯on a year ago pri짯ma짯ri짯ly due to amor짯tiza짯ti짯on of intan짯gi짯ble assets lar짯ge짯ly asso짯cia짯ted with the Xilinx acquisition.

Recent PR Highlights

  • Adop짯ti짯on of AMD data cen짯ter solu짯ti짯ons con짯ti짯nues to grow among key cus짯to짯mers and partners: 
    • Micro짯soft Azu짯re announ짯ced the gene짯ral avai짯la짯bi짯li짯ty (GA) of new con짯fi짯den짯ti짯al com짯pu짯ting VMs lever짯aging sta짯te-of-the-art AMD secu짯ri짯ty tech짯no짯lo짯gies offe짯red by EPYC pro짯ces짯sors and new GPU-acce짯le짯ra짯ted VMs. Addi짯tio짯nal짯ly, Ama짯zon Web Ser짯vices announ짯ced the new memo짯ry opti짯mi짯zed ins짯tances powered by EPYC processors.
    • AMD announ짯ced that AMD Pen짯san짯do data pro짯ces짯sing units (DPUs) will be one of the first DPU solu짯ti짯ons to sup짯port VMware vSphe짯re짰 8 with Dis짯tri짯bu짯ted Ser짯vices Engi짯ne capa짯bi짯li짯ties run짯ning on ser짯vers from lea짯ding ven짯dors inclu짯ding Dell Tech짯no짯lo짯gies and HPE.
  • AMD laun짯ched the Ryzen 7000 Series pro짯ces짯sors for desk짯top, deli짯ve짯ring domi짯nant per짯for짯mance and lea짯der짯ship ener짯gy effi짯ci짯en짯cy. Powered by the new 쏾en 4 archi짯tec짯tu짯re, the Ryzen 7000 Series pro짯ces짯sors fea짯ture up to 16 cores and 32 threads and are built on an opti짯mi짯zed, high-per짯for짯mance 5nm pro짯cess node. AMD also announ짯ced the new Socket AM5 motherboard.
  • AMD announ짯ced the Ryzen 7020 Series pro짯ces짯sors for mobi짯le appli짯ca짯ti짯ons, brin짯ging high-end per짯for짯mance and bat짯tery life to ever짯y짯day users.
  • AMD announ짯ced a stra짯te짯gic col짯la짯bo짯ra짯ti짯on with glo짯bal mobi짯li짯ty tech com짯pa짯ny ECARX to col짯la짯bo짯ra짯te on the ECARX digi짯tal cock짯pit for next-gene짯ra짯ti짯on elec짯tric vehic짯les, the first in-vehic짯le plat짯form to be offe짯red with AMD Ryzen Embedded V2000 pro짯ces짯sors and AMD Rade짯on꽓 RX 6000 Series GPUs along with ECARX hard짯ware and software.
  • AMD intro짯du짯ced the Ryzen Embedded V3000 Series pro짯ces짯sors, adding the high-per짯for짯mance 쏾en 3 core to the V멣eries port짯fo짯lio to deli짯ver relia짯ble, sca짯lable pro짯ces짯sing per짯for짯mance for a wide ran짯ge of sto짯rage and net짯wor짯king sys짯tem applications.
  • AMD and Ener짯gy Sci짯en짯ces Net짯work (ESnet) announ짯ced the launch of ESnet6, the U.S. Depart짯ment of Energy셲 next gene짯ra짯ti짯on net짯work to enhan짯ce col짯la짯bo짯ra짯ti짯ve sci짯ence. AMD Alveo꽓 U280-based net짯work acce짯le짯ra짯tor cards bring powerful adap짯ti짯ve com짯pu짯ting to ESnet6, enab짯ling deep insights, rapid detec짯tion and cor짯rec짯tion of pro짯blems, and con짯ti짯nuous inno짯va짯ti짯on across the network.
  • AMD and Sam짯sung announ짯ced the second gene짯ra짯ti짯on of its SmartS짯SD, powered by AMD Ver짯sal꽓 Adap짯ti짯ve SoCs, enab짯ling effi짯ci짯ent data pro짯ces짯sing for the data cen짯ter by inte짯gra짯ting the com짯pu짯te and sto짯rage functions.
  • AMD announ짯ced its 27th annu짯al Cor짯po짯ra짯te Respon짯si짯bi짯li짯ty Report, demons짯t짯ra짯ting its com짯mit짯ment to advan짯cing com짯pu짯ting to help sol짯ve the world셲 most important chal짯lenges and detail짯ing its pro짯gress toward envi짯ron짯men짯tal, social and gover짯nan짯ce goals.

Cur짯rent Outlook
AMD셲 out짯look state짯ments are based on cur짯rent expec짯ta짯ti짯ons. The fol짯lo짯wing state짯ments are for짯ward-loo짯king and actu짯al results could dif짯fer mate짯ri짯al짯ly depen짯ding on mar짯ket con짯di짯ti짯ons and the fac짯tors set forth under 쏞au짯tio짯na짯ry State짯ment below. AMD셲 fourth quar짯ter is a 14-week quarter.

For the fourth quar짯ter of 2022, AMD expects reve짯nue to be appro짯xi짯m짯ate짯ly $5.5 bil짯li짯on, plus or minus $300 mil짯li짯on, an increase of appro짯xi짯m짯ate짯ly 14% year-over-year and flat sequen짯ti짯al짯ly. Year-over-year and sequen짯ti짯al짯ly, the Embedded and Data Cen짯ter seg짯ments are expec짯ted to grow. AMD expects non-GAAP gross mar짯gin to be appro짯xi짯m짯ate짯ly 51% in the fourth quar짯ter of 2022.

For the full year 2022, AMD expects reve짯nue to be appro짯xi짯m짯ate짯ly $23.5 bil짯li짯on, plus or minus $300 mil짯li짯on, an increase of appro짯xi짯m짯ate짯ly 43% over 2021 led by growth in the Embedded and Data Cen짯ter seg짯ments. AMD expects non-GAAP gross mar짯gin to be appro짯xi짯m짯ate짯ly 52% for 2022.

AMD Tele짯con짯fe짯rence
AMD will hold a con짯fe짯rence call for the finan짯cial com짯mu짯ni짯ty at 2:00 p.m. PT (5:00 p.m. ET) today to dis짯cuss its third quar짯ter 2022 finan짯cial results. AMD will pro짯vi짯de a real-time audio broad짯cast of the tele짯con짯fe짯rence on the Inves짯tor Rela짯ti짯ons page of its web짯site at www.amd.com.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in mil짯li짯ons, except per share data) (Unau짯di짯ted)    
    Three Months Ended
    Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 25,
2021
 
GAAP gross profit   $ 2,354     $ 2,086    
GAAP gross margin %     42 %     48 %  
Stock-based com짯pen짯sa짯ti짯on     8       1    
Acqui짯si짯ti짯on-rela짯ted cos짯ts (1)     2          
Amor짯tiza짯ti짯on of acqui짯red intan짯gi짯ble assets     412          
Non-GAAP gross profit   $ 2,776     $ 2,087    
Non-GAAP gross margin %     50 %     48 %  
           
GAAP ope짯ra짯ting expenses   $ 2,426     $ 1,141    
GAAP ope짯ra짯ting expenses/revenue %     44 %     26 %  
Stock-based com짯pen짯sa짯ti짯on     261       98    
Acqui짯si짯ti짯on-rela짯ted cos짯ts (1)     55       8    
Amor짯tiza짯ti짯on of acqui짯red intan짯gi짯ble assets     590          
Non-GAAP ope짯ra짯ting expenses   $ 1,520     $ 1,035    
Non-GAAP ope짯ra짯ting expenses/revenue %     27 %     24 %  
           
GAAP ope짯ra짯ting inco짯me (loss)   $ (64 )   $ 948    
GAAP ope짯ra짯ting margin %   (1)%     22 %  
Stock-based com짯pen짯sa짯ti짯on     269       99    
Acqui짯si짯ti짯on-rela짯ted cos짯ts (1)     57       8    
Amor짯tiza짯ti짯on of acqui짯red intan짯gi짯ble assets     1,002          
Non-GAAP ope짯ra짯ting income   $ 1,264     $ 1,055    
Non-GAAP ope짯ra짯ting margin %     23 %     24 %  
    Three Months Ended
    Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 25,
2021
 
GAAP net inco짯me / diluted ear짯nings per share   $ 66     $ 0.04     $ 923     $ 0.75    
(Gains) los짯ses on equi짯ty invest짯ments, net     3             (60 )     (0.05 )  
Stock-based com짯pen짯sa짯ti짯on     269       0.16       99       0.08    
Equi짯ty inco짯me in investee     (4 )           (2 )        
Acqui짯si짯ti짯on-rela짯ted cos짯ts (1)     57       0.04       8       0.01    
Amor짯tiza짯ti짯on of acqui짯red intan짯gi짯ble assets     1,002       0.62                
Inco짯me tax provision     (298 )     (0.19 )     (75 )     (0.06 )  
Non-GAAP net inco짯me / diluted ear짯nings per share   $ 1,095     $ 0.67     $ 893     $ 0.73    
                   
(1 )   Acqui짯si짯ti짯on-rela짯ted cos짯ts pri짯ma짯ri짯ly com짯pri짯sed of tran짯sac짯tion cos짯ts, purcha짯se pri짯ce adjus짯t짯ments for inven짯to짯ry and cer짯tain com짯pen짯sa짯ti짯on charges

About AMD
For more than 50 years AMD has dri짯ven inno짯va짯ti짯on in high-per짯for짯mance com짯pu짯ting, gra짯phics and visua짯liza짯ti짯on tech짯no짯lo짯gies. AMD employees are focu짯sed on buil짯ding lea짯der짯ship high-per짯for짯mance and adap짯ti짯ve pro짯ducts that push the boun짯da짯ries of what is pos짯si짯ble. Bil짯li짯ons of peo짯p짯le, lea짯ding For짯tu짯ne 500 busi짯nesses and cut짯ting-edge sci짯en짯ti짯fic rese짯arch insti짯tu짯ti짯ons around the world rely on AMD tech짯no짯lo짯gy dai짯ly to impro짯ve how they live, work and play. For more infor짯ma짯ti짯on about how AMD is enab짯ling today and inspi짯ring tomor짯row, visit the AMD (NASDAQ: AMDweb짯siteblogFace짯book and Twit짯ter pages.

Cau짯tio짯na짯ry Statement

This press release con짯ta짯ins for짯ward-loo짯king state짯ments con짯cer짯ning Advan짯ced Micro Devices, Inc. (AMD) such as AMD셲 expec짯ta짯ti짯on that its lea짯der짯ship pro짯duct port짯fo짯lio, strong balan짯ce sheet, and ongo짯ing growth oppor짯tu짯ni짯ties in its data cen짯ter and embedded busi짯nesses posi짯ti짯ons AMD well to navi짯ga짯te the cur짯rent mar짯ket dyna짯mics; the fea짯tures, func짯tion짯a짯li짯ty, per짯for짯mance, avai짯la짯bi짯li짯ty, timing and expec짯ted bene짯fits of AMD pro짯ducts; and AMD셲 expec짯ted fourth quar짯ter 2022 and fis짯cal 2022 finan짯cial out짯look, inclu짯ding reve짯nue and non-GAAP gross mar짯gin and expec짯ted dri짯vers based on cur짯rent expec짯ta짯ti짯ons, which are made pur짯su짯ant to the Safe Har짯bor pro짯vi짯si짯ons of the Pri짯va짯te Secu짯ri짯ties Liti짯ga짯ti짯on Reform Act of 1995. For짯ward-loo짯king state짯ments are com짯mon짯ly iden짯ti짯fied by words such as 쐗ould, 쐌ay, 쐃xpects, 쐀elie짯ves, 쐏lans, 쐇ntends, 쐏ro짯jects and other terms with simi짯lar mea짯ning. Inves짯tors are cau짯tio짯ned that the for짯ward-loo짯king state짯ments in this press release are based on cur짯rent beliefs, assump짯ti짯ons and expec짯ta짯ti짯ons, speak only as of the date of this press release and invol짯ve risks and uncer짯tain짯ties that could cau짯se actu짯al results to dif짯fer mate짯ri짯al짯ly from cur짯rent expec짯ta짯ti짯ons. Such state짯ments are sub짯ject to cer짯tain known and unknown risks and uncer짯tain짯ties, many of which are dif짯fi짯cult to pre짯dict and gene짯ral짯ly bey짯ond AMD셲 con짯trol, that could cau짯se actu짯al results and other future events to dif짯fer mate짯ri짯al짯ly from tho짯se expres짯sed in, or impli짯ed or pro짯jec짯ted by, the for짯ward-loo짯king infor짯ma짯ti짯on and state짯ments. Mate짯ri짯al fac짯tors that could cau짯se actu짯al results to dif짯fer mate짯ri짯al짯ly from cur짯rent expec짯ta짯ti짯ons include, wit짯hout limi짯ta짯ti짯on, the fol짯lo짯wing: Intel Corporation셲 domi짯nan짯ce of the micro짯pro짯ces짯sor mar짯ket and its aggres짯si짯ve busi짯ness prac짯ti짯ces; glo짯bal eco짯no짯mic uncer짯tain짯ty; loss of a signi짯fi짯cant cus짯to짯mer; impact of the COVID-19 pan짯de짯mic on AMD셲 busi짯ness, finan짯cial con짯di짯ti짯on and results of ope짯ra짯ti짯ons; com짯pe짯ti짯ti짯ve mar짯kets in which AMD셲 pro짯ducts are sold; mar짯ket con짯di짯ti짯ons of the indus짯tries in which AMD pro짯ducts are sold; cycli짯cal natu짯re of the semi짯con짯duc짯tor indus짯try; quar짯ter짯ly and sea짯so짯nal sales pat짯terns; AMD셲 abili짯ty to ade짯qua짯te짯ly pro짯tect its tech짯no짯lo짯gy or other intellec짯tu짯al pro짯per짯ty; unfa짯vorable cur짯ren짯cy exch짯an짯ge rate fluc짯tua짯tions; abili짯ty of third par짯ty manu짯fac짯tu짯r짯ers to manu짯fac짯tu짯re AMD셲 pro짯ducts on a time짯ly basis in suf짯fi짯ci짯ent quan짯ti짯ties and using com짯pe짯ti짯ti짯ve tech짯no짯lo짯gies; avai짯la짯bi짯li짯ty of essen짯ti짯al equip짯ment, mate짯ri짯als, sub짯stra짯tes or manu짯fac짯tu짯ring pro짯ces짯ses; abili짯ty to achie짯ve expec짯ted manu짯fac짯tu짯ring yields for AMD셲 pro짯ducts; AMD셲 abili짯ty to intro짯du짯ce pro짯ducts on a time짯ly basis with expec짯ted fea짯tures and per짯for짯mance levels; AMD셲 abili짯ty to gene짯ra짯te reve짯nue from its semi-cus짯tom SoC pro짯ducts; poten짯ti짯al secu짯ri짯ty vul짯nerabi짯li짯ties; poten짯ti짯al secu짯ri짯ty inci짯dents inclu짯ding IT outa짯ges, data loss, data brea짯ches and cyber-attacks; poten짯ti짯al dif짯fi짯cul짯ties in upgrading and ope짯ra짯ting AMD셲 new enter짯pri짯se resour짯ce plan짯ning sys짯tem; uncer짯tain짯ties invol짯ving the orde짯ring and ship짯ment of AMD셲 pro짯ducts; AMD셲 reli짯ance on third-par짯ty intellec짯tu짯al pro짯per짯ty to design and intro짯du짯ce new pro짯ducts in a time짯ly man짯ner; AMD셲 reli짯ance on third-par짯ty com짯pa짯nies for design, manu짯fac짯tu짯re and sup짯p짯ly of mother짯boards, soft짯ware and other com짯pu짯ter plat짯form com짯pon짯ents; AMD셲 reli짯ance on Micro짯soft and other soft짯ware ven짯dors sup짯port to design and deve짯lop soft짯ware to run on AMD셲 pro짯ducts; AMD셲 reli짯ance on third-par짯ty dis짯tri짯bu짯tors and add-in-board part짯ners; impact of modi짯fi짯ca짯ti짯on or inter짯rup짯ti짯on of AMD셲 inter짯nal busi짯ness pro짯ces짯ses and infor짯ma짯ti짯on sys짯tems; com짯pa짯ti짯bi짯li짯ty of AMD셲 pro짯ducts with some or all indus짯try-stan짯dard soft짯ware and hard짯ware; cos짯ts rela짯ted to defec짯ti짯ve pro짯ducts; effi짯ci짯en짯cy of AMD셲 sup짯p짯ly chain; AMD셲 abili짯ty to rely on third par짯ty sup짯p짯ly-chain logi짯stics func짯tions; AMD셲 abili짯ty to effec짯tively con짯trol sales of its pro짯ducts on the gray mar짯ket; impact of govern짯ment actions and regu짯la짯ti짯ons such as export admi짯nis짯tra짯ti짯on regu짯la짯ti짯ons, tariffs and trade pro짯tec짯tion mea짯su짯res; AMD셲 abili짯ty to rea짯li짯ze its defer짯red tax assets; poten짯ti짯al tax lia짯bi짯li짯ties; cur짯rent and future claims and liti짯ga짯ti짯on; impact of envi짯ron짯men짯tal laws, con짯flict mine짯rals-rela짯ted pro짯vi짯si짯ons and other laws or regu짯la짯ti짯ons; impact of acqui짯si짯ti짯ons, joint ven짯tures and/or invest짯ments, inclu짯ding acqui짯si짯ti짯ons of Xilinx and Pen짯san짯do, on AMD셲 busi짯ness and AMD셲 abili짯ty to inte짯gra짯te acqui짯red busi짯nesses; impact of any impair짯ment of the com짯bi짯ned company셲 assets on the com짯bi짯ned company셲 finan짯cial posi짯ti짯on and results of ope짯ra짯ti짯on; rest짯ric짯tions impo짯sed by agree짯ments gover짯ning AMD셲 notes, the gua짯ran짯tees of Xilinx셲 notes and the revol짯ving cre짯dit faci짯li짯ty; AMD셲 indeb짯ted짯ness; AMD셲 abili짯ty to gene짯ra짯te suf짯fi짯ci짯ent cash to meet its working capi짯tal requi짯re짯ments or gene짯ra짯te suf짯fi짯ci짯ent reve짯nue and ope짯ra짯ting cash flow to make all of its plan짯ned R&D or stra짯te짯gic invest짯ments; poli짯ti짯cal, legal, eco짯no짯mic risks and natu짯ral dis짯as짯ters; future impairm짯ents of good짯will and tech짯no짯lo짯gy licen짯se purcha짯ses; AMD셲 abili짯ty to attract and retain qua짯li짯fied per짯son짯nel; AMD셲 stock pri짯ce vola짯ti짯li짯ty; and world짯wi짯de poli짯ti짯cal con짯di짯ti짯ons. Inves짯tors are urged to review in detail the risks and uncer짯tain짯ties in AMD셲 Secu짯ri짯ties and Exch짯an짯ge Com짯mis짯si짯on filings, inclu짯ding but not limi짯t짯ed to AMD셲 most recent reports on Forms 10멚 and 10멡.

(*)   In this ear짯nings press release, in addi짯ti짯on to GAAP finan짯cial results, AMD has pro짯vi짯ded non-GAAP finan짯cial mea짯su짯res inclu짯ding non-GAAP gross pro짯fit, non-GAAP ope짯ra짯ting expen짯ses, non-GAAP ope짯ra짯ting inco짯me, non-GAAP net inco짯me, non-GAAP diluted ear짯nings per share. AMD uses a nor짯ma짯li짯zed tax rate in its com짯pu짯ta짯ti짯on of the non-GAAP inco짯me tax pro짯vi짯si짯on to pro짯vi짯de bet짯ter con짯sis짯ten짯cy across the report짯ing peri짯ods. For fis짯cal 2022, AMD uses a pro짯jec짯ted non-GAAP tax rate of 13%, which excludes the tax impact of pre-tax non-GAAP adjus짯t짯ments, reflec짯ting curr짯ent짯ly available infor짯ma짯ti짯on. AMD also pro짯vi짯ded adjus짯ted EBITDA and free cash flow as sup짯ple짯men짯tal non-GAAP mea짯su짯res of its per짯for짯mance. The짯se items are defi짯ned in the foot짯no짯tes to the sel짯ec짯ted cor짯po짯ra짯te data tables pro짯vi짯ded at the end of this ear짯nings press release. AMD is pro짯vi짯ding the짯se finan짯cial mea짯su짯res becau짯se it belie짯ves this non-GAAP pre짯sen짯ta짯ti짯on makes it easier for inves짯tors to compa짯re its ope짯ra짯ting results for cur짯rent and his짯to짯ri짯cal peri짯ods and also becau짯se AMD belie짯ves it assists inves짯tors in com짯pa짯ring AMD셲 per짯for짯mance across report짯ing peri짯ods on a con짯sis짯tent basis by exclu짯ding items that it does not belie짯ve are indi짯ca짯ti짯ve of its core ope짯ra짯ting per짯for짯mance and for the other reasons descri짯bed in the foot짯no짯tes to the sel짯ec짯ted data tables. The non-GAAP finan짯cial mea짯su짯res dis짯c짯lo짯sed in this ear짯nings press release should be view짯ed in addi짯ti짯on to and not as a sub짯sti짯tu짯te for or supe짯ri짯or to AMD셲 repor짯ted results pre짯pared in accordance with GAAP and should be read only in con짯junc짯tion with AMD셲 Con짯so짯li짯da짯ted Finan짯cial State짯ments pre짯pared in accordance with GAAP. The짯se non GAAP finan짯cial mea짯su짯res refe짯ren짯ced are recon짯ci짯led to their most direct짯ly com짯pa짯ra짯ble GAAP finan짯cial mea짯su짯res in the data tables in this ear짯nings press release. This ear짯nings press release also con짯ta짯ins for짯ward-loo짯king non-GAAP gross mar짯gin con짯cer짯ning AMD셲 finan짯cial out짯look, which is based on cur짯rent expec짯ta짯ti짯ons as of Novem짯ber 1, 2022 and assump짯ti짯ons and beliefs that invol짯ve num짯e짯rous risks and uncer짯tain짯ties. AMD under짯ta짯kes no intent or obli짯ga짯ti짯on to publicly update or revi짯se its out짯look state짯ments as a result of new infor짯ma짯ti짯on, future events or other짯wi짯se, except as may be requi짯red by law.

AMD, the AMD Arrow logo, EPYC, Rade짯on, Ryzen, Thre짯ad짯rip짯per, Ver짯sal and com짯bi짯na짯ti짯ons the짯reof, are trade짯marks of Advan짯ced Micro Devices, Inc.
Other names are for infor짯ma짯tio짯nal pur짯po짯ses only and used to iden짯ti짯fy com짯pa짯nies and pro짯ducts and may be trade짯marks of their respec짯ti짯ve owner.

ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Mil짯li짯ons except per share amounts and per짯cen짯ta짯ges) (Unau짯di짯ted)

    Three Months Ended   Nine Months Ended
    Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 25,
2021
  Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 25,
2021
Net reve짯nue   $ 5,565     $ 4,313     $ 18,002     $ 11,608  
Cost of sales     2,799       2,227       8,797       6,105  
Amor짯tiza짯ti짯on of acqui짯si짯ti짯on-rela짯ted intangibles     412             1,005        
Total cost of sales     3,211       2,227       9,802       6,105  
Gross pro짯fit     2,354       2,086       8,200       5,503  
Gross mar짯gin %     42 %     48 %     46 %     47 %
Rese짯arch and development     1,279       765       3,639       2,034  
Mar짯ke짯ting, gene짯ral and administrative     557       376       1,746       1,036  
Amor짯tiza짯ti짯on of acqui짯si짯ti짯on-rela짯ted intangibles     590             1,499        
Licen짯sing gain     (8 )     (3 )     (97 )     (8 )
Ope짯ra짯ting inco짯me (loss)     (64 )     948       1,413       2,441  
Inte짯rest expense     (31 )     (7 )     (69 )     (26 )
Other inco짯me (expen짯se), net     22       62       (24 )     51  
Inco짯me (loss) befo짯re inco짯me taxes and equi짯ty income     (73 )     1,003       1,320       2,466  
Inco짯me tax pro짯vi짯si짯on (bene짯fit)     (135 )     82       32       284  
Equi짯ty inco짯me in investee     4       2       11       6  
Net inco짯me   $ 66     $ 923     $ 1,299     $ 2,188  
Ear짯nings per share                
Basic   $ 0.04     $ 0.76     $ 0.84     $ 1.80  
Diluted   $ 0.04     $ 0.75     $ 0.84     $ 1.78  
Shares used in per share calculation                
Basic     1,615       1,214       1,542       1,214  
Diluted     1,625       1,230       1,555       1,231  

 

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

    Sep짯tem짯ber 24,
2022
  Decem짯ber 25,
2021
    (Unau짯di짯ted)    
ASSETS        
Cur짯rent assets:        
Cash and cash equivalents   $ 3,398     $ 2,535  
Short-term invest짯ments     2,193       1,073  
Accounts receiva짯ble, net     4,336       2,706  
Invent짯ories     3,369       1,955  
Receiv짯a짯bles from rela짯ted parties     4       2  
Pre짯paid expen짯ses and other cur짯rent assets     1,120       312  
Total cur짯rent assets     14,420       8,583  
Pro짯per짯ty and equip짯ment, net     1,486       702  
Ope짯ra짯ting lea짯se right-of use assets     490       367  
Good짯will     24,187       289  
Acqui짯si짯ti짯on-rela짯ted intan짯gi짯bles, net     25,162        
Invest짯ment: equi짯ty method     80       69  
Defer짯red tax assets     32       931  
Other non-cur짯rent assets     1,954       1,478  
Total Assets   $ 67,811     $ 12,419  
         
LIABILITIES AND STOCKHOLDERS EQUITY        
Cur짯rent liabilities:        
Accounts paya짯ble   $ 2,337     $ 1,321  
Paya짯bles to rela짯ted parties     397       85  
Accrued lia짯bi짯li짯ties     3,598       2,424  
Short-term debt           312  
Other cur짯rent liabilities     359       98  
Total cur짯rent liabilities     6,691       4,240  
Long-term debt, net     2,466       1  
Long-term ope짯ra짯ting lea짯se liabilities     424       348  
Defer짯red tax liabilities     2,078       12  
Other long-term liabilities     1,610       321  
         
Stock짯hol짯ders equity:        
Capi짯tal stock:        
Com짯mon stock, par value     16       12  
Addi짯tio짯nal paid-in capital     57,581       11,069  
Tre짯asu짯ry stock, at cost     (2,815 )     (2,130 )
Accu짯mu짯la짯ted deficit     (152 )     (1,451 )
Accu짯mu짯la짯ted other com짯pre짯hen짯si짯ve loss     (88 )     (3 )
Total stock짯hol짯ders equity   $ 54,542     $ 7,497  
Total Lia짯bi짯li짯ties and Stock짯hol짯ders Equity   $ 67,811     $ 12,419  

 

ADVANCED MICRO DEVICES, INC.
SELECTED CASH FLOW INFORMATION
(Mil짯li짯ons) (Unau짯di짯ted)

    Three Months Ended   Nine Months Ended
    Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 25,
2021
  Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 25,
2021
Net cash pro짯vi짯ded by (used in)                
Ope짯ra짯ting activities   $ 965     $ 849     $ 2,998     $ 2,699  
Inves짯t짯ing activities   $ (1,298 )   $ (83 )   $ 932     $ (686 )
Finan짯cing activities   $ (1,233 )   $ (949 )   $ (3,067 )   $ (1,168 )

 

SELECTED CORPORATE DATA
(Mil짯li짯ons) (Unau짯di짯ted)

    Three Months Ended   Nine Months Ended
    Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 25, 2021   Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 25,
2021
Seg짯ment and Cate짯go짯ry Infor짯ma짯ti짯on(1)                
Data Cen짯ter                
    Net revenue   $ 1,609     $ 1,108     $ 4,388     $ 2,531  
    Ope짯ra짯ting income   $ 505     $ 308     $ 1,404     $ 622  
Cli짯ent                
    Net revenue   $ 1,022     $ 1,692     $ 5,298     $ 5,058  
    Ope짯ra짯ting inco짯me (loss)   $ (26 )   $ 490     $ 1,342     $ 1,558  
Gam짯ing                
    Net revenue   $ 1,631     $ 1,434     $ 5,161     $ 3,844  
    Ope짯ra짯ting income   $ 142     $ 231     $ 687     $ 527  
Embedded                
    Net revenue   $ 1,303     $ 79     $ 3,155     $ 175  
    Ope짯ra짯ting income   $ 635     $ 23     $ 1,553     $ 26  
All Other                
    Net revenue   $     $     $     $  
    Ope짯ra짯ting loss   $ (1,320 )   $ (104 )   $ (3,573 )   $ (292 )
Total                
    Net revenue   $ 5,565     $ 4,313     $ 18,002     $ 11,608  
    Ope짯ra짯ting inco짯me (loss)   $ (64 )   $ 948     $ 1,413     $ 2,441  
                 
Other Data                
Capi짯tal expenditures   $ 123     $ 85     $ 326     $ 215  
Adjus짯ted EBITDA (2)   $ 1,427     $ 1,152     $ 5,533     $ 3,030  
Cash, cash equi짯va짯lents and short-term investments   $ 5,591     $ 3,608     $ 5,591     $ 3,608  
Free cash flow (3)   $ 842     $ 764     $ 2,672     $ 2,484  
Total assets   $ 67,811     $ 11,153     $ 67,811     $ 11,153  
Total debt   $ 2,466     $ 313     $ 2,466     $ 313  

 

(1)   The Data Cen짯ter seg짯ment pri짯ma짯ri짯ly includes ser짯ver micro짯pro짯ces짯sors and GPUs, data pro짯ces짯sing units (DPUs), Field Pro짯gramma짯ble Gate Arrays (FPGAs) and adap짯ti짯ve Sys짯tem-on-Chip (SoC) pro짯ducts for data centers.
    The Cli짯ent seg짯ment pri짯ma짯ri짯ly includes micro짯pro짯ces짯sors, acce짯le짯ra짯ted pro짯ces짯sing units (APUs) that inte짯gra짯te micro짯pro짯ces짯sors and gra짯phics, and chip짯sets for desk짯top and note짯book per짯so짯nal computers.
    The Gam짯ing seg짯ment pri짯ma짯ri짯ly includes dis짯crete gra짯phics pro짯ces짯sing units (GPUs), semi-cus짯tom SoC pro짯ducts and deve짯lo짯p짯ment services.
    The Embedded seg짯ment pri짯ma짯ri짯ly includes embedded micro짯pro짯ces짯sors and GPUs, FPGAs, adap짯ti짯ve SoC pro짯ducts, and Adap짯ti짯ve Com짯pu짯te Acce짯le짯ra짯ti짯on Plat짯form (ACAP) products.
    From time to time, the Com짯pa짯ny may also sell or licen짯se por짯ti짯ons of its IP portfolio.
    All Other cate짯go짯ry pri짯ma짯ri짯ly includes cer짯tain expen짯ses and cre짯dits that are not allo짯ca짯ted to any of the ope짯ra짯ting seg짯ments. Also included in this cate짯go짯ry are acqui짯si짯ti짯on-rela짯ted intan짯gi짯ble asset amor짯tiza짯ti짯on expen짯se, stock-based com짯pen짯sa짯ti짯on expen짯se, acqui짯si짯ti짯on-rela짯ted cos짯ts and licen짯sing gain.
     
(2)   Recon짯ci짯lia짯ti짯on of GAAP Net Inco짯me to Adjus짯ted EBITDA
    Three Months Ended   Nine Months Ended
    Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 25,
2021
  Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 25,
2021
GAAP net income   $ 66     $ 923     $ 1,299     $ 2,188  
Inte짯rest expense     31       7       69       26  
Other (inco짯me) expen짯se, net     (22 )     (62 )     24       (51 )
Inco짯me tax pro짯vi짯si짯on (bene짯fit)     (135 )     82       32       284  
Equi짯ty inco짯me in investee     (4 )     (2 )     (11 )     (6 )
Stock-based com짯pen짯sa짯ti짯on     269       99       702       267  
Depre짯cia짯ti짯on and amortization     163       97       450       289  
Amor짯tiza짯ti짯on of acqui짯red intan짯gi짯ble assets     1,002             2,504        
Acqui짯si짯ti짯on-rela짯ted costs     57       8       464       33  
Adjus짯ted EBITDA   $ 1,427     $ 1,152     $ 5,533     $ 3,030  
                                 
The Com짯pa짯ny pres짯ents 쏛djus짯ted EBITDA as a sup짯ple짯men짯tal mea짯su짯re of its per짯for짯mance. Adjus짯ted EBITDA for the Com짯pa짯ny is deter짯mi짯ned by adjus짯ting GAAP net inco짯me for inte짯rest expen짯se, other inco짯me (expen짯se), net, inco짯me tax pro짯vi짯si짯on (bene짯fit), equi짯ty inco짯me in inves짯tee, stock-based com짯pen짯sa짯ti짯on, depre짯cia짯ti짯on and amor짯tiza짯ti짯on expen짯se and acqui짯si짯ti짯on-rela짯ted cos짯ts. The Com짯pa짯ny also included amor짯tiza짯ti짯on of acqui짯red intan짯gi짯ble assets for the three months and nine months ended Sep짯tem짯ber 24, 2022. The Com짯pa짯ny cal짯cu짯la짯tes and pres짯ents Adjus짯ted EBITDA becau짯se manage짯ment belie짯ves it is of importance to inves짯tors and len짯ders in rela짯ti짯on to its over짯all capi짯tal struc짯tu짯re and its abili짯ty to bor짯row addi짯tio짯nal funds. In addi짯ti짯on, the Com짯pa짯ny pres짯ents Adjus짯ted EBITDA becau짯se it belie짯ves this mea짯su짯re assists inves짯tors in com짯pa짯ring its per짯for짯mance across report짯ing peri짯ods on a con짯sis짯tent basis by exclu짯ding items that the Com짯pa짯ny does not belie짯ve are indi짯ca짯ti짯ve of its core ope짯ra짯ting per짯for짯mance. The Company셲 cal짯cu짯la짯ti짯on of Adjus짯ted EBITDA may or may not be con짯sis짯tent with the cal짯cu짯la짯ti짯on of this mea짯su짯re by other com짯pa짯nies in the same indus짯try. Inves짯tors should not view Adjus짯ted EBITDA as an alter짯na짯ti짯ve to the GAAP ope짯ra짯ting mea짯su짯re of inco짯me or GAAP liqui짯di짯ty mea짯su짯res of cash flows from ope짯ra짯ting, inves짯t짯ing and finan짯cing acti짯vi짯ties. In addi짯ti짯on, Adjus짯ted EBITDA does not take into account chan짯ges in cer짯tain assets and lia짯bi짯li짯ties that can affect cash flows.
(3)   Recon짯ci짯lia짯ti짯on of GAAP Net Cash Pro짯vi짯ded by Ope짯ra짯ting Acti짯vi짯ties to Free Cash Flow
    Three Months Ended   Nine Months Ended
    Sep짯tem짯ber 24, 2022   Sep짯tem짯ber 25, 2021   Sep짯tem짯ber 24, 2022   Sep짯tem짯ber 25, 2021
GAAP net cash pro짯vi짯ded by ope짯ra짯ting activities   $ 965     $ 849     $ 2,998     $ 2,699  
Ope짯ra짯ting cash flow margin %     17 %     20 %     17 %     23 %
Purcha짯ses of pro짯per짯ty and equipment   $ (123 )   $ (85 )   $ (326 )   $ (215 )
Free cash flow   $ 842     $ 764     $ 2,672     $ 2,484  
Free cash flow margin %     15 %     18 %     15 %     21 %
                                 
The Com짯pa짯ny also pres짯ents free cash flow as a sup짯ple짯men짯tal Non-GAAP mea짯su짯re of its per짯for짯mance. Free cash flow is deter짯mi짯ned by adjus짯ting GAAP net cash pro짯vi짯ded by ope짯ra짯ting acti짯vi짯ties for capi짯tal expen짯dit짯ures. The Com짯pa짯ny cal짯cu짯la짯tes and com짯mu짯ni짯ca짯tes free cash flow in the finan짯cial ear짯nings press release becau짯se manage짯ment belie짯ves it is of importance to inves짯tors to under짯stand the natu짯re of the짯se cash flows. The Company셲 cal짯cu짯la짯ti짯on of free cash flow may or may not be con짯sis짯tent with the cal짯cu짯la짯ti짯on of this mea짯su짯re by other com짯pa짯nies in the same indus짯try. Inves짯tors should not view free cash flow as an alter짯na짯ti짯ve to GAAP liqui짯di짯ty mea짯su짯res of cash flows from ope짯ra짯ting activities.