AMD Reports Third Quarter 2023 Financial Results

SANTA CLARA, Calif., Oct. 31, 2023 (GLOBE NEWSWIRE) — AMD (NASDAQ:AMD) today announ­ced reve­nue for the third quar­ter of 2023 of $5.8 bil­li­on, gross mar­gin of 47%, ope­ra­ting inco­me of $224 mil­li­on, net inco­me of $299 mil­li­on and diluted ear­nings per share of $0.18. On a non-GAAP(*) basis, gross mar­gin was 51%, ope­ra­ting inco­me was $1.3 bil­li­on, net inco­me was $1.1 bil­li­on and diluted ear­nings per share was $0.70.

We deli­ver­ed strong reve­nue and ear­nings growth dri­ven by demand for our Ryzen 7000 series PC pro­ces­sors and record ser­ver pro­ces­sor sales,” said AMD Chair and CEO Dr. Lisa Su. “Our data cen­ter busi­ness is on a signi­fi­cant growth tra­jec­to­ry based on the strength of our EPYC CPU port­fo­lio and the ramp of Instinct MI300 acce­le­ra­tor ship­ments to sup­port mul­ti­ple deploy­ments with hypers­ca­le, enter­pri­se and AI customers.”

We exe­cu­ted well in the third quar­ter, deli­ve­ring year-over-year growth in reve­nue, gross mar­gin and ear­nings per share,” said AMD EVP, CFO and Tre­asurer Jean Hu. “In the fourth quar­ter, we expect to see strong growth in Data Cen­ter and con­tin­ued momen­tum in Cli­ent, par­ti­al­ly off­set by lower sales in the Gam­ing seg­ment and addi­tio­nal sof­tening of demand in the embedded markets.”

GAAP Quar­ter­ly Finan­cial Results

  Q3 2023 Q3 2022 Y/Y Q2 2023 Q/Q
Reve­nue ($M) $5,800 $5,565 Up 4% $5,359 Up 8%
Gross pro­fit ($M) $2,747 $2,354 Up 17% $2,443 Up 12%
Gross mar­gin 47% 42% Up 5 ppts 46% Up 1 ppt
Ope­ra­ting expen­ses ($M) $2,533 $2,426 Up 4% $2,471 Up 3%
Ope­ra­ting inco­me (loss) ($M) $224 $(64) Up 450% $(20) Up 1,220%
Ope­ra­ting margin 4% (1%) Up 5 ppts 0% Up 4 ppts
Net inco­me ($M) $299 $66 Up 353% $27 Up 1,007%
Diluted ear­nings per share $0.18 $0.04 Up 350% $0.02 Up 800%

Non-GAAP(*) Quar­ter­ly Finan­cial Results

  Q3 2023 Q3 2022 Y/Y Q2 2023 Q/Q
Reve­nue ($M) $5,800 $5,565 Up 4% $5,359 Up 8%
Gross pro­fit ($M) $2,963 $2,776 Up 7% $2,665 Up 11%
Gross mar­gin 51% 50% Up 1 ppt 50% Up 1 ppt
Ope­ra­ting expen­ses ($M) $1,697 $1,520 Up 12% $1,605 Up 6%
Ope­ra­ting inco­me ($M) $1,276 $1,264 Flat $1,068 Up 19%
Ope­ra­ting margin 22% 23% Down 1 ppt 20% Up 2 ppts
Net inco­me ($M) $1,135 $1,095 Up 4% $948 Up 20%
Diluted ear­nings per share $0.70 $0.67 Up 4% $0.58 Up 21%

Quar­ter­ly Seg­ment Summary

  • Data Cen­ter seg­ment reve­nue was $1.6 bil­li­on, flat year-over-year, as growth in 4th Gen AMD EPYCCPU sales was off­set by a decli­ne in adap­ti­ve Sys­tem-on-Chip (SoC) data cen­ter products. 
    • Reve­nue increased 21% sequen­ti­al­ly as cus­to­mer adop­ti­on of 4th Gen AMD EPYC CPUs acce­le­ra­ted during the quarter.
    • AMD Instinct™ MI300A and MI300X GPUs are on track for volu­me pro­duc­tion in the fourth quar­ter to sup­port deploy­ments with seve­ral lea­ding HPC, cloud and AI customers.
  • Cli­ent seg­ment reve­nue was $1.5 bil­li­on, up 42% year-over-year dri­ven pri­ma­ri­ly by hig­her Ryzen mobi­le pro­ces­sor sales. 
    • Reve­nue grew 46% sequen­ti­al­ly dri­ven by an increase in AMD Ryzen™ 7000 Series CPU sales.
  • Gam­ing seg­ment reve­nue was $1.5 bil­li­on, down 8% year-over-year, pri­ma­ri­ly due to a decli­ne in semi-cus­tom reve­nue, par­ti­al­ly off­set by an increase in AMD Rade­on™ GPU sales. 
    • Reve­nue decli­ned 5% sequen­ti­al­ly due to lower semi-cus­tom sales.
  • Embedded seg­ment reve­nue was $1.2 bil­li­on, down 5% year-over-year pri­ma­ri­ly due to a decrease in reve­nue in the com­mu­ni­ca­ti­ons market. 
    • Reve­nue decreased 15% sequen­ti­al­ly due to inven­to­ry cor­rec­tion at cus­to­mers in seve­ral end markets.

Recent PR Highlights

  • Cloud adop­ti­on of AMD EPYC pro­ces­sors con­ti­nues to grow signi­fi­cant­ly, with near­ly 100 new ins­tances from Micro­soft Azu­re, AWS, Ora­cle and others available for pre­view and gene­ral access, inclu­ding new AWS ins­tances powered by 4th Gen AMD EPYC CPUs that deli­ver lea­der­ship per­for­mance and ener­gy efficiency.
  • AMD expan­ded the 4th Gen EPYC CPU port­fo­lio with the launch of the AMD EPYC 8004 Series pro­ces­sors, pur­po­se built to deli­ver excep­tio­nal ener­gy effi­ci­en­cy and per­for­mance for cloud ser­vices, intel­li­gent edge and telco.
  • AMD made signi­fi­cant pro­gress powe­ring per­va­si­ve AI across the cloud, edge and end point devices: 
    • AMD com­ple­ted the acqui­si­ti­on of open-source AI soft­ware expert Nod.ai, expan­ding the company’s open AI soft­ware capa­bi­li­ties. Nod.ai has deve­lo­ped an indus­try-lea­ding soft­ware tech­no­lo­gy that acce­le­ra­tes the deploy­ment of AI solu­ti­ons opti­mi­zed for AMD Instinct data cen­ter acce­le­ra­tors, Ryzen AI pro­ces­sors, EPYC pro­ces­sors, Ver­sal™ SoCs and Rade­on GPUs.
    • AMD acqui­red AI soft­ware lea­der Mip­so­lo­gy. With pro­ven exper­ti­se deli­ve­ring AI soft­ware and solu­ti­ons run­ning on top of AMD adap­ti­ve com­pu­ting sili­con, the Mip­so­lo­gy team will help deve­lop the full AMD AI soft­ware stack and expand the open eco­sys­tem of soft­ware tools, libra­ri­es and models.
    • AI start­up Lami­ni unvei­led that it has been run­ning pro­duc­tion-rea­dy Lar­ge Lan­guage Models (LLMs) exclu­si­ve­ly on AMD Instinct acce­le­ra­tors, enab­ling enter­pri­se cus­to­mers to deploy LLMs fine­tu­n­ed for their spe­ci­fic data across hundreds of AMD Instinct MI250 GPUs with only three lines of code.
  • AMD expan­ded its AMD Ryzen pro­ces­sor lin­e­up, deli­ve­ring more per­for­mance and capa­bi­li­ties for enthu­si­asts, gamers and creators: 
    • AMD announ­ced the AMD Ryzen Thre­ad­rip­per™ PRO 7000 WX-Series and Ryzen Thre­ad­rip­per 7000 pro­ces­sors, deli­ve­ring out­stan­ding per­for­mance for the most deman­ding desk­top plat­forms. Ryzen Thre­ad­rip­per PRO 7000 WX-Series pro­ces­sors will be available later this year to DIY cus­to­mers, SI part­ners and through OEM part­ners inclu­ding Dell Tech­no­lo­gies, HP and Lenovo.
    • AMD laun­ched new Ryzen 7045HX3D Series mobi­le pro­ces­sors, the first mobi­le pro­ces­sor with AMD 3D V‑Cache™ tech­no­lo­gy, and the world’s fas­test mobi­le gam­ing processor.
    • AMD laun­ched the AMD Ryzen 5 5600X3D pro­ces­sor, deli­ve­ring incre­di­ble gam­ing per­for­mance with AMD 3D V‑cache technology.
  • Lea­der­ship AMD adap­ti­ve and embedded com­pu­ting pro­ducts are enab­ling new capa­bi­li­ties in key markets: 
    • AMD exten­ded its lea­der­ship in radia­ti­on-tole­rant, space-gra­de com­pu­te solu­ti­ons with the announce­ment of the Ver­sal AI Edge XQRVE2302, the second device in the Ver­sal adap­ti­ve SoC port­fo­lio to be qua­li­fied for space flight.
    • AMD announ­ced the AMD Alveo™ UL3524 acce­le­ra­tor card, a new fin­tech acce­le­ra­tor desi­gned for elec­tro­nic tra­ding appli­ca­ti­ons and AI-enab­led tra­ding strategies.
    • AMD announ­ced the AMD Kria™ K24 Sys­tem-on-Modu­le (SOM) and KD240 Dri­ves Star­ter Kit, offe­ring power-effi­ci­ent com­pu­te in a small form fac­tor for cost-sen­si­ti­ve indus­tri­al and com­mer­cial edge applications.
  • New AMD gra­phics pro­ces­sors and soft­ware fea­tures are enab­ling incre­di­ble expe­ri­en­ces for gamers and professionals: 
    • AMD intro­du­ced the flag­ship lap­top gra­phics pro­ces­sor, AMD Rade­on RX 7900M, the fas­test AMD Rade­on GPU ever deve­lo­ped for lap­tops, deli­ve­ring desk­top-class per­for­mance for gam­ing and con­tent creation.
    • AMD laun­ched the Rade­on RX 7800 XT and Rade­on RX 7700 XT gra­phics cards, opti­mi­zed to deli­ver incre­di­bly high-per­for­mance, high-refresh 1440p gam­ing expe­ri­en­ces for deman­ding AAA and esports titles.
    • AMD laun­ched Fide­li­ty­FX™ Super Reso­lu­ti­on 3 in Fors­po­ken and Immor­tals of Ave­um, fea­turing new frame gene­ra­ti­on tech­no­lo­gy that deli­vers mas­si­ve per­for­mance impro­ve­ments over both nati­ve reso­lu­ti­on and tem­po­ral upscaling.
    • AMD laun­ched the latest ver­si­on of the AMD Soft­ware: Adre­na­lin Edi­ti­on appli­ca­ti­on fea­turing AMD HYPR-RX tech­no­lo­gy, allo­wing AMD Rade­on Super Reso­lu­ti­on and AMD Rade­on Boost tech­no­lo­gies to work tog­e­ther to deli­ver grea­ter performance.
    • AMD laun­ched the Rade­on PRO W7600 and Rade­on PRO W7500 work­sta­tion gra­phics cards, engi­nee­red to tack­le workloads across a ran­ge of pro­fes­sio­nal industries.
  • AMD published its annu­al Cor­po­ra­te Respon­si­bi­li­ty Report, detail­ing 2022 pro­gress across focus are­as span­ning digi­tal impact, envi­ron­men­tal sus­taina­bi­li­ty, sup­p­ly chain respon­si­bi­li­ty, and diver­si­ty, belon­ging and inclusion.
  • AMD announ­ced plans to invest appro­xi­m­ate­ly $400 mil­li­on over the next five years to expand rese­arch, deve­lo­p­ment and engi­nee­ring ope­ra­ti­ons in India, inclu­ding the addi­ti­on of appro­xi­m­ate­ly 3,000 new engi­nee­ring roles by the end of 2028.

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

For the fourth quar­ter of 2023, AMD expects reve­nue to be appro­xi­m­ate­ly $6.1 bil­li­on, plus or minus $300 mil­li­on. At the mid-point of the reve­nue ran­ge, this repres­ents year-over-year growth of appro­xi­m­ate­ly 9% and sequen­ti­al growth of appro­xi­m­ate­ly 5%. Non-GAAP gross mar­gin is expec­ted to be appro­xi­m­ate­ly 51.5%.

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 third quar­ter 2023 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
    Sep­tem­ber 30,
2023
  July 1,
2023
  Sep­tem­ber 24,
2022
 
GAAP gross profit   $ 2,747     $ 2,443     $ 2,354    
GAAP gross margin     47 %     46 %     42 %  
Stock-based com­pen­sa­ti­on     6       10       8    
Amor­tiza­ti­on of acqui­si­ti­on-rela­ted intangibles     210       212       412    
Acqui­si­ti­on-rela­ted and other cos­ts (1)                 2    
Non-GAAP gross profit   $ 2,963     $ 2,665     $ 2,776    
Non-GAAP gross margin     51 %     50 %     50 %  
               
GAAP ope­ra­ting expenses   $ 2,533     $ 2,471     $ 2,426    
GAAP ope­ra­ting expenses/revenue %     44 %     46 %     44 %  
Stock-based com­pen­sa­ti­on     347       338       261    
Amor­tiza­ti­on of acqui­si­ti­on-rela­ted intangibles     450       481       590    
Acqui­si­ti­on-rela­ted and other cos­ts (1)     39       47       55    
Non-GAAP ope­ra­ting expenses   $ 1,697     $ 1,605     $ 1,520    
Non-GAAP ope­ra­ting expenses/revenue %     29 %     30 %     27 %  
               
GAAP ope­ra­ting inco­me (loss)   $ 224     $ (20 )   $ (64 )  
GAAP ope­ra­ting margin     4 %     0 %         (1) )%  
Stock-based com­pen­sa­ti­on     353       348       269    
Amor­tiza­ti­on of acqui­si­ti­on-rela­ted intangibles     660       693       1,002    
Acqui­si­ti­on-rela­ted and other cos­ts (1)     39       47       57    
Non-GAAP ope­ra­ting income   $ 1,276     $ 1,068     $ 1,264    
Non-GAAP ope­ra­ting margin     22 %     20 %     23 %  
               

 

    Three Months Ended  
    Sep­tem­ber 30,
2023
  July 1,
2023
  Sep­tem­ber 24,
2022
 
GAAP net inco­me / diluted ear­nings per share   $ 299     $ 0.18     $ 27     $ 0.02     $ 66     $ 0.04    
(Gains) los­ses on equi­ty invest­ments, net     (4 )           3             3          
Stock-based com­pen­sa­ti­on     353       0.22       348       0.21       269       0.16    
Equi­ty inco­me in investee     (3 )           (6 )           (4 )        
Amor­tiza­ti­on of acqui­si­ti­on-rela­ted intangibles     660       0.41       693       0.42       1,002       0.62    
Acqui­si­ti­on-rela­ted and other cos­ts (1)     39       0.02       47       0.03       57       0.04    
Inco­me tax provision     (209 )     (0.13 )     (164 )     (0.10 )     (298 )     (0.19 )  
Non-GAAP net inco­me / diluted ear­nings per share   $ 1,135     $ 0.70     $ 948     $ 0.58     $ 1,095     $ 0.67    

 

(1 )   Acqui­si­ti­on-rela­ted and other cos­ts pri­ma­ri­ly com­pri­sed of tran­sac­tion cos­ts, purcha­se pri­ce adjus­t­ments for inven­to­ry, cer­tain com­pen­sa­ti­on char­ges, con­tract ter­mi­na­ti­on and work­force reba­lan­cing 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 the signi­fi­cant growth tra­jec­to­ry of AMD’s data cen­ter busi­ness; that AMD expects to see strong growth in Data Cen­ter and con­tin­ued momen­tum in Cli­ent, par­ti­al­ly off­set by lower sales in the Gam­ing seg­ment and addi­tio­nal sof­tening of demand in the embedded mar­kets; that AMD Instinct™ MI300A and MI300X GPUs are on track for volu­me pro­duc­tion in the fourth quar­ter of 2023 to sup­port deploy­ments with seve­ral lea­ding HPC, Cloud and AI cus­to­mers; the fea­tures, func­tion­a­li­ty, per­for­mance, avai­la­bi­li­ty, timing and expec­ted bene­fits of AMD pro­ducts; AMD’s plans to invest appro­xi­m­ate­ly $400 mil­li­on over the next five years to expand rese­arch, deve­lo­p­ment and engi­nee­ring ope­ra­ti­ons in India, inclu­ding the addi­ti­on of appro­xi­m­ate­ly 3,000 new engi­nee­ring roles by the end of 2028; and AMD’s expec­ted fourth quar­ter 2023 finan­cial out­look, inclu­ding reve­nue and non-GAAP gross mar­gin, 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; cycli­cal natu­re of the semi­con­duc­tor indus­try; mar­ket con­di­ti­ons of the indus­tries in which AMD pro­ducts are sold; 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; 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; poten­ti­al dif­fi­cul­ties in upgrading and ope­ra­ting AMD’s new enter­pri­se resour­ce plan­ning sys­tem; 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 AMD’s abili­ty to inte­gra­te acqui­red busi­nesses; impact of any impair­ment of AMD’s tan­gi­ble, defi­ni­te-lived or inde­fi­ni­te-lived intan­gi­ble assets, inclu­ding good­will, on AMD’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, as well as the impact of finan­cial insti­tu­ti­on fail­ure on AMD’s cash and cash equi­va­lents; poli­ti­cal, legal, eco­no­mic risks and natu­ral dis­as­ters; future impairm­ents of tech­no­lo­gy licen­se purcha­ses; AMD’s abili­ty to attract and retain qua­li­fied per­son­nel; AMD’s stock pri­ce vola­ti­li­ty. 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 diluted 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 2023, 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 in this ear­nings press release. This ear­nings press release also con­ta­ins for­ward-loo­king non-GAAP gross mar­gin con­cer­ning AMD’s finan­cial out­look, which is based on cur­rent expec­ta­ti­ons as of Octo­ber 31, 2023 and assump­ti­ons and beliefs that invol­ve num­e­rous risks and uncer­tain­ties. Adjus­t­ments to arri­ve at the GAAP gross mar­gin out­look typi­cal­ly include stock-based com­pen­sa­ti­on, amor­tiza­ti­on of acqui­red intan­gi­ble assets and acqui­si­ti­on-rela­ted and other cos­ts. The timing and impact of such adjus­t­ments are depen­dent on future events that are typi­cal­ly uncer­tain or out­side of AMD’s con­trol, the­r­e­fo­re, a recon­ci­lia­ti­on to equi­va­lent GAAP mea­su­res is not prac­ti­ca­ble at this time. AMD under­ta­kes no intent or obli­ga­ti­on to publicly update or revi­se its out­look state­ments as a result of new infor­ma­ti­on, future events or other­wi­se, except as may be requi­red by law.

 

AMD, the AMD Arrow logo, EPYC, Rade­on, Ryzen, Instinct, Ver­sal, Alveo, Kria, Fide­li­ty­FX, 3D V‑Cache, Ultras­ca­le+, Zynq, Thre­ad­rip­per and com­bi­na­ti­ons the­reof, are trade­marks of Advan­ced Micro Devices, Inc.

 


ADVANCED MICRO DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Mil­li­ons except per share amounts and per­cen­ta­ges) (Unau­di­ted)

  Three Months Ended   Nine Months Ended
  Sep­tem­ber 30,
2023
  July 1,
2023
  Sep­tem­ber 24,
2022
  Sep­tem­ber 30,
2023
  Sep­tem­ber 24,
2022
Net reve­nue $ 5,800     $ 5,359     $ 5,565     $ 16,512     $ 18,002  
Cost of sales   2,843       2,704       2,799       8,236       8,797  
Amor­tiza­ti­on of acqui­si­ti­on-rela­ted intangibles   210       212       412       727       1,005  
Total cost of sales   3,053       2,916       3,211       8,963       9,802  
Gross pro­fit   2,747       2,443       2,354       7,549       8,200  
Gross mar­gin   47 %     46 %     42 %     46 %     46 %
Rese­arch and development   1,507       1,443       1,279       4,361       3,639  
Mar­ke­ting, gene­ral and administrative   576       547       557       1,708       1,746  
Amor­tiza­ti­on of acqui­si­ti­on-rela­ted intangibles   450       481       590       1,449       1,499  
Licen­sing gain   (10 )     (8 )     (8 )     (28 )     (97 )
Ope­ra­ting inco­me (loss)   224       (20 )     (64 )     59       1,413  
Inte­rest expense   (26 )     (28 )     (31 )     (79 )     (69 )
Other inco­me (expen­se), net   59       46       22       148       (24 )
Inco­me (loss) befo­re inco­me taxes and equi­ty income   257       (2 )     (73 )     128       1,320  
Inco­me tax pro­vi­si­on (bene­fit)   (39 )     (23 )     (135 )     (49 )     32  
Equi­ty inco­me in investee   3       6       4       10       11  
Net inco­me $ 299     $ 27     $ 66     $ 187     $ 1,299  
Ear­nings per share                  
Basic $ 0.18     $ 0.02     $ 0.04     $ 0.12     $ 0.84  
Diluted $ 0.18     $ 0.02     $ 0.04     $ 0.11     $ 0.84  
Shares used in per share calculation                  
Basic   1,616       1,612       1,615       1,613       1,542  
Diluted   1,629       1,627       1,625       1,625       1,555  


ADVANCED MICRO DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Mil­li­ons)

  Sep­tem­ber 30,
2023
  Decem­ber 31,
2022
  (Unau­di­ted)    
ASSETS      
Cur­rent assets:      
Cash and cash equivalents $ 3,561     $ 4,835  
Short-term invest­ments   2,224       1,020  
Accounts receiva­ble, net   5,054       4,126  
Invent­ories   4,445       3,771  
Receiv­a­bles from rela­ted parties   1       2  
Pre­paid expen­ses and other cur­rent assets   1,403       1,265  
Total cur­rent assets   16,688       15,019  
Pro­per­ty and equip­ment, net   1,566       1,513  
Ope­ra­ting lea­se right-of-use assets   507       460  
Good­will   24,186       24,177  
Acqui­si­ti­on-rela­ted intan­gi­bles, net   21,950       24,118  
Invest­ment: equi­ty method   93       83  
Defer­red tax assets   76       58  
Other non-cur­rent assets   2,560       2,152  
Total Assets $ 67,626     $ 67,580  
       
LIABILITIES AND STOCKHOLDERSEQUITY      
Cur­rent liabilities:      
Accounts paya­ble $ 2,245     $ 2,493  
Paya­bles to rela­ted parties   325       463  
Accrued lia­bi­li­ties   3,376       3,077  
Cur­rent por­ti­on of long-term debt, net   752        
Other cur­rent liabilities   929       336  
Total cur­rent liabilities   7,627       6,369  
Long-term debt, net of cur­rent portion   1,715       2,467  
Long-term ope­ra­ting lea­se liabilities   395       396  
Defer­red tax liabilities   1,152       1,934  
Other long-term liabilities   1,767       1,664  
       
Stock­hol­ders’ equity:      
Capi­tal stock:      
Com­mon stock, par value   17       16  
Addi­tio­nal paid-in capital   59,182       58,005  
Tre­asu­ry stock, at cost   (4,235 )     (3,099 )
Retai­ned ear­nings (Accu­mu­la­ted deficit)   56       (131 )
Accu­mu­la­ted other com­pre­hen­si­ve loss   (50 )     (41 )
Total stock­hol­ders’ equity $ 54,970     $ 54,750  
Total Lia­bi­li­ties and Stock­hol­ders’ Equity $ 67,626     $ 67,580  


ADVANCED MICRO DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Mil­li­ons) (Unau­di­ted)

  Three Months Ended   Nine Months Ended
  Sep­tem­ber 30,
2023
  Sep­tem­ber 24,
2022
  Sep­tem­ber 30,
2023
  Sep­tem­ber 24,
2022
Cash flows from ope­ra­ting activities:              
Net inco­me $ 299     $ 66     $ 187     $ 1,299  
Adjus­t­ments to recon­ci­le net inco­me to net cash pro­vi­ded by ope­ra­ting activities:              
Depre­cia­ti­on and amortization   823       1,165       2,654       2,954  
Stock-based com­pen­sa­ti­on   353       275       1,010       766  
Amor­tiza­ti­on of ope­ra­ting lea­se right-of-use assets   25       23       73       63  
Amor­tiza­ti­on of inven­to­ry fair value adjustment         2       3       187  
Loss on sale or dis­po­sal of pro­per­ty and equipment   3             10       15  
Defer­red inco­me taxes   (218 )     (710 )     (800 )     (1,328 )
(Gains) los­ses on equi­ty invest­ments, net   (3 )     3       (1 )     57  
Other   (23 )     (5 )     (43 )     (9 )
Chan­ges in ope­ra­ting assets and liabilities              
Accounts receiva­ble, net   (743 )     (285 )     (929 )     (1,301 )
Invent­ories   122       (723 )     (674 )     (997 )
Receiv­a­bles from rela­ted parties   1             1       (1 )
Pre­paid expen­ses and other assets   (143 )     (588 )     (380 )     (825 )
Paya­bles to rela­ted parties   13       36       (137 )     313  
Accounts paya­ble   (547 )     783       (238 )     811  
Accrued and other liabilities   459       923       550       994  
Net cash pro­vi­ded by ope­ra­ting activities   421       965       1,286       2,998  
Cash flows from inves­t­ing activities:              
Purcha­ses of pro­per­ty and equipment   (124 )     (123 )     (407 )     (326 )
Purcha­ses of short-term investments   (496 )     (1,779 )     (3,312 )     (2,399 )
Pro­ceeds from matu­ri­ty of short-term investments   746       615       1,917       2,864  
Pro­ceeds from sale of short-term investments               248        
Cash recei­ved from acqui­si­ti­on of Xilinx                     2,366  
Acqui­si­ti­ons, net of cash acquired   (14 )           (14 )     (1,558 )
Other   (10 )     (11 )     (5 )     (15 )
Net cash pro­vi­ded by (used in) inves­t­ing activities   102       (1,298 )     (1,573 )     932  
Cash flows from finan­cing activities:              
Pro­ceeds from debt, net of issu­an­ce costs                     991  
Repay­ment of debt         (312 )           (312 )
Pro­ceeds from sales of com­mon stock through employee equi­ty plans   4       1       148       79  
Repurcha­ses of com­mon stock   (511 )     (617 )     (752 )     (3,452 )
Com­mon stock repurcha­ses for tax with­hol­ding on employee equi­ty plans   (295 )     (305 )     (382 )     (371 )
Other   (1 )           (1 )     (2 )
Net cash used in finan­cing activities   (803 )     (1,233 )     (987 )     (3,067 )
Net increase (decrease) in cash and cash equivalents   (280 )     (1,566 )     (1,274 )     863  
Cash and cash equi­va­lents at begin­ning of period   3,841       4,964       4,835       2,535  
Cash and cash equi­va­lents at end of period $ 3,561     $ 3,398     $ 3,561     $ 3,398  


ADVANCED MICRO DEVICES, INC.

SELECTED CORPORATE DATA
(Mil­li­ons) (Unau­di­ted)

  Three Months Ended   Nine Months Ended
  Sep­tem­ber 30,
2023
  July 1,
2023
  Sep­tem­ber 24,
2022
  Sep­tem­ber 30,
2023
  Sep­tem­ber 24,
2022
Seg­ment and Cate­go­ry Infor­ma­ti­on(1)                  
Data Cen­ter                  
Net reve­nue $ 1,598     $ 1,321     $ 1,609     $ 4,214     $ 4,388  
Ope­ra­ting income $ 306     $ 147     $ 505     $ 601     $ 1,404  
Cli­ent                  
Net reve­nue $ 1,453     $ 998     $ 1,022     $ 3,190     $ 5,298  
Ope­ra­ting inco­me (loss) $ 140     $ (69 )   $ (26 )   $ (101 )   $ 1,342  
Gam­ing                  
Net reve­nue $ 1,506     $ 1,581     $ 1,631     $ 4,844     $ 5,161  
Ope­ra­ting income $ 208     $ 225     $ 142     $ 747     $ 687  
Embedded                  
Net reve­nue $ 1,243     $ 1,459     $ 1,303     $ 4,264     $ 3,155  
Ope­ra­ting income $ 612     $ 757     $ 635     $ 2,167     $ 1,553  
All Other                  
Net reve­nue $     $     $     $     $  
Ope­ra­ting loss $ (1,042 )   $ (1,080 )   $ (1,320 )   $ (3,355 )   $ (3,573 )
Total                  
Net reve­nue $ 5,800     $ 5,359     $ 5,565     $ 16,512     $ 18,002  
Ope­ra­ting inco­me (loss) $ 224     $ (20 )   $ (64 )   $ 59     $ 1,413  
                   
Other Data                  
Capi­tal expenditures $ 124     $ 125     $ 123     $ 407     $ 326  
Adjus­ted EBITDA (2) $ 1,439     $ 1,224     $ 1,427     $ 3,920     $ 5,533  
Cash, cash equi­va­lents and short-term investments $ 5,785     $ 6,285     $ 5,591     $ 5,785     $ 5,591  
Free cash flow (3) $ 297     $ 254     $ 842     $ 879     $ 2,672  
Total assets $ 67,626     $ 67,967     $ 67,811     $ 67,626     $ 67,811  
Total debt $ 2,467     $ 2,467     $ 2,466     $ 2,467     $ 2,466  

 

(1) The Data Cen­ter seg­ment pri­ma­ri­ly includes ser­ver micro­pro­ces­sors (CPUs) and gra­phics pro­ces­sing units (GPUs), data pro­ces­sing units (DPUs), Field Pro­gramma­ble Gate Arrays (FPGAs) and Adap­ti­ve Sys­tem-on-Chip (SoC) pro­ducts for data centers.
   
  The Cli­ent seg­ment pri­ma­ri­ly includes CPUs, acce­le­ra­ted pro­ces­sing units that inte­gra­te micro­pro­ces­sors and GPUs (APUs), and chip­sets for desk­top and note­book per­so­nal computers.
   
  The Gam­ing seg­ment pri­ma­ri­ly includes dis­crete GPUs, semi-cus­tom SoC pro­ducts and deve­lo­p­ment services.
   
  The Embedded seg­ment pri­ma­ri­ly includes embedded CPUs and GPUs, APUs, FPGAs, and Adap­ti­ve SoC 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, such as amor­tiza­ti­on of acqui­si­ti­on-rela­ted intan­gi­ble asset, employee stock-based com­pen­sa­ti­on expen­se, acqui­si­ti­on-rela­ted and other cos­ts, and licen­sing gain.

 

(2) Recon­ci­lia­ti­on of GAAP Net Inco­me to Adjus­ted EBITDA

 

  Three Months Ended   Nine Months Ended
  Sep­tem­ber 30,
2023
  July 1,
2023
  Sep­tem­ber 24,
2022
  Sep­tem­ber 30,
2023
  Sep­tem­ber 24,
2022
GAAP net income $ 299     $ 27     $ 66     $ 187     $ 1,299  
Inte­rest expense   26       28       31       79       69  
Other (inco­me) expen­se, net   (59 )     (46 )     (22 )     (148 )     24  
Inco­me tax pro­vi­si­on (bene­fit)   (39 )     (23 )     (135 )     (49 )     32  
Equi­ty inco­me in investee   (3 )     (6 )     (4 )     (10 )     (11 )
Stock-based com­pen­sa­ti­on   353       348       269       1,006       702  
Depre­cia­ti­on and amortization   163       156       163       478       450  
Amor­tiza­ti­on of acqui­si­ti­on-rela­ted intangibles   660       693       1,002       2,176       2,504  
Acqui­si­ti­on-rela­ted and other costs   39       47       57       201       464  
Adjus­ted EBITDA $ 1,439     $ 1,224     $ 1,427     $ 3,920     $ 5,533  

 

The Com­pa­ny pres­ents “Adjus­ted EBITDA” as a sup­ple­men­tal mea­su­re of its per­for­mance. Adjus­ted EBITDA for the Com­pa­ny is deter­mi­ned by adjus­ting GAAP net inco­me for inte­rest expen­se, other inco­me (expen­se), net, inco­me tax pro­vi­si­on (bene­fit), equi­ty inco­me in inves­tee, stock-based com­pen­sa­ti­on, depre­cia­ti­on and amor­tiza­ti­on expen­se (inclu­ding amor­tiza­ti­on of acqui­si­ti­on-rela­ted intan­gi­bles), acqui­si­ti­on-rela­ted and other cos­ts. 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   Nine Months Ended
  Sep­tem­ber 30,
2023
  July 1,
2023
  Sep­tem­ber 24,
2022
  Sep­tem­ber 30,
2023
  Sep­tem­ber 24,
2022
GAAP net cash pro­vi­ded by ope­ra­ting activities $ 421     $ 379     $ 965     $ 1,286     $ 2,998  
Ope­ra­ting cash flow margin %   7 %     7 %     17 %     8 %     17 %
Purcha­ses of pro­per­ty and equipment $ (124 )   $ (125 )   $ (123 )   $ (407 )   $ (326 )
Free cash flow $ 297     $ 254     $ 842     $ 879     $ 2,672  
Free cash flow margin %   5 %     5 %     15 %     5 %     15 %

 

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, and free cash flow mar­gin % is free cash flow expres­sed as a per­cen­ta­ge of the Company’s net reve­nue. 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.