AMD Reports Third Quarter 2023 Financial Results

SANTA CLARA, Calif., Oct. 31, 2023 (GLOBE NEWSWIRE) AMD (NASDAQ:AMD) today announ짯ced reve짯nue for the third quar짯ter of 2023 of $5.8 bil짯li짯on, gross mar짯gin of 47%, ope짯ra짯ting inco짯me of $224 mil짯li짯on, net inco짯me of $299 mil짯li짯on and diluted ear짯nings per share of $0.18. On a non-GAAP(*) basis, gross mar짯gin was 51%, ope짯ra짯ting inco짯me was $1.3 bil짯li짯on, net inco짯me was $1.1 bil짯li짯on and diluted ear짯nings per share was $0.70.

We deli짯ver짯ed strong reve짯nue and ear짯nings growth dri짯ven by demand for our Ryzen 7000 series PC pro짯ces짯sors and record ser짯ver pro짯ces짯sor sales, said AMD Chair and CEO Dr. Lisa Su. 쏰ur data cen짯ter busi짯ness is on a signi짯fi짯cant growth tra짯jec짯to짯ry based on the strength of our EPYC CPU port짯fo짯lio and the ramp of Instinct MI300 acce짯le짯ra짯tor ship짯ments to sup짯port mul짯ti짯ple deploy짯ments with hypers짯ca짯le, enter짯pri짯se and AI customers.

We exe짯cu짯ted well in the third quar짯ter, deli짯ve짯ring year-over-year growth in reve짯nue, gross mar짯gin and ear짯nings per share, said AMD EVP, CFO and Tre짯asurer Jean Hu. 쏧n the fourth quar짯ter, we expect to see strong growth in Data Cen짯ter and con짯tin짯ued momen짯tum in Cli짯ent, par짯ti짯al짯ly off짯set by lower sales in the Gam짯ing seg짯ment and addi짯tio짯nal sof짯tening of demand in the embedded markets.

GAAP Quar짯ter짯ly Finan짯cial Results

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

Non-GAAP(*) Quar짯ter짯ly Finan짯cial Results

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

Quar짯ter짯ly Seg짯ment Summary

  • Data Cen짯ter seg짯ment reve짯nue was $1.6 bil짯li짯on, flat year-over-year, as growth in 4th Gen AMD EPYCCPU sales was off짯set by a decli짯ne in adap짯ti짯ve Sys짯tem-on-Chip (SoC) data cen짯ter products. 
    • Reve짯nue increased 21% sequen짯ti짯al짯ly as cus짯to짯mer adop짯ti짯on of 4th Gen AMD EPYC CPUs acce짯le짯ra짯ted during the quarter.
    • AMD Instinct꽓 MI300A and MI300X GPUs are on track for volu짯me pro짯duc짯tion in the fourth quar짯ter to sup짯port deploy짯ments with seve짯ral lea짯ding HPC, cloud and AI customers.
  • Cli짯ent seg짯ment reve짯nue was $1.5 bil짯li짯on, up 42% year-over-year dri짯ven pri짯ma짯ri짯ly by hig짯her Ryzen mobi짯le pro짯ces짯sor sales. 
    • Reve짯nue grew 46% sequen짯ti짯al짯ly dri짯ven by an increase in AMD Ryzen꽓 7000 Series CPU sales.
  • Gam짯ing seg짯ment reve짯nue was $1.5 bil짯li짯on, down 8% year-over-year, pri짯ma짯ri짯ly due to a decli짯ne in semi-cus짯tom reve짯nue, par짯ti짯al짯ly off짯set by an increase in AMD Rade짯on꽓 GPU sales. 
    • Reve짯nue decli짯ned 5% sequen짯ti짯al짯ly due to lower semi-cus짯tom sales.
  • Embedded seg짯ment reve짯nue was $1.2 bil짯li짯on, down 5% year-over-year pri짯ma짯ri짯ly due to a decrease in reve짯nue in the com짯mu짯ni짯ca짯ti짯ons market. 
    • Reve짯nue decreased 15% sequen짯ti짯al짯ly due to inven짯to짯ry cor짯rec짯tion at cus짯to짯mers in seve짯ral end markets.

Recent PR Highlights

  • Cloud adop짯ti짯on of AMD EPYC pro짯ces짯sors con짯ti짯nues to grow signi짯fi짯cant짯ly, with near짯ly 100 new ins짯tances from Micro짯soft Azu짯re, AWS, Ora짯cle and others available for pre짯view and gene짯ral access, inclu짯ding new AWS ins짯tances powered by 4th Gen AMD EPYC CPUs that deli짯ver lea짯der짯ship per짯for짯mance and ener짯gy efficiency.
  • AMD expan짯ded the 4th Gen EPYC CPU port짯fo짯lio with the launch of the AMD EPYC 8004 Series pro짯ces짯sors, pur짯po짯se built to deli짯ver excep짯tio짯nal ener짯gy effi짯ci짯en짯cy and per짯for짯mance for cloud ser짯vices, intel짯li짯gent edge and telco.
  • AMD made signi짯fi짯cant pro짯gress powe짯ring per짯va짯si짯ve AI across the cloud, edge and end point devices: 
    • AMD com짯ple짯ted the acqui짯si짯ti짯on of open-source AI soft짯ware expert Nod.ai, expan짯ding the company셲 open AI soft짯ware capa짯bi짯li짯ties. Nod.ai has deve짯lo짯ped an indus짯try-lea짯ding soft짯ware tech짯no짯lo짯gy that acce짯le짯ra짯tes the deploy짯ment of AI solu짯ti짯ons opti짯mi짯zed for AMD Instinct data cen짯ter acce짯le짯ra짯tors, Ryzen AI pro짯ces짯sors, EPYC pro짯ces짯sors, Ver짯sal꽓 SoCs and Rade짯on GPUs.
    • AMD acqui짯red AI soft짯ware lea짯der Mip짯so짯lo짯gy. With pro짯ven exper짯ti짯se deli짯ve짯ring AI soft짯ware and solu짯ti짯ons run짯ning on top of AMD adap짯ti짯ve com짯pu짯ting sili짯con, the Mip짯so짯lo짯gy team will help deve짯lop the full AMD AI soft짯ware stack and expand the open eco짯sys짯tem of soft짯ware tools, libra짯ri짯es and models.
    • AI start짯up Lami짯ni unvei짯led that it has been run짯ning pro짯duc짯tion-rea짯dy Lar짯ge Lan짯guage Models (LLMs) exclu짯si짯ve짯ly on AMD Instinct acce짯le짯ra짯tors, enab짯ling enter짯pri짯se cus짯to짯mers to deploy LLMs fine짯tu짯n짯ed for their spe짯ci짯fic data across hundreds of AMD Instinct MI250 GPUs with only three lines of code.
  • AMD expan짯ded its AMD Ryzen pro짯ces짯sor lin짯e짯up, deli짯ve짯ring more per짯for짯mance and capa짯bi짯li짯ties for enthu짯si짯asts, gamers and creators: 
    • AMD announ짯ced the AMD Ryzen Thre짯ad짯rip짯per꽓 PRO 7000 WX-Series and Ryzen Thre짯ad짯rip짯per 7000 pro짯ces짯sors, deli짯ve짯ring out짯stan짯ding per짯for짯mance for the most deman짯ding desk짯top plat짯forms. Ryzen Thre짯ad짯rip짯per PRO 7000 WX-Series pro짯ces짯sors will be available later this year to DIY cus짯to짯mers, SI part짯ners and through OEM part짯ners inclu짯ding Dell Tech짯no짯lo짯gies, HP and Lenovo.
    • AMD laun짯ched new Ryzen 7045HX3D Series mobi짯le pro짯ces짯sors, the first mobi짯le pro짯ces짯sor with AMD 3D V멌ache꽓 tech짯no짯lo짯gy, and the world셲 fas짯test mobi짯le gam짯ing processor.
    • AMD laun짯ched the AMD Ryzen 5 5600X3D pro짯ces짯sor, deli짯ve짯ring incre짯di짯ble gam짯ing per짯for짯mance with AMD 3D V멵ache technology.
  • Lea짯der짯ship AMD adap짯ti짯ve and embedded com짯pu짯ting pro짯ducts are enab짯ling new capa짯bi짯li짯ties in key markets: 
    • AMD exten짯ded its lea짯der짯ship in radia짯ti짯on-tole짯rant, space-gra짯de com짯pu짯te solu짯ti짯ons with the announce짯ment of the Ver짯sal AI Edge XQRVE2302, the second device in the Ver짯sal adap짯ti짯ve SoC port짯fo짯lio to be qua짯li짯fied for space flight.
    • AMD announ짯ced the AMD Alveo꽓 UL3524 acce짯le짯ra짯tor card, a new fin짯tech acce짯le짯ra짯tor desi짯gned for elec짯tro짯nic tra짯ding appli짯ca짯ti짯ons and AI-enab짯led tra짯ding strategies.
    • AMD announ짯ced the AMD Kria꽓 K24 Sys짯tem-on-Modu짯le (SOM) and KD240 Dri짯ves Star짯ter Kit, offe짯ring power-effi짯ci짯ent com짯pu짯te in a small form fac짯tor for cost-sen짯si짯ti짯ve indus짯tri짯al and com짯mer짯cial edge applications.
  • New AMD gra짯phics pro짯ces짯sors and soft짯ware fea짯tures are enab짯ling incre짯di짯ble expe짯ri짯en짯ces for gamers and professionals: 
    • AMD intro짯du짯ced the flag짯ship lap짯top gra짯phics pro짯ces짯sor, AMD Rade짯on RX 7900M, the fas짯test AMD Rade짯on GPU ever deve짯lo짯ped for lap짯tops, deli짯ve짯ring desk짯top-class per짯for짯mance for gam짯ing and con짯tent creation.
    • AMD laun짯ched the Rade짯on RX 7800 XT and Rade짯on RX 7700 XT gra짯phics cards, opti짯mi짯zed to deli짯ver incre짯di짯bly high-per짯for짯mance, high-refresh 1440p gam짯ing expe짯ri짯en짯ces for deman짯ding AAA and esports titles.
    • AMD laun짯ched Fide짯li짯ty짯FX꽓 Super Reso짯lu짯ti짯on 3 in Fors짯po짯ken and Immor짯tals of Ave짯um, fea짯turing new frame gene짯ra짯ti짯on tech짯no짯lo짯gy that deli짯vers mas짯si짯ve per짯for짯mance impro짯ve짯ments over both nati짯ve reso짯lu짯ti짯on and tem짯po짯ral upscaling.
    • AMD laun짯ched the latest ver짯si짯on of the AMD Soft짯ware: Adre짯na짯lin Edi짯ti짯on appli짯ca짯ti짯on fea짯turing AMD HYPR-RX tech짯no짯lo짯gy, allo짯wing AMD Rade짯on Super Reso짯lu짯ti짯on and AMD Rade짯on Boost tech짯no짯lo짯gies to work tog짯e짯ther to deli짯ver grea짯ter performance.
    • AMD laun짯ched the Rade짯on PRO W7600 and Rade짯on PRO W7500 work짯sta짯tion gra짯phics cards, engi짯nee짯red to tack짯le workloads across a ran짯ge of pro짯fes짯sio짯nal industries.
  • AMD published its annu짯al Cor짯po짯ra짯te Respon짯si짯bi짯li짯ty Report, detail짯ing 2022 pro짯gress across focus are짯as span짯ning digi짯tal impact, envi짯ron짯men짯tal sus짯taina짯bi짯li짯ty, sup짯p짯ly chain respon짯si짯bi짯li짯ty, and diver짯si짯ty, belon짯ging and inclusion.
  • AMD announ짯ced plans to invest appro짯xi짯m짯ate짯ly $400 mil짯li짯on over the next five years to expand rese짯arch, deve짯lo짯p짯ment and engi짯nee짯ring ope짯ra짯ti짯ons in India, inclu짯ding the addi짯ti짯on of appro짯xi짯m짯ate짯ly 3,000 new engi짯nee짯ring roles by the end of 2028.

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.

For the fourth quar짯ter of 2023, AMD expects reve짯nue to be appro짯xi짯m짯ate짯ly $6.1 bil짯li짯on, plus or minus $300 mil짯li짯on. At the mid-point of the reve짯nue ran짯ge, this repres짯ents year-over-year growth of appro짯xi짯m짯ate짯ly 9% and sequen짯ti짯al growth of appro짯xi짯m짯ate짯ly 5%. Non-GAAP gross mar짯gin is expec짯ted to be appro짯xi짯m짯ate짯ly 51.5%.

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

 

    Three Months Ended  
    Sep짯tem짯ber 30,
2023
  July 1,
2023
  Sep짯tem짯ber 24,
2022
 
GAAP net inco짯me / diluted ear짯nings per share   $ 299     $ 0.18     $ 27     $ 0.02     $ 66     $ 0.04    
(Gains) los짯ses on equi짯ty invest짯ments, net     (4 )           3             3          
Stock-based com짯pen짯sa짯ti짯on     353       0.22       348       0.21       269       0.16    
Equi짯ty inco짯me in investee     (3 )           (6 )           (4 )        
Amor짯tiza짯ti짯on of acqui짯si짯ti짯on-rela짯ted intangibles     660       0.41       693       0.42       1,002       0.62    
Acqui짯si짯ti짯on-rela짯ted and other cos짯ts (1)     39       0.02       47       0.03       57       0.04    
Inco짯me tax provision     (209 )     (0.13 )     (164 )     (0.10 )     (298 )     (0.19 )  
Non-GAAP net inco짯me / diluted ear짯nings per share   $ 1,135     $ 0.70     $ 948     $ 0.58     $ 1,095     $ 0.67    

 

(1 )   Acqui짯si짯ti짯on-rela짯ted and other cos짯ts pri짯ma짯ri짯ly com짯pri짯sed of tran짯sac짯tion cos짯ts, purcha짯se pri짯ce adjus짯t짯ments for inven짯to짯ry, cer짯tain com짯pen짯sa짯ti짯on char짯ges, con짯tract ter짯mi짯na짯ti짯on and work짯force reba짯lan짯cing 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 the signi짯fi짯cant growth tra짯jec짯to짯ry of AMD셲 data cen짯ter busi짯ness; that AMD expects to see strong growth in Data Cen짯ter and con짯tin짯ued momen짯tum in Cli짯ent, par짯ti짯al짯ly off짯set by lower sales in the Gam짯ing seg짯ment and addi짯tio짯nal sof짯tening of demand in the embedded mar짯kets; that AMD Instinct꽓 MI300A and MI300X GPUs are on track for volu짯me pro짯duc짯tion in the fourth quar짯ter of 2023 to sup짯port deploy짯ments with seve짯ral lea짯ding HPC, Cloud and AI cus짯to짯mers; the fea짯tures, func짯tion짯a짯li짯ty, per짯for짯mance, avai짯la짯bi짯li짯ty, timing and expec짯ted bene짯fits of AMD pro짯ducts; AMD셲 plans to invest appro짯xi짯m짯ate짯ly $400 mil짯li짯on over the next five years to expand rese짯arch, deve짯lo짯p짯ment and engi짯nee짯ring ope짯ra짯ti짯ons in India, inclu짯ding the addi짯ti짯on of appro짯xi짯m짯ate짯ly 3,000 new engi짯nee짯ring roles by the end of 2028; and AMD셲 expec짯ted fourth quar짯ter 2023 finan짯cial out짯look, inclu짯ding reve짯nue and non-GAAP gross mar짯gin, 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; cycli짯cal natu짯re of the semi짯con짯duc짯tor indus짯try; mar짯ket con짯di짯ti짯ons of the indus짯tries in which AMD pro짯ducts are sold; 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; 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 on AMD셲 busi짯ness and AMD셲 abili짯ty to inte짯gra짯te acqui짯red busi짯nesses; impact of any impair짯ment of AMD셲 tan짯gi짯ble, defi짯ni짯te-lived or inde짯fi짯ni짯te-lived intan짯gi짯ble assets, inclu짯ding good짯will, on AMD셲 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, as well as the impact of finan짯cial insti짯tu짯ti짯on fail짯ure on AMD셲 cash and cash equi짯va짯lents; poli짯ti짯cal, legal, eco짯no짯mic risks and natu짯ral dis짯as짯ters; future impairm짯ents of tech짯no짯lo짯gy licen짯se purcha짯ses; AMD셲 abili짯ty to attract and retain qua짯li짯fied per짯son짯nel; AMD셲 stock pri짯ce vola짯ti짯li짯ty. 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 2023, 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 Octo짯ber 31, 2023 and assump짯ti짯ons and beliefs that invol짯ve num짯e짯rous risks and uncer짯tain짯ties. Adjus짯t짯ments to arri짯ve at the GAAP gross mar짯gin out짯look typi짯cal짯ly include stock-based com짯pen짯sa짯ti짯on, amor짯tiza짯ti짯on of acqui짯red intan짯gi짯ble assets and acqui짯si짯ti짯on-rela짯ted and other cos짯ts. The timing and impact of such adjus짯t짯ments are depen짯dent on future events that are typi짯cal짯ly uncer짯tain or out짯side of AMD셲 con짯trol, the짯r짯e짯fo짯re, a recon짯ci짯lia짯ti짯on to equi짯va짯lent GAAP mea짯su짯res is not prac짯ti짯ca짯ble at this time. 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, Instinct, Ver짯sal, Alveo, Kria, Fide짯li짯ty짯FX, 3D V멌ache, Ultras짯ca짯le+, Zynq, Thre짯ad짯rip짯per and com짯bi짯na짯ti짯ons the짯reof, are trade짯marks of Advan짯ced Micro Devices, Inc.

 


ADVANCED MICRO DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Mil짯li짯ons except per share amounts and per짯cen짯ta짯ges) (Unau짯di짯ted)

  Three Months Ended   Nine Months Ended
  Sep짯tem짯ber 30,
2023
  July 1,
2023
  Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 30,
2023
  Sep짯tem짯ber 24,
2022
Net reve짯nue $ 5,800     $ 5,359     $ 5,565     $ 16,512     $ 18,002  
Cost of sales   2,843       2,704       2,799       8,236       8,797  
Amor짯tiza짯ti짯on of acqui짯si짯ti짯on-rela짯ted intangibles   210       212       412       727       1,005  
Total cost of sales   3,053       2,916       3,211       8,963       9,802  
Gross pro짯fit   2,747       2,443       2,354       7,549       8,200  
Gross mar짯gin   47 %     46 %     42 %     46 %     46 %
Rese짯arch and development   1,507       1,443       1,279       4,361       3,639  
Mar짯ke짯ting, gene짯ral and administrative   576       547       557       1,708       1,746  
Amor짯tiza짯ti짯on of acqui짯si짯ti짯on-rela짯ted intangibles   450       481       590       1,449       1,499  
Licen짯sing gain   (10 )     (8 )     (8 )     (28 )     (97 )
Ope짯ra짯ting inco짯me (loss)   224       (20 )     (64 )     59       1,413  
Inte짯rest expense   (26 )     (28 )     (31 )     (79 )     (69 )
Other inco짯me (expen짯se), net   59       46       22       148       (24 )
Inco짯me (loss) befo짯re inco짯me taxes and equi짯ty income   257       (2 )     (73 )     128       1,320  
Inco짯me tax pro짯vi짯si짯on (bene짯fit)   (39 )     (23 )     (135 )     (49 )     32  
Equi짯ty inco짯me in investee   3       6       4       10       11  
Net inco짯me $ 299     $ 27     $ 66     $ 187     $ 1,299  
Ear짯nings 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
(Mil짯li짯ons)

  Sep짯tem짯ber 30,
2023
  Decem짯ber 31,
2022
  (Unau짯di짯ted)    
ASSETS      
Cur짯rent assets:      
Cash and cash equivalents $ 3,561     $ 4,835  
Short-term invest짯ments   2,224       1,020  
Accounts receiva짯ble, net   5,054       4,126  
Invent짯ories   4,445       3,771  
Receiv짯a짯bles from rela짯ted parties   1       2  
Pre짯paid expen짯ses and other cur짯rent assets   1,403       1,265  
Total cur짯rent assets   16,688       15,019  
Pro짯per짯ty and equip짯ment, net   1,566       1,513  
Ope짯ra짯ting lea짯se right-of-use assets   507       460  
Good짯will   24,186       24,177  
Acqui짯si짯ti짯on-rela짯ted intan짯gi짯bles, net   21,950       24,118  
Invest짯ment: equi짯ty method   93       83  
Defer짯red tax assets   76       58  
Other non-cur짯rent assets   2,560       2,152  
Total Assets $ 67,626     $ 67,580  
       
LIABILITIES AND STOCKHOLDERS EQUITY      
Cur짯rent liabilities:      
Accounts paya짯ble $ 2,245     $ 2,493  
Paya짯bles to rela짯ted parties   325       463  
Accrued lia짯bi짯li짯ties   3,376       3,077  
Cur짯rent por짯ti짯on of long-term debt, net   752        
Other cur짯rent liabilities   929       336  
Total cur짯rent liabilities   7,627       6,369  
Long-term debt, net of cur짯rent portion   1,715       2,467  
Long-term ope짯ra짯ting lea짯se liabilities   395       396  
Defer짯red tax liabilities   1,152       1,934  
Other long-term liabilities   1,767       1,664  
       
Stock짯hol짯ders equity:      
Capi짯tal stock:      
Com짯mon stock, par value   17       16  
Addi짯tio짯nal paid-in capital   59,182       58,005  
Tre짯asu짯ry stock, at cost   (4,235 )     (3,099 )
Retai짯ned ear짯nings (Accu짯mu짯la짯ted deficit)   56       (131 )
Accu짯mu짯la짯ted other com짯pre짯hen짯si짯ve loss   (50 )     (41 )
Total stock짯hol짯ders equity $ 54,970     $ 54,750  
Total Lia짯bi짯li짯ties and Stock짯hol짯ders Equity $ 67,626     $ 67,580  


ADVANCED MICRO DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Mil짯li짯ons) (Unau짯di짯ted)

  Three Months Ended   Nine Months Ended
  Sep짯tem짯ber 30,
2023
  Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 30,
2023
  Sep짯tem짯ber 24,
2022
Cash flows from ope짯ra짯ting activities:              
Net inco짯me $ 299     $ 66     $ 187     $ 1,299  
Adjus짯t짯ments to recon짯ci짯le net inco짯me to net cash pro짯vi짯ded by ope짯ra짯ting activities:              
Depre짯cia짯ti짯on and amortization   823       1,165       2,654       2,954  
Stock-based com짯pen짯sa짯ti짯on   353       275       1,010       766  
Amor짯tiza짯ti짯on of ope짯ra짯ting lea짯se right-of-use assets   25       23       73       63  
Amor짯tiza짯ti짯on of inven짯to짯ry fair value adjustment         2       3       187  
Loss on sale or dis짯po짯sal of pro짯per짯ty and equipment   3             10       15  
Defer짯red inco짯me taxes   (218 )     (710 )     (800 )     (1,328 )
(Gains) los짯ses on equi짯ty invest짯ments, net   (3 )     3       (1 )     57  
Other   (23 )     (5 )     (43 )     (9 )
Chan짯ges in ope짯ra짯ting assets and liabilities              
Accounts receiva짯ble, net   (743 )     (285 )     (929 )     (1,301 )
Invent짯ories   122       (723 )     (674 )     (997 )
Receiv짯a짯bles from rela짯ted parties   1             1       (1 )
Pre짯paid expen짯ses and other assets   (143 )     (588 )     (380 )     (825 )
Paya짯bles to rela짯ted parties   13       36       (137 )     313  
Accounts paya짯ble   (547 )     783       (238 )     811  
Accrued and other liabilities   459       923       550       994  
Net cash pro짯vi짯ded by ope짯ra짯ting activities   421       965       1,286       2,998  
Cash flows from inves짯t짯ing activities:              
Purcha짯ses of pro짯per짯ty and equipment   (124 )     (123 )     (407 )     (326 )
Purcha짯ses of short-term investments   (496 )     (1,779 )     (3,312 )     (2,399 )
Pro짯ceeds from matu짯ri짯ty of short-term investments   746       615       1,917       2,864  
Pro짯ceeds from sale of short-term investments               248        
Cash recei짯ved from acqui짯si짯ti짯on of Xilinx                     2,366  
Acqui짯si짯ti짯ons, net of cash acquired   (14 )           (14 )     (1,558 )
Other   (10 )     (11 )     (5 )     (15 )
Net cash pro짯vi짯ded by (used in) inves짯t짯ing activities   102       (1,298 )     (1,573 )     932  
Cash flows from finan짯cing activities:              
Pro짯ceeds from debt, net of issu짯an짯ce costs                     991  
Repay짯ment of debt         (312 )           (312 )
Pro짯ceeds from sales of com짯mon stock through employee equi짯ty plans   4       1       148       79  
Repurcha짯ses of com짯mon stock   (511 )     (617 )     (752 )     (3,452 )
Com짯mon stock repurcha짯ses for tax with짯hol짯ding on employee equi짯ty plans   (295 )     (305 )     (382 )     (371 )
Other   (1 )           (1 )     (2 )
Net cash used in finan짯cing activities   (803 )     (1,233 )     (987 )     (3,067 )
Net increase (decrease) in cash and cash equivalents   (280 )     (1,566 )     (1,274 )     863  
Cash and cash equi짯va짯lents at begin짯ning of period   3,841       4,964       4,835       2,535  
Cash and cash equi짯va짯lents at end of period $ 3,561     $ 3,398     $ 3,561     $ 3,398  


ADVANCED MICRO DEVICES, INC.

SELECTED CORPORATE DATA
(Mil짯li짯ons) (Unau짯di짯ted)

  Three Months Ended   Nine Months Ended
  Sep짯tem짯ber 30,
2023
  July 1,
2023
  Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 30,
2023
  Sep짯tem짯ber 24,
2022
Seg짯ment and Cate짯go짯ry Infor짯ma짯ti짯on(1)                  
Data Cen짯ter                  
Net reve짯nue $ 1,598     $ 1,321     $ 1,609     $ 4,214     $ 4,388  
Ope짯ra짯ting income $ 306     $ 147     $ 505     $ 601     $ 1,404  
Cli짯ent                  
Net reve짯nue $ 1,453     $ 998     $ 1,022     $ 3,190     $ 5,298  
Ope짯ra짯ting inco짯me (loss) $ 140     $ (69 )   $ (26 )   $ (101 )   $ 1,342  
Gam짯ing                  
Net reve짯nue $ 1,506     $ 1,581     $ 1,631     $ 4,844     $ 5,161  
Ope짯ra짯ting income $ 208     $ 225     $ 142     $ 747     $ 687  
Embedded                  
Net reve짯nue $ 1,243     $ 1,459     $ 1,303     $ 4,264     $ 3,155  
Ope짯ra짯ting income $ 612     $ 757     $ 635     $ 2,167     $ 1,553  
All Other                  
Net reve짯nue $     $     $     $     $  
Ope짯ra짯ting loss $ (1,042 )   $ (1,080 )   $ (1,320 )   $ (3,355 )   $ (3,573 )
Total                  
Net reve짯nue $ 5,800     $ 5,359     $ 5,565     $ 16,512     $ 18,002  
Ope짯ra짯ting inco짯me (loss) $ 224     $ (20 )   $ (64 )   $ 59     $ 1,413  
                   
Other Data                  
Capi짯tal expenditures $ 124     $ 125     $ 123     $ 407     $ 326  
Adjus짯ted EBITDA (2) $ 1,439     $ 1,224     $ 1,427     $ 3,920     $ 5,533  
Cash, cash equi짯va짯lents 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 Cen짯ter seg짯ment pri짯ma짯ri짯ly includes ser짯ver micro짯pro짯ces짯sors (CPUs) and gra짯phics pro짯ces짯sing units (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 CPUs, acce짯le짯ra짯ted pro짯ces짯sing units that inte짯gra짯te micro짯pro짯ces짯sors and GPUs (APUs), and chip짯sets for desk짯top and note짯book per짯so짯nal computers.
   
  The Gam짯ing seg짯ment pri짯ma짯ri짯ly includes dis짯crete GPUs, semi-cus짯tom SoC pro짯ducts and deve짯lo짯p짯ment services.
   
  The Embedded seg짯ment pri짯ma짯ri짯ly includes embedded CPUs and GPUs, APUs, FPGAs, and Adap짯ti짯ve SoC 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, such as amor짯tiza짯ti짯on of acqui짯si짯ti짯on-rela짯ted intan짯gi짯ble asset, employee stock-based com짯pen짯sa짯ti짯on expen짯se, acqui짯si짯ti짯on-rela짯ted and other cos짯ts, and licen짯sing gain.

 

(2) Recon짯ci짯lia짯ti짯on of GAAP Net Inco짯me to Adjus짯ted EBITDA

 

  Three Months Ended   Nine Months Ended
  Sep짯tem짯ber 30,
2023
  July 1,
2023
  Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 30,
2023
  Sep짯tem짯ber 24,
2022
GAAP net income $ 299     $ 27     $ 66     $ 187     $ 1,299  
Inte짯rest expense   26       28       31       79       69  
Other (inco짯me) expen짯se, net   (59 )     (46 )     (22 )     (148 )     24  
Inco짯me tax pro짯vi짯si짯on (bene짯fit)   (39 )     (23 )     (135 )     (49 )     32  
Equi짯ty inco짯me in investee   (3 )     (6 )     (4 )     (10 )     (11 )
Stock-based com짯pen짯sa짯ti짯on   353       348       269       1,006       702  
Depre짯cia짯ti짯on and amortization   163       156       163       478       450  
Amor짯tiza짯ti짯on of acqui짯si짯ti짯on-rela짯ted intangibles   660       693       1,002       2,176       2,504  
Acqui짯si짯ti짯on-rela짯ted and other costs   39       47       57       201       464  
Adjus짯ted EBITDA $ 1,439     $ 1,224     $ 1,427     $ 3,920     $ 5,533  

 

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 (inclu짯ding amor짯tiza짯ti짯on of acqui짯si짯ti짯on-rela짯ted intan짯gi짯bles), acqui짯si짯ti짯on-rela짯ted and other cos짯ts. 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 30,
2023
  July 1,
2023
  Sep짯tem짯ber 24,
2022
  Sep짯tem짯ber 30,
2023
  Sep짯tem짯ber 24,
2022
GAAP net cash pro짯vi짯ded by ope짯ra짯ting activities $ 421     $ 379     $ 965     $ 1,286     $ 2,998  
Ope짯ra짯ting cash flow margin %   7 %     7 %     17 %     8 %     17 %
Purcha짯ses of pro짯per짯ty 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 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, and free cash flow mar짯gin % is free cash flow expres짯sed as a per짯cen짯ta짯ge of the Company셲 net reve짯nue. 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.