― Data Center, Gaming and Embedded segments each grew significantly year-over-year and Client segment revenue was lower than expected ―

― Cash and operating cash flow increased year-over-year ―

SANTA CLARA, Calif., Nov. 01, 2022 (GLOBE NEWSWIRE) — AMD (NASDAQ:AMD) today announced revenue for the third quarter of 2022 of $5.6 billion, gross margin of 42%, operating loss of $64 million, net income of $66 million and diluted earnings per share of $0.04. On a non-GAAP(*) basis, gross margin was 50%, operating income was $1.3 billion, net income was $1.1 billion and diluted earnings per share was $0.67.

GAAP Quarterly Financial Results

Non-GAAP(*) Quarterly Financial Results

“Third quarter results came in below our expectations due to the softening PC market and substantial inventory reduction actions across the PC supply chain,” said AMD Chair and CEO Dr. Lisa Su. “Despite the challenging macro environment, we grew revenue 29% year-over-year driven by increased sales of our data center, embedded and game console products. We are confident that our leadership product portfolio, strong balance sheet, and ongoing growth opportunities in our data center and embedded businesses position us well to navigate the current market dynamics.”

Q3 2022 Financial Summary

  • Revenue of $5.6 billion increased 29% year-over-year driven by growth across the Data Center, Gaming and Embedded segments.
  • Gross margin was 42%, a decrease of 6 percentage points year-over-year, primarily due to amortization of intangible assets associated with the Xilinx acquisition. Non-GAAP gross margin was 50%, an increase of 2 percentage points year-over-year, primarily driven by higher Embedded and Data Center segment revenue. Gross margin and non-GAAP gross margin include $160 million of charges for inventory, pricing, and related reserves in the graphics and client businesses.
  • Operating loss was $64 million, compared to operating income of $948 million, or 22% of revenue, a year ago. The loss was primarily due to the amortization of intangible assets associated with the Xilinx acquisition and increased R&D investments. Non-GAAP operating income was $1.3 billion, or 23% of revenue, up from $1.1 billion or 24% a year ago primarily driven by higher revenue and gross margin partially offset by higher operating expenses.
  • Net income was $66 million compared to $923 million a year ago primarily due to the amortization of intangible assets associated with the Xilinx acquisition and increased R&D investments, partially offset by a $135 million tax benefit in the quarter. Non-GAAP net income was $1.1 billion, up from $893 million a year ago primarily driven by higher revenue and gross margin, partially offset by higher operating expenses.
  • Diluted earnings per share was $0.04 compared to $0.75 a year ago primarily due to lower net income. Non-GAAP diluted earnings per share was $0.67 compared to $0.73 a year ago primarily due to lower Client segment revenue.
  • Cash, cash equivalents and short-term investments were $5.6 billion at the end of the quarter. The company repaid the $312 million 7.50% Senior Notes that matured in August and repurchased $617 million of common stock during the quarter.
  • Cash from operations was $965 million in the quarter, compared to $849 million a year ago. Free cash flow was $842 million in the quarter compared to $764 million a year ago.
  • Goodwill and acquisition-related intangible assets associated with the acquisitions of Xilinx and Pensando were $49.3 billion.

Quarterly Segment Financial Summary

  • Prior period results have been conformed to the current reporting segments for comparison purposes.
  • Data Center segment revenue was $1.6 billion, up 45% year-over-year driven by strong sales of EPYC™ server processors. Operating income was $505 million, or 31% of revenue, compared to $308 million or 28% a year ago. The operating income and margin increases were primarily driven by higher revenue, partially offset by higher operating expenses.
  • Client segment revenue was $1.0 billion, down 40% year-over-year due to reduced processor shipments resulting from a weak PC market and a significant inventory correction across the PC supply chain. Client processor ASP increased year-over-year driven primarily by a richer mix of Ryzen™ desktop processor sales. Operating loss was $26 million, compared to operating income of $490 million or 29% a year ago. The decrease was primarily due to lower revenue.
  • Gaming segment revenue was $1.6 billion, up 14% year-over-year driven by higher semi-custom product sales partially offset by lower graphics revenue. Operating income was $142 million, or 9% of revenue, compared to $231 million or 16% a year ago. The decrease was primarily due to lower graphics revenue and inventory, pricing and related charges in the graphics business. Operating margin was lower primarily due to lower graphics revenue and higher operating expenses.
  • Embedded segment revenue was $1.3 billion, up 1,549% year-over-year driven primarily by the inclusion of Xilinx embedded product revenue. Operating income was $635 million, or 49% of revenue, compared to $23 million or 30% a year ago. Operating income and margin increases were primarily driven by higher revenue.
  • All Other operating loss was $1.3 billion as compared to $104 million a year ago primarily due to amortization of intangible assets largely associated with the Xilinx acquisition.

Recent PR Highlights

Current OutlookAMD’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. AMD’s fourth quarter is a 14-week quarter.

For the fourth quarter of 2022, AMD expects revenue to be approximately $5.5 billion, plus or minus $300 million, an increase of approximately 14% year-over-year and flat sequentially. Year-over-year and sequentially, the Embedded and Data Center segments are expected to grow. AMD expects non-GAAP gross margin to be approximately 51% in the fourth quarter of 2022.

For the full year 2022, AMD expects revenue to be approximately $23.5 billion, plus or minus $300 million, an increase of approximately 43% over 2021 led by growth in the Embedded and Data Center segments. AMD expects non-GAAP gross margin to be approximately 52% for 2022.

AMD TeleconferenceAMD 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 2022 financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com.

About AMDFor 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: AMD) website, blog, Facebook and Twitter pages.

Cautionary Statement

This press release contains forward-looking statements concerning Advanced Micro Devices, Inc. (AMD) such as AMD’s expectation that its leadership product portfolio, strong balance sheet, and ongoing growth opportunities in its data center and embedded businesses positions AMD well to navigate the current market dynamics; the features, functionality, performance, availability, timing and expected benefits of AMD products; and AMD’s expected fourth quarter 2022 and fiscal 2022 financial outlook, including revenue and non-GAAP gross margin and expected drivers based on current expectations, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as “would,” “may,” “expects,” “believes,” “plans,” “intends,” “projects” and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this press release are based on current beliefs, assumptions and expectations, speak only as of the date of this press release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond AMD’s control, that could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: Intel Corporation’s dominance of the microprocessor market and its aggressive business practices; global economic uncertainty; loss of a significant customer; impact of the COVID-19 pandemic on AMD’s business, financial condition and results of operations; competitive markets in which AMD’s products are sold; market conditions of the industries in which AMD products are sold; cyclical nature of the semiconductor industry; quarterly and seasonal sales patterns; AMD’s ability to adequately protect its technology or other intellectual property; unfavorable currency exchange rate fluctuations; ability of third party manufacturers to manufacture AMD’s products on a timely basis in sufficient quantities and using competitive technologies; availability of essential equipment, materials, substrates or manufacturing processes; ability to achieve expected manufacturing yields for AMD’s products; AMD’s ability to introduce products on a timely basis with expected features and performance levels; AMD’s ability to generate revenue from its semi-custom SoC products; potential security vulnerabilities; potential security incidents including IT outages, data loss, data breaches and cyber-attacks; 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, including acquisitions of Xilinx and Pensando, on AMD’s business and AMD’s ability to integrate acquired businesses; impact of any impairment of the combined company’s assets on the combined company’s financial position and results of operation; restrictions imposed by agreements governing AMD’s notes, the guarantees of Xilinx’s notes and the revolving credit facility; AMD’s indebtedness; AMD’s ability to generate sufficient cash to meet its working capital requirements or generate sufficient revenue and operating cash flow to make all of its planned R&D or strategic investments; political, legal, economic risks and natural disasters; future impairments of goodwill and technology license purchases; AMD’s ability to attract and retain qualified personnel; AMD’s stock price volatility; and worldwide political conditions. Investors are urged to review in detail the risks and uncertainties in AMD’s Securities and Exchange Commission filings, including but not limited to AMD’s most recent reports on Forms 10-K and 10-Q.

AMD, the AMD Arrow logo, EPYC, Radeon, Ryzen, Threadripper, Versal and combinations thereof, are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and used to identify companies and products and may be trademarks of their respective owner.

ADVANCED MICRO DEVICES, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Millions except per share amounts and percentages) (Unaudited)

 

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

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

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Media Contact:Drew PrairieAMD Communications512-602-4425[email protected] 

Investor Contact:Suresh BhaskaranAMD Investor Relations408-749-2845[email protected]

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