AMD Reports Second Quarter 2022 Financial Results
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AMD Reports Second Quarter 2022 Financial Results

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

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

GAAP Quarterly Financial Results

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

Non-GAAP(*) Quarterly Financial Results

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

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

Q2 2022 Financial Summary

Quarterly Segment Financial Summary

Recent PR Highlights

Current Outlook

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

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

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

AMD Teleconference

AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its second quarter 2022 financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com.


RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions, except per share data) (Unaudited)  
  Three Months Ended
  June 25,
2022		 June 26,
2021		 
GAAP gross profit $3,028  $1,830  
GAAP gross margin %  46%  48% 
Stock-based compensation  8   2  
Acquisition-related costs (1)  95   —  
Amortization of acquired intangible assets  407   —  
Non-GAAP gross profit $3,538  $1,832  
Non-GAAP gross margin %  54%  48% 
      
GAAP operating expenses $2,508  $1,000  
GAAP operating expenses/revenue %  38%  26% 
Stock-based compensation  251   81  
Acquisition-related costs (1)  79   10  
Amortization of acquired intangible assets  616   —  
Non-GAAP operating expenses $1,562  $909  
Non-GAAP operating expenses/revenue %  24%  24% 
      
GAAP operating income $526  $831  
GAAP operating margin %  8%  22% 
Stock-based compensation  259   83  
Acquisition-related costs (1)  174   10  
Amortization of acquired intangible assets  1,023   —  
Non-GAAP operating income $1,982  $924  
Non-GAAP operating margin %  30%  24% 


  Three Months Ended
  June 25,
2022		 June 26,
2021		 
GAAP net income / earnings per share $447  $0.27  $710  $0.58  
Loss on debt redemption/conversion  —   —   1   —  
(Gains) losses on equity investments, net  10   —   —   —  
Stock-based compensation  259   0.16   83   0.06  
Equity income in investee  (4)  —   (2)  —  
Acquisition-related costs (1)  174   0.11   10   0.01  
Amortization of acquired intangible assets  1,023   0.63   —   —  
Income tax provision  (202)  (0.12)  (24)  (0.02) 
Non-GAAP net income / earnings per share $1,707  $1.05  $778  $0.63  
          


(1) Acquisition-related costs primarily comprised of transaction costs, purchase price adjustments for inventory and certain compensation charges           

About AMD

For more than 50 years AMD has driven innovation in high-performance computing, graphics and visualization technologies. AMD employees are focused on building leadership high-performance and adaptive products that push the boundaries of what is possible. Billions of people, leading Fortune 500 businesses and cutting-edge scientific research institutions around the world rely on AMD technology daily to improve how they live, work and play. For more information about how AMD is enabling today and inspiring tomorrow, visit the AMD (NASDAQ: 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 expected growth in the back half of the year; the features, functionality, performance, availability, timing and expected benefits of AMD products; the estimated market for high-performance and adaptive computing solutions; and AMD’s expected third quarter 2022 and fiscal  2022 financial outlook, including revenue and non-GAAP gross margin and expected drivers based on current expectations, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as "would," "may," "expects," "believes," "plans," "intends," "projects" and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this press release are based on current beliefs, assumptions and expectations, speak only as of the date of this press release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond AMD's control, that could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: Intel Corporation’s dominance of the microprocessor market and its aggressive business practices; global economic uncertainty; loss of a significant customer; impact of the COVID-19 pandemic on AMD’s business, financial condition and results of operations; competitive markets in which AMD’s products are sold; market conditions of the industries in which AMD products are sold; cyclical nature of the semiconductor industry; quarterly and seasonal sales patterns; AMD's ability to adequately protect its technology or other intellectual property; unfavorable currency exchange rate fluctuations; ability of third party manufacturers to manufacture AMD's products on a timely basis in sufficient quantities and using competitive technologies; availability of essential equipment, materials, substrates or manufacturing processes; ability to achieve expected manufacturing yields for AMD’s products; AMD's ability to introduce products on a timely basis with expected features and performance levels; AMD's ability to generate revenue from its semi-custom SoC products; potential security vulnerabilities; potential security incidents including IT outages, data loss, data breaches and cyber-attacks; uncertainties involving the ordering and shipment of AMD’s products; AMD’s reliance on third-party intellectual property to design and introduce new products in a timely manner; AMD's reliance on third-party companies for design, manufacture and supply of motherboards, software and other computer platform components; AMD's reliance on Microsoft and other software vendors' support to design and develop software to run on AMD’s products; AMD’s reliance on third-party distributors and add-in-board partners; impact of modification or interruption of AMD’s internal business processes and information systems; compatibility of AMD’s products with some or all industry-standard software and hardware; costs related to defective products; efficiency of AMD's supply chain; AMD's ability to rely on third party supply-chain logistics functions; AMD’s ability to effectively control sales of its products on the gray market; impact of government actions and regulations such as export administration regulations, tariffs and trade protection measures; AMD’s ability to realize its deferred tax assets; potential tax liabilities; current and future claims and litigation; impact of environmental laws, conflict minerals-related provisions and other laws or regulations; impact of acquisitions, joint ventures and/or investments on AMD's business, and ability to integrate acquired businesses, such as Xilinx and Pensando;  impact of any impairment of the combined company’s assets on the combined company’s financial position and results of operation; restrictions imposed by agreements governing AMD’s notes, the guarantees of Xilinx’s notes and the revolving credit facility; AMD's indebtedness; AMD's ability to generate sufficient cash to meet its working capital requirements or generate sufficient revenue and operating cash flow to make all of its planned R&D or strategic investments; political, legal, economic risks and natural disasters; future impairments of goodwill and technology license purchases; AMD’s ability to attract and retain qualified personnel; AMD’s stock price volatility; and worldwide political conditions. Investors are urged to review in detail the risks and uncertainties in AMD’s Securities and Exchange Commission filings, including but not limited to AMD’s most recent reports on Forms 10-K and 10-Q.

(*) In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP earnings per share. AMD uses a normalized tax rate in its computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2022, AMD uses a projected non-GAAP tax rate of 13%, which excludes the tax impact of pre-tax non-GAAP adjustments, reflecting currently available information. AMD also provided adjusted EBITDA and free cash flow as supplemental non-GAAP measures of its performance. These items are defined in the footnotes to the selected corporate data tables provided at the end of this earnings press release. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. The non-GAAP financial measures disclosed in this earnings press release should be viewed in addition to and not as a substitute for or superior to AMD’s reported results prepared in accordance with GAAP and should be read only in conjunction with AMD’s Consolidated Financial Statements prepared in accordance with GAAP. These non GAAP financial measures referenced are reconciled to their most directly comparable GAAP financial measures in the data tables at the end of this earnings press release. This earnings press release also contains forward-looking non-GAAP gross margin concerning AMD’s financial outlook, which is based on current expectations as of August 2, 2022 and assumptions and beliefs that involve numerous risks and uncertainties. AMD undertakes no intent or obligation to publicly update or revise its outlook statements as a result of new information, future events or otherwise, except as may be required by law.

AMD, the AMD Arrow logo, EPYC, Radeon, Ryzen, Threadripper, Versal and combinations thereof, are trademarks of Advanced Micro Devices, Inc. 

Other names are for informational purposes only and used to identify companies and products and may be trademarks of their respective owner.

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

  Three Months Ended Six Months Ended 
  June 25,
2022		 June 26,
2021		 June 25,
2022		 June 26,
2021		 
Net revenue $6,550  $3,850  $12,437  $7,295  
Cost of sales  3,115   2,020   5,998   3,878  
Amortization of acquisition-related intangibles  407   —   593   —  
Total cost of sales  3,522   2,020   6,591   3,878  
Gross profit  3,028   1,830   5,846   3,417  
Gross margin %  46%  48%  47%  47% 
Research and development  1,300   659   2,360   1,269  
Marketing, general and administrative  592   341   1,189   660  
Amortization of acquisition-related intangibles  616   —   909   —  
Licensing gain  (6)  (1)  (89)  (5) 
Operating income  526   831   1,477   1,493  
Interest expense  (25)  (10)  (38)  (19) 
Other income (expense), net  (4)  —   (46)  (11) 
Income before income taxes and equity income  497   821   1,393   1,463  
Income tax provision  54   113   167   202  
Equity income in investee  4   2   7   4  
Net income $447  $710  $1,233  $1,265  
Earnings per share         
Basic $0.28  $0.58  $0.82  $1.04  
Diluted $0.27  $0.58  $0.81  $1.03  
Shares used in per share calculation         
Basic  1,618   1,216   1,506   1,214  
Diluted  1,632   1,232   1,521   1,231  



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

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



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

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



SELECTED CORPORATE DATA
(Millions) (Unaudited)

  Three Months Ended Six Months Ended 
  June 25,
2022		 June 26,
2021		 June 25,
2022		 June 26,
2021		 
Segment and Category Information(1)         
Data Center         
Net revenue $1,486  $813  $2,779  $1,423  
Operating income $472  $204  $899  $314  
Client         
Net revenue $2,152  $1,728  $4,276  $3,366  
Operating income $676  $538  $1,368  $1,068  
Gaming         
Net revenue $1,655  $1,255  $3,530  $2,410  
Operating income $187  $175  $545  $296  
Embedded         
Net revenue $1,257  $54  $1,852  $96  
Operating income $641  $6  $918  $3  
All Other         
Net revenue $—  $—  $—  $—  
Operating loss $(1,450) $(92) $(2,253) $(188) 
Total         
Net revenue $6,550  $3,850  $12,437  $7,295  
Operating income $526  $831  $1,477  $1,493  
          
Other Data         
Capital expenditures $132  $64  $203  $130  
Adjusted EBITDA (2) $2,139  $1,021  $4,106  $1,878  
Cash, cash equivalents and short-term investments $5,992  $3,793  $5,992  $3,793  
Free cash flow (3) $906  $888  $1,830  $1,720  
Total assets $67,502  $10,691  $67,502  $10,691  
Total debt $2,777  $313  $2,777  $313  


(1) The Data Center segment primarily includes server microprocessors, GPUs, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs) and adaptive SoC products for data centers.
  The Client segment primarily includes microprocessors, accelerated processing units (APUs) that integrate microprocessors and graphics, and chipsets for desktop and notebook personal computers.
  The Gaming segment primarily includes discrete graphics processing units (GPUs), semi-custom System-on-Chip (SoC) products and development services.
  The Embedded segment primarily includes embedded microprocessors, GPUs, FPGAs, adaptive SoC products, and Adaptive Compute Acceleration Platform (ACAP) products.
  From time to time, the Company may also sell or license portions of its IP portfolio.
  All Other category primarily includes certain expenses and credits that are not allocated to any of the operating segments. Also included in this category are acquisition-related intangible asset amortization expense, stock-based compensation expense, acquisition-related costs and licensing gain.
   
(2) Reconciliation of GAAP Net Income to Adjusted EBITDA


  Three Months Ended Six Months Ended 
  June 25,
2022		 June 26,
2021		 June 25,
2022		 June 26,
2021		 
GAAP net income $447  $710  $1,233  $1,265  
Interest expense  25   10   38   19  
Other (income) expense, net  4   —   46   11  
Income tax provision  54   113   167   202  
Equity income in investee  (4)  (2)  (7)  (4) 
Stock-based compensation  259   83   433   168  
Depreciation and amortization  157   97   287   192  
Amortization of acquired intangible assets  1,023   —   1,502   —  
Acquisition-related costs  174   10   407   25  
Adjusted EBITDA $2,139  $1,021  $4,106  $1,878  


The Company presents “Adjusted EBITDA” as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting GAAP net income for interest expense, other income (expense), net, income tax provision, equity income in investee, stock-based compensation, depreciation and amortization expense and acquisition-related costs. The Company also included amortization of acquired intangible assets for the three months and six months ended June 25, 2022. The Company calculates and presents Adjusted EBITDA because management believes it is of importance to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. In addition, the Company presents Adjusted EBITDA because it believes this measure assists investors in comparing its performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company’s calculation of Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view Adjusted EBITDA as an alternative to the GAAP operating measure of income or GAAP liquidity measures of cash flows from operating, investing and financing activities. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities that can affect cash flows.



(3) Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow


  Three Months Ended Six Months Ended 
  June 25, 2022 June 26, 2021 June 25, 2022 June 26, 2021 
GAAP net cash provided by operating activities $1,038  $952  $2,033  $1,850  
Operating cash flow margin %  16%  25%  16%  25% 
Purchases of property and equipment $(132) $(64) $(203) $(130) 
Free cash flow $906  $888  $1,830  $1,720  
Free cash flow margin %  14%  23%  15%  24% 


The Company also presents free cash flow as a supplemental Non-GAAP measure of its performance. Free cash flow is determined by adjusting GAAP net cash provided by operating activities for capital expenditures. The Company calculates and communicates free cash flow in the financial earnings press release because management believes it is of importance to investors to understand the nature of these cash flows. The Company’s calculation of free cash flow may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view free cash flow as an alternative to GAAP liquidity measures of cash flows from operating activities. The Company has provided reconciliations within the earnings press release of these Non-GAAP financial measures to the most directly comparable GAAP financial measures.

Media Contact:
Drew Prairie
AMD Communications
512-602-4425
Email Contact 

Investor Contact:
Laura Graves
AMD Investor Relations
408-749-5467
Email Contact 


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