AMD Reports Fourth Quarter and Full Year 2022 Financial Results

[btarunr]

AMD (NASDAQ:AMD) today announced revenue for the fourth quarter of 2022 of $5.6 billion, gross margin of 43%, operating loss of $149 million, net income of $21 million and diluted earnings per share of $0.01. 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 $0.69.

For full year 2022, the company reported revenue of $23.6 billion, gross margin of 45%, operating income of $1.3 billion, net income of $1.3 billion and diluted earnings per share of $0.84. On a non-GAAP basis, gross margin was 52%, operating income was $6.3 billion, net income was $5.5 billion and diluted earnings per share was $3.50.



"2022 was a strong year for AMD as we delivered best-in-class growth and record revenue despite the weak PC environment in the second half of the year," said AMD Chair and CEO Dr. Lisa Su. "We accelerated our data center momentum and closed our strategic acquisition of Xilinx, significantly diversifying our business and strengthening our financial model. Although the demand environment is mixed, we are confident in our ability to gain market share in 2023 and deliver long-term growth based on our differentiated product portfolio."

Q4 2022 Results

• Revenue of $5.6 billion increased 16% year-over-year primarily driven by growth across the Embedded and Data Center segments, partially offset by lower Client and Gaming segment revenue.
• Gross margin was 43%, a decrease of 7 percentage points year-over-year, primarily due to amortization of intangible assets associated with the Xilinx acquisition. Non-GAAP gross margin was 51%, an increase of 1 percentage point year-over-year, primarily driven by a richer product mix with higher Embedded and Data Center segment revenue, partially offset by lower Client segment revenue.
• Operating loss was $149 million, compared to operating income of $1.2 billion, or 25% of revenue a year ago. The loss was primarily due to the amortization of intangible assets associated with the Xilinx acquisition. Non-GAAP operating income was $1.3 billion, or 23% of revenue, compared to $1.3 billion or 27% a year ago. The non-GAAP operating margin decline was primarily due to lower Client segment operating income.
• Net income was $21 million compared to net income of $974 million a year ago primarily due to the amortization of intangible assets associated with the Xilinx acquisition, partially offset by a $154 million tax benefit in the quarter. Non-GAAP net income was $1.1 billion, flat from a year ago.
• Diluted earnings per share was $0.01 compared to $0.80 a year ago primarily due to the amortization of intangible assets associated with the Xilinx acquisition, partially offset by a $154 million tax benefit in the quarter. Non-GAAP diluted earnings per share was $0.69 compared to $0.92 a year ago primarily due to lower Client segment operating income.
• Cash, cash equivalents and short-term investments were $5.9 billion at the end of the quarter. The company returned $250 million to shareholders through share repurchases in the quarter.
• Cash from operations was $567 million in the quarter, compared to $822 million a year ago. Free cash flow was $443 million in the quarter compared to $736 million a year ago.
• Goodwill and acquisition-related intangible assets associated with the acquisitions of Xilinx and Pensando were $48.3 billion at the end of the quarter.

Quarterly Financial Segment Summary

• Prior period results have been conformed to the current reporting segments for comparison purposes.
• Data Center segment revenue was $1.7 billion, up 42% year-over-year primarily driven by strong sales of EPYC server processors. Operating income was $444 million, or 27% of revenue, compared to $369 million or 32% a year ago. The operating income increase was primarily driven by higher revenue, partially offset by higher R&D investments to support growth. The operating margin decrease was primarily due to higher R&D investments to support growth.
• Client segment revenue was $903 million, down 51% 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 was flat year-over-year. Operating loss was $152 million, compared to operating income of $530 million or 29% of revenue a year ago primarily due to lower revenue.
• Gaming segment revenue was $1.6 billion, down 7% year-over-year driven by lower gaming graphics sales partially offset by higher semi-custom product revenue. Operating income was $266 million, or 16% of revenue, compared to $407 million or 23% a year ago. The operating income and margin decreases were primarily due to lower graphics revenue.
• Embedded segment revenue was $1.4 billion, up 1,868% year-over-year primarily driven by the inclusion of Xilinx embedded revenue. Operating income was $699 million, or 50% of revenue, compared to $18 million or 25% a year ago. The operating income and margin increases were primarily driven by higher revenue.
• All Other operating loss was $1.4 billion as compared to $117 million a year ago primarily due to amortization of intangible assets largely associated with the Xilinx acquisition.

2022 Annual Results

• Revenue of $23.6 billion was up 44% over 2021 driven by higher Embedded, Data Center, and Gaming segment revenue, partially offset by lower Client segment revenue. On a combined AMD and Xilinx company basis, 2022 pro forma revenue was $24.1 billion, up 20% compared to $20.1 billion in 2021.
• Gross margin was 45%, a decrease of 3 percentage points over 2021 primarily due to amortization of intangible assets associated with the Xilinx acquisition. Non-GAAP gross margin was 52%, an increase of 4 percentage points compared to a year ago, primarily driven by a richer product mix with higher Embedded and Data Center segment revenue, partially offset by lower Client segment revenue.
• Operating income was $1.3 billion compared to $3.6 billion in the prior year. The decrease was primarily due to the amortization of intangible assets associated with the Xilinx acquisition. Non-GAAP operating income was $6.3 billion compared to $4.1 billion in the prior year primarily driven by higher revenue and gross margin expansion.
• Net income was $1.3 billion compared to $3.2 billion in the prior year. Non-GAAP net income was $5.5 billion compared to $3.4 billion in the prior year.
• Diluted earnings per share was $0.84 compared to $2.57 in the prior year. Non-GAAP diluted earnings per share was $3.50 compared to $2.79 in the prior year.
• Cash, cash equivalents and short-term investments were $5.9 billion at the end of the year. The company returned a total of $3.7 billion to shareholders through share repurchases in 2022.
• Cash from operations was $3.6 billion, compared to $3.5 billion in the prior year. Free cash flow was $3.1 billion compared to $3.2 billion in the prior year.

Recent PR Highlights

• AMD showcased continued growth and momentum in the data center with AMD EPYC processors powering the modern data center and critical cloud workloads.
  • AMD announced the availability of 4th Gen AMD EPYC CPUs, delivering leadership performance and energy efficiency. The latest AMD EPYC processors, built on the "Zen 4" core, deliver next-generation architecture, technology and features to power the modern data center. Cloud service providers including Google Cloud, Microsoft and Oracle Cloud Infrastructure announced planned solutions leveraging the performance and security features of 4th Gen AMD EPYC CPUs.
  • AMD powers 101 supercomputers in the latest Top500 list of the most powerful supercomputers in the world and 75% of the top 20 systems on the Green500 list of the world's most energy efficient supercomputers.
• AMD delivered the opening keynote at CES 2023 alongside partners Microsoft, HP, Lenovo, Magic Leap and Intuitive Surgical highlighting next-generation AMD technologies advancing AI, hybrid work, gaming, healthcare, aerospace and sustainable computing. During the keynote, AMD announced:
  • The broadest portfolio of high-performance PC products for mobile and desktop applications, including Ryzen 7000X3D Series Desktop processors that bring the power of AMD 3D V-Cache technology to gamers and creators and Ryzen 7000 Series Mobile processors that deliver unparalleled performance for demanding workloads with up to 16 powerful "Zen 4" cores and bring new Ryzen AI technology to select laptop devices.
  • AMD Radeon RX 7000 Series Graphics for laptop PCs, built on AMD RDNA 3 architecture and designed to deliver exceptional energy efficiency and performance to power 1080p gaming at ultra-settings and advanced content creation applications on next-generation premium laptops.
  • The AMD Alveo V70 AI Accelerator with industry-leading performance and energy efficiency for multiple AI inference workloads.
  • A preview of the world's first integrated data center CPU and GPU, the AMD Instinct MI300. Designed for leadership HPC and AI performance, MI300 accelerators leverage chiplet design combining AMD CDNA 3 GPU architecture, "Zen 4" CPU cores, and HBM.
  • AMD Vitis Medical Imaging libraries to bring premium medical imaging products to market faster by reducing development times. These software libraries accelerate premium medical imaging on AMD Versal SoC devices with AI Engines to deliver healthcare providers and their patients high-quality, low-latency imaging.
• AMD continued to showcase its embedded market leadership.
  • AMD announced its collaboration with the Energy Sciences Network on the launch of ESnet6, the newest generation of the U.S. Department of Energy's high-performance network dedicated to science.
  • AMD announced it completed Class B qualification for the company's first space-grade Versal adaptive SoCs.
  • AMD shared that the AMD Xilinx Automotive (XA) Zynq UltraScale+ MPSoC platform has been selected to power the Aisin Automated Parking-Assist (APA) system.
  • AMD unveiled the new Alveo X3 series network cards, the first AMD network cards designed with screened FPGAs and optimized specifically for low latency trading.
  • AMD and Viettel High Tech announced a collaboration on a 5G mobile network expansion.
  • AMD announced that its adaptive computing technology is powering leading mobility supplier DENSO Corporation's next-generation LiDAR platform.
    • AMD announced the Radeon RX 7900 series graphics cards, the world's first gaming graphics cards to feature an advanced AMD chiplet design, delivering exceptional performance and energy efficiency to power high-framerate 4K and higher resolution gaming in the most demanding titles.
    • AMD announced changes to its senior leadership team, including the retirement of executive vice president, chief financial officer and treasurer Devinder Kumar after 39 years with the company. The company appointed Jean Hu as AMD executive vice president, chief financial officer and treasurer, effective January 23, 2023 and announced the promotion of Forrest Norrod to executive vice president and general manager of the Data Center Solutions business group.
    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 first quarter of 2023, AMD expects revenue to be approximately $5.3 billion, plus or minus $300 million, a decrease of approximately 10% year-over-year. Year-over-year the Client and Gaming segments are expected to decline, partially offset by Embedded and Data Center segment growth. AMD expects non-GAAP gross margin to be approximately 50% in the first quarter of 2023.
    
    View at TechPowerUp Main Site

 

[nguyen]

Well hopefully AMD and Nvidia won't start laying off employees like MS, Apple, Google, etc...

 

[john_]

Better results than what I was expecting. Xilinx is starting showing why AMD spend all those billions to get it.

Client segment on the other hand evaporated. While many will be happy about this, because they love to justify Nvidia and Intel prices as AMD's fault and attack AMD when it is not giving away free hardware, the client segment reported a loss of 152 millions. So the question is. Can AMD lower prices and at the same time risk two price wars against two stronger companies?

 

[Garrus]

Well hopefully AMD and Nvidia won't start laying off employees like MS, Apple, Google, etc...

AMD is doing fine, unlike Intel.

AMD: "Data Center segment revenue was $1.7 billion, up 42% year-over-year"

Intel: "Data Center revenue $4.3 billion, down 33% year-over-year"

look at the huge spread between GAAP and non-GAAP results, because of the Xilinx acquisition, that's fine, temporary

It's kind of shocking how dependent AMD is on their data center business. Consumer is such a small part of AMD compared to Intel.

Here's a funny statistic. Intel's quarterly revenue dropped more than AMD's entire total quarterly revenue haha. Intel down $6.5 billion. AMD is <$6 billion total.

Better results than what I was expecting. Xilinx is starting showing why AMD spend all those billions to get it.

Client segment on the other hand evaporated. While many will be happy about this, because they love to justify Nvidia and Intel prices as AMD's fault and attack AMD when it is not giving away free hardware, the client segment reported a loss of 152 millions. So the question is. Can AMD lower prices and at the same time risk two price wars against two stronger companies?

yeah the total lack of client revenue from AMD is the most concerning thing, they are not doing well with "consumers" but instead are kicking butt with corporations, interesting

I guess that is proof that corporations care more about power efficiency and multi core performance compared to consumers that want gaming and ST performance

 

[evernessince]

yeah the total lack of client revenue from AMD is the most concerning thing, they are not doing well with "consumers" but instead are kicking butt with corporations, interesting

I guess that is proof that corporations care more about power efficiency and multi core performance compared to consumers that want gaming and ST performance

Companies care about TCO and it that regard AMD absolutely dominates Intel.

 

[bug]

net income of $21 million

Is that right? it seems "a tad" low.

 

[Bwaze]

Yeah the total lack of client revenue from AMD is the most concerning thing, they are not doing well with "consumers" but instead are kicking butt with corporations, interesting

I guess that is proof that corporations care more about power efficiency and multi core performance compared to consumers that want gaming and ST performance

Gaming, on the other hand, isn't terrible, in today's climate of impending recession and high inflation, I'm kind of surprised.

Client segment reduced sales were expected - this just confirmed really bad Mindfactory figures where 7000 CPUs trail way behind the last generation - when was the last time that happened?

 

[btk2k2]

Gaming, on the other hand, isn't terrible, in today's climate of impending recession and high inflation, I'm kind of surprised.

Client segment reduced sales were expected - this just confirmed really bad Mindfactory figures where 7000 CPUs trail way behind the last generation - when was the last time that happened?

I would guess without looking it up Rocket Lake may be a candidate.

Zen 4 is in this situation because there are no cheap motherboards to make really low CPU pricing worth while. I expect when A620 releases AMD might adjust the pricing at the bottom of the stack to make it far more budget friendly.

Also plenty of people already have AM4 motherboards so looking at platform cost of going Zen 4 vs the cost of plugging in a Zen 3 chip tilts the balance heavily towards Zen 3 for a price/perf upgrade.

 

[Bwaze]

Rocket Lake?

I haven't checked, but if I google news articles, they just point out how Rocket Lake is trailing behind Ryzen 3000 processors, I can't find anything similar to:

"AMD Ryzen 5000 CPUs are Selling Nearly 7x More than the Ryzen 7000 Chips in Germany"

 

[claes]

Companies care about TCO and it that regard AMD absolutely dominates Intel.

Epyc has changed sockets every gen since TR4, and sTRX4 only supported one gen. Not that it matters — that market doesn’t care at all.

 

[The_Enigma]

I'm not much of a financial reporting person, so can someone explain the massive difference between the gaap reporting style and the non-gaap reporting style for AMD in these postings? From what I remember it isn't usually nearly so large a difference.

 

[mahirzukic2]

I'm not much of a financial reporting person, so can someone explain the massive difference between the gaap reporting style and the non-gaap reporting style for AMD in these postings? From what I remember it isn't usually nearly so large a difference.

GAAP includes the acquisitions and other stuff in the operating expenses, whereas the NON-GAAP does not. That's why those numbers very wildly.

 

[Tomorrow]

Epyc has changed sockets every gen since TR4, and sTRX4 only supported one gen. Not that it matters — that market doesn’t care at all.

Epyc has had only two sockets. SP3 and SP5. They maintained compatibility from first gen Epyc Rome up until Milan.
SP5 is new because of DDR5.

 

[claes]

Correct me if I’m wrong but:

Naples and Rome are compatible with one another.

Milan is compatible with rome but not naples, Rome boards lose compatibility with Naples after bios update (obvs not a problem but requires you to have a Rome processor ie you can’t move from Naples to Milan on a rome board)

Genoa is sp5 (well, and sp6 soon) and has more pins (couldn’t be backwards if it wanted to)

 

[Daven]

I'm not much of a financial reporting person, so can someone explain the massive difference between the gaap reporting style and the non-gaap reporting style for AMD in these postings? From what I remember it isn't usually nearly so large a difference.

Its all because of the Xilinx acquisition.

Epyc has changed sockets every gen since TR4, and sTRX4 only supported one gen. Not that it matters — that market doesn’t care at all.

You are thinking Threadripper not Epyc.

 

[Garrus]

Gaming, on the other hand, isn't terrible, in today's climate of impending recession and high inflation, I'm kind of surprised.

Client segment reduced sales were expected - this just confirmed really bad Mindfactory figures where 7000 CPUs trail way behind the last generation - when was the last time that happened?

This is the first major recession since 2008. You can't really compare. Remember this recession isn't just about nominal dollar terms, the mass inflation means that actually even companies that are "breaking even" are actually shrinking by a lot. Down 20 percent in the last 3 years for example, even if your revenue hadn't dropped. Inflation hides the true scale of this recession.

AMD is up in revenue year over year. What more can you ask? Intel dropped a whopping 6 billion, as I said, Intel dropped more than the entire revenue of AMD.

 

[Bwaze]

But they're telling us we're not really in recession? Apart from maybe UK.

 

[Daven]

But they're telling us we're not really in recession? Apart from maybe UK.

By the definition of recession, the US is not in one as GDP was up last quarter. GDP must be negative for two consecutive quarters for their to be a recession.

Inflation is the big concern now. Usually one leads to the other but for some reasons economies are growing not shrinking. Mainly the tech sector is suffering as it thrived during the pandemic while most other industries flailed.

 

[bug]

Epyc has changed sockets every gen since TR4, and sTRX4 only supported one gen. Not that it matters — that market doesn’t care at all.

That would be Threadripper. Not something meant for companies.
For an enthusiast platform, I see no problem changing the socket with every new release.

 

[claes]

You are thinking Threadripper not Epyc.

That would be Threadripper. Not something meant for companies.

Is the below incorrect? I’ve only ever (physically) worked with tr so am maybe misunderstanding about Epyc (I did make the mistake of conflating the two after all )

Correct me if I’m wrong but:

Naples and Rome are compatible with one another.

Milan is compatible with rome but not naples, Rome boards lose compatibility with Naples after bios update (obvs not a problem but requires you to have a Rome processor ie you can’t move from Naples to Milan on a rome board)

Genoa is sp5 (well, and sp6 soon) and has more pins (couldn’t be backwards if it wanted to)

 

[mb194dc]

Good to see EPYC doing well. Client side crash is no surprise.

If they think Q1 -10% revenue is the bottom, probably in for a shock... Possibly Q1 2024 or 2025...

 

[Daven]

Is the below incorrect? I’ve only ever (physically) worked with tr so am maybe misunderstanding about Epyc (I did make the mistake of conflating the two after all )

Epyc is AMDs line of enterprise server processors that plug into socket SP3. They typically go into rackmount enclosures (1U, 2U, etc). Its been the same pin compatible socket across Zen, Zen 2 and Zen 3 (there is no Epyc Zen+). There are one and two socket motherboard versions. Epyc processors are used for distributed workloads such as cloud, compute, AI, HPC, database, web servers, etc.

Socket SP3 - Wikipedia

en.wikipedia.org

AMD recently changed Epyc to socket SP5 to support DDR5 in Zen 4 architectures.

Ryzen Threadripper is an enthusiast/workstation line of processors that has similar specs as Epyc. Only one socket motherboards are supported. That socket has changed between generations with two different sockets simultaneously supported for Pro and non-Pro versions. Ryzen Threadrippers are usually installed in large desktop chassis for client based work loads.

 

[medi01]

So, AMD gaming revenue (last reported Quarter): 1.6 billion
NV gaming revenue (last reported quarter): 1.57 billion (down 51% YoY, cough)


How much of that 1.6 is "semi-custom"?

Good to see EPYC doing well. Client side crash is no surprise.

If they think Q1 -10% revenue is the bottom, probably in for a shock... Possibly Q1 2024 or 2025...

Think of it like this, Intel used to make in one Quarter, more than AMD was getting in a year.

In Q1 23 it is expected that AMD will be at about 50% of Intel's revenue.

. Consumer is such a small part of AMD compared to Intel.

DIY market is only 16% or so of the desktop market.

The rest is OEMs and all of those have... "special relationships" with Intel.

Client segment on the other hand evaporated. While many will be happy about this, because they love to justify Nvidia and Intel prices as AMD's fault and attack AMD when it is not giving away free hardware, the client segment reported a loss of 152 millions. So the question is. Can AMD lower prices and at the same time risk two price wars against two stronger companies?

AMD's GPUs are shown under "Gaming", not "Client", so NV has nothing to do with it.

On the contrary, NV's gaming revenue dropped 51% YoY.

 

[mechtech]

Are they still paying off Xilinx??

 

[claes]

Epyc is AMDs line of enterprise server processors that plug into socket SP3. They typically go into rackmount enclosures (1U, 2U, etc). Its been the same pin compatible socket across Zen, Zen 2 and Zen 3 (there is no Epyc Zen+). There are one and two socket motherboard versions. Epyc processors are used for distributed workloads such as cloud, compute, AI, HPC, database, web servers, etc.

Socket SP3 - Wikipedia

en.wikipedia.org

AMD recently changed Epyc to socket SP5 to support DDR5 in Zen 4 architectures.

Ryzen Threadripper is an enthusiast/workstation line of processors that has similar specs as Epyc. Only one socket motherboards are supported. That socket has changed between generations with two different sockets simultaneously supported for Pro and non-Pro versions. Ryzen Threadrippers are usually installed in large desktop chassis for client based work loads.

I know; at the risk of dragging this out, but I’m curious if, for Epyc, the below is true:

Correct me if I’m wrong but:

Naples and Rome are compatible with one another.

Milan is compatible with rome but not naples, Rome boards lose compatibility with Naples after bios update (obvs not a problem but requires you to have a Rome processor ie you can’t move from Naples to Milan on a rome board)

Genoa is sp5 (well, and sp6 soon) and has more pins (couldn’t be backwards if it wanted to)

By BIOS update I mean Rome boards being flashed for Milan compatibility