8-K
ADVANCED MICRO DEVICES INC (AMD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
January 31, 2023
Date of Report (Date of earliest event reported)
ADVANCED MICRO DEVICES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-07882 | 94-1692300 |
|---|---|---|
| (State of<br><br>Incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification Number) |
2485 Augustine Drive
Santa Clara, California 95054
(Address of principal executive offices) (Zip Code)
(408) 749-4000
(Registrant’s telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | AMD | The Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
Item 7.01 Regulation FD Disclosure.
On January 31, 2023, Advanced Micro Devices, Inc. (the "Company") announced its financial position and results of operations as of and for its fiscal quarter and fiscal year ended December 31, 2022 in a press release that is attached hereto as Exhibit 99.1. Attached hereto as Exhibit 99.2 is a presentation regarding the Company's fiscal quarter and fiscal year ended December 31, 2022.
The Company will hold a conference call on January 31, 2023 at 2:00 p.m. PT (5:00 p.m. ET) to discuss its fiscal quarter and fiscal year ended December 31, 2022 financial results and forward-looking financial guidance.
To supplement the Company’s financial results presented on a U.S. Generally Accepted Accounting Principles (“GAAP”) basis, the Company’s earnings press release and presentation contains 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, Adjusted EBITDA and free cash flow. The Company uses a normalized tax rate in its computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For full year 2022, AMD uses a non-GAAP tax rate of 13%, which excludes the tax impact of pre-tax non-GAAP adjustments. For full year 2023, AMD uses a projected non-GAAP tax rate of 13%, which excludes the tax impact of pre-tax non-GAAP adjustments, reflecting currently available information. In addition, AMD provided pro forma revenue for the year ended December 31, 2022 and December 25, 2021 which include unaudited Xilinx pre-acquisition revenue from January 2, 2022 to February 13, 2022 and for the twelve months ended January 1, 2022, respectively, as supplemental information. The Company believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because the Company believes it assists investors in comparing the Company's performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance. The Company’s non-GAAP financial measures should be viewed in addition to and not as a substitute for or superior to the Company'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 the earnings press release and presentation.
The information in this report furnished pursuant to Items 2.02 and 7.01, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or the Securities Act of 1933, as amended, if such subsequent filing specifically references the information furnished pursuant to Items 2.02 and 7.01 of this report.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| EXHIBIT INDEX | |
|---|---|
| Exhibit No. | Description |
| 99.1 | Press release datedJanuary 31, 2023 |
| 99.2 | Fourth Quarter and FY 2022 Financial Results Presentation |
| 104 | Inline XBRL for the cover page of this Current Report on Form 8-K |
SIGNATURE
Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date:January 31, 2023 | ADVANCED MICRO DEVICES, INC. | |
|---|---|---|
| By: | /s/ Jean Hu | |
| Name: | Jean Hu | |
| Title: | Executive Vice President, Chief Financial Officer & Treasurer |
Document
NEWS RELEASE
Media Contact:
Drew Prairie
AMD Communications
512-602-4425
drew.prairie@amd.com
Investor Contact:
Suresh Bhaskaran
AMD Investor Relations
408-749-2845
suresh.bhaskaran@amd.com
AMD Reports Fourth Quarter and Full Year 2022 Financial Results
― Record full year revenue of $23.6 Billion up 44% year-over-year ―
SANTA CLARA, Calif. ― Jan. 31, 2023 ― 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 $3.50.
GAAP Quarterly Financial Results
| Q4 2022 | Q4 2021 | Y/Y | |
|---|---|---|---|
| Revenue ($M) | $5,599 | $4,826 | Up 16% |
| Gross profit ($M) | $2,403 | $2,426 | Flat |
| Gross margin % | 43% | 50% | Down 740 bps |
| Operating expenses ($M) | $2,557 | $1,223 | Up 109% |
| Operating income (loss) ($M) | $(149) | $1,207 | Down 112% |
| Operating margin % | (3)% | 25% | Down 28pp |
| Net income ($M) | $21 | $974 | Down 98% |
| Earnings per share | $0.01 | $0.80 | Down 99% |
Non-GAAP(*) Quarterly Financial Results
| Q4 2022 | Q4 2021 | Y/Y | |
|---|---|---|---|
| Revenue ($M) | $5,599 | $4,826 | Up 16% |
| Gross profit ($M) | $2,859 | $2,427 | Up 18% |
| Gross margin % | 51% | 50% | Up 70 bps |
| Operating expenses ($M) | $1,602 | $1,103 | Up 45% |
| Operating income ($M) | $1,262 | $1,328 | Down 5% |
| Operating margin % | 23% | 27% | Down 4pp |
| Net income ($M) | $1,113 | $1,122 | Flat |
| Earnings per share | $0.69 | $0.92 | Down 25% |
Annual Financial Results
| GAAP | Non-GAAP(*) | |||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | Y/Y | 2022 | 2021 | Y/Y | |
| Revenue ($M) | $23,601 | $16,434 | Up 44% | $23,601 | $16,434 | Up 44% |
| Gross profit ($M) | $10,603 | $7,929 | Up 34% | $12,273 | $7,934 | Up 55% |
| Gross margin % | 45% | 48% | Down 330bps | 52% | 48% | Up 370bps |
| Operating expenses ($M) | $9,441 | $4,293 | Up 120% | $6,030 | $3,877 | Up 56% |
| Operating income ($M) | $1,264 | $3,648 | Down 65% | $6,345 | $4,069 | Up 56% |
| Operating margin % | 5% | 22% | Down 17pp | 27% | 25% | Up 2pp |
| Net income ($M) | $1,320 | $3,162 | Down 58% | $5,504 | $3,435 | Up 60% |
| Earnings per share | $0.84 | $2.57 | Down 67% | $3.50 | $2.79 | Up 25% |
“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.
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 fourth quarter and full-year 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 | Year Ended | |||||||||||||||
| December 31,<br>2022 | December 25,<br>2021 | December 31,<br>2022 | December 25,<br>2021 | |||||||||||||
| GAAP gross profit | $ | 2,403 | $ | 2,426 | $ | 10,603 | $ | 7,929 | ||||||||
| GAAP gross margin % | 43 | % | 50 | % | 45 | % | 48 | % | ||||||||
| Stock-based compensation | 9 | 1 | 29 | 5 | ||||||||||||
| Acquisition-related costs (1) | 4 | — | 193 | — | ||||||||||||
| Amortization of acquired intangible assets | 443 | — | 1,448 | — | ||||||||||||
| Non-GAAP gross profit | $ | 2,859 | $ | 2,427 | $ | 12,273 | $ | 7,934 | ||||||||
| Non-GAAP gross margin % | 51 | % | 50 | % | 52 | % | 48 | % | ||||||||
| GAAP operating expenses | $ | 2,557 | $ | 1,223 | $ | 9,441 | $ | 4,293 | ||||||||
| GAAP operating expenses/revenue % | 46 | % | 25 | % | 40 | % | 26 | % | ||||||||
| Stock-based compensation | 301 | 111 | 983 | 374 | ||||||||||||
| Acquisition-related costs (1) | 53 | 9 | 328 | 42 | ||||||||||||
| Amortization of acquired intangible assets | 601 | — | 2,100 | — | ||||||||||||
| Non-GAAP operating expenses | $ | 1,602 | $ | 1,103 | $ | 6,030 | $ | 3,877 | ||||||||
| Non-GAAP operating expenses/revenue % | 29 | % | 23 | % | 26 | % | 24 | % | ||||||||
| GAAP operating income (loss) | $ | (149) | $ | 1,207 | $ | 1,264 | $ | 3,648 | ||||||||
| GAAP operating margin % | (3) | % | 25 | % | 5 | % | 22 | % | ||||||||
| Stock-based compensation | 310 | 112 | 1,012 | 379 | ||||||||||||
| Acquisition-related costs (1) | 57 | 9 | 521 | 42 | ||||||||||||
| Amortization of acquired intangible assets | 1,044 | — | 3,548 | — | ||||||||||||
| Non-GAAP operating income | $ | 1,262 | $ | 1,328 | $ | 6,345 | $ | 4,069 | ||||||||
| Non-GAAP operating margin % | 23 | % | 27 | % | 27 | % | 25 | % | ||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31,<br>2022 | December 25,<br>2021 | December 31,<br>2022 | December 25,<br>2021 | |||||||||||||
| GAAP net income / earnings per share | $ | 21 | $ | 0.01 | $ | 974 | $ | 0.80 | $ | 1,320 | $ | 0.84 | $ | 3,162 | $ | 2.57 |
| Loss on debt redemption/conversion | — | — | — | — | — | — | 7 | — | ||||||||
| (Gains) losses on equity investments, net | 5 | — | (4) | — | 62 | 0.04 | (56) | (0.04) | ||||||||
| Stock-based compensation | 310 | 0.19 | 112 | 0.09 | 1,012 | 0.64 | 379 | 0.31 | ||||||||
| Equity income in investee | (3) | — | — | — | (14) | (0.01) | (6) | — | ||||||||
| Acquisition-related costs (1) | 57 | 0.04 | 9 | — | 521 | 0.33 | 42 | 0.03 | ||||||||
| Amortization of acquired intangible assets | 1,044 | 0.65 | — | — | 3,548 | 2.26 | — | — | ||||||||
| Income tax provision | (321) | (0.20) | 31 | 0.03 | (945) | (0.60) | (93) | (0.08) | ||||||||
| Non-GAAP net income / earnings per share | $ | 1,113 | $ | 0.69 | $ | 1,122 | $ | 0.92 | $ | 5,504 | $ | 3.50 | $ | 3,435 | $ | 2.79 |
| (1) | Acquisition-related costs primarily comprised of transaction costs, purchase price adjustments for inventory and certain compensation charges | |||||||||||||||
| --- | --- |
RECONCILIATION OF AMD AS-REPORTED REVENUE TO PRO FORMA REVENUE
(in billions) (Unaudited)
| Year Ended | ||
|---|---|---|
| December 31,<br>2022 | December 25,<br>2021 | |
| AMD Net Revenue - As reported | 23.6 | 16.4 |
| Pre-Acquisition Revenue (1) | 0.5 | 3.7 |
| AMD Net Revenue - Pro forma (2) | 24.1 | 20.1 |
| (1) | Pre-acquisition revenue for the year ended December 31, 2022 includes unaudited Xilinx revenue from January 2, 2022 to February 13, 2022. Pre-acquisition revenue for the year ended December 25, 2021 includes unaudited Xilinx revenue for the twelve months ended January 1, 2022. | |
| --- | --- | |
| (2) | The unaudited AMD net revenue prepared on a pro forma basis represents the Company's consolidated revenue for the year ended December 31, 2022 and December 25, 2021, as if the acquisitions had been consummated as of the beginning of the fiscal year 2021 (i.e., December 27, 2020). The unaudited pro forma revenue is presented on the basis of the Company’s fiscal year and combines the historical results of the fiscal periods of the Company with the following historical results of Xilinx: the year ended December 31, 2022 includes Xilinx revenue for the twelve-month period beginning January 2, 2022 through December 31, 2022; and the year ended December 25, 2021 includes Xilinx revenue for the twelve months ended January 1, 2022. <br><br>The unaudited pro forma financial revenue presented is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the Xilinx acquisitions were completed at the beginning of fiscal year 2021 and are not indicative of the future operating results of the combined company. |
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 ability to gain market share in 2023 and deliver long-term growth based on its differentiated product portfolio; the features, functionality, performance, availability, timing and expected benefits of AMD products; and AMD’s expected first quarter of 2023 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; cyclical nature of the semiconductor industry; market conditions of the industries in which AMD products are sold; loss of a significant customer; impact of the COVID-19 pandemic on AMD’s business, financial condition and results of operations; competitive markets in which AMD’s products are sold; quarterly and seasonal sales patterns; AMD's ability to adequately protect its technology or other intellectual property; unfavorable currency exchange rate fluctuations; ability of third party manufacturers to manufacture AMD's products on a timely basis in sufficient quantities and using competitive technologies; availability of essential equipment, materials, substrates or manufacturing processes; ability to achieve expected manufacturing yields for AMD’s products; AMD's ability to introduce products on a timely basis with expected features and performance levels; AMD's ability to generate revenue from its semi-custom SoC products; potential security vulnerabilities; potential security incidents including IT outages, data loss, data breaches and cyber-attacks; potential difficulties in upgrading and operating AMD’s new enterprise resource planning system; uncertainties involving the ordering and shipment of AMD’s products; AMD’s reliance on third-party intellectual property to design and introduce new products in a timely manner; AMD's reliance on third-party companies for design, manufacture and supply of motherboards, software and other computer platform components; AMD's reliance on Microsoft and other software vendors' support to design and develop software to run on AMD’s products; AMD’s reliance on third-party distributors and add-in-board partners; impact of modification or interruption of AMD’s internal business processes and information systems; compatibility of AMD’s products with some or all industry-standard software and hardware; costs related to defective products; efficiency of AMD's supply chain; AMD's ability to rely on third party supply-chain logistics functions; AMD’s ability to effectively control sales of its products on the gray
market; impact of government actions and regulations such as export administration regulations, tariffs and trade protection measures; AMD’s ability to realize its deferred tax assets; potential tax liabilities; current and future claims and litigation; impact of environmental laws, conflict minerals-related provisions and other laws or regulations; impact of acquisitions, joint ventures and/or investments, 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.
| (*) | In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share. AMD uses a normalized tax rate in its computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2022, AMD uses a non-GAAP tax rate of 13%, which excludes the tax impact of pre-tax non-GAAP adjustments. 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. In addition, AMD provided pro forma revenue for the year ended December 31, 2022 and December 25, 2021 which include unaudited Xilinx pre-acquisition revenue from January 2, 2022 to February 13, 2022 and for the twelve months ended January 1, 2022, respectively, as supplemental information. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. The non-GAAP financial measures disclosed in this earnings press release should be viewed in addition to and not as a substitute for or superior to AMD’s reported results prepared in accordance with GAAP and should be read only in conjunction with AMD’s Consolidated Financial Statements prepared in accordance with GAAP. These non GAAP financial measures referenced are reconciled to their most directly comparable GAAP financial measures in the data tables in this earnings press release. This earnings press release also contains forward-looking non-GAAP gross margin concerning AMD’s financial outlook, which is based on current expectations as of January 31, 2023 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. |
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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 | Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31,<br>2022 | December 25,<br>2021 | December 31,<br>2022 | December 25,<br>2021 | |||||||||
| Net revenue | $ | 5,599 | $ | 4,826 | $ | 23,601 | $ | 16,434 | ||||
| Cost of sales | 2,753 | 2,400 | 11,550 | 8,505 | ||||||||
| Amortization of acquisition-related intangibles | 443 | — | 1,448 | — | ||||||||
| Total cost of sales | 3,196 | 2,400 | 12,998 | 8,505 | ||||||||
| Gross profit | 2,403 | 2,426 | 10,603 | 7,929 | ||||||||
| Gross margin % | 43 | % | 50 | % | 45 | % | 48 | % | ||||
| Research and development | 1,366 | 811 | 5,005 | 2,845 | ||||||||
| Marketing, general and administrative | 590 | 412 | 2,336 | 1,448 | ||||||||
| Amortization of acquisition-related intangibles | 601 | — | 2,100 | — | ||||||||
| Licensing gain | (5) | (4) | (102) | (12) | ||||||||
| Operating income (loss) | (149) | 1,207 | 1,264 | 3,648 | ||||||||
| Interest expense | (19) | (8) | (88) | (34) | ||||||||
| Other income (expense), net | 32 | 4 | 8 | 55 | ||||||||
| Income (loss) before income taxes and equity income | (136) | 1,203 | 1,184 | 3,669 | ||||||||
| Income tax provision (benefit) | (154) | 229 | (122) | 513 | ||||||||
| Equity income in investee | 3 | — | 14 | 6 | ||||||||
| Net income | $ | 21 | $ | 974 | $ | 1,320 | $ | 3,162 | ||||
| Earnings per share | ||||||||||||
| Basic | $ | 0.01 | $ | 0.81 | $ | 0.85 | $ | 2.61 | ||||
| Diluted | $ | 0.01 | $ | 0.80 | $ | 0.84 | $ | 2.57 | ||||
| Shares used in per share calculation | ||||||||||||
| Basic | 1,613 | 1,208 | 1,561 | 1,213 | ||||||||
| Diluted | 1,618 | 1,222 | 1,571 | 1,229 |
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions)
| December 31,<br>2022 | December 25,<br>2021 | |||
|---|---|---|---|---|
| (Unaudited) | ||||
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 4,835 | $ | 2,535 |
| Short-term investments | 1,020 | 1,073 | ||
| Accounts receivable, net | 4,126 | 2,706 | ||
| Inventories | 3,771 | 1,955 | ||
| Receivables from related parties | 2 | 2 | ||
| Prepaid expenses and other current assets | 1,265 | 312 | ||
| Total current assets | 15,019 | 8,583 | ||
| Property and equipment, net | 1,513 | 702 | ||
| Operating lease right-of use assets | 460 | 367 | ||
| Goodwill | 24,177 | 289 | ||
| Acquisition-related intangibles, net | 24,118 | — | ||
| Investment: equity method | 83 | 69 | ||
| Deferred tax assets | 58 | 931 | ||
| Other non-current assets | 2,152 | 1,478 | ||
| Total Assets | $ | 67,580 | $ | 12,419 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 2,493 | $ | 1,321 |
| Payables to related parties | 463 | 85 | ||
| Accrued liabilities | 3,077 | 2,424 | ||
| Current portion of long-term debt, net | — | 312 | ||
| Other current liabilities | 336 | 98 | ||
| Total current liabilities | 6,369 | 4,240 | ||
| Long-term debt, net of current portion | 2,467 | 1 | ||
| Long-term operating lease liabilities | 396 | 348 | ||
| Deferred tax liabilities | 1,934 | 12 | ||
| Other long-term liabilities | 1,664 | 321 | ||
| Stockholders' equity: | ||||
| Capital stock: | ||||
| Common stock, par value | 16 | 12 | ||
| Additional paid-in capital | 58,005 | 11,069 | ||
| Treasury stock, at cost | (3,099) | (2,130) | ||
| Accumulated deficit | (131) | (1,451) | ||
| Accumulated other comprehensive loss | (41) | (3) | ||
| Total stockholders' equity | $ | 54,750 | $ | 7,497 |
| Total Liabilities and Stockholders' Equity | $ | 67,580 | $ | 12,419 |
ADVANCED MICRO DEVICES, INC.
SELECTED CASH FLOW INFORMATION
(Millions) (Unaudited)
| Three Months Ended | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31,<br>2022 | December 25,<br>2021 | December 31,<br>2022 | December 25,<br>2021 | |||||
| Net cash provided by (used in) | ||||||||
| Operating activities | $ | 567 | $ | 822 | $ | 3,565 | $ | 3,521 |
| Investing activities | $ | 1,067 | $ | — | $ | 1,999 | $ | (686) |
| Financing activities | $ | (197) | $ | (727) | $ | (3,264) | $ | (1,895) |
SELECTED CORPORATE DATA
(Millions) (Unaudited)
| Three Months Ended | Year Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31,<br>2022 | December 25, 2021 | December 31,<br>2022 | December 25,<br>2021 | |||||||||||
| Segment and Category Information(1) | ||||||||||||||
| Data Center | ||||||||||||||
| Net revenue | $ | 1,655 | $ | 1,163 | $ | 6,043 | $ | 3,694 | ||||||
| Operating income | $ | 444 | $ | 369 | $ | 1,848 | $ | 991 | ||||||
| Client | ||||||||||||||
| Net revenue | $ | 903 | $ | 1,829 | $ | 6,201 | $ | 6,887 | ||||||
| Operating income (loss) | $ | (152) | $ | 530 | $ | 1,190 | $ | 2,088 | ||||||
| Gaming | ||||||||||||||
| Net revenue | $ | 1,644 | $ | 1,763 | $ | 6,805 | $ | 5,607 | ||||||
| Operating income | $ | 266 | $ | 407 | $ | 953 | $ | 934 | ||||||
| Embedded | ||||||||||||||
| Net revenue | $ | 1,397 | $ | 71 | $ | 4,552 | $ | 246 | ||||||
| Operating income | $ | 699 | $ | 18 | $ | 2,252 | $ | 44 | ||||||
| All Other | ||||||||||||||
| Net revenue | $ | — | $ | — | $ | — | $ | — | ||||||
| Operating loss | $ | (1,406) | $ | (117) | $ | (4,979) | $ | (409) | ||||||
| Total | ||||||||||||||
| Net revenue | $ | 5,599 | $ | 4,826 | $ | 23,601 | $ | 16,434 | ||||||
| Operating income (loss) | $ | (149) | $ | 1,207 | $ | 1,264 | $ | 3,648 | ||||||
| (Blank) | ||||||||||||||
| Other Data | ||||||||||||||
| Capital expenditures | $ | 124 | $ | 86 | $ | 450 | $ | 301 | ||||||
| Adjusted EBITDA (2) | $ | 1,438 | $ | 1,446 | $ | 6,971 | $ | 4,476 | ||||||
| Cash, cash equivalents and short-term investments | $ | 5,855 | $ | 3,608 | $ | 5,855 | $ | 3,608 | ||||||
| Free cash flow (3) | $ | 443 | $ | 736 | $ | 3,115 | $ | 3,220 | ||||||
| Total assets | $ | 67,580 | $ | 12,419 | $ | 67,580 | $ | 12,419 | ||||||
| Total debt | $ | 2,467 | $ | 313 | $ | 2,467 | $ | 313 | ||||||
| (1) | The Data Center segment primarily includes server microprocessors (CPUs) and graphics processing units (GPUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs) and Adaptive System-on-Chip (SoC) products for data centers. | |||||||||||||
| --- | --- | |||||||||||||
| The Client segment primarily includes CPUs, accelerated processing units that integrate microprocessors and GPUs (APUs), and chipsets for desktop and notebook personal computers. | ||||||||||||||
| The Gaming segment primarily includes discrete GPUs, semi-custom SoC products and development services. | ||||||||||||||
| The Embedded segment primarily includes embedded CPUs and GPUs, FPGAs, and Adaptive SoC products. | ||||||||||||||
| From time to time, the Company may also sell or license portions of its IP portfolio. | ||||||||||||||
| All Other category primarily includes certain expenses and credits that are not allocated to any of the operating segments, such as acquisition-related intangible asset amortization expense, employee stock-based compensation expense, acquisition-related costs and licensing gain. | (2) | Reconciliation of GAAP Net Income to Adjusted EBITDA | ||||||||||||
| --- | --- | Three Months Ended | Year Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| December 31,<br>2022 | December 25,<br>2021 | December 31,<br>2022 | December 25,<br>2021 | |||||||||||
| GAAP net income | $ | 21 | $ | 974 | $ | 1,320 | $ | 3,162 | ||||||
| Interest expense | 19 | 8 | 88 | 34 | ||||||||||
| Other (income) expense, net | (32) | (4) | (8) | (55) | ||||||||||
| Income tax provision (benefit) | (154) | 229 | (122) | 513 | ||||||||||
| Equity income in investee | (3) | — | (14) | (6) | ||||||||||
| Stock-based compensation | 310 | 112 | 1,012 | 379 | ||||||||||
| Depreciation and amortization | 176 | 118 | 626 | 407 | ||||||||||
| Amortization of acquired intangible assets | 1,044 | — | 3,548 | — | ||||||||||
| Acquisition-related costs | 57 | 9 | 521 | 42 | ||||||||||
| Adjusted EBITDA | $ | 1,438 | $ | 1,446 | $ | 6,971 | $ | 4,476 | The Company presents “Adjusted EBITDA” as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting GAAP net income for interest expense, other income (expense), net, income tax provision (benefit), equity income in investee, stock-based compensation, depreciation and amortization expense and acquisition-related costs. The Company also included amortization of acquired intangible assets for the three months and year ended December 31, 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 | Year Ended | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| December 31, 2022 | December 25, 2021 | December 31, 2022 | December 25, 2021 | |||||||||||
| GAAP net cash provided by operating activities | $ | 567 | $ | 822 | $ | 3,565 | $ | 3,521 | ||||||
| Operating cash flow margin % | 10 | % | 17 | % | 15 | % | 21 | % | ||||||
| Purchases of property and equipment | $ | (124) | $ | (86) | $ | (450) | $ | (301) | ||||||
| Free cash flow | $ | 443 | $ | 736 | $ | 3,115 | $ | 3,220 | ||||||
| Free cash flow margin % | 8 | % | 15 | % | 13 | % | 20 | % | The Company also presents free cash flow as a supplemental Non-GAAP measure of its performance. Free cash flow is determined by adjusting GAAP net cash provided by operating activities for capital expenditures, and free cash flow margin % is free cash flow expressed as a percentage of the Company's net revenue. The Company calculates and communicates free cash flow in the financial earnings press release because management believes it is of importance to investors to understand the nature of these cash flows. The Company’s calculation of free cash flow may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view free cash flow as an alternative to GAAP liquidity measures of cash flows from operating activities. | |||||
| --- |
13
amdq422earningsslidesfin
AMD FINANCIAL RESULTS Fourth Quarter and Full Year 2022 January 31, 2023
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202322 CAUTIONARY STATEMENT This presentation contains forward-looking statements concerning Advanced Micro Devices, Inc. (AMD) such as the features, functionality, performance, availability, timing and expected benefits of AMD products; AMD’s expected first quarter of 2023 and fiscal 2023 financial outlook, including revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP interest expense, taxes and other, non-GAAP tax rates and diluted share count; AMD’s total addressable market; and AMD’s ability to drive long-term shareholder returns, 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 presentation are based on current beliefs, assumptions and expectations, speak only as of the date of this presentation and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond AMD's control, that could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: Intel Corporation’s dominance of the microprocessor market and its aggressive business practices; global economic uncertainty; cyclical nature of the semiconductor industry; market conditions of the industries in which AMD products are sold; loss of a significant customer; impact of the COVID-19 pandemic on AMD’s business, financial condition and results of operations; competitive markets in which AMD’s products are sold; quarterly and seasonal sales patterns; AMD's ability to adequately protect its technology or other intellectual property; unfavorable currency exchange rate fluctuations; ability of third party manufacturers to manufacture AMD's products on a timely basis in sufficient quantities and using competitive technologies; availability of essential equipment, materials, substrates or manufacturing processes; ability to achieve expected manufacturing yields for AMD’s products; AMD's ability to introduce products on a timely basis with expected features and performance levels; AMD's ability to generate revenue from its semi-custom SoC products; potential security vulnerabilities; potential security incidents including IT outages, data loss, data breaches and cyber-attacks; potential difficulties in upgrading and operating AMD’s new enterprise resource planning system; uncertainties involving the ordering and shipment of AMD’s products; AMD’s reliance on third-party intellectual property to design and introduce new products in a timely manner; AMD's reliance on third-party companies for design, manufacture and supply of motherboards, software and other computer platform components; AMD's reliance on Microsoft and other software vendors' support to design and develop software to run on AMD’s products; AMD’s reliance on third-party distributors and add-in-board partners; impact of modification or interruption of AMD’s internal business processes and information systems; compatibility of AMD’s products with some or all industry-standard software and hardware; costs related to defective products; efficiency of AMD's supply chain; AMD's ability to rely on third party supply-chain logistics functions; AMD’s ability to effectively control sales of its products on the gray market; impact of government actions and regulations such as export administration regulations, tariffs and trade protection measures; AMD’s ability to realize its deferred tax assets; potential tax liabilities; current and future claims and litigation; impact of environmental laws, conflict minerals-related provisions and other laws or regulations; impact of acquisitions, joint ventures and/or investments, 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. NON-GAAP FINANCIAL MEASURES In this presentation, 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 and free cash flow. 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 non-GAAP tax rate of 13%, which excludes the tax impact of pre-tax non-GAAP adjustments. For fiscal year 2023, AMD uses a projected non-GAAP tax rate of 13%, which excludes the tax impact of pre-tax non GAAP adjustments, reflecting currently available information. In addition, AMD provided pro forma revenue for the year ended December 31, 2022 and December 25, 2021 which include unaudited Xilinx pre-acquisition revenue from January 2, 2022 to February 13, 2022 and for the twelve months ended January 1, 2022, respectively, as supplemental information. 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. The non-GAAP financial measures disclosed in this presentation 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 Appendices at the end of this presentation. This presentation also contains forward-looking non-GAAP measures concerning AMD’s financial outlook such as gross margin, operating expenses, interest expense, taxes and other. These forward-looking non-GAAP measures are based on current expectations as of January 31, 2023, and assumptions and beliefs that involve numerous risks and uncertainties. AMD undertakes no intent or obligation to publicly update or revise its forward-looking statements made in this presentation except as may be required by law.
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202333 Expanding Customer & Partner Ecosystem Data Center and Embedded Growth Strong Financial Foundation Leadership Product Portfolio OUR JOURNEY
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202344 OUR LEADERSHIP TECHNOLOGY Software Enablement Open-source software co-designed with hardware and optimized for performance across heterogenous solutions Data Center Leadership Delivering innovation in cloud, enterprise, AI and accelerated computing Advanced Technology Driving leadership process technology and 3D chiplet packaging Industry-Leading IP Executing leadership CPU, GPU, DPU, FPGA and Adaptive SoC products and roadmaps
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202355 OUR LEADERSHIP PRODUCTS Embedded Leadership FPGAs, Adaptive SoCs and SoMs, and embedded CPUs and GPUs for a broad set of markets Gaming Top-to-bottom desktop and notebook GPUs, game console and semi-custom SoCs Client Leadership CPUs and APUs for notebook and desktop PCs and commercial workstations Data Center Leadership data center solutions with server CPUs, GPUs, FPGAs, DPUs and Adaptive SoCs
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 20236 REVENUE SUMMARY FY 2022 ▪ Revenue of $23.6 billion grew 44% y/y driven by higher Embedded, Data Center and Gaming segment revenue, partially offset by lower Client segment revenue ▪ Pro forma1 revenue of $24.1 billion, up 20% compared to $20.1 billion in 2021, on combined AMD and Xilinx company basis $16.4B $23.6B FY 2021 FY 2022 1. See Appendices for Pro-forma revenue reconciliation.
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 20237 REVENUE SUMMARY Q4 2022 ▪ Revenue of $5.6 billion grew 16% y/y driven by growth across the Embedded and Data Center segments, partially offset by lower Client and Gaming segment revenue $4.8B $5.6B Q4 2021 Q4 2022
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 20238 GROSS MARGIN SUMMARY FY 2022 1. See Appendices for GAAP to Non-GAAP reconciliation ▪ Non-GAAP gross margin increase primarily driven by a richer product mix with higher Embedded and Data Center segment revenue, partially offset by lower Client segment revenue Non-GAAP1 48% 45% FY 2021 FY 2022 GAAP ▪ Gross margin decrease primarily due to amortization of Xilinx acquisition-related intangible assets 48% 52% FY 2021 FY 2022
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 20239 GROSS MARGIN SUMMARY Q4 2022 1. See Appendices for GAAP to Non-GAAP reconciliation ▪ Non-GAAP gross margin increase primarily driven by a richer product mix with higher Embedded and Data Center segment revenue, partially offset by lower Client segment revenue Non-GAAP1 50% 43% Q4 2021 Q4 2022 GAAP ▪ Gross margin decrease primarily due to amortization of Xilinx acquisition-related intangible assets 50% 51% Q4 2021 Q4 2022
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202310 $3.6B $1.3B FY 2021 FY 2022 OPERATING INCOME SUMMARY FY 2022 1. See Appendices for GAAP to Non-GAAP reconciliation GAAP Non-GAAP1 $4.1B $6.3B FY 2021 FY 2022 ▪ Operating income decrease primarily due to amortization of Xilinx acquisition-related intangible assets ▪ Non-GAAP operating income primarily driven by higher revenue and gross margin expansion
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202311 $1.2B $(0.1)B Q4 2021 Q4 2022 OPERATING INCOME (LOSS) SUMMARY Q4 2022 1. See Appendices for GAAP to Non-GAAP reconciliation GAAP Non-GAAP1 $1.3B $1.3B Q4 2021 Q4 2022 ▪ Operating loss primarily due to amortization of Xilinx acquisition-related intangible assets ▪ Non-GAAP operating income was flat y/y
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202312 EARNINGS PER SHARE SUMMARY FY 2022 1. See Appendices for GAAP to Non-GAAP reconciliation GAAP Non-GAAP1 ▪ Net income of $1.3 billion compared to $3.2 billion in prior year ▪ Earnings per share $0.84 compared to $2.57 in prior year $2.57 $0.84 FY 2021 FY 2022 $2.79 $3.50 FY 2021 FY 2022 ▪ Non-GAAP net income of $5.5 billion compared to $3.4 billion, up 60% from the prior year ▪ Earnings per share $3.50 compared to $2.79 in prior year, primarily due to Data Center segment growth and the addition of Xilinx
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202313 EARNINGS PER SHARE SUMMARY Q4 2022 1. See Appendices for GAAP to Non-GAAP reconciliation GAAP Non-GAAP1 ▪ Net income of $21 million, decreased y/y primarily due to amortization of Xilinx acquisition-related intangible assets, partially offset by a $154 million tax benefit in the quarter ▪ EPS declined primarily due to amortization of Xilinx acquisition-related intangible assets $0.80 $0.01 Q4 2021 Q4 2022 $0.92 $0.69 Q4 2021 Q4 2022 ▪ Non-GAAP net income of $1.1 billion, flat y/y ▪ Non-GAAP EPS declined primarily due to lower Client segment operating income
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202314 ($ in millions, except per share data) 2022 2021 Y/Y Revenue $23,601 $16,434 Up 44% Gross Profit $10,603 $7,929 Up 34% Gross Margin % 45% 48% Down 330bps Operating Expenses $9,441 $4,293 Up 120% Operating Expense/Revenue % 40% 26% Up 14 pp Operating Income $1,264 $3,648 Down 65% Operating Margin % 5% 22% Down 17 pp Net Income $1,320 $3,162 Down 58% Earnings Per Share $0.84 $2.57 Down 67% FY 2022 SUMMARY P&L | GAAP
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202315 ($ in millions, except per share data) 2022 2021 Y/Y Revenue $23,601 $16,434 Up 44% Gross Profit $12,273 $7,934 Up 55% Gross Margin % 52% 48% Up 370 bps Operating Expenses $6,030 $3,877 Up 56% Operating Expense/Revenue % 26% 24% Up 2 pp Operating Income $6,345 $4,069 Up 56% Operating Margin % 27% 25% Up 2 pp Net Income $5,504 $3,435 Up 60% Earnings Per Share1 $3.50 $2.79 Up 25% FY 2022 SUMMARY P&L | NON-GAAP 1 1. See Appendices for GAAP to Non-GAAP reconciliation and share count reference
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202316 ($ in millions, except per share data) Q4’22 Q4’21 Y/Y Revenue $5,599 $4,826 Up 16% Gross Profit $2,403 $2,426 Flat Gross Margin % 43% 50% Down 740 bps Operating Expenses $2,557 $1,223 Up 109% Operating Expense/Revenue % 46% 25% Up 21 pp Operating Income (Loss) $(149) $1,207 Down 112% Operating Margin % (3)% 25% Down 28 pp Net Income $21 $974 Down 98% Earnings Per Share $0.01 $0.80 Down 99% Q4 2022 SUMMARY P&L | GAAP
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202317 ($ in millions, except per share data) Q4’22 Q4’21 Y/Y Revenue $5,599 $4,826 Up 16% Gross Profit $2,859 $2,427 Up 18% Gross Margin % 51% 50% Up 70 bps Operating Expenses $1,602 $1,103 Up 45% Operating Expense/Revenue % 29% 23% Up 6 pp Operating Income $1,262 $1,328 Down 5% Operating Margin % 23% 27% Down 4 pp Net Income $1,113 $1,122 Flat Earnings Per Share¹ $0.69 $0.92 Down 25% Q4 2022 SUMMARY P&L | NON-GAAP1 1. See Appendices for GAAP to Non-GAAP reconciliation and share count reference
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202318 $3.4 $3.9 $4.3 $4.8 $5.9 $6.6 $5.6 $5.6 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 EMBEDDED AND DATA CENTER SEGMENTS GREW Y/Y, CLIENT AND GAMING SEGMENT LOWER Y/Y +16% y/y REVENUE ($ in Billions)
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202319 46% 48% 48% 50% 48% 46% 42% 43% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Y/Y DECREASE PRIMARILY DUE TO AMORTIZATION OF XILINX ACQUISITION-RELATED INTANGIBLE ASSETS GROSS MARGIN (GAAP) -7pp y/y
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202320 46% 48% 48% 50% 53% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 51% Y/Y INCREASE PRIMARILY DRIVEN BY RICHER PRODUCT MIX WITH HIGHER EMBEDDED AND DATA CENTER SEGMENT REVENUE, PARTIALLY OFFSET BY LOWER CLIENT SEGMENT REVENUE GROSS MARGIN (Non-GAAP)* *See Appendices for GAAP to Non-GAAP reconciliation. 50% 54% +1pp y/y
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202321 $0.45 $0.58 $0.75 $0.80 $0.56 $0.27 $0.04 $0.01 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 -99% y/y EARNINGS PER SHARE (GAAP) Y/Y DECREASE PRIMARILY DUE TO AMORTIZATION OF XILINX ACQUISITION-RELATED INTANGIBLE ASSETS
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202322 $0.52 $0.63 $0.73 $0.92 $1.13 $1.05 $0.67 $0.69 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 -25% y/y EARNINGS PER SHARE (Non-GAAP)* Q4 DOWN Y/Y PRIMARILY DUE TO LOWER CLIENT OPERATING INCOME *See Appendices for GAAP to Non-GAAP reconciliation
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202323 Q4 & FY 2022 SUMMARY BALANCE SHEET ITEMS STRONG NET CASH POSITION Returned $3.7 billion to shareholders in FY’22 through share repurchases ($ in millions) Q4’22 Q4’21 Y/Y Cash, Cash Equivalents and Short-term Investments $5,855 $3,608 Up $2,247 Accounts Receivable, Net $4,126 $2,706 Up $1,420 Inventories $3,771 $1,955 Up $1,816 Total Debt, Net $2,467 $313 Up $2,154
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202324 Q4 & FY 2022 SEGMENT RESULTS ($ in millions) Q4’22 Q4’21 Y/Y 2022 2021 Y/Y Data Center Net Revenue $1,655 $1,163 Up 42% $6,043 $3,694 Up 64% Operating Income $444 $369 Up 20% $1,848 $991 Up 86% Client Net Revenue $903 $1,829 Down 51% $6,201 $6,887 Down 10% Operating Income (Loss) $(152) $530 Down 129% $1,190 $2,088 Down 43% Gaming Net Revenue $1,644 $1,763 Down 7% $6,805 $5,607 Up 21% Operating Income $266 $407 Down 35% $953 $934 Up 2% Embedded Net Revenue $1,397 $71 Up 1,868% $4,552 $246 Up 1,750% Operating Income $699 $18 Up 3,783% $2,252 $44 Up 5,018% (GAAP)
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202325 DATA CENTER SEGMENT Q4 2022 ▪ Announced availability of 4th Gen EPYC CPU processors delivering leadership performance and energy efficiency ▪ Previewed AMD InstinctTM MI300 designed for leadership HPC and AI performance ▪ Powering 101 supercomputers in Top500 list of most powerful supercomputers ▪ Record sales of Xilinx data center and networking products, and significant ramp of Pensando DPU sales from prior quarter Strategic Highlights $1.2B $1.7B Q4 2021 Q4 2022 32% 27% Q4 2021 Q4 2022 Quarterly Revenue Operating Margin Revenue $1.7 Billion Up 42% y/y Operating Income $444 Million vs. $369 Million a year ago Growth in operating income primarily driven by higher revenue, partially offset by higher R&D investments to support growth Strong sales of EPYC™ server processors
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202326 CLIENT SEGMENT Q4 2022 ▪ Announced broadest portfolio of high- performance PC products for mobile and desktop applications, including: ▪ RyzenTM 7040 CPU Series for ultrathin notebooks, industry’s 1st x86 CPUs with a dedicated, on-chip AI inference engine ▪ Ryzen 7045 CPU Series, AMD’s 1st mobile processors based on chiplet design delivering significantly higher performance for gaming and content creation applications Strategic Highlights $1.8B $0.9B Q4 2021 Q4 2022 29% (17)% Q4 2021 Q4 2022 Quarterly Revenue Operating Margin Revenue $903 Million Down 51% y/y Due to reduced processor shipments Operating Income (Loss) $(152) Million vs. $530 Million a year ago Operating loss primarily due to lower revenue
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202327 23% 16% Q4 2021 Q4 2022 GAMING SEGMENT Q4 2022 ▪ Announced RadeonTM RX 7900 series graphics cards, world’s 1st gaming graphics card with advanced AMD chiplet design ▪ Announced AMD Radeon 7000 Series Graphics for laptop PCs designed for exceptional energy efficiency and performance Strategic Highlights $1.8B $1.6B Q4 2021 Q4 2022 Quarterly Revenue Operating Margin Revenue $1.6 Billion Down 7% y/y Operating Income $266 Million vs. $407 Million a year ago Decline in operating income primarily due to lower graphics revenue Driven by lower gaming graphics sales partially offset by higher semi-custom product revenue
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202328 EMBEDDED SEGMENT Q4 2022 ▪ Announced multiple new wins for AMD’s automotive grade ZynqTM Ultrascale+TM MP SoC platforms with several of the largest vehicle equipment suppliers ▪ AMD VitisTM Medical Imaging libraries to bring premium medical imaging products to market faster Strategic Highlights $1.4B Q4 2021 Q4 2022 25% 50% Q4 2021 Q4 2022 Quarterly Revenue Operating Margin Revenue $1.4 Billion Up 1,868% y/y Primarily driven by inclusion of Xilinx embedded revenue Operating Income $699 Million vs. $18 Million a year ago $0.1B Growth in operating income primarily driven by inclusion of Xilinx revenue
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202329 ($ in millions) Q1’23 FY 2023 Revenue ~$5.3 Billion +/- $300 Million Decrease of ~10% y/y Data Center and Embedded segments expected to grow y/y Gross Margin % ~50% ~flattish in 1H 2023, expansion in 2H 2023 Operating Expenses ~$1.6 Billion ~flat quarterly with Q1’23 until demand environment improves Interest Expense, Taxes and Other ~$146 Million -- Effective Tax Rate ~13% of pre-tax income ~13% of pre-tax income Diluted Share Count² ~1.62 Billion shares ~1.62 Billion shares FINANCIAL OUTLOOK – NON-GAAP1 1. See Cautionary Statement on Slide 2. These forward-looking outlook statements and non-GAAP measures are based on current expectations as of January 31, 2023, 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. All items, except revenue, are on a non-GAAP basis. Adjustments to arrive at the GAAP financial outlook typically include stock-based compensation, amortization of acquired intangible assets, income tax provision, equity income in investee, and other non- recurring items such as loss on debt redemption/conversion, impairment charges and acquisition-related costs. The timing and impact of such adjustments are dependent on future events that are typically uncertain or outside of AMD's control, therefore, a reconciliation to equivalent GAAP measures is not practicable at this time. 2. Refer to Diluted Share Count overview in the Appendices
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 20233030 Strong Data Center, Embedded and Gaming Segment Performance Gross Margin 45% Non-GAAP GM 52% Operating Cash Flow $3.6B Free Cash Flow $3.1B Revenue $23.6B Up 44% Y/Y FY 2022 SUMMARY 1 RECORD ANNUAL REVENUE, NON-GAAP GROSS MARGIN AND PROFITABILITY1 1. 1. See Appendices for GAAP to Non-GAAP reconciliation
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 20233131 Growth in Embedded and Data Center Segments Gross Margin 43% Non-GAAP GM 51% Operating Cash Flow $567M Free Cash Flow $443M Revenue $5.6B Up 16% Y/Y Q4 2022 SUMMARY 1 DATA CENTER AND EMBEDDED PRODUCTS >50% OF 4TH QUARTER REVENUE 1. 1. See Appendices for GAAP to Non-GAAP reconciliation
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 20233232 AMD COMMITMENT TO ESG Governance Delivering industry leading products with integrity, innovation and quality in order to help solve global challenges Social Creating a culture that drives innovation by fostering diversity, inclusion and belonging Environmental Steadfast commitment to environmental sustainability and contributing to our local communities PURPOSE-DRIVEN HIGH-PERFORMANCE AND ADAPTIVE COMPUTING
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 2023333 Large and Compelling $300B TAM World-Class Execution and Focus Unmatched Technology Leadership Expanding Data Center Leadership and Pervasive AI Strong Balance Sheet OUR NEXT JOURNEY DRIVING LONG-TERM SHAREHOLDER RETURNS
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202334 RECONCILIATION OF AS-REPORTED REVENUE TO AMD PRO FORMA REVENUE APPENDICES (1) Pre-acquisition revenue for the year ended December 31, 2022 includes unaudited Xilinx revenue from January 2, 2022 to February 13, 2022. Pre-acquisition revenue for the year ended December 25, 2021 includes unaudited Xilinx revenue for the twelve months ended January 1, 2022. (2) The unaudited AMD net revenue prepared on a pro forma basis represents the Company's consolidated revenue for the year ended December 31, 2022 and December 25, 2021, as if the acquisitions had been consummated as of the beginning of the fiscal year 2021 (i.e., December 27, 2020). The unaudited pro forma revenue is presented on the basis of the Company’s fiscal year and combines the historical results of the fiscal periods of the Company with the following historical results of Xilinx: the year ended December 31, 2022 includes Xilinx revenue for the twelve-month period beginning January 2, 2022 through December 31, 2022; and the year ended December 25, 2021 includes Xilinx revenue for the twelve months ended January 1, 2022. The unaudited pro forma financial revenue presented is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the Xilinx acquisitions were completed at the beginning of fiscal year 2021 and are not indicative of the future operating results of the combined company. (Billions) (Unaudited) 2022 2021 AMD Net Revenue – As Reported $ 23.6 $ 16.4 Pre-Acquisition Revenue (1) 0.5 3.7 AMD Net Revenue – Pro Forma (2) $ 24.1 $ 20.1
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202335 RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT AND GROSS MARGIN (Millions) (Unaudited) Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 2021 2022 GAAP gross profit $ 1,587 $ 1,830 $ 2,086 $ 2,426 $ 2,818 $ 3,028 $ 2,354 $ 2,403 $ 7,929 $ 10,603 GAAP gross margin % 46% 48% 48% 50% 48% 46% 42% 43% 48% 45% Stock-based compensation 1 2 1 1 4 8 8 9 5 29 Acquisition-related costs (1) – – – – 92 95 2 4 – 193 Amortization of acquired intangible assets – – – – 186 407 412 443 – 1,448 Non-GAAP gross profit $ 1,588 $ 1,832 $ 2,087 $ 2,427 $ 3,100 $ 3,538 $ 2,776 $ 2,859 $ 7,934 $ 12,273 Non-GAAP gross margin % 46% 48% 48% 50% 53% 54% 50% 51% 48% 52% RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES (Millions) (Unaudited) Q4’22 Q4’21 2022 2021 GAAP operating expenses $ 2,557 $ 1,223 $9,441 $4,293 GAAP Operating Expenses/Revenue % 46% 25% 40% 26% Stock-based compensation 301 111 983 374 Acquisition-related costs (1) 53 9 328 42 Amortization of acquired intangible assets 601 – 2,100 – Non-GAAP operating expenses $ 1,602 $ 1,103 $6,030 $3,877 Non-GAAP Operating Expenses/Revenue % 29% 23% 26% 24% APPENDICES (1) Acquisition-related costs primarily comprised of transaction costs, purchase price adjustments for inventory and certain compensation charges.
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202336 APPENDICES RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME (Millions) (Unaudited) Q4’22 Q4’21 2022 2021 GAAP operating income (loss) $ (149) $ 1,207 $1,264 $3,648 GAAP operating margin % (3%) 25% 5% 22% Stock-based compensation 310 112 1,012 379 Acquisition-related costs (1) 57 9 521 42 Amortization of acquired intangible assets 1,044 - 3,548 – Non-GAAP operating income $ 1,262 $ 1,328 $6,345 $4,069 Non-GAAP operating margin % 23% 27% 27% 25% (1) Acquisition-related costs primarily comprised of transaction costs, purchase price adjustments for inventory and certain compensation charges
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202337 RECONCILIATION OF GAAP TO NON-GAAP NET INCOME / EARNINGS PER SHARE (1) Acquisition-related costs primarily comprised of transaction costs, purchase price adjustments for inventory and certain compensation charges. (2) GAAP and non-GAAP diluted EPS include the assumed conversion of the Company's 2026 Convertible Notes under the "if converted" method. APPENDICES (Millions, except per share data) (Unaudited) Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 GAAP net income / earnings per share $ 555 $ 0.45 $ 710 $ 0.58 $ 923 $ 0.75 $ 974 $ 0.80 $ 786 $ 0.56 $ 447 $ 0.27 $ 66 $ 0.04 $ 21 $ 0.01 Loss on debt redemption/conversion 6 0.01 1 – – – – – – – – – – – – – (Gains) losses on equity investments, net 8 0.01 – – (60) (0.05) (4) – 44 0.03 10 – 3 – 5 – Stock-based compensation 85 0.07 83 0.06 99 0.08 112 0.09 174 0.12 259 0.16 269 0.16 310 0.19 Equity income in investee (2) – (2) – (2) – – – (3) – (4) – (4) – (3) – Acquisition-related costs (1) 15 0.01 10 0.01 8 0.01 9 – 233 0.17 174 0.11 57 0.04 57 0.04 Amortization of acquired intangible assets – – – – – – – – 479 0.34 1,023 0.63 1,002 0.62 1,044 0.65 Income tax provision (25) (0.03) (24) (0.02) (75) (0.06) 31 0.03 (124) (0.09) (202) (0.12) (298) (0.19) (321) (0.20) Non-GAAP net income / earnings per share $ 642 $ 0.52 $ 778 $ 0.63 $ 893 $ 0.73 $1,122 $ 0.92 $1,589 $ 1.13 $1,707 $ 1.05 $1,095 $ 0.67 $1,113 $ 0.69 Shares used and net income adjustment in earnings per share calculation Shares used in per share calculation (GAAP) (2) 1,231 1,232 1,230 1,222 1,410 1,632 1,625 1,618 Shares used in per share calculation (Non-GAAP) (2) 1,233 1,232 1,230 1,222 1,410 1,632 1,625 1,618
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202338 (Millions, except per share data) (Unaudited) 2021 2022 GAAP net income / earnings per share $ 3,162 $ 2.57 $1,320 $0.84 Loss on debt redemption/conversion 7 – – – (Gains) losses on equity investments, net (56) (0.04) 62 0.04 Stock-based compensation 379 0.31 1,012 0.64 Equity income in investee (6) – (14) (0.01) Acquisition-related costs (1) 42 0.03 521 0.33 Amortization of acquired intangible assets – – 3,548 2.26 Income tax provision (93) (0.08) (945) (0.60) Non-GAAP net income / earnings per share $3,435 $ 2.79 $5,504 $3.50 Shares used and net income adjustment in earnings per share calculation Shares used in per share calculation (GAAP) (2) 1,229 1,571 Shares used in per share calculation (Non-GAAP) (2) 1,229 1,571 RECONCILIATION OF GAAP TO NON-GAAP NET INCOME / EARNINGS PER SHARE (1) Acquisition-related costs primarily comprised of transaction costs, purchase price adjustments for inventory and certain compensation charges. (2) GAAP and non-GAAP diluted EPS include the assumed conversion of the Company's 2026 Convertible Notes under the "if converted" method. APPENDICES
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202339 (Millions) (Unaudited) Q4’22 2022 Operating cash flow 567 3,565 Operating cash flow margin % 10% 15% Purchases of property and equipment (124) (450) Free cash flow 443 3,115 Free cash flow margin % 8% 13% APPENDICES RECONCILIATION OF OPERATING CASH FLOW TO FREE CASH FLOW
Q4 AND FY 2022 FINANCIAL RESULTS – JANUARY 31, 202340 Shares (millions) (1) Q1’22 Q2’22 Q3’22 Q4’22 2022 Q1’23 2023 Actual Actual Actual Actual Actual Estimate Estimate Basic shares 1,393 1,618 1,615 1,613 1,561 1,612 1,619 Dilutive impact from employee equity grants and warrant (2) 17 14 10 5 10 5 6 Diluted shares 1,410 1,632 1,625 1,618 1,571 1,617 1,625 APPENDICES SHARE COUNT OVERVIEW The table above provides actual share count for Q1’22, Q2’22, Q3’22, Q4’22, and 2022 and an estimate of share count to use when calculating GAAP and non-GAAP diluted earnings per share for Q1’23 and FY 2023. (1) Share counts are weighted average shares. (2) The dilutive impact of employee equity grants is based on the Treasury Stock method and is dependent upon the average stock price during the period. The Q1’22, Q2’22, Q3’22, and Q4’22 average stock price was $121.81, $96.04, $86.37, and $66.00, respectively. The Q4’22 average stock price of $66.00 was assumed for Q1’23 and FY23 average stock price estimates.
