01—Abstract
Summary
Summary of the 10-Q filed October 27, 2021. Cited figures are marked; the original filing is the authoritative source.
Advanced Micro Devices, Inc. (AMD) reported strong financial performance for the third quarter and the first nine months of 2021, demonstrating significant year-over-year growth across key metrics.
Net revenue surged by 54% to $4.31 billiona for the quarter and by 78% to $11.61 billion for the nine-month period, driven by robust sales in both the Computing and Graphics segment and the Enterprise, Embedded and Semi-Custom segment. Profitability also saw substantial improvement, with gross margin increasing to 48% in Q3 2021 from 44% in Q3 2020, attributed to a richer product mix. Operating income more than doubled year-over-year for both the quarter and the nine-month period.
Net income and diluted earnings per share also showed significant increases, reflecting the company's enhanced operational efficiency and strong market demand. AMD ended the period with a strengthened cash position, underscoring its financial health and ability to fund future growth initiatives.
02—Key points
Key Highlights
- Net revenue for the third quarter of 2021 increased by 54% to $4.31 billion, compared to $2.80 billion in the prior year period.
- Gross margin improved to 48% for the third quarter of 2021, up from 44% in the same period last year, driven by a richer product mix.
- Operating income for the third quarter of 2021 was $948 million, a significant increase from $449 million in the prior year period.
- Net income for the third quarter of 2021 more than doubled to $923 million, from $390 million in the prior year period.
- Diluted earnings per share rose to $0.75 for the third quarter of 2021, compared to $0.32 in the prior year period.
- The company repurchased approximately $750 million of common stock during the third quarter of 2021 under its $4 billion repurchase program.
- Cash, cash equivalents, and short-term investments increased to $3.6 billion as of September 25, 2021, from $2.3 billion as of December 26, 2020.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2021, Advanced Micro Devices Inc kept $0.21.
- Revenue$4.31B100.0%
- Cost of revenue−$2.23B51.6%
- Gross profit$2.09B48.4%
- Operating costs−$1.14B26.4%
- Operating income$948.0M22.0%
- Interest, other & tax−$25.0M0.6%
- Net income$923.0M21.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed October 27, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $4.31B$2.80B | +54.0% |
| Cost of Revenue | $2.23B$1.57B | +41.8% |
| Gross Profit | $2.09B$1.23B | +69.6% |
| R&D Expenses | $765.00M$508.00M | +50.6% |
| SG&A Expenses | $376.00M$273.00M | +37.7% |
| Operating Income | $948.00M$449.00M | +111.1% |
| Interest Expense | $7.00M$11.00M | −36.4% |
| Net Income | $923.00M$390.00M | +136.7% |
| EPS (Basic) | $0.76$0.33 | +130.3% |
| EPS (Diluted) | $0.75$0.32 | +134.4% |
| Shares Outstanding (Basic) | 1.21B1.18B | +2.5% |
| Shares Outstanding (Diluted) | 1.23B1.22B | +1.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of the significant revenue growth in the third quarter of 2021?
The substantial revenue growth was primarily driven by strong performance in both segments. The Computing and Graphics segment saw increased sales of client and graphics processors, while the Enterprise, Embedded and Semi-Custom segment benefited from higher sales volumes of server processors and semi-custom products. This growth was further supported by an increase in average selling prices, particularly in the Computing and Graphics segment, due to a richer mix of premium products.
How did AMD's profitability improve, and what contributed to the higher gross margin?
Profitability improved significantly due to strong revenue growth and an expanding gross margin. The gross margin increased to 48% in Q3 2021 from 44% in Q3 2020. This improvement was largely attributed to a more favorable product mix, with higher sales of premium EPYC, Ryzen, and Radeon processors.
What is the status of the Xilinx acquisition, and what are the potential impacts?
AMD announced a definitive agreement to acquire Xilinx, Inc. in an all-stock transaction in October 2020, with the closing currently expected by the end of calendar year 2021. The acquisition is subject to customary conditions, including regulatory approval. The company believes this acquisition will enhance its position in high-performance computing. However, the filing notes that the announcement and pendency of the merger could cause disruptions, and successfully integrating Xilinx will be crucial for realizing anticipated benefits.
How is AMD managing its cash and debt?
AMD ended the period with a strong cash position of $3.6 billion in cash, cash equivalents, and short-term investments. The company's principal debt obligations were $313 million. AMD believes its current liquidity, coupled with its revolving credit facility and operating cash flows, will be sufficient to fund operations and capital expenditures. During the quarter, AMD also repurchased $750 million of its common stock, indicating a commitment to returning value to shareholders while maintaining financial flexibility.
06—Continue