10-QPeriod: Q1 FY2022

ADVANCED MICRO DEVICES INC Quarterly Report for Q1 Ended Mar 26, 2022

Filed May 4, 2022For Securities:AMD

Summary

Advanced Micro Devices (AMD) reported strong financial results for the first quarter of 2022, driven significantly by the recent acquisition of Xilinx. Net revenue surged by 71% year-over-year to $5.89 billion, bolstered by growth in both the Computing and Graphics segment and the Enterprise, Embedded, and Semi-Custom segment, along with the initial contribution from Xilinx. The company also saw an improvement in gross margin to 48%, primarily due to higher server processor revenue and the inclusion of Xilinx's high-margin business, partially offset by acquisition-related costs. Net income rose to $786 million, or $0.56 per diluted share, up from $555 million in the prior year. AMD's balance sheet strengthened with a significant increase in cash, cash equivalents, and short-term investments, largely due to the cash acquired as part of the Xilinx transaction. The company also highlighted substantial investments in research and development and significant share repurchases, demonstrating a commitment to both innovation and returning value to shareholders.

Financial Highlights

51 data points
Beta

Revenue

$5.89B

47.9% Gross Margin

Net Income

$786.00M

13.4% Net Margin

EPS (Diluted)

$0.56

Total Assets

$66.92B

Cash & Equivalents

$4.74B

Free Cash Flow

$924.00M

Financial Statements
Beta
Revenue$5.89B
Cost of Revenue$3.07B
Gross Profit$2.82B
R&D Expenses$1.06B
SG&A Expenses$597.00M
Operating Income$951.00M
Interest Expense$13.00M
Net Income$786.00M
EPS (Basic)$0.56
EPS (Diluted)$0.56
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.41B

Key Highlights

  • 1Net revenue increased 71% year-over-year to $5.89 billion, significantly boosted by the Xilinx acquisition and growth in key segments.
  • 2Gross margin improved to 48% from 46% in the prior year, driven by higher server processor revenue and Xilinx's contribution.
  • 3Net income rose to $786 million ($0.56 per diluted share) compared to $555 million in the prior year period.
  • 4The Xilinx acquisition, completed in February 2022, added $559 million in revenue and $233 million in operating income for the acquired segment.
  • 5Cash, cash equivalents, and short-term investments increased significantly to $6.5 billion, largely due to cash acquired from Xilinx.
  • 6AMD repurchased $1.9 billion of its common stock during the quarter under its expanded stock repurchase program.
  • 7Research and development expenses increased by 74% to $1.06 billion, reflecting increased headcount and the inclusion of Xilinx R&D efforts.

Frequently Asked Questions

The acquisition of Xilinx, completed in February 2022, was a major driver of AMD's financial performance. It contributed $559 million in net revenue and $233 million in operating income for the Xilinx segment in the first quarter. The acquisition also significantly increased AMD's cash and short-term investments and expanded its product portfolio into adaptive hardware platforms.

AMD's gross margin improved to 48% in Q1 2022 from 46% in Q1 2021. This improvement was driven by higher server processor revenue and the inclusion of Xilinx's high-margin revenue. However, the company noted that gross margin was partially offset by amortization of intangible assets and acquisition-related costs. Investors should monitor how these costs evolve as integration progresses.

AMD's cash, cash equivalents, and short-term investments saw a substantial increase, reaching $6.5 billion as of March 26, 2022, compared to $3.6 billion at the end of the prior year. This increase is primarily attributable to the $2.4 billion in cash and $1.6 billion in short-term investments acquired from Xilinx. Total debt increased significantly to $1.8 billion from $313 million, largely due to $1.5 billion of debt assumed from Xilinx.

AMD continues to actively return capital to shareholders through its stock repurchase program, having repurchased $1.9 billion of common stock in the first quarter of 2022, with $8.3 billion remaining available. Simultaneously, the company is heavily investing in future growth, with research and development expenses increasing by 74% to $1.06 billion, reflecting ongoing product development and the integration of Xilinx's R&D capabilities.