01—Abstract
Summary
Summary of the 10-Q filed May 4, 2022. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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.
02—Key points
Key Highlights
- Net revenue increased 71% year-over-year to $5.89 billion, significantly boosted by the Xilinx acquisition and growth in key segments.
- Gross margin improved to 48% from 46% in the prior year, driven by higher server processor revenue and Xilinx's contribution.
- Net income rose to $786 million ($0.56 per diluted share) compared to $555 million in the prior year period.
- The Xilinx acquisition, completed in February 2022, added $559 million in revenue and $233 million in operating income for the acquired segment.
- Cash, cash equivalents, and short-term investments increased significantly to $6.5 billion, largely due to cash acquired from Xilinx.
- AMD repurchased $1.9 billion of its common stock during the quarter under its expanded stock repurchase program.
- Research and development expenses increased by 74% to $1.06 billion, reflecting increased headcount and the inclusion of Xilinx R&D efforts.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2022, Advanced Micro Devices Inc kept $0.13.
- Revenue$5.89B100.0%
- Cost of revenue−$3.07B52.1%
- Gross profit$2.82B47.9%
- Operating costs−$1.87B31.7%
- Operating income$951.0M16.2%
- Interest, other & tax−$165.0M2.8%
- Net income$786.0M13.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2022filed May 4, 2022Financial Statements
Q1 FY2022 against Q1 FY2021
| Line item | Q1 FY2022Q1 FY2021 | Change |
|---|---|---|
| Revenue | $5.89B$3.44B | +70.9% |
| Cost of Revenue | $3.07B$1.86B | +65.2% |
| Gross Profit | $2.82B$1.59B | +77.6% |
| R&D Expenses | $1.06B$610.00M | +73.8% |
| SG&A Expenses | $597.00M$319.00M | +87.1% |
| Operating Income | $951.00M$662.00M | +43.7% |
| Interest Expense | $13.00M$9.00M | +44.4% |
| Net Income | $786.00M$555.00M | +41.6% |
| EPS (Basic) | $0.56$0.46 | +21.7% |
| EPS (Diluted) | $0.56$0.45 | +24.4% |
| Shares Outstanding (Basic) | 1.39B1.21B | +14.8% |
| Shares Outstanding (Diluted) | 1.41B1.23B | +14.5% |
05—Questions
Frequently Asked Questions
How did the Xilinx acquisition impact AMD's financial performance this quarter?
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.
What is the outlook for gross margin, given the acquisition and ongoing costs?
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.
How has AMD's cash position and debt changed following the Xilinx acquisition?
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.
What is the company doing with its capital regarding share repurchases and R&D?
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.
06—Continue