ADVANCED MICRO DEVICES INC Quarterly Report for Q2 Ended Apr 1, 2023

Summary

Advanced Micro Devices, Inc. (AMD) reported a net loss of $139 million for the first quarter of 2023, a significant shift from the $786 million net income in the same period last year. This decline was primarily driven by a 65% decrease in the Client segment's revenue, attributed to inventory reduction efforts and weak PC market conditions, as well as a 6% dip in the Gaming segment. The Data Center segment remained flat year-over-year, while the Embedded segment saw substantial growth, largely due to the full quarter inclusion of Xilinx's results. Despite the net loss, the company generated $486 million in operating cash flow. However, operating expenses increased, notably in Research and Development, up 33% year-over-year, driven by acquisitions and organic growth. A significant factor impacting profitability was the increase in amortization of acquisition-related intangible assets, which rose substantially due to the Xilinx acquisition. AMD continues to manage its balance sheet, with $5.9 billion in cash, cash equivalents, and short-term investments, and has $6.3 billion remaining under its stock repurchase program.

Key Highlights

• 1Net loss of $139 million in Q1 2023, compared to a net income of $786 million in Q1 2022.
• 2Total revenue decreased by 9% to $5.35 billion compared to $5.89 billion in the prior year period.
• 3Client segment revenue declined significantly by 65% due to inventory reduction and weak market conditions.
• 4Embedded segment revenue surged by 163%, boosted by the full quarter impact of the Xilinx acquisition.
• 5Gross margin decreased to 44% from 48% year-over-year, impacted by lower Client segment performance and higher amortization costs.
• 6Research and Development expenses increased by 33% to $1.41 billion, driven by acquisitions and growth.
• 7Generated $486 million in cash from operating activities in the quarter.

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