AMD reported its third-quarter 2022 earnings at the close of trading on Tuesday.
The results come on the heels of AMD’s preliminary financial results released in early October, which reported revenue of $5.6 billion and annual growth of 29 percent at a time when the personal computer market is facing an inflationary downturn. More importantly, AMD’s non-GAAP results and cash flow showed solid growth, indicating that the company is on solid footing, despite an operating loss on GAAP results from the Xilinx acquisition.
According to its earnings report, AMD reported a third-quarter profit of $66 million on revenue of approximately $5.6 billion, compared to a net operating loss of $64 million for the quarter when the cost of the Xilinx acquisition is taken into account. For comparison, the company reported a profit of $923 million on revenue of $4.3 billion in the third quarter last year.
For non-GAAP results, AMD’s revenue grew about 20 percent year over year to $1.2 billion. Of course, the company’s operating income measures the money left to it after product costs and other expenses (such as salaries) are taken into account and deducted from revenue or net sales.
On the net income side, AMD had just $1.1 billion in non-GAAP revenue and $66 million in GAAP revenue, achieving a 23 percent increase and a 93 percent year-over-year decline. AMD’s GAAP and non-GAAP earnings per share are now 4 cents and 67 cents, respectively.
In a key quarter of industry downturn, the key points in AMD’s latest earnings report were the company’s operating and free cash flow, which totaled $965 million in operating cash flow and $842 million in free cash flow for the quarter, up 15 percent and 10 percent from $849 million and $764 million, respectively, in the same quarter last year.
AMD said it missed its targets for the quarter due to “weakness in the PC market and significant inventory reductions in the PC supply chain,” and that a significant factor in the profit decline was accounting for the acquisition of chip company Xilinx for about $50 billion in February.
Excluding the Xilinx acquisition, AMD’s gross margin (which reflects product costs as a percentage of total revenue) still grew in the quarter, and that was largely due to more expensive data center and enterprise products that helped them achieve more revenue sales. The non-GAAP operating margin was 50%, in line with AMD’s own targets.
The company also did see growth in some areas, and while the market for gaming graphics cards isn’t as hot as it was during the mining boom, AMD said that its gaming segment (revenue) grew 14 percent, or $1.6 billion, thanks to “higher sales of semi-custom products. That could mean custom chips for consoles like PlayStation 5, Xbox Series S and X, and Steam Deck.
Elsewhere, AMD’s data center division also achieved a 45 percent year-over-year increase – after all, AMD EPYC chip sales are still doing well – and the embedded business was boosted significantly by the Xilinx acquisition.
AMD will unveil its next-generation processors on Nov. 10 and its latest GPU architecture on Nov. 3. AMD CEO Lisa Su said on the company’s earnings call that the company is also betting that many more people will be willing to buy consoles as the winter holidays approach, she believes.
Looking ahead, AMD expects revenue to reach $5.5 billion in the fourth quarter and $23.5 billion for the full year in 2022. For comparison, the company brought in $4.8 billion in revenue in the fourth quarter of 2021 and $16 billion for the full year, which means the company will achieve a 68 percent annual growth rate.
AMD shares were up about 4.02 percent after hours at $62.06 per share.
