AMD reported 70% year-over-year revenue growth. Gross marging down 2%, due to higher costs

Autor: Financial Market
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AMD (NASDAQ:AMD) announced revenue for the second quarter of 2022 of $6.6 billion, gross margin of 46%, operating income of $526 million, operating margin of 8%, net income of $447 million and diluted earnings per share of $0.27.

On a non-GAAP basis, gross margin was 54%, operating income was $2.0 billion, operating margin was 30%, net income was $1.7 billion and diluted earnings per share was $1.05.

We delivered our eighth straight quarter of record revenue based on our strong execution and expanded product portfolio,” said AMD Chair and CEO Dr. Lisa Su.

Each of our segments grew significantly year-over-year, led by higher sales of our data center and embedded products. We see continued growth in the back half of the year highlighted by our next generation 5nm product shipments and supported by our diversified business model.

Q2 2022 Financial Summary

Revenue of $6.6 billion increased 70% year-over-year driven by growth across all segments and the inclusion of Xilinx revenue.

Gross margin was 46%, a decrease of 2 percentage points year-over-year, primarily due to Xilinx acquisition. Non-GAAP gross margin was 54%, an increase of 6 percentage points year-over-year, primarily driven by higher Data Center and Embedded segment revenue.

Operating income was $526 million, or 8% of revenue, compared to $831 million or 22% a year ago. Record non-GAAP operating income was $2.0 billion, or 30% of revenue, up from $924 million or 24% a year ago primarily driven by higher revenue and gross profit.

Net income was $447 million compared to $710 million a year ago primarily due to lower operating income.

Diluted earnings per share was $0.27 compared to $0.58 a year ago primarily due to lower net income and a higher share count as a result of the Xilinx acquisition.

Cash, cash equivalents and short-term investments were $6.0 billion at the end of the quarter and debt was $2.8 billion. AMD repurchased $920 million of common stock during the quarter. Cash from operations was a record $1.04 billion in the quarter, compared to $952 million a year ago. Free cash flow was $906 million in the quarter compared to $888 million a year ago. Goodwill and acquisition-related intangible assets associated with the acquisitions of Xilinx and Pensando were $50.4 billion.

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AMD stock evolution. Source TradingView

AMD completed the acquisition of Pensando Systems in a transaction valued at approximately $1.9 billion to expand AMD’s data center product portfolio with a high-performance data processing unit (DPU) and software stack.

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Pensando DPUs are already deployed at scale across cloud and enterprise customers including Goldman Sachs, IBM Cloud, Microsoft Azure and Oracle Cloud.

The cloud computing industry continues to show growing preference for AMD products.
• Google Cloud N2D and C2D virtual machines (VMs) are enabling enhanced security offerings with 3rd Gen AMD EPYC processors
• As part of the Oracle Cloud VMware® solution product offering, new Oracle Cloud Infrastructure E4 Dense instances leverage AMD EPYC processors to deliver ideal performance for hybrid cloud environments
• Microsoft Azure is the first public cloud provider to deploy AMD Instinct MI200 accelerators for large scale AI training.

For the third quarter of 2022, AMD expects revenue to be approximately $6.7 billion, plus or minus $200 million, an increase of approximately 55% year-over-year led by growth in the Data Center and Embedded segments. AMD expects non-GAAP gross margin to be approximately 54% in the third quarter of 2022.

For the full year 2022, AMD continues to expect revenue to be approximately $26.3 billion, plus or minus $300 million, an increase of approximately 60% over 2021 led by growth in the Data Center and Embedded segments. AMD continues to expect non-GAAP gross margin to be approximately 54% for 2022.