In this AMD earnings call summary, we summarize key metrics and topics discussed on the Q4 2022 call, including:
- Earnings Call Summary
- Revenue Highlights
- Profitability
- New Initiatives
- Mergers & Acquisitions (M&A)
- Key Partnerships
- Upcoming Product Launches
- Guidance
This earning call summary was partially done by our GPT-3 enabled earnings call assistant, which you can learn more about here.
Earnings Call Summary
AMD reported record revenue and profitability for the 2022 fiscal year, with total revenue of $23.6 billion, up 44% year-over-year. This was driven by increased Embedded, Data Center, and Gaming segment revenue, partially offset by lower Client segment revenue. Operating expenses were $1.6 billion compared to $1.1 billion a year ago, driven by the inclusion of Xilinx OpEx and additional R&D and go-to-market investments.
Operating income declined $66 million from a year ago to $1.3 billion, and the operating margin was 23%, down from 27% a year ago. Net income was $1.1 billion flat year-over-year. Diluted earnings per share was $0.69 compared to $0.92 per share a year ago.
Free cash flow was $443 million compared to $736 million in the same quarter last year. AMD returned $3.7 billion to shareholders in 2022, which was 119% of free cash flow. Inventory was $3.8 billion, up approximately $402 million from the prior quarter, primarily driven by the inventory increase in advanced process nodes to support the ramp of new products.
For 2023, AMD is planning for the PC TAM to be down approximately 10%. They expect to continue to ship below consumption in the first quarter to reduce downstream inventory.
In the Embedded and Data Center segments, AMD believes they are well positioned to grow revenue and gain share in 2023 based on the strength of their competitive positioning and leadership high-performance and adaptive product portfolio. They do see elevated levels of inventory with some cloud customers, which will lead to a softer first half and a stronger second half of the year.
Overall, AMD is confident in their product portfolio and their ability to expand gross margins in 2023. They are continuing to focus on executing their long-term growth strategy while driving financial discipline and operational excellence. They are also leveraging their broad portfolio of CPUs, GPUs, and FPGAs to capitalize on the growth of AI adoption.
Earnings Per Share (EPS)
AMD reported diluted earnings per share of $0.69 for the fourth quarter of 2022, which was slightly below analyst expectations of $0.71. This was due to lower Client segment revenue and higher operating expenses, which were partially offset by higher revenue in the Embedded and Data Center segments.
For the full year 2022, AMD reported record revenue of $23.6 billion and pro forma revenue of $24.1 billion, up 20% and 44% year-over-year, respectively. The company also returned $3.7 billion to shareholders through share repurchases, which was 119% of free cash flow.
Revenue Highlights
This quarter, the Client segment revenue was $903 million, down 51% year-over-year due to reduced processor shipments resulting from a weak PC market and significant inventory correction across the PC supply chain.
The Data Center segment revenue was $1.7 billion, up 42% year-over-year, primarily driven by strong growth in third-generation EPYC server processor revenue and the early ramp of fourth-generation EPYC processors. The Embedded segment revenue increased significantly year-over-year to a record $1.4 billion. Overall, the total revenue for the quarter was $3.4 billion.
Profitability
This quarter, AMD reported net income of $1.1 billion, which was flat year-over-year. Operating income declined $66 million from a year ago to $1.3 billion, and the operating margin was 23%, down from 27% a year ago. Diluted earnings per share was $0.69 compared to $0.92 per share a year ago.
Free cash flow was $443 million compared to $736 million in the same quarter last year. This decrease was primarily due to higher Client segment revenue. Overall, AMD reported strong financial results this quarter, with record revenue and profitability driven by their leadership in product portfolio and diversification of their business.
New Initiatives
This quarter saw a number of new initiatives from AMD. In communications, there were expanded 5G wireless installations in India and ongoing wired infrastructure deployments with Tier 1 communications providers. In the automotive sector, there were ramps of new camera, 4D radar and infotainment wins across multiple customers.
Additionally, AMD announced multiple new wins for their automotive grade Zynq UltraScale+ platforms with some of the largest vehicle equipment suppliers. Finally, AMD launched their latest generation Ryzen 7000 series notebook processors earlier in January, including their Ryzen 7040 CPU series that deliver leadership performance in battery life and are their first processors to feature Ryzen AI.
Key Partnerships
AMD announced multiple new partnerships this quarter, including a collaboration with Xilinx to integrate their IP into the XDNA architecture for Ryzen AI. They also launched their Ryzen 7045 series CPUs, their first mobile processor based on a triplet design, which has been adopted by over 250 ultrathin gaming and commercial notebook designs.
Additionally, AMD announced multiple new wins for their automotive grade Zynq UltraScale+ platforms with some of the largest vehicle equipment suppliers, such as Aisin's next-generation automated parking assist system and DENSO's next-generation LiDAR platform.
These partnerships demonstrate AMD's commitment to expanding their product portfolio and gaining market share in the automotive, communications, and industrial machine vision markets.
Upcoming Product Launches
AMD is launching their Genoa fourth gen EPYC and Bergamo products this year. These products are expected to be a large contributor to the Data Center segment in the second half of the year.
Ryzen 7000 and Ryzen AI are also being launched in the PC portfolio, with additional AI acceleration coming in the server portfolio. MI300 is expected to be released on the GPU training side. Lastly, AMD is launching their Zen 4 and Zen 3 products towards the end of the year.
Guidance
AMD provided guidance for 2023, expecting the PC TAM to be down approximately 10% for the year. They expect to continue to ship below consumption in the first quarter to reduce downstream inventory, which is reflected in their guidance.
In the Embedded and Data Center segments, AMD believes they are well positioned to grow revenue and gain share in 2023 based on the strength of their competitive positioning and leadership high-performance and adaptive product portfolio.
They do see elevated levels of inventory with some cloud customers, which will lead to a softer first half and a stronger second half of the year. AMD also expects to return $3.7 billion to shareholders in 2023.
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