AMD announced its earnings report for the third quarter of 2022 at the close. The results came after AMD released its preliminary forecast in early October, showing revenue of $5.6 billion, an annual growth rate of 29%, at a time when the PC market faced sluggish inflation. More importantly, AMD's non-GAAP results and cash flow both showed solid growth, indicating that the company is on a solid footing, even though the Xilinx acquisition resulted in an operating loss in GAAP results.
According to its earnings report, AMD posted a third-quarter profit of $66 million on revenue of about $5.6 billion, and if you factor in the cost of acquiring Xilinx, the company posted a net operating loss of $64 million for the quarter. For comparison, the company posted a profit of $923 million on revenue of $4.3 billion in the third quarter of last year.
For non-GAAP results, AMD's revenue rose about 20% year over year to $1.2 billion. Of course, the company's operating income measures the money left to it after accounting for production costs and other expenses (such as salaries) and deducting it from revenue or net sales.
Net income: AMD had only $1.1 billion in non-GAAP revenue and $66 million in GAAP revenue, a 23% increase, and a 93% year-over-year decrease. Currently, AMD's GAAP and non-GAAP earnings per share are 4 cents and 67 cents, respectively.
In a key quarter of an industry downturn, the key takeaways from AMD's latest earnings report were the company's operations and free cash flow. AMD had a combined operating cash flow of $965 million and free cash flow of $842 million in the quarter, up 15% and 10%, respectively, compared to $849 million and $764 million in the year-ago quarter.
AMD said the company missed its targets for the quarter due to "softening PC markets and significant inventory cuts in the PC supply chain," a big factor behind the profit slide following its roughly $50 billion acquisition of chip company Xilinx in February. accounting treatment.
Excluding the cost of acquiring Xilinx, AMD's gross margin, which reflects product costs as a percentage of total revenue, continued to grow in the quarter, mainly as more expensive data center and enterprise products helped them achieve more. Income sales. The non-GAAP operating margin was 50%, in line with AMD's own goal.
The company has indeed seen growth in some areas. Although the market for gaming graphics cards is not as hot as it was during the previous mining boom, AMD said that thanks to "higher sales of semi-custom products", its games Area (revenue) increased 14%, or $1.6 billion. This likely refers to the custom chips for consoles like the PlayStation 5, Xbox Series S and X, and Steam Deck.
Other aspects: the performance of AMD's data center division also achieved a year-on-year increase of 45%. After all, the sales performance of AMD EPYC chips is still very good, and the embedded business has also been greatly improved due to the acquisition of Xilinx.
AMD will release a new generation of processors on November 10 and its latest GPU architecture on the 3rd. AMD's chief executive Lisa Su said on the company's earnings call that the company is also betting that with the winter holiday approaches, she believes there will be many more people willing to buy consoles.
Looking ahead, AMD expects revenue of $5.5 billion in the fourth quarter and $23.5 billion in full-year 2022. For comparison, the company brought in $4.8 billion in Q4 2021 and $16 billion for the full year, implying an annual growth rate of 68%.
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