AMD finished the most recent quarter with revenue up 16% to $5.6 billion, though investors were expecting a more modest result. At the same time, it was noted that revenue could have been even higher, but fell by 51% in the customer segment and by 7% in the gaming segment. The weakness of the PC market in the second half of the year, as the AMD boss noted, did not deter the company receive Record sales for the whole year. This year, it expects to strengthen its market position.
CEO Lisa Su had this to say: “2022 was a strong year for AMD, as we delivered best-in-class growth and record revenue in the second half of the year despite the weak PC market. We have built on our success in the data center segment and completed a strategic acquisition Xilinx by significantly diversifying our business and strengthening our financial model. While the demand landscape is mixed, we are confident that we can increase market share in 2023 and deliver long-term growth based on a diverse product portfolio.”.
In the fourth quarter, its yield fell to 43% from 50% year over year, but that was mostly due to the write-down of assets following its acquisition of Xilinx. On a non-GAAP basis, that number actually rose one percentage point to 51%, primarily due to the increased share of more expensive products in the server and embedded segments, and declining revenue in the client segment offset the growth.
Operating losses were $149 million, while operating profit reached $1.2 billion a year ago. Again, this dynamic is precisely due to the depreciation of assets related to the Xilinx purchase. On a non-GAAP basis, operating income was maintained at $1.3 billion. As a percentage of revenue, it declined from 27% to 23% for the year, again due to a decline in customer segment revenue.
Net income fell to $21 million from $974 million, and again, the write-down of assets related to the Xilinx purchase played a key role. The negative momentum was partially offset by a $154 million tax deduction.According to non-GAAP methodology, net income remained at the level of the fourth quarter of 2021 – $1.1 billion.
At the end of the quarter, AMD had accumulated $5.9 billion in cash and returned $250 million to shareholders through share repurchases over the period.
Looking specifically at AMD’s businesses, its data center components business nearly doubled its customer business, with revenue growing 42% in the former to $1.7 billion and the latter rising 51% to $903 million Operating profit increased to $444 million from $369 million. At the same time, the operating profit margin declined from 32% to 27% due to increased research and development expenses.
In the client segment, revenue fell 51% to $903 million, precisely due to a decline in the supply of processors for personal computers. Stocks of finished products remained high in the distribution chains, making customers reluctant to buy new products. The average sales price for processors remained at the same level as in the same quarter of the previous year. The division ended the quarter with an operating loss of $152 million compared to an operating profit of $530 million a year ago.
In the gaming segment, AMD’s quarterly revenue fell 7% year over year to $1.6 billion. Sluggish sales of gaming graphics cards contributed to the decline, but game console components offset the trend. Operating profit in the segment fell from $407 million to $266 million, and as a percentage of sales, its share fell from 23% to 16%. In society, this dynamic is explained by the reduction in income from the implementation of graphic solutions.
The embedded segment was recently recognized with a separate statistic in AMD’s reporting structure, which is entirely justified given the Xilinx acquisition. Revenue in this area grew from $0.1 billion to $1.4 billion precisely due to the inclusion of Xilinx indicators in the reporting. Operating income increased to $699 million from $18 million, and the operating profit margin increased from 25% to 50%. Again, the need to write down assets related to this transaction caused AMD to report an operating loss of $1.4 billion in “Other” in the fourth quarter.
AMD ended the full year with revenue up 44% to $23.6 billion, and throughout the year not only server and embedded solutions but also the gaming direction showed positive momentum, but the customer worked against it Trend. Profit margin for the year fell from 48% to 45% because of the Xilinx deal, as you can imagine. On a non-GAAP basis, that number reached 52%, up four percentage points compared to 2021. In this sense, server direction combined with embedded solutions acted as a locomotive for profit margin growth, and client segment revenue acted against it .
AMD ended last year with operating profit down from $3.6 billion to $1.3 billion, on a non-GAAP basis it went from $4.1 billion to $6.3 billion because the deal with Xilinx also had a negative impact here. Year-end net income decreased from $3.2 billion to $1.3 billion, but increased from $3.4 billion to $5.5 billion on a non-GAAP basis. AMD returned $3.7 billion to investors last year through share buybacks.
In the first quarter of this year, AMD expects revenue to fall 10% year over year to $5.3 billion — slightly worse than analysts’ expectations, which had called for revenue of $5.48 billion in the first quarter of this year. Additionally, this will be AMD’s first quarterly revenue decline year over year since 2019. The client and gaming divisions will see revenue decline, but the server and embedded divisions will grow year over year. AMD expects to keep its profit margin at a decent level of around 50% for the quarter.
Notably, rival Intel expects first-quarter earnings of $11 billion, reducing revenue by 40% from the prior-year period. In this respect, AMD’s forecast seems less pessimistic, but at the same time we can see how close it is to a larger competitor whose market share in the same server segment was almost ten times larger just a few years ago.
Like Intel, AMD hasn’t provided full-year 2023 revenue guidance. “In view of the macroeconomic conditions, we naturally want to be cautious this year,” — the head of the company, Lisa Su, explained this refusal. According to her, in the last quarter the company has strengthened its position in the PC market, but the coming year will lead to a decrease in PC sales in the world as a whole by about 10% to 260 million units. Excess products in customers’ warehouses will remain at a high level in the first half of the year, in the second, according to them, the situation should improve slightly. “The first quarter should be the low for us in the PC segment and we will grow in the second quarter and the second half of the year.” – said the head of AMD.
“In our Embedded Solutions and Data Center Components segments, we believe that given our strong competitive position and leadership position, we have room for revenue and market share growth in 2023,” said Lisa Su. The company’s shares were up less than one and a half percent after the close, which is not too bad given AMD’s revenue forecast for the current quarter, although the level of revenue is high. The fourth quarter was better than market expectations, and the The share was able to increase more strongly due to the price.