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AMD CEO Lisa Su: Strong First Quarter Sets Stage For Year Of Big Growth

‘In summary, the start of 2022 is a significant inflection point for AMD, marked by record top and bottom-line financial results, driven by our leadership product portfolio and strong execution, and the close of our Xilinx acquisition,’ says AMD CEO Lisa Su.

AMD Tuesday reported the financial results of its fiscal 2022 first quarter, one that pretty much fit just about anybody’s definition of a really great quarter. Both revenue and net income hit records even before the incremental increase from AMD’s Xilinx acquisition, and guidance for the rest of the year is now considerably higher than expected.

AMD CEO Lisa Su told investors during the company’s quarterly financial analyst conference call that the results AMD reported were a long time in the making.

“For the last several years, we have been on a journey to both scale and transform AMD,” Su said. “We have consistently executed our strategy, expanded our portfolio of leadership products, and diversified our business – all while driving best in class growth. We reached a significant inflection point in our journey during the first few months of 2022 as we took several major steps that fundamentally reshape our business.”

For its first fiscal quarter of 2022, ended March 26, AMD reported total revenue of $5.9 billion, up an impressive 71 percent over the first quarter of fiscal 2021. That revenue number includes six weeks of Xilinx revenue.

Fiscal 2022 is slated to be enhanced by two major changes to the AMD product family, Su said. The first was the closing of AMD’s $49-billion acquisition of Xilinx. That acquisition, which AMD called the largest chip deal in history, gave AMD a huge expansion of its product portfolio into the FPGA, or field programmable gate array, business, critical to its growth in the data center, embedded computing, and telecommunications business.

The second was the unveiling of AMD’s $1.9-billion planned acquisition of Pensando, a move the company said will give the company distributed computing technology for working with software-defined cloud, compute, networking, storage, and security services.

Both acquisitions mean big opportunities for AMD, Su said.

“Longer term, I‘m incredibly excited about our additional growth opportunities as we add the Xilinx and Pensando teams,” she said. “We now see a significantly larger TAM (total addressable market) opportunity for AMD across a diverse set of end markets based on our broader portfolio of leadership compute engines and expanded solutions capabilities.”

Here’s a sample of Su’s remarks during the earnings call:

The Importance Of AMD’s Xilinx, Pensando Acquisitions

“The strategic importance of the Xilinx acquisition to our long-term goals cannot be overstated. As the industry‘s number one provider of FPGA and adaptive computing solutions, Xilinx significantly expands our technology and product portfolio. Xilinx also adds multiple high-margin, long-term revenue streams spanning a new set of markets and customers, further strengthening and diversifying our business model. Importantly, Xilinx has successfully executed its own growth strategy in recent years with the increased adoption of adaptive silicon across data center, communications, automotive, and other large embedded markets.

“With Pensando, we will further expand our data center solutions capabilities. Pensando will add a proven team that has developed an industry-leading GPU and software stack already deployed with key customers including IBM, HPE [Hewlett Packard Enterprise], Microsoft, Oracle, and Goldman Sachs. Pensando‘s differentiated technology further expands our product portfolio, and will enable AMD to innovate at silicon, software, and platform levels to deliver leadership solutions for our cloud, enterprise, and edge customers.”

Q1 Fiscal 2022 Results: Computing And Graphics Segment

“Our computing and graphics segment revenue increased 33 percent year over year to $2.8 billion driven primarily by the ramp of our latest Ryzen and Radeon products. Client compute revenue grew by a strong double-digit percentage year over year based on higher Ryzen mobile and desktop processor sales. As a result, we believe we gained client processor revenue share for the eighth straight quarter.

In desktop we expanded our processor portfolio with the introduction of seven new Ryzen CPUs, including the Ryzen 5800X3D CPU, which is the industry‘s fastest gaming CPU and first desktop processor featuring 3D stack chiplets. In notebooks, record mobile processor revenue was driven by the launch of our Rembrandt Ryzen 6000 mobile processors that extend the leadership compute, gaming, and battery life capabilities of our mobile processors.

“In commercial, we recently introduced our latest Ryzen 6000 Pro processors with leadership performance and battery life, and modern security and manageability features. We are well positioned to accelerate our growth in commercial notebooks in 2022 based on the expanded number of design wins on track to launch. Although the PC market is experiencing some softness coming off multiple quarters of near record unit shipments, our focus remains on the premium, gaming, and commercial portions of the market. …

“In graphics, revenue grew by a strong double-digit percentage year over year with record desktop graphics channel sales. Desktop GPU sales nearly doubled year over year as sales of our Radeon 6000 series graphics cards were strong. In mobile, the first notebooks featuring our latest Radeon 6000 Mobile GPUs launched in the quarter, and we expect sales to ramp over the coming quarters. Data center graphics revenue was flat year over year as we launched our Instinct MI210 accelerators. We expanded our engagements with large cloud customers in the quarter and launched our ROCm 5.0 software suite targeting exascale-class HPC [high performance computing] and AI applications.”

Q1 Fiscal 2022 Results: Enterprise, Embedded, And Semi-Custom Segment

“Our enterprise embedded and semi-custom segment revenue increased 88 percent year over year to $2.5 billion driven by record server, semi-custom, and embedded processor sales. Semi-custom sales grew by a significant double-digit percentage year over year based on strong demand for Sony and Microsoft consoles, as well as Valve‘s new steam deck. Sales for this game console generation continued to outpace all prior generations, and we expect 2022 to be a record year for our semi-custom business. …

“Turning to server, we had another record quarter as revenue more than doubled year over year and increased by a double-digit percentage sequentially. We have more than doubled server processor revenue year over year in eight of the last 10 quarters, highlighting the growing demand for our EPYC processors with cloud, enterprise, and HPC customers.

“Cloud revenue more than doubled year over year as hyperscalers expanded their internal infrastructure deployments, and 70 new AMD-powered instances launched from Alibaba, Amazon, Baidu Cloud, Microsoft Azure, Google, and others. ...

“In enterprise, revenue more than doubled year over year with strong growth in key verticals including IT infrastructure, financial services, and database applications. Our sales pipeline continues to be very strong, and we saw our win rate grow in the first quarter across a broad set of enterprise end customers. We launched our first EPYC processors with 3D Stack chiplets in the quarter. This technology extends our performance leadership in technical computing workloads by up to 66 percent compared to our prior generation. Athos, Cisco, Dell, HPE, Lenovo, and Supermicro all launched servers featuring the new CPUs in the quarter.

“Excitement for our next-generation Genoa server processors continues to grow as we expanded customer and partnering sampling in the quarter. We expect Genoa will be the industry‘s highest performance general purpose server CPU, further extending the performance, energy efficiency, and TCO [total cost of ownership] advantages of our EPYC processors. We remain on track to launch Genoa in the second half of the year. ... Development of our higher core count Bergamo processors optimized for high throughput cloud workloads continues to progress well, with shipments on track to begin in the first half of 2023.”

Q1 Fiscal 2022 Results: Xilinx Segment

“For the six weeks following acquisition close, Xilinx revenue was $559 million. On a pro-forma basis for the full quarter, Xilinx delivered its fourth straight quarter of greater than 20 percent year-over-year revenue growth, and the second straight quarter of greater than $1 billion of revenue.

“In data center, first-quarter demand was led by expanded FPGA-as-a-service and smart NIC deployments at tier-one hyperscalers as well as low-latency networking solutions with FinTech companies. We saw strengthened communications led by direct demand and access and optical transport. In wireless, [Xilinx] Versal-based 5G deployments continue ramping in multiple regions. ... Looking forward, we see very strong demand across all of the Xilinx end markets and are focused on increasing supply.

“[Since the Xilinx deal] closed, we have seen tremendous excitement from our customers, partners, and employees, and we expect to see significant product and revenue synergies. We now have the best portfolio of high performance and adaptive computing engines in the industry. “And we see multiple opportunities to leverage our expanded technology portfolio to deliver even stronger products. As one example, we‘re integrating Xilinx’s differentiated AI engine across our CPU product portfolio to enable industry-leading inference capabilities with the first product expected in 2023.”

Q1 Fiscal 2022 Results: The Numbers

For its first fiscal quarter of 2022, which ended March 26, AMD reported total revenue of $5.9 billion, up an impressive 71 percent over the $3.4 billion the company reported for its first quarter of fiscal 2021. That revenue number includes six weeks of Xilinx revenue. Excluding the Xilinx revenue, AMD had organic revenue in the quarter of $5.3 billion – still up 55 percent higher than the same quarter as last year.

Both revenue numbers made the quarter AMD’s highest ever in terms of revenue.

For the quarter, AMD also recorded GAAP net income of $786 million, or 56 cents per share, up considerably over the $555 million, or 45 cents per share, the company reported last year. On a non-GAAP basis, net income for the quarter was $1.6 billion, or $1.13 per share, more than double last year’s net income of $642 million, or 52 cents per share.

Looking ahead, Su said AMD is projecting faster than expected growth for all of fiscal 2022.

“Based on higher AMD organic growth, as well as the addition of Xilinx with strong demand across multiple end markets, we now expect annual revenue to grow by approximately 60 percent year-over-year, up from approximately 31 percent growth we guided at the beginning of the year,” she said.

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