AMD's third-quarter revenue was about $5.6 billion, and the Sony PS and Microsoft Xbox custom chip business was very good

IT House News on November 2, local time on Tuesday, AMD closed with its earnings report for the third quarter of 2022.

The results come after AMD released preliminary earnings in early October, with revenue of $5.6 billion and annual growth of 29% at a time when the PC market was facing low inflation. More importantly, AMD's non-GAAP results and cash flow showed solid growth, indicating that the company was on solid footing, despite operating losses in GAAP results as a result of the acquisition of Xilinx.

According to its earnings report, AMD had a third-quarter profit of $66 million and revenue of about $5.6 billion, while the company's net operating loss for the quarter was $64 million if expenses incurred to acquire Xilinx are taken into account. For comparison, the company generated $4.3 billion in revenue and $923 million in profit in the third quarter of last year.

For non-GAAP results, AMD revenue grew approximately 20% year-over-year to $1.2 billion. Of course, the company's operating income measures the money left to it after taking into account product costs and other expenses (such as salaries) and deducting from revenue or net sales.

In terms of net income, AMD generated only $1.1 billion in non-GAAP revenue and $66 million in GAAP revenue, representing a 23% increase and a 93% year-over-year decline. AMD's current GAAP and non-GAAP earnings per share are 4 cents and 67 cents, respectively.

In a pivotal quarter of the industry downturn, the key points of AMD's latest earnings report are the company's operations and free cash flow. AMD recorded a total of $965 million in operating cash flow and $842 million in free cash flow in the quarter, up 15% and 10%, respectively, from $849 million and $764 million in the year-ago quarter.

AMD said it missed its targets for the quarter because of "a weak PC market and significant inventory cuts in the PC supply chain," and an important factor in the decline in profit was the accounting treatment that followed the acquisition of chip company Xilinx for about $50 billion in February.

Excluding the acquisition of Xilinx, AMD's gross margin (reflecting product costs as a percentage of total revenue) continued to increase in the quarter, driven by more expensive data center and enterprise products that helped them achieve more revenue sales. Non-GAAP operating margin of 50% is in line with AMD's own targets.

In addition, the company did see growth in some areas, and while the market for gaming graphics cards is not as hot as it was during the previous mining boom, AMD said that its gaming segment (revenue) increased by 14%, or $1.6 billion, thanks to "higher semi-custom product sales." This could refer to custom chips for consoles such as the PlayStation 5, Xbox Series S and X, and Steam Deck.

In other areas, AMD's data center division also achieved a 45% year-over-year increase, after all, AMD EPYC chip sales are still very good, and the embedded business has also improved significantly due to the acquisition of Xilinx.

AMD will release its next-generation processors on November 10 and will release its latest GPU architecture on November 3. AMD's CEO Lisa Su said on the company's earnings call that the company is also betting that with the winter break, she believes there will be many more people willing to buy the console.

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 revenue in the fourth quarter of 2021 and $16 billion in full-year revenue, which means the company will grow at an annual rate of 68%.

As of IT House press time, AMD shares are up about 4.02% after hours at $62.06 per share.