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

IT House reported on November 2 that on Tuesday, local time, AMD announced its earnings report for the third quarter of 2022 at the close of trading.

The results announcement came after AMD released preliminary earnings forecasts in early October, with revenue reaching $5.6 billion and an annual growth rate of 29% at a time when the PC market was facing low inflation. What's more, AMD's non-GAAP results and cash flow both showed solid growth, indicating a solid foundation despite operating losses on GAAP results due to the acquisition of Xilinx.

According to its earnings report, AMD reported a third-quarter profit of $66 million and revenue of about $5.6 billion, compared to a net operating loss of $64 million for the quarter if you take into account the expenses spent on acquiring Xilinx. By comparison, the company had revenue of $4.3 billion and profit of $923 million in the third quarter of last year.

For non-GAAP results, AMD's revenue increased by 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 the cost of products and other expenses (such as salaries) and deducting them from revenue or net sales.

In terms of 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 decline. AMD's current GAAP and non-GAAP earnings per share are 4 cents and 67 cents, respectively.

In a critical quarter of industry downturn, the key points of AMD's latest earnings report are the company's operations and free cash flow. AMD received a total of $965 million in operating cash flow and $842 million in free cash flow during the quarter, up 15% and 10%, respectively, compared to $849 million and $764 million in the same period last year.

AMD said the company failed to meet its targets for the quarter because of "a weak PC market and a significant inventory cut in the PC supply chain," and a significant factor in the decline in profits was accounting after acquiring chip company Xilinx for about $50 billion in February.

After deducting the cost of acquiring Xilinx, AMD's gross margin (which reflects product cost as a percentage of total revenue) continued to grow this quarter, mainly due to more revenue sales from more expensive data center and enterprise products. Non-GAAP operating margin of 50%, in line with AMD's own goals.

In addition, the company did see growth in some areas, and while the market for gaming graphics cards is no longer 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 sales of semi-custom products." This could refer to custom chips for consoles like the PlayStation 5, Xbox Series S and X, and Steam Deck.

Elsewhere, AMD's data center division also achieved a 45% year-over-year increase, despite the strong sales of AMD EPYC chips and the significant increase in the embedded business due to the acquisition of Xilinx.

AMD will release the new generation of processors on November 10 and will release its latest GPU architecture on the 3rd. AMD's CEO Lisa Su said on the company's earnings call that the company is also betting that she believes there will still be many people willing to buy the console as the winter break approaches.

Looking ahead, AMD expects revenue of $5.5 billion in the fourth quarter and $23.5 billion in full-year 2022. By 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 achieve an annual growth rate of 68%.

As of press time, AMD shares rose about 4.02% to $62.06 per share after hours.