AMD(AMD) - 2025 Q2 - Quarterly Results

Q2 2025 Financial Highlights AMD achieved record Q2 2025 revenue of $7.7 billion, growing 32% year-over-year, despite an $800 million impact from U.S. export controls Overview of Q2 2025 Performance AMD reported record revenue of $7.7 billion in Q2 2025, marking a 32% year-over-year growth, significantly impacted by U.S. Government export controls on AMD Instinct™ MI308 data center GPU products Q2 2025 Key Financial Highlights (GAAP & Non-GAAP) | Metric | GAAP (Q2 2025) (Million USD) | Non-GAAP (Q2 2025) (Million USD) | | :----------------------- | :--------------------------- | :------------------------------- | | Revenue | $7,700 | $7,700 | | Gross Margin | 40% | 43% | | Operating Income (Loss) | $(134) | $897 | | Net Income | $872 | $781 | | Diluted EPS | $0.54 | $0.48 | - Second quarter revenue was a record $7.7 billion, representing 32% year-over-year growth[2] - Q2 2025 results were impacted by U.S. Government's export control on AMD Instinct™ MI308 data center GPU products, leading to approximately $800 million in inventory and related charges; excluding these charges, non-GAAP gross margin would have been approximately 54%[2] Quarterly Financial Results This section details AMD's GAAP and non-GAAP financial performance for Q2 2025, comparing it to prior periods and highlighting key changes in revenue, margins, and profitability GAAP Quarterly Financial Results AMD's GAAP financial results for Q2 2025 show significant year-over-year growth in revenue, net income, and diluted EPS, despite a decrease in gross margin and an operating loss compared to the prior year and previous quarter GAAP Quarterly Financial Results (Q2 2025 vs. Q2 2024 & Q1 2025) | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Y/Y Change | Q1 2025 (Million USD) | Q/Q Change | | :------------------------- | :-------------------- | :-------------------- | :------------------- | :-------------------- | :------------------- | | Revenue | $7,685 | $5,835 | Up 32% | $7,438 | Up 3% | | Gross profit | $3,059 | $2,864 | Up 7% | $3,736 | Down 18% | | Gross Margin | 40% | 49% | Down 9 percentage points | 50% | Down 10 percentage points | | Operating expenses | $3,193 | $2,595 | Up 23% | $2,930 | Up 9% | | Operating Income (Loss) | $(134) | $269 | Down 150% | $806 | Down 117% | | Operating Margin | (2)% | 5% | Down 7 percentage points | 11% | Down 13 percentage points | | Net Income | $872 | $265 | Up 229% | $709 | Up 23% | | Diluted EPS | $0.54 | $0.16 | Up 238% | $0.44 | Up 23% | Non-GAAP Quarterly Financial Results AMD's non-GAAP results for Q2 2025 show strong revenue growth year-over-year, but a decline in gross margin, operating income, net income, and diluted EPS compared to both the prior year and previous quarter, primarily due to the impact of export restrictions Non-GAAP Quarterly Financial Results (Q2 2025 vs. Q2 2024 & Q1 2025) | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Y/Y Change | Q1 2025 (Million USD) | Q/Q Change | | :------------------------- | :-------------------- | :-------------------- | :------------------- | :-------------------- | :------------------- | | Revenue | $7,685 | $5,835 | Up 32% | $7,438 | Up 3% | | Gross profit | $3,326 | $3,101 | Up 7% | $3,992 | Down 17% | | Gross Margin | 43% | 53% | Down 10 percentage points | 54% | Down 11 percentage points | | Operating expenses | $2,429 | $1,837 | Up 32% | $2,213 | Up 10% | | Operating income | $897 | $1,264 | Down 29% | $1,779 | Down 50% | | Operating Margin | 12% | 22% | Down 10 percentage points | 24% | Down 12 percentage points | | Net Income | $781 | $1,126 | Down 31% | $1,566 | Down 50% | | Diluted EPS | $0.48 | $0.69 | Down 30% | $0.96 | Down 50% | Segment Performance Overview This section analyzes the financial performance of AMD's Data Center, Client and Gaming, and Embedded segments, highlighting key revenue drivers and year-over-year changes Data Center Segment The Data Center segment achieved $3.2 billion in revenue, a 14% year-over-year increase, primarily driven by strong demand for AMD EPYC™ processors, which offset the impact of export restrictions on AMD Instinct MI308 shipments to China - Data Center segment revenue was $3.2 billion, up 14% year-over-year[9] - Growth was primarily driven by strong demand for AMD EPYC™ processors, offsetting headwinds impacting AMD Instinct MI308 shipments to China[9] Client and Gaming Segment The Client and Gaming segment reported $3.6 billion in revenue, a substantial 69% year-over-year increase, fueled by record client revenue from 'Zen 5' AMD Ryzen™ desktop processors and robust gaming revenue - Client and Gaming segment revenue was $3.6 billion, up 69% year-over-year[9] - Client revenue reached a record $2.5 billion, up 67% year-over-year, driven by strong demand for 'Zen 5' AMD Ryzen™ desktop processors and a richer product mix[9] - Gaming revenue was $1.1 billion, up 73% year-over-year, driven by an increase in semi-custom revenue and strong AMD Radeon™ GPU demand[9] Embedded Segment The Embedded segment generated $824 million in revenue, experiencing a slight 4% year-over-year decline due to mixed demand across its end markets - Embedded segment revenue was $824 million, down 4% year-over-year[9] - Demand in end markets for the Embedded segment remained mixed[9] Recent Business Highlights AMD announced new AI solutions, strategic partnerships, product portfolio expansions, and a significant corporate transaction, reinforcing its market position and future growth initiatives AI Solutions and Ecosystem AMD unveiled its latest AI solutions, roadmap, and vision for an open AI ecosystem at Advancing AI 2025, including new Instinct MI350 Series GPUs, the 'Helios' rack-scale solution, the ROCm™ 7 platform, and the AMD Developer Cloud - Announced AMD Instinct MI350 Series GPUs and systems for generative AI and high-performance computing[10] - Introduced the next-generation 'Helios' rack-scale solution powered by AMD Instinct MI400 GPUs, AMD EPYC 'Venice' CPUs, and AMD Pensando™ 'Vulcano' NICs[10] - Launched AMD ROCm™ 7 platform, the newest version of the AMD open-source AI software stack, with expanded support and enterprise capabilities[10] - Unveiled the AMD Developer Cloud, providing on-demand access to high-performance AMD Instinct MI300X GPUs for open-source contributors and developers[10] Strategic Partnerships and Infrastructure Deployments AMD expanded its strategic collaborations, securing new partnerships with HUMAIN, Red Hat, KDDI, Nokia, and Dell to deploy AMD Instinct GPUs and EPYC CPUs in data center and AI infrastructure, as well as 5G virtualized networks and cloud platforms - HUMAIN and AMD announced a strategic collaboration to deploy 500 megawatts of AI compute capacity over the next five years[10] - Red Hat and AMD expanded their collaboration for high-performance AI inference with vLLM on AMD Instinct GPUs and Red Hat OpenShift Virtualization on AMD EPYC CPUs[10] - KDDI and Nokia will leverage 4th and 5th Gen AMD EPYC CPUs for advanced 5G virtualized networks and Nokia Cloud Platform, respectively[10] - Dell announced new AI platforms, including PowerEdge XE9785 and XE9785L servers, maximizing performance with AMD Instinct MI350 Series GPUs and AMD EPYC CPUs[10] Product Portfolio Expansion AMD broadened its CPU and GPU offerings for various markets, including new Ryzen Threadripper processors for workstations, Radeon RX 9060 XT for gaming, Radeon AI PRO R9700 GPU for local AI inference, and Spartan™ UltraScale+™ FPGA devices for edge applications - Announced AMD Ryzen Threadripper™ 9000WX and Ryzen Threadripper PRO 9000X Series processors for demanding workstation workloads[10] - Launched the Radeon RX 9060 XT, offering leadership gaming performance-per-dollar[10] - Introduced the AMD Radeon AI PRO R9700 GPU, designed for local AI inference, model finetuning, and complex creative workloads[14] - Began shipments of the first AMD Spartan™ UltraScale+™ FPGA devices for cost-sensitive edge applications[14] - Collaborating with Bosch on next-generation robotaxi services in Europe, leveraging the AMD Versal™ device for security and real-time encryption[14] Corporate Transactions AMD announced a definitive agreement to sell ZT Systems' data center infrastructure manufacturing business to Sanmina for $3 billion in cash and stock, with Sanmina becoming a preferred manufacturing partner for AMD's cloud rack and cluster-scale AI solutions - AMD entered into a definitive agreement to sell ZT Systems' data center infrastructure manufacturing business to Sanmina for $3 billion in cash and stock, including a contingent payment of up to $450 million[14] - Sanmina will become a preferred new product introduction manufacturing partner for AMD cloud rack and cluster-scale AI solutions[14] - The transaction is expected to close near the end of 2025, subject to regulatory approvals and customary closing conditions[14] Third Quarter 2025 Outlook AMD provides its financial guidance for Q3 2025, projecting significant revenue growth and a strong non-GAAP gross margin, while noting the exclusion of certain export-restricted shipments Q3 2025 Guidance For the third quarter of 2025, AMD anticipates revenue of approximately $8.7 billion, representing significant year-over-year and sequential growth, with a non-GAAP gross margin of approximately 54% - AMD expects Q3 2025 revenue to be approximately $8.7 billion, plus or minus $300 million[12] - At the mid-point, this represents approximately 28% year-over-year growth and 13% sequential growth[12] - Non-GAAP gross margin is expected to be approximately 54%[12] - The current outlook does not include any revenue from AMD Instinct MI308 shipments to China due to ongoing license application review by the U.S. Government[12] Reconciliation of Non-GAAP Financial Measures This section provides detailed reconciliations from GAAP to non-GAAP financial measures, including gross profit, operating income, net income, and diluted EPS, along with an adjusted gross margin excluding export restriction impacts GAAP to Non-GAAP Adjustments This section provides a detailed reconciliation of GAAP to non-GAAP financial measures for gross profit, operating expenses, operating income, net income, and diluted earnings per share, highlighting adjustments for stock-based compensation, amortization of acquisition-related intangibles, and acquisition-related and other costs Reconciliation of GAAP to Non-GAAP Financial Measures (Q2 2025) | Metric | GAAP (Q2 2025) (Million USD) | Adjustments (Million USD) | Non-GAAP (Q2 2025) (Million USD) | | :-------------------------------------- | :--------------------------- | :------------------------ | :------------------------------- | | Gross Profit | $3,059 | $267 | $3,326 | | Gross Margin | 40% | | 43% | | Operating Expenses | $3,193 | $(764) | $2,429 | | Operating Income (Loss) | $(134) | $1,031 | $897 | | Net Income | $872 | $(91) | $781 | | Diluted EPS | $0.54 | $(0.06) | $0.48 | - Adjustments primarily include stock-based compensation, amortization of acquisition-related intangibles, and acquisition-related and other costs[15] - A significant non-GAAP adjustment in Q2 2025 was the release of reserves for uncertain tax positions of $(853) million, related to dual consolidated losses approved by IRS[15] Adjusted Non-GAAP Gross Margin (Excluding Export Restrictions) AMD provides an adjusted non-GAAP gross profit and gross margin that excludes the $800 million in inventory and related charges associated with U.S. export restrictions, demonstrating the underlying profitability without this specific impact Adjusted Non-GAAP Gross Margin (Q2 2025) | Metric | Amount (Million USD) | | :------------------------------------------------------------------------ | :------------------- | | GAAP Gross Profit | $3,059 | | Stock-based compensation, amortization of acquisition-related intangibles, acquisition-related and other costs | $267 | | Inventory and related charges associated with U.S. export restrictions | $800 | | Non-GAAP Gross Profit (as adjusted) | $4,126 | | Non-GAAP Gross Margin (as adjusted) | 54% | - Excluding the $800 million in inventory and related charges due to U.S. export restrictions, the adjusted non-GAAP gross margin would have been 54%[17] Consolidated Financial Statements This section presents AMD's condensed consolidated statements of operations, balance sheets, and cash flows, offering a comprehensive view of the company's financial performance and position Condensed Consolidated Statements of Operations The condensed consolidated statements of operations provide a detailed breakdown of AMD's revenue, cost of sales, operating expenses, and net income for the three and six months ended June 28, 2025, compared to prior periods, reflecting the impact of various income and expense items Condensed Consolidated Statements of Operations (Q2 2025 vs. Q2 2024 & Q1 2025) | Metric | Q2 2025 (Million USD) | Q1 2025 (Million USD) | Q2 2024 (Million USD) | | :------------------------------------------ | :-------------------- | :-------------------- | :-------------------- | | Net revenue | $7,685 | $7,438 | $5,835 | | Total cost of sales | $4,626 | $3,702 | $2,971 | | Gross profit | $3,059 | $3,736 | $2,864 | | Gross Margin | 40% | 50% | 49% | | Total operating expenses | $3,193 | $2,930 | $2,595 | | Operating Income (Loss) | $(134) | $806 | $269 | | Income from Continuing Operations, Net of Tax| $768 | $709 | $265 | | Income from Discontinued Operations, Net of Tax| $104 | — | — | | Net Income | $872 | $709 | $265 | | Diluted EPS | $0.54 | $0.44 | $0.16 | Condensed Consolidated Balance Sheets The condensed consolidated balance sheets present AMD's financial position as of June 28, 2025, compared to December 28, 2024, showing increases in total assets, current assets (especially assets held for sale), and stockholders' equity, alongside changes in liabilities Condensed Consolidated Balance Sheets (June 28, 2025 vs. December 28, 2024) | Asset/Liability/Equity | June 28, 2025 (Million USD) | December 28, 2024 (Million USD) | | :----------------------------------------- | :-------------------------- | :------------------------------ | | Total Current Assets | $24,519 | $19,049 | | Assets Held for Sale | $4,326 | — | | Goodwill | $25,083 | $24,839 | | Total Assets | $74,820 | $69,226 | | Total Current Liabilities | $9,843 | $7,281 | | Liabilities Held for Sale | $1,968 | — | | Long-Term Debt | $3,218 | $1,721 | | Total Stockholders' Equity | $59,665 | $57,568 | | Total Liabilities and Stockholders' Equity | $74,820 | $69,226 | - Assets held for sale increased significantly to $4,326 million as of June 28, 2025, reflecting the classification of ZT Systems' manufacturing business[23] - Total assets grew from $69,226 million at year-end 2024 to $74,820 million by Q2 2025[23] Condensed Consolidated Statements of Cash Flows The condensed consolidated statements of cash flows detail AMD's cash generation and usage across operating, investing, and financing activities for the three and six months ended June 28, 2025, reporting strong net cash provided by operating activities and a net cash outflow from investing activities Condensed Consolidated Statements of Cash Flows (Q2 2025 vs. Q2 2024) | Cash Flow Activity | Q2 2025 (Million USD) | Q2 2024 (Million USD) | | :--------------------------------------------------------- | :-------------------- | :-------------------- | | Net Cash Provided by Operating Activities of Continuing Operations | $1,462 | $593 | | Net Cash Provided by Operating Activities of Discontinued Operations | $549 | — | | Net Cash Flows Provided by Operations | $2,011 | $593 | | Net Cash Flows (Used in) Provided by Investing Activities | $(2,298) | $386 | | Net Cash (Used in) Provided by Financing Activities of Continuing Operations | $(1,319) | $(1,056) | | Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash | $(1,606) | $(77) | | Cash, Cash Equivalents and Restricted Cash at End of Period | $4,453 | $4,113 | - Net cash provided by operating activities significantly increased to $2,011 million in Q2 2025 from $593 million in Q2 2024[24] - Net cash used in investing activities was $(2,298) million in Q2 2025, compared to net cash provided of $386 million in Q2 2024, largely due to acquisitions, net of cash acquired ($1,716 million)[24] Supplemental Financial Data and Reconciliations This section presents supplemental financial data, including segment operating income, capital expenditures, Adjusted EBITDA, and free cash flow, along with their respective reconciliations Selected Corporate Data This section provides key corporate data including segment operating income, capital expenditures, Adjusted EBITDA, cash and investments, free cash flow, total assets, and total debt, offering insights into operational efficiency and financial health Selected Corporate Data (Q2 2025 vs. Q2 2024 & Q1 2025) | Metric | Q2 2025 (Million USD) | Q1 2025 (Million USD) | Q2 2024 (Million USD) | | :-------------------------------------- | :-------------------- | :-------------------- | :-------------------- | | Data Center Segment Operating Income (Loss) | $(155) | $932 | $743 | | Client and Gaming Segment Operating Income | $767 | $496 | $166 | | Embedded Segment Operating Income | $275 | $328 | $345 | | Capital Expenditures | $282 | $212 | $154 | | Adjusted EBITDA | $1,088 | $1,954 | $1,430 | | Free Cash Flow | $1,180 | $727 | $439 | | Total Assets | $74,820 | $71,550 | $67,886 | | Total Debt | $3,218 | $4,164 | $1,719 | - Free cash flow increased significantly to $1,180 million in Q2 2025, up from $439 million in Q2 2024[25] - Data Center segment operating income shifted to a loss of $(155) million in Q2 2025, compared to income of $743 million in Q2 2024[25] Adjusted EBITDA Reconciliation This reconciliation details the adjustments made to GAAP net income to arrive at Adjusted EBITDA, a supplemental measure used by management to assess performance by excluding non-core operating items such as interest, taxes, depreciation, amortization, stock-based compensation, and acquisition-related costs Reconciliation of GAAP Net Income to Adjusted EBITDA (Q2 2025) | Metric | Q2 2025 (Million USD) | | :------------------------------------------ | :-------------------- | | GAAP Net Income | $872 | | Interest Expense | $38 | | Other (Income) Expense, Net | $(98) | | Income Tax Provision (Benefit) | $(834) | | Equity Income in Investee | $(8) | | Stock-Based Compensation | $369 | | Depreciation and Amortization | $189 | | Amortization of Acquisition-Related Intangibles | $568 | | Acquisition-Related and Other Costs | $96 | | Income from Discontinued Operations, Net of Tax | $(104) | | Adjusted EBITDA | $1,088 | - Adjusted EBITDA for Q2 2025 was $1,088 million, down from $1,430 million in Q2 2024[29] Free Cash Flow Reconciliation The free cash flow reconciliation shows how GAAP net cash provided by operating activities of continuing operations is adjusted for capital expenditures to derive free cash flow, a key liquidity measure for investors Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow (Q2 2025) | Metric | Q2 2025 (Million USD) | | :-------------------------------------------------------- | :-------------------- | | GAAP Net Cash Provided by Operating Activities of Continuing Operations | $1,462 | | Operating Cash Flow Margin from Continuing Operations (%) | 19% | | Purchases of Property and Equipment | $(282) | | Free Cash Flow | $1,180 | | Free Cash Flow Margin (%) | 15% | - Free cash flow for Q2 2025 was $1,180 million, with a free cash flow margin of 15%[30] - Operating cash flow margin from continuing operations was 19% in Q2 2025, up from 10% in Q2 2024[30] Additional Information This section provides details on the Q2 2025 earnings teleconference, an overview of AMD's mission and impact, and a cautionary statement regarding forward-looking information and non-GAAP financial measures Teleconference Information AMD held a conference call on August 5, 2025, to discuss its second quarter 2025 financial earnings results, with a real-time audio broadcast available on its Investor Relations website - AMD held a conference call on August 5, 2025, at 2:00 p.m. PT (5:00 p.m. ET) to discuss Q2 2025 financial results[13] - A real-time audio broadcast of the teleconference was available on the Investor Relations page of AMD's website[13] About AMD AMD is a global leader in high-performance computing, graphics, and visualization technologies, with over 55 years of innovation, focusing on building leadership products that push technological boundaries and serve diverse global customers - AMD has driven innovation in high-performance computing, graphics, and visualization technologies for over 55 years[18] - The company focuses on building leadership high-performance and adaptive products[18] - AMD technology is relied upon by billions of people, leading Fortune 500 businesses, and cutting-edge scientific research institutions globally[18] Cautionary Statement This section advises investors that the press release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from current expectations, and clarifies the use and limitations of non-GAAP financial measures - The press release contains forward-looking statements regarding future products, growth, strategic investments, the ZT Systems sale, and Q3 2025 financial outlook[19] - Investors are cautioned that these statements are based on current beliefs and assumptions and involve risks and uncertainties that could cause actual results to differ materially[19] - Non-GAAP financial measures are provided to make it easier for investors to compare operating results and performance across periods, by excluding items not indicative of core operating performance, and should be viewed in addition to GAAP results[20]