Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: Intel Corporation’s dominance of the microprocessor market and its aggressive business practices; economic and market uncertainty; cyclical nature of the semiconductor industry; market conditions of the industries in which AMD products are sold; loss of a significant customer; public health crises, such as pandemics and epidemics; competitive markets in which AMD’s products are sold; quarterly and seasonal sales patterns; AMD's ability to adequately protect its technology or other intellectual property; unfavorable currency exchange rate fluctuations; ability of third party manufacturers to manufacture AMD's products on a timely basis in sufficient quantities and using competitive technologies; availability of essential equipment, materials, substrates or manufacturing processes; ability to achieve expected manufacturing yields for AMD’s products; AMD's ability to introduce products on a timely basis with expected features and performance levels; AMD's ability to generate revenue from its semi-custom SoC products; potential security vulnerabilities; potential security incidents including IT outages, data loss, data breaches and cyberattacks; potential difficulties in operating AMD’s newly upgraded enterprise resource planning system; uncertainties involving the ordering and shipment of AMD’s products; AMD’s reliance on third-party intellectual property to design and introduce new products in a timely manner; AMD's reliance on third-party companies for design, manufacture and supply of motherboards, software, memory and other computer platform components; AMD's reliance on Microsoft and other software vendors' support to design and develop software to run on AMD’s products; AMD’s reliance on third-party distributors and add-in-board partners; impact of modification or interruption of AMD’s internal business processes and information systems; compatibility of AMD’s products with some or all industry-standard software and hardware; costs related to defective products; efficiency of AMD's supply chain; AMD's ability to rely on third party supply-chain logistics functions; AMD’s ability to effectively control sales of its products on the gray market; long-term impact of climate change on AMD’s business; impact of government actions and regulations such as export regulations, tariffs and trade protection measures; AMD’s ability to realize its deferred tax assets; potential tax liabilities; current and future claims and litigation; impact of environmental laws, conflict minerals-related provisions and other laws or regulations; evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters; issues related to the responsible use of AI; impact of acquisitions, joint ventures and/or investments on AMD’s business and AMD’s ability to integrate acquired businesses; impact of any impairment of the combined company’s assets; restrictions imposed by agreements governing AMD’s notes, the guarantees of Xilinx’s notes and the revolving credit facility; AMD's indebtedness; AMD's ability to generate sufficient cash to meet its working capital requirements or generate sufficient revenue and operating cash flow to make all of its planned R&D or strategic investments; political, legal and economic risks and natural disasters; future impairments of technology license purchases; AMD’s ability to attract and retain qualified personnel; and AMD’s stock price volatility.
SELECTED CORPORATE DATA(Millions) (Unaudited) Three Months Ended March 30,2024 December 30,2023 April 1,2023Segment and Category Information(1) Data Center Net revenue $2,337 $2,282 $1,295 Operating income $541 $666 $148 Client Net revenue $1,368 $1,461 $739 Operating income (loss) $86 $55 $(172)Gaming Net revenue $922 $1,368 $1,757 Operating income $151 $224 $314 Embedded Net revenue $846 $1,057 $1,562 Operating income $342 $461 $798 All Other Net revenue $— $— $— Operating loss $(1,084) $(1,064) $(1,233)Total Net revenue $5,473 $6,168 $5,353 Operating income (loss) $36 $342 $(145) Other Data Capital expenditures $142 $139 $158 Adjusted EBITDA (2) $1,295 $1,576 $1,257 Cash, cash equivalents and short-term investments $6,035 $5,773 $5,939 Free cash flow (3) $379 $242 $328 Total assets $67,895 $67,885 $67,634 Total debt $2,468 $2,468 $2,467 (1) The Data Center segment primarily includes server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) accelerators and Adaptive System-on-Chip (SoC) products for data centers. The Client segment primarily includes CPUs, APUs, and chipsets for desktop, notebook and handheld personal computers. The Gaming segment primarily includes discrete GPUs, and semi-custom SoC products and development services. The Embedded segment primarily includes embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products. From time to time, the Company may also sell or license portions of its IP portfolio. All Other category primarily includes certain expenses and credits that are not allocated to any of the operating segments, such as amortization of acquisition-related intangible asset, employee stock-based compensation expense, acquisition-related and other costs, inventory loss at contract manufacturer, and licensing gain. (2) Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA Three Months Ended March 30,2024 December 30,2023 April 1,2023GAAP net income (loss) $123 $667 $(139)Interest expense 25 27 25 Other (income) expense, net (53) (49) (43)Income tax provision (benefit) (52) (297) 13 Equity income in investee (7) (6) (1)Stock-based compensation 371 374 305 Depreciation and amortization 162 164 159 Amortization of acquisition-related intangibles 622 635 823 Inventory loss at contract manufacturer 65 — — Acquisition-related and other costs 39 61 115 Adjusted EBITDA $1,295 $1,576 $1,257 The Company presents "Adjusted EBITDA” as a supplemental measure of its performance.
AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in millions, except per share data) (Unaudited) Three Months Ended March 30,2024 December 30,2023 April 1,2023 GAAP gross profit $2,560 $2,911 $2,359 GAAP gross margin 47% 47% 44%Stock-based compensation 6 6 8 Amortization of acquisition-related intangibles 230 215 305 Acquisition-related and other costs (1) — 1 3 Inventory loss at contract manufacturer (2) 65 — — Non-GAAP gross profit $2,861 $3,133 $2,675 Non-GAAP gross margin 52% 51% 50% GAAP operating expenses $2,537 $2,575 $2,514 GAAP operating expenses/revenue % 46% 42% 47%Stock-based compensation 365 368 297 Amortization of acquisition-related intangibles 392 420 518 Acquisition-related and other costs (1) 39 60 112 Non-GAAP operating expenses $1,741 $1,727 $1,587 Non-GAAP operating expenses/revenue % 32% 28% 30% GAAP operating income (loss) $36 $342 $(145)GAAP operating margin 1% 6% (3)%Stock-based compensation 371 374 305 Amortization of acquisition-related intangibles 622 635 823 Acquisition-related and other costs (1) 39 61 115 Inventory loss at contract manufacturer (2) 65 — — Non-GAAP operating income $1,133 $1,412 $1,098 Non-GAAP operating margin 21% 23% 21% Three Months Ended March 30,2024 December 30,2023 April 1,2023GAAP net income (loss) / earnings (loss) per share $123 $0.07 $667 $0.41 $(139) $(0.09)(Gains) losses on equity investments, net 3 — 1 — (1) — Stock-based compensation 371 0.23 374 0.23 305 0.19 Equity income in investee (7) — (6) — (1) — Amortization of acquisition-related intangibles 622 0.38 635 0.39 823 0.51 Acquisition-related and other costs (1) 39 0.02 61 0.04 115 0.07 Inventory loss at contract manufacturer (2) 65 0.04 — — — — Income tax provision (203) (0.12) (483) (0.30) (132) (0.08)Non-GAAP net income / earnings per share $1,013 $0.62 $1,249 $0.77 $970 $0.60 (1) Acquisition-related and other costs primarily comprised of transaction costs, purchase price adjustments for inventory, certain compensation charges, contract termination and workforce rebalancing charges.(2) Inventory loss at contract manufacturer is related to an incident at a third-party contract manufacturing facility. About AMD For more than 50 years AMD has driven innovation in high-performance computing, graphics and visualization technologies.
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