Advanced Micro Devices, Inc.

Greetings, and welcome to the AMD fourth quarter and fiscal year 2019 conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Laura Graves. Corporate Vice President, Investor Relations for AMD. Please go ahead, Laura.

Thank you, and welcome to AMD's fourth quarter and year-end 2019 Financial Results Conference Call. By now, you should have had the opportunity to review a copy of our earnings release and slides. If you have not reviewed these documents, they can be found on the Investor Relations page of AMD's website, amd.com. Participants on today's conference call are Dr. Lisa Su, our President and Chief Executive Officer, and Devinder Kumar, our Senior Vice President, Chief Financial Officer, and Treasurer. This is a live call and will be replayed via webcast on our website. I would like to highlight some important dates for you. On the afternoon of Thursday, March 5th, we will hold our Financial Analyst Day at our headquarters in Santa Clara, California, and our first quarter 2020 quiet time is expected to begin at the close of business on Friday, March 13th. Today's discussion contains forward-looking statements based on the environment as we currently see it. Those statements are based on current beliefs, assumptions, and expectations, speak only as of the current date, and as such involve risks and uncertainties that could cause actual results to differ materially from our expectations. We will refer primarily to non-GAAP financial measures during this call, except for revenue and segment operational results, which are on a GAAP basis. The non-GAAP financial measures referenced herein are reconciled to their most directly comparable GAAP financial measure in today's press release posted on our website. Please refer to the cautionary statement in our press release for more information on risks related to any forward-looking statements that we may make. You will also find detailed discussions about our risk factors in our filings with the SEC and, in particular, AMD's quarterly report on Form 10-Q for the quarter ended September 28, 2019. With that, I will hand the call over to Lisa. Lisa?

Thank you, Laura, and good afternoon to all those listening in today. 2019 marked another major milestone in our multi-year journey. We delivered record annual revenue of $6.73 billion and significantly increased both gross margin and net income as we successfully introduced and ramped the strongest product portfolio in our 50-year history. We grew client and server processor annual revenue by one and a half billion dollars in 2019, driven largely by the strong demand for our seven nanometer Ryzen and EPYC processors powered by our Zen 2 processor core. Looking at the fourth quarter, we ended the year very strong with quarterly revenue increasing 50% year over year to a record 2.13 billion, while also significantly increasing net income. Turning to our computing and graphics segment, fourth quarter revenue increased 69% year-over-year to $1.66 billion. Ryzen processor adoption accelerated sharply in 2019, helping to drive significant double-digit percentage increases in client processor annual unit shipments, ASPs, and revenue. We ended 2019 with our highest quarterly client processor unit shipment in more than six years based on strong demand for Ryzen desktop and mobile processors. In desktop, we had a very strong holiday season as our second and third generation Ryzen processors consistently held top sales spots at the largest global e-tailers and retailers. We launched our Ryzen 3950X processor, and the 24 and 32 core versions of our third-generation Ryzen Threadripper processors in November. Our 16-core Ryzen 3950X processor is the world's fastest mainstream desktop processor, while our latest Threadripper CPUs offer unmatched performance for the high-end desktop market. In January, we expanded our leadership position in the HEDT market with the launch of our flagship 64-core Ryzen Threadripper processor, which is the world's highest performance desktop processor. In mobile, we had our eighth straight quarter of strong double-digit percentage year-over-year revenue growth as we expanded the number of AMD-powered laptops available for major OEMs. We began shipping our Ryzen 4000 mobile processors powered by our Zen 2 core at the end of the fourth quarter. These new processors double the performance per watt of our prior generation and deliver leadership single-threaded, multi-threaded, and graphics performance for thin and light notebooks, while enabling the industry's first ultra-thin laptops with eight cores. Initial systems featuring the Ryzen 4000 processors are expected to launch later this quarter, and more than 100 AMD-based consumer and commercial laptops are planned for 2020, from Acer, Asus, Dell, HP, Lenovo, and other major OEMs. In graphics, fourth quarter unit shipments grew by a strong double-digit percentage year over year, driven by sales of our Radeon RX 5000 series GPUs, featuring our new RDNA architecture. We further expanded our portfolio of RDNA GPUs with the introductions of the 5500 XT and 5600 XT desktop graphics cards, highlighted by strong third-party reviews that clearly established 5600 XT as the most powerful gaming GPU available for under $300. We launched our Radeon 5000M mobile GPUs in the quarter as well, and we are seeing solid design win momentum based on their strong performance and power efficiency. The first laptops powered by the new GPUs are available now, including the recently updated Apple MacBook Pro, and we expect many more notebooks featuring our Radeon 5000M GPUs to launch throughout 2020. Data center GPU revenue increased sequentially, driven by cloud VDI and game streaming deployments. We announced a major update to our open source GPU computing software stack in the fourth quarter, featuring performance optimizations, expanded development tools, and support for the most popular machine learning frameworks. We continue making strategic software investments to make it easier for developers to tap into the full capabilities of our Radeon Instinct accelerators for HPC and AI applications. For the year, data center GPU revenue grew by a strong double-digit percentage as we continued to make progress growing our presence in this important part of the market. Turning to our enterprise embedded and semi-custom segment, Revenue of $465 million increased 7% year-over-year as Epic processor revenue growth offset declines in semi-custom revenue. Semi-custom sales continued to soften in the quarter in advance of the next generation console launches from Sony and Microsoft planned this year. For 2020, we expect first quarter semi-custom revenue to be negligible and the ramp of next generation semi-custom products to start in the second quarter with revenue to be heavily weighted towards the second half of the year. In server, revenue grew by a strong double-digit percentage as unit shipments and ASPs increased sequentially, driven by demand for our second-gen EPIC processors. Our second-gen EPIC processors are ramping significantly faster than the first generation, as we see particular strength for our higher core count models where our performance and TCO advantages are the most significant. Cloud adoption with the largest providers continues to accelerate, driven by the expanding use of EPIC processors to power their critical internal workloads, as well as a significant increase in the number of AMD-powered instances publicly available. Shipments to cloud providers increase sequentially by a significant double-digit percentage to support expanding build-outs at Amazon, Google, Microsoft, Oracle, and Tencent. Microsoft announced the availability of four new virtual machines, and AWS announced two new EC2 instances powered by second-gen EPIC processors. In the enterprise, Dell began shipping their full portfolio of servers powered by our latest EPIC processors. We have doubled the number of EPIC processor platforms in market to more than 100 offerings in the quarter. These new platforms are driving increased enterprise customer engagements, broadening our sales pipeline considerably. In HPC, we secured multiple large wins in the quarter based on our unmatched performance and scalability, highlighted by French, German, and UK National Supercomputing Center deployments, as well as the San Diego Supercomputing Center. We are pleased with the significant traction and momentum in our server business and remain on track to achieve our goal of double-digit percentage unit share by mid-year based on the growing demand for our second-gen EPIC processors. I am very proud of our 2019 accomplishments as the successful ramps of our latest Ryzen, Radeon, and EPIC processors resulted in record annual revenue and substantial increases in gross margin and net income. I want to take a moment to recognize the more than 11,000 AMDers around the world whose focus and determination enabled us to achieve these results. We entered 2020 well-positioned to continue gaining share across the PC, gaming, and server markets based on having an unmatched portfolio of leadership products spanning from desktops to laptops, data centers, and game consoles. With more than 27 nanometer designs in production or development, we are very excited about our next wave of products that can accelerate our growth in 2020 and beyond. We are still in the early stages of our journey and remain focused on meeting our commitments as we establish AMD as the high performance computing and graphics leader. Now I'd like to turn the call over to Devinder to provide some additional color on our fourth quarter and full year financial performance.