Advanced Micro Devices, Inc.

Greetings, and welcome to the AMD first quarter financial results conference call. At this time, all participants are in listen-only mode. 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's now my pleasure to introduce Ruth Cotter, Senior Vice President, Worldwide Market, Human Resources, and Investor Relations. Ruth, please go ahead.

Thank you and welcome to AMD's first quarter 2020 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 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. Before we begin today, please note that our annual shareholder meeting will be held on Thursday, the 7th of May as a virtual event accessible from amd.com. We will also be attending several virtual Wall Street events during the second quarter including the Bernstein Strategic Decisions Conference on Thursday, May 28th. And our second quarter 2020 quiet time is expected to begin at the close of business on Friday, the 12th of June. Today's discussions contain 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 current expectations. We will refer primarily to non-GAAP financial metrics during this call, except for revenue and segment operational results, which are on a GAAP basis. The non-GAAP financial measures referenced are reconciled to their most directly comparable GAAP financial measures in today's press release posted on AMD.com. 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 annual report on Form 10-K for the year ended December 28, 2019. Now, with that, I'd like to hand the call over to Lisa. Lisa?

Thank you, Ruth, and good afternoon to all those listening in today. Before covering our quarterly results, I wanted to provide some comments addressing our response to COVID-19. First, I want to recognize the toll the pandemic has taken on the world. The breadth and speed at which COVID-19 has changed the world since our last earnings call has been staggering. I want to thank the countless healthcare professionals and essential workers serving on the front lines every day. At AMD, our first priority has been to protect the health and safety of our employees. We have transitioned the vast majority of our more than 12,000 employees worldwide to working from home while ensuring we maintain focus on reliably supplying our customers with the products and services their businesses depend on. We are also supporting the communities we call home through financial and personal protective equipment donations and providing our technology to accelerate medical research. More than ever, the pandemic has placed technology at the forefront of how we work, learn, shop, and connect. And we are proud to be providing many of the components powering these essential technologies. Against that backdrop, we performed well in the first quarter. Revenue increased 40% year over year to $1.79 billion, as demand for 7 nanometer Ryzen, Radeon, and Epic processors drove record first quarter revenue and our highest gross margin in eight years. I'm pleased with our execution in the quarter as we quickly adapted our global operations to navigate pockets of supply chain disruption and addressed geographic and market demand shifts caused by COVID-19. Turning to our computing and graphics segment, First quarter segment revenue increased 73% year-over-year to 1.44 billion, driven by increased Ryzen and Radeon processor adoption. We saw some softness based on the COVID-19 situation in China that impacted PC-related sales in the first quarter. While both component and system demand were relatively strong at online vendors, Offline channel sales were weaker than expected, as many retail locations across China were closed for much of the quarter. PC demand in the rest of the world was strong, offsetting the softness in China. Client processor revenue grew significantly year over year, as strong rise in processor demand resulted in significant double-digit percentage increases in unit shipments and ASPs. As a result, we believed we gained client unit market share for the 10th straight quarter. In desktop, overall demand for our latest Ryzen 3000 and prior generation Ryzen 2000 processor families was strong, both of which continue to top retailer bestseller lists and have more than 50% share of premium processor sales at many top global e-tailers. In mobile, unit shipments increased by a strong double-digit percentage year over year. We set a record for quarterly notebook processor revenue driven by sustained demand for our previous generation offerings and the ramp of the first Ryzen Mobile 4000 design wins. Initial consumer notebooks featuring our new Ryzen 4000 processors launched to strong demand based on reviews that demonstrated their performance and battery life leadership for ultra-thin and gaming notebooks. We also gained momentum in the commercial market, winning multiple large-scale deployments as Lenovo announced new ThinkPads and HP launched commercial-class ProBooks powered by our latest Ryzen 4000 mobile processors. We are on track to accelerate our mobile growth this year, as Acer, Asus, Dell, HP, Lenovo, and other OEMs are expected to launch more than 135 new Ryzen-powered consumer and commercial notebooks over the coming quarters. In graphics, first quarter unit shipments and revenue both grew by a double digit percentage year over year, driven largely by sales of our Radeon RX 5000 series desktop and notebook GPUs. Desktop channel sales increased based on solid demand for both 7 nanometer RDNA graphics cards and previous generation Radeon RX 500 series GPUs. In mobile, demand for notebooks powered by our Radeon 5000M mobile GPUs, including the latest Apple MacBook Pro and other gaming notebooks, drove a richer mix as customers transitioned their platforms to our new RDNA mobile offerings. Development of our RDNA2 GPUs continues to progress well. We are on track to launch our next generation gaming GPUs later this year, with a 50% performance per watt increase compared to our current offerings. In the data center, Microsoft Azure introduced new virtual machines optimized for visualization workloads powered by our Radeon Instinct MI25 GPUs. Microsoft is using our differentiated virtualization technology to partition a GPU for the first time in the same way they partition multi-core CPUs. allowing customers to tailor the GPU capability to meet the needs of their specific workload. Turning to our enterprise embedded in semi-custom segment, revenue of $348 million decreased 21% year over year as lower semi-custom revenue more than offset a significant increase in server revenue. As expected, semi-custom product revenue was negligible in the quarter as Sony and Microsoft both reduced inventory in advance of next-generation console launches. We expect semi-custom revenue to increase in the second quarter and be heavily weighted towards the second half of the year as we ramp production to support the holiday launches of the new PlayStation 5 and Xbox Series X consoles. In server, unit shipments grew by a double-digit percentage sequentially and more than tripled year over year as we continue gaining momentum across cloud, enterprise, and HPC customers. We saw particular strength with cloud providers introducing new instances and accelerating current deployments. Microsoft Azure, Google, and IBM all announced new offerings powered by second-generation EPYC processors highlighted by Google launching multiple general-purpose VMs and Microsoft rolling out an all-AMD virtual desktop offering that also includes Radeon Instinct GPUs. Several cloud providers accelerated their infrastructure deployments to address rising demand from the growing number of users working and schooling from home. For instance, one of our large cloud customers was able to deploy 10,000 second-gen Epic servers in less than 10 days, to support the surge in demand for their collaboration services. In the enterprise, we expanded our second-gen EPYC processor portfolio with new high-frequency processors that expand our performance leadership to advanced modeling, database, and hyper-converged workloads. With these new offerings, our second-gen EPYC processor family now includes both the highest performance per core and performance per socket processors in the industry. We continue winning in HPC, highlighted by Lawrence Livermore National Laboratories, announcing they selected next generation AMD EPYC CPUs and Radeon Instinct GPUs to power their El Capitan supercomputer, which is expected to deliver more than two exaflops of computing performance when it is deployed in early 2023. We are incredibly proud that two of the three publicly announced U.S. exascale supercomputing systems will exclusively use AMD CPUs and GPUs, clearly positioning AMD as the exascale computing leader based on our high-performance computing and graphics technologies and software capabilities. In closing, our long-term strategy and growth drivers remain unchanged. Although there are some near-term uncertainties in the demand environment, we are well-positioned to navigate through this situation. We have a solid financial foundation, and our product portfolio is very well positioned across the PC, gaming, and data center markets. While demand indicators across commercial, education, and data center infrastructure markets are strong, we expect some softness in consumer demand in the second half of the year, depending on how overall macroeconomic conditions evolve. We remain on track to launch our next generation Zen 3 CPUs and RDNA2 GPUs in late 2020, and believe we can deliver another year of strong revenue growth and margin expansion based on the strength of our product portfolio and the diversity of markets we serve. Now I'd like to turn the call over to Devinder to provide some additional color on our first quarter financial performance. Devinder?