Advanced Micro Devices, Inc.

Hello and welcome to the AMD second quarter 2022 earnings 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Laura Graves, Corporate Vice President, Investor Relations. Please go ahead, Laura.

Thank you and welcome to AMD's second quarter 2022 financial results conference call. By now, you should have had the opportunity to review a copy of our earnings press release and accompanying slides. If you have not reviewed these documents, they can be found on the investor relations page of AMD.com. We will refer primarily to non-GAAP financial measures during this call. The full non-GAAP to GAAP reconciliations are available in today's press release and slides posted on our website. In addition, today's financial results reflect our new segment reporting, which aligns with how we now manage our business in strategic and markets. Participants on today's conference call are Dr. Lisa Su, our Chair and Chief Executive Officer, and Devinder Kumar, our Executive Vice President, Chief Financial Officer, and Treasurer. This is a live call and will be replayed via webcast on our website. Before we begin, I would like to note Dr. Lisa Su will attend the Goldman Sachs Communicopia and Technology Conference on Thursday, September 15th. Victor Peng, President of our Adaptive and Embedded Computing Group, will attend the Rosenblatt Second Annual Technology Summit, The Age of AI Scaling, on Tuesday, August 23rd. Ruth Cotter, Senior Vice President of Marketing, Human Resources, and Investor Relations, will attend the Jeffries Semiconductor IT Hardware and Communications Infrastructure Summit on Tuesday, August 30th. and AMD's third quarter 2022 quiet time is expected to begin at the close of business on Friday, September 16th. Today's discussion contains forward-looking statements based on our current beliefs, assumptions, and expectations, speak only as of today, and as such involve risks and uncertainties that could cause actual results to differ materially from our current expectations. Please refer to the cautionary statement in our press release for more information on factors that could cause results to differ. With that, I will hand the call over to Lisa Su. Lisa?

Thank you, Laura, and good afternoon to all those listening in today. This was an excellent quarter for our business as we delivered record revenue and profitability based on our strong execution, leadership product portfolio, and diversified business model. Each of our segments grew significantly year over year. led by higher data center and embedded sales as we continue expanding our presence across a broader set of markets and customers. Revenue grew 70% year-over-year to a record $6.6 billion. We also expanded gross margin six percentage points year-over-year to 54% and set records for operating and net income, both of which more than doubled from the prior year. Turning to the business results, Starting in the second quarter, we updated our financial segment reporting to align with our four strategic end markets, data center, client, gaming, and embedded. Let me start with our data center segment. Revenue increased 83% year-over-year and 15% sequentially to $1.5 billion, led by record server processor sales. Epic processor demand was strong in the quarter, with significant year-over-year growth across both cloud and enterprise customers. In cloud, more than 60 new instances powered by third-gen EPYC processors launched in the quarter from AWS, Baidu, Google, Microsoft Azure, and Oracle, including the industry's first cloud-based software-as-a-service solution for chip design from Microsoft Azure and Synopsys, powered by our Milan X processors with 3D stack chiplets. In enterprise, OEM adoption accelerated in the quarter as Dell, HPE, Lenovo, Supermicro, Cisco, and others brought tailored solutions to market that deliver leadership performance and TCO across many enterprise workloads. Recent examples include Lenovo's AMD-powered Think System setting a price performance world record for transaction processing, and AMD-based HPE ProLiant servers delivering record-setting virtualization performance. We made progress further establishing our data center GPU footprint in the quarter, highlighted by the AMD-powered Frontier supercomputer, debuting in the number one spot on both the top 500 list of the world's fastest supercomputers and the green 500 list of the most energy efficient supercomputers. I am extremely proud of our work with HPE and Oak Ridge National Laboratory to build the world's first exascale supercomputer. Breaking the exaflop barrier is a significant computing milestone, and the fact that it was made possible by epic processors and instinct accelerators highlights AMD's unique ability to push the envelope in computing further and faster than anyone else. Looking at our broader data center opportunities, we saw a strong growth year over year for our industry-leading FPGA and networking products with cloud and financial customers. We closed our acquisition of Pensando in the quarter, further expanding our data center solutions capabilities with the addition of a world-class team and an industry-leading DPU and software stack that complement our existing products. With the additions of Xilinx and Pensando, AMD now provides the industry's broadest set of leadership compute engines and accelerators to enable the best performance, security, flexibility, and TCO for leading-edge data centers. Looking ahead, Customer pull for our next generation 5 nanometer Genoa server CPU is very strong. We are on track to launch and ramp production of Genoa as the industry's highest performance general purpose server CPU later this year, positioning our data center business for continued growth and share gains. Turning to our client segment, revenue grew 25% year over year to $2.2 billion based on record mobile processor sales. We believe we gained client processor revenue share for the ninth straight quarter, led by strong adoption of our latest generation Ryzen mobile processors. Acer, Asus, Dell, HP, Lenovo, and others are on track to significantly expand their portfolio of AMD-based notebooks as they bring almost 300 new designs to market this year, powered by Ryzen processors. We also saw strong demand in the quarter for our latest generation Ryzen Pro processors that deliver leadership performance and battery life for professional notebooks. Commercial client processor revenue grew significantly year over year as HP, Lenovo, and others launched more than 50 AMD-based commercial notebooks, and Dell announced its first AMD-based precision workstation. Looking ahead, we're on track to launch our all-new 5 nanometer Ryzen 7000 desktop processors and AM5 platforms later this quarter with leadership performance in gaming and content creation. Taking a step back, while there has been additional softness in the PC market in recent months, we believe we are very well positioned to navigate through the current environment based on the strength of our existing product portfolio and upcoming product launches. Now turning to our gaming segment, revenue increased 32% year-over-year to $1.7 billion as semi-custom growth more than offset a decline in gaming graphics sales. Semi-custom SOC sales continue outpacing the prior generation, and we remain on track for record semi-custom annual revenue in 2022. Gaming graphics declined in the quarter as macro conditions impacted discretionary spending. New AMD Advantage gaming notebooks that combine Ryzen and Radeon processors to enable outstanding gaming experiences launched recently to strong reviews, highlighted by the Alienware M17 receiving multiple Editor's Choice Awards from leading industry publications. While we expect the gaming graphics market to be down in the third quarter, we remain focused on executing our GPU roadmap, including launching our high-end RDNA3 GPUs later this year. Our next generation RDNA3 architecture is another major step forward for our graphics roadmap, delivering more than a 50% generational improvement in performance per watt by combining our most advanced gaming architecture with 5 nanometer chiplet manufacturing. Looking at our embedded segment, revenue grew significantly year over year to $1.3 billion, led by robust demand across all markets and nodes for our FPGA and adaptive computing products. Xilinx products are deployed in virtually every market, powering mission-critical applications for thousands of customers. We accelerated Xilinx product sales in the second quarter with the benefit of the additional manufacturing scale and resources of AMD. We delivered record core markets revenue led by aerospace and defense, industrial vision and health, and test and measurement. Communications growth was led by higher demand and wired from multiple Tier 1 system vendors, while wireless demand was driven by multiple ramping O-RAN deployments in North America. Embedded CPU revenue also grew significantly in the quarter based on higher automotive sales and the ramp of new networking and storage design wins. As we highlighted at our Financial Analyst Day in June, we have identified greater than $10 billion in long-term revenue synergy opportunities as we bring the AMD and Xilinx assets together. Our largest opportunity is in AI, and we've already started executing new hardware and software roadmaps to capture the significant opportunity we see to drive pervasive AI across cloud, edge, and endpoints. In summary, our work over the last several years has placed AMD on a significant growth trajectory. AMD has never been stronger, and the markets for our products have never been as large or diverse. As a result, we have now delivered eight straight quarters of record revenue as our strong execution and leadership products have driven increased adoption across an expanded set of markets and customers. Despite the current macroeconomic environment, we see continued growth in the back half of the year, highlighted by our next generation 5 nanometer product shipments and supported by our diversified business model. We remain laser focused on executing our product and technology roadmaps further deepening our customer relationships, and investing strategically across the company to drive our next phase of growth across the 300 billion high performance and adaptive computing market. Now I'd like to turn the call over to Devinder to provide some additional color on our second quarter financial performance. Devinder?