Advanced Micro Devices, Inc.

Greetings and welcome to the AMD first quarter 2025 conference call. At this time, all participants are in a 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. And as a reminder, this conference is being recorded. It is now my pleasure to introduce to you Matt Ramsey, Vice President, Financial Strategy and Investor Relations. Thank you, sir. You may begin.

Thank you, and welcome to AMD's 2025 First Quarter Financial Results Conference Call. By now, you should have had the opportunity to review a copy of our earnings press release and the accompanying slides. If you have not had the chance to review these materials, they can be found on the investor relations portion of AMD.com. We will refer primarily to non-GAAP financial measures during today's call. The full non-GAAP to GAAP reconciliations are available in today's press release and the slides posted on our website. Participants on today's conference call are Dr. Lisa Su, our Chair and Chief Executive Officer, and Gene Hu, 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 take note that Mark Papermaster, our Executive Vice President and Chief Technology Officer, will attend the TD Cowan TMT Conference on Wednesday, May 28th. and Gene Hu will attend the Bank of America Global Technology Conference on Tuesday, June 3rd. Today's discussion contains forward-looking statements based on our current beliefs, assumptions, and expectations. Speak only 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 on our press release for more information on factors that could cause actual results to differ materially. You will also find detailed discussion of our risk factors in our filings with the SEC, in particular, AMD's most recent quarterly report on Form 10Q and annual report on Form 10K. And with that, I would like to hand the call over to Lisa.

Thank you, Matt, and good afternoon to all those listening today. We delivered an outstanding start to the year, despite the evolving dynamics related to tariffs and the regulatory environment. Growth accelerated for the fourth consecutive quarter year-over-year, driven by strength in our core businesses and expanding data center and AI momentum. Revenue and EPS both exceeded consensus estimates as Instinct AI Accelerator, Epic, and Ryzen CPU sales grew significantly year-over-year. As a result, first quarter revenue increased 36% year-over-year to $7.4 billion. as our data center and client and gaming segments both grew by a large double-digit percentage. We expanded gross margin year over year for the fifth straight quarter and increased net income by 55%, driven by a higher overall percentage of data center product sales and a richer Ryzen processor mix. Despite the uncertain macroeconomic backdrop, our first quarter performance highlights the strength of our differentiated product portfolio and execution, and positions us well for strong growth in 2025. Turning to the segments, data center segment revenue increased 57% year-over-year to $3.7 billion. We gained server CPU share driven by the ramp of our latest 5th Gen EPYC TURN processors and sustained demand for 4th Gen EPYC. Hyperscaler demand remained strong as cloud providers expanded EPYC deployments to power their critical infrastructure and public services. More than 30 new instances launched from Alibaba, AWS, Google, Oracle, Tencent, and others in the quarter, including the initial wave of 5th Gen Epic Turn instances. In addition, AWS launched new FPGA accelerated instances in the quarter powered by Epic processors with Xilinx Vertex FPGAs that are optimized for data and compute intensive workloads like genomics, multimedia processing, network security, and cloud-based video broadcasting. Every major cloud provider is deep in development on TURN programs, with a steady stream of public instances and internal deployments expected to ramp into production over the coming quarters. Enterprise adoption of Epic instances was very strong in the quarter. The number of Epic-powered cloud instances activated by Forbes 2000 Enterprise customers more than doubled year over year. including new wins with internet-native streaming, transportation, financial services, and social media companies. For example, CrowdStrike achieved major performance and cost improvements by broadly deploying Epic instances across its multi-cloud infrastructure. At the same time, we're also actively partnering with leading application and cloud providers to deploy Epic-optimized solutions tailored for specialized industry verticals. Siemens launched their latest software-defined vehicle solution powered by Epic CPUs and Radeon Pro GPUs on Azure, leveraging digital twin technology to significantly speed up automotive design and validation. Oracle launched a new version of its Exadata database platform, which is used by more than half of the Fortune Global 100. The latest Exadata X11M has been optimized for 5th Gen Epic processors to deliver up to 25% faster performance in transaction processing and analytics compared to the prior generation. Turning to enterprise on-prem adoption, Epic CPU sales grew by a large double-digit percentage year over year for the seventh straight quarter, driven by new public sector wins and high-volume deployments with large automotive, semiconductor, financial services, retail, energy, and technology companies. We have built significant enterprise momentum over the last few years as our partners expanded the number of EPIC-based platforms to more than 450, and we scaled our joint go-to-market programs. As a result, EPIC is now deployed by all of the top 10 telecom, aerospace, and semiconductor companies, nine out of the top 10 automotive, seven out of the top 10 manufacturing, and six out of the top 10 energy companies on the Forbes 2000. We expect enterprise adoption to accelerate over the coming quarters as more than 150 turn platforms become broadly available from Dell, Cisco, HPE, Lenovo, Supermicro, and others. Looking forward, we see a clear path to continued share gains as customers ramp their 5th Gen EPIC offerings that deliver unmatched performance, efficiency, and TCO across every major cloud and enterprise data center workload. We passed key milestones in April to begin manufacturing fifth gen EPIC at TSMC's new Arizona fab with first production shipments expected in the second half of 2025. Longer term, we announced our next gen EPIC Venice processors are the lead HPC products for TSMC's two nanometer process node. Venice silicon is in our labs and performing well with bring up and validation progressing to plan to support a 2026 launch. Turning to our data center AI business, revenue increased by a significant double-digit percentage year over year, as MI325X shipments ramped to support new enterprise and cloud deployments. More than 35 MI300 series platforms are in production from all the leading service providers, supporting the expanding number of instinct GPU deployments with cloud, enterprise, and AI customers. Several hyperscalers expanded their use of instinct accelerators to cover an increasing range of generative AI search, ranking, and recommendation use cases. We also added multiple tier one cloud and enterprise customers in the quarter, including one of the largest frontier model developers that is now using instinct GPUs to serve a significant portion of their daily inference traffic. The depth and breadth of our customer engagements continues to expand as breakthroughs in large-scale AI models like OpenAI's O3 and DeepSeq's R1 drive increased demand for traditional inferencing and increasingly as a critical part of pre-training. The industry-leading memory capacity and bandwidth of our Instinct portfolio is ideally suited for these workloads, and we are actively working with multiple customers to scale Instinct from single-node deployments to distributed inferencing clusters. Training engagements also ramped in the quarter as multiple tier one hyperscale AI and enterprise customers scaled instinct GPU clusters to train internal and next gen frontier models. In parallel, we're making meaningful progress with sovereign AI deployments as countries expand investments to establish domestic nation scale AI infrastructure. In February, we announced a strategic partnership with G42 to build one of France's most powerful AI compute facilities powered by Instinct accelerators. On the AI software front, we significantly accelerated our release cadence in the first quarter, shifting from quarterly Rackham updates to delivering ready-to-deploy training and inferencing containers on a biweekly basis that include performance optimizations and support for the latest libraries, kernels, and algorithms. We expanded our open source community enablement in the quarter, making significantly more instinct compute infrastructure available to enable developers to automatically build, test, and deploy updates to Rockham code nightly. As a result, more than 2 million models on Hugging Face now run out of the box on AMD. We're also enabling an increasing number of models to launch with Day Zero support for instinct accelerators, including Meta's Llama 4, Google's Gemma 3, and DeepSeq's R1 models that were released in the first quarter. Beyond launch, we are delivering regular software updates that increase performance for new models. For example, in the weeks following the launch of DeepSeq's R1 model, we introduced Rackham optimizations that enabled MI300 to deliver leadership inferencing throughput. We released Rackham 6.4 in the quarter with major upgrades that increased training and inferencing performance across popular AI frameworks like PyTorch, JAX, and VLLM. The release also adds multiple ease-of-use features, including new cluster management tools that simplify the scaling and optimization of large-scale instinct deployments. Turning to our AI solutions capabilities, earlier this quarter, we completed our acquisition of ZT Systems, adding world-class systems design expertise to complement our silicon and software leadership. With ZT, we can provide ready-to-deploy rack-level AI solutions based on industry standards built with AMD CPUs, GPUs, and networking, reducing deployment time for hyperscalers, and accelerating time to market for OEM and ODM partners. The team is fully engaged in already co-designing with key customers on rack-level designs optimized for our upcoming MI400 series, and working with customers and OEM partners to accelerate time to market for MI350 series. We have received significant interest in ZT's manufacturing business and expect to announce a strategic partner shortly. We began sampling our next-gen MI350 series with multiple customers in the first quarter and remain on track to begin accelerated production by mid-year. MI350 series performance is very strong based on the advances in our CDNA4 architecture. We designed CDNA4 to deliver leadership performance across a wide range of AI workloads, increasing memory capacity and bandwidth 1.5x, adding support for new data types, and improving network efficiency to deliver 35x higher throughput and performance compared to MI300x. Customer interest in the MI350 series is very strong, setting the stage for broad deployment in the second half of this year. As one example, we are partnering with Oracle to deploy a large-scale cluster powered by MI355X accelerators, 5th Gen EPYC turn processors, and Polara 400 AI NICs. This multi-billion dollar initiative highlights the expanding AMD and OCI partnership and a growing demand for AMD Instinct to power the next wave of large-scale AI infrastructure. Looking ahead, our MI400 series development remains on track to launch next year. The MI400 series is designed to deliver leadership performance for both inferencing and training, scaling seamlessly from single servers to full data center deployments. Early customer feedback has been very positive, marking a major step forward in our Instinct roadmap, and significantly expanding our AI accelerator TAM as customers plan broader instinct deployments to power a larger share of their AI infrastructure. I'm looking forward to sharing more details on the MI350 series, future MI400 rack scale solutions, and the growing customer adoption of our instinct platforms at our Advancing AI event on June 12th. Turning to our client and gaming segment, Segment revenue increased 28% year over year to $2.9 billion. Client revenue grew 68% year over year, marking our fifth consecutive quarter of revenue share gains. We delivered record client CPU ASP, driven by a richer mix of high-end desktop and mobile Ryzen processors. Desktop channel sellout increased by more than 50% year over year. We set new sellout records in multiple regions as our latest generation Ryzen processors became the CPU of choice for gamers, topping bestseller lists at leading global e-tailers. To build on this momentum, we extended our desktop CPU portfolio with the launch of our 16-core Ryzen 9950X3D processor that delivers significantly higher gaming and productivity performance than the competition. In mobile, AMD-based notebook sell-through was very strong in the quarter. We also saw strong demand for our latest generation AI PC processors as sales ramped, increasing by more than 50% quarter on quarter. The first notebooks powered by our new high-end Ryzen AI Max Plus and the first mainstream Ryzen AI 7 and 5 300 series processors launched to very positive reviews. These new processors set the standard for traditional computing and graphics performance, while also delivering unmatched AI capabilities and battery life, positioning Ryzen as the CPU of choice for gaming, ultra-thin, and commercial notebooks. Demand for AMD-based commercial PCs was also very strong in the quarter. Ryzen Pro PC sell-through grew more than 30% year-over-year, driven by new end customer wins and an 80% increase from 2024 in the number of AMD-powered commercial systems from HP, Lenovo, Dell, and Asus. We closed multiple wins with large auto, energy, healthcare, financial services, and telecom companies in the quarter. Looking more broadly across the PC market, we remain confident we can grow client processor revenue well ahead of the market in 2025. led by expanding adoption of our desktop channel and consumer and commercial notebook portfolio, as well as a richer mix. Turning to our gaming business results, gaming revenue decreased 30% year-over-year as higher Radeon graphics sales were more than offset by lower semi-custom sales. While our semi-custom SOC sales declined year-over-year, console channel inventories have normalized and demand signals have strengthened for 2025. For PC gaming, we launched our Radeon 9070 series to strong demand as our new RDNA4 architecture delivers leadership performance for mainstream gamers. First week's sellout set a record and was more than 10x higher than our previous best Radeon launch. Demand remains very strong and we are working closely with our board partners to replenish inventory weekly and meet the sustained demand. We also introduced FSR4, our first machine learning based rendering technology that delivers significantly higher frame rates and more immersive gaming experiences. FSR 4 is already enabled in over 30 games with support expected to reach 75 titles by year end. Turning to our embedded segment, first quarter revenue decreased 3% year over year to $823 million. Embedded demand continues to recover gradually. We expect improving demand in the test and measurement communications and aerospace markets will drive a return to growth in the second half of 2025. We completed initial shipments of our cost-optimized Spartan Ultra Scale Plus FPGAs and second-generation Versal AI Edge SoCs to meet growing demand for AI at the edge. As a part of continuing to grow our embedded x86 business, we launched our Epic Embedded 9,005 series CPUs that deliver leadership performance for networking, storage, and industrial edge applications. Cisco selected our new EPYC embedded processors for their latest high-end firewall solutions, and IBM is using them to power its latest storage scale system 6,000 for performance-intensive enterprise analytics and AI workloads. We also released our latest Vitus AI software suite, expanding support for the latest models and accelerating Edge AI deployment across a broader range of applications, further strengthening our leadership in the rapidly emerging Edge AI market. In summary, our strong first quarter results and second quarter outlook reflect the momentum we are building across our business. While we face some headwinds from the dynamic macro and regulatory environments, including the recently announced export controls for Instinct MI308X shipments to China, we believe they are more than offset by the powerful tailwinds from our leadership product portfolio. Against this backdrop, we remain confident we can deliver strong double-digit percentage revenue growth in 2025 based on accelerating share gains with our latest generation of Zen 5 Epic and Ryzen CPUs and Radeon GPUs. and ramping production of our Instinct MI350 series accelerators in the second half of the year to support an expanded set of customers and AI workloads. We also expect full-year growth in our semi-custom business and for our embedded business to return to year-over-year growth in the second half of the year, driven by the reduced inventory levels and improving demand environment. To capitalize on our unprecedented growth opportunities and deliver our next major growth arc, We are expanding investments in our product and technology roadmaps, go-to-market initiatives, and full-stack AI software and data center scale solutions capabilities. We're also doubling down on our execution to deliver and, where possible, accelerate our industry-leading roadmaps. We view the current environment as a strategic opportunity to further differentiate AMD as we deliver an expanding product portfolio that combines leadership compute and AI capabilities for data centers, edge, PCs, and embedded end devices. Now I'd like to turn the call over to Jean to provide some additional color on our first quarter results. Jean?