Presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Matt Ramsey, Vice President of Investor Relations. Thank you, Matt. You may begin.
Thank you and welcome to AMD's fourth quarter and full year 2024 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 had the chance to review these materials, they can be found on the Investor Relations page of AMD.com. We will refer primarily to non-GAAP financial measures during today's call. The full non-GAAP to GAAP reconciliation is in our press release. This is a live call and will be replayed via webcast on our website. Before we begin, I would like to note that Jean will attend the Morgan Stanley Global TMT Conference on Monday, March 3rd. 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 statements in our press release for more information on factors that could cause our actual results to differ materially. With that, I will hand the call over to Lisa.
Significant server and PC market share. As a result, we delivered record annual revenue, grew net income 26% for the year, and more than doubled free cash flow from 2023. Importantly, the data center segment contributed roughly 50% of annual revenue as Instinct and EPYC processor adoption expanded significantly with cloud, enterprise, and supercomputing customers. Looking at our financial results, fourth quarter revenue increased 24% year-over-year to a record $7.7 billion, led by record quarterly data center and client segment revenue, both of which grew by a significant double-digit percentage. On a full-year basis, annual revenue increased 69% year-over-year to a record $3.9 billion. 2024 marked another major inflection point for our server business as share gains accelerated, driven by the ramp of fifth-gen EPYC Turin and strong double-digit percentage year-over-year growth in fourth-gen EPYC sales. In cloud, we exited 2024 with well over 50% share at the majority of our largest hyperscale customers. Hyperscaler demand for EPYC CPUs was very strong, driven by expanded deployments powering both their internal compute infrastructure and online services. Public cloud demand was also very strong, with the number of EPYC instances increasing 27% in 2024 to more than 450 EPYC platforms available from the leading server OEMs and ODMs, including more than 120 Turin platforms that went into production in the fourth quarter from Cisco, Dell, HPE, Lenovo, Supermicro, and others. Looking forward, Turin is clearly the best server processor in the world, with more than 540 performance records across a broad range of industry-standard benchmarks. At the same time, we are seeing sustained demand for both fourth- and third-gen EPYC processors as our consistent roadmap execution has made AMD the dependable and safe choice. As a result, we see clear growth opportunities in 2025 across both cloud and enterprise. 2024 was an outstanding year as we accelerated our AI hardware roadmap to deliver an annual cadence of new Instinct accelerators, expanded our ROCm software suite with significant uplifts in inferencing and training performance, built strong customer relationships with key industry leaders, and delivered greater than $5 billion of data center AI revenue for the year. Looking at the fourth quarter, MI300X production deployments expanded with our largest cloud partners. Meta exclusively used MI300X to serve their Llama 405B frontier model on Meta, and added Instinct GPUs to its OCP-compliant Grand Teton platform designed for AI training and inference and HPC workloads. IBM, DigitalOcean, Vultr, and several other AI-focused CSPs have begun deploying AMD Instinct accelerators for new instances. IBM also announced plans to enable MI300X on their WatsonX AI and data platform for training and deploying enterprise-ready generative AI applications. Instinct platforms are currently being deployed across more than a dozen CSPs globally, and we expect this number to grow in 2025. For enterprise customers, more than 25 MI30 series platforms are in production with the largest OEMs and ODMs to simplify and accelerate AI adoption. In supercomputing, AMD now powers five of the 10 fastest and 15 of the 25 most energy-efficient systems in the world on the latest TOP500 supercomputer list. Notably, the El Capitan system at Lawrence Livermore National Labs debuted as the world's fastest supercomputer, using over 44,000 MI300A APUs to deliver more than 1.7 exaflops of compute performance. Earlier this month, the High Performance Computing Center at the University of Stuttgart launched the Hunter supercomputer that also uses MI300A. Like El Capitan, Hunter will be used for both foundational scientific research and advanced AI projects. In 2024, our strategy is to establish AMD ROCm as the industry's leading open software stack for AI, providing developers with greater choice and accelerating the pace of industry innovation. More than 1 million models on Hugging Face now run out of the box on AMD, and our platforms are supported in the leading frameworks like PyTorch and JAX, serving solutions like vLLM, and compilers like OpenAI Triton. We have also successfully ramped large-scale production deployments with numerous customers using ROCm, including our lead hyperscale partners. We ended the year with the release of ROCm 6.3 that included multiple performance optimizations, including support for the latest Flash Attention algorithm that runs up to three times faster than prior versions since launch. Looking forward, we're continuing to accelerate our software investments to improve the out-of-the-box experience for a growing number of customers adopting Instinct to power their diverse AI workloads. For example, in January we began delivering bi-weekly container releases that provide more frequent performance and feature updates and ready-to-deploy packages, and we continue adding resources dedicated to the open source community that enable us to build, test, and launch new software enhancements at a faster pace. On the product front, we began volume production of MI325X in the fourth quarter. The production ramp is progressing very well to support new deployments. We recently closed several large wins with MI300 and MI325 at lighthouse AI customers that are deploying Instinct at scale across both their inferencing and training production environments for the first time. Looking ahead, our next-generation MI350 series, featuring our CDNA 4 architecture, is looking very strong. CDNA 4 will deliver the biggest generational leap in AI performance in our history, with a 35x increase in AI compute performance compared to CDNA 3. The silicon has come up really well. We were running large-scale LLMs within 24 hours of receiving first silicon, and based on early silicon progress and the strong customer interest in the MI350 series, we now plan to sample lead customers this quarter and are on track to accelerate production shipments to midyear. As we look forward into our multi-year AMD Instinct roadmap, I'm excited to share that MI400 series development is also progressing very well. The CDNA Next architecture takes another major leap, enabling powerful rack-scale solutions that tightly integrate networking, CPU, and GPU capabilities at the silicon level to support Instinct solutions at data center scale. We designed CDNA Next to deliver leadership AI and HPC flops while expanding our memory capacity and capabilities. Turning to our acquisition of ZT Systems, we passed key milestones in the quarter and received unconditional regulatory approvals in multiple jurisdictions, including Japan, Singapore, and Taiwan. OEM customer response to the acquisition has been very positive, as ZT Systems' expertise can accelerate time to market for future Instinct accelerator platforms. We have also received significant interest in ZT's manufacturing business. We expect to successfully divest ZT's industry-leading US-based data center infrastructure production capabilities shortly after we close the acquisition, which remains on track for the first half of the year. In our client segment, revenue was a record $2.3 billion, up 58% year-over-year, driven by strong demand for AMD Ryzen desktop and mobile processors. We had record desktop channel sellout in the fourth quarter in multiple regions as Ryzen dominated the bestselling CPU lists at many retailers globally, exceeding 70% share at Amazon, Newegg, Micro Center, and numerous others over the holiday period. In mobile, we believe we had a record OEM PC sell-in share in the fourth quarter as Ryzen AI 300 series notebooks ramped. In addition to growing share with our existing PC partners, we were very excited to announce a new strategic collaboration with Dell that marks the first time they will offer a full portfolio of commercial PCs powered by Ryzen Pro. We also expanded our mobile portfolio with the launch of 22 new mobile processors that deliver leadership compute, graphics, and AI capabilities. Our Ryzen processor portfolio has never been stronger, with leadership compute performance across the stack. For AI PC, we are the only provider that offers a complete portfolio of CPUs enabling Windows Copilot+ experiences on premium ultra-thin, commercial, gaming, and mainstream notebooks. Looking into 2025, we're planning for the PC TAM to grow by a mid-single-digit percentage year-over-year. Based on the breadth of our leadership client CPU portfolio and strong design win momentum, we believe we can grow client segment revenue well above the market. In gaming, semi-custom revenue declined year-over-year as we reduced channel inventory overall. This console generation has been very strong, highlighted by cumulative unit shipments surpassing 100 million in the fourth quarter. Looking forward, we believe channel inventories have now normalized and semi-custom sales will return to more historical patterns in 2025. In gaming graphics, revenue declined year-over-year as we accelerated channel sellout in preparation for the launch of our next-gen Radeon 9000 series GPUs. Our focus with this generation is to address the highest volume portion of the enthusiast gaming market with our new RDNA 4 architecture. RDNA 4 delivers significantly better ray tracing performance and we are on track to launch in March. Now turning to our embedded segment, fourth quarter revenue decreased 13% year-over-year to $923 million. The demand environment remains mixed, with the overall market recovering slower than expected as strength in aerospace and defense and test and emulation is offset by softness in the industrial and communication markets. We continued expanding our adaptive computing portfolio in the quarter with differentiated solutions for key markets. We launched our Versal RF series with industry-leading compute performance for aerospace and defense markets, introduced our Versal Premium Series Gen 2 as the industry's first adaptive compute devices supporting CXL 3.1 and PCIe Gen 6, and began shipping our next-gen products. We closed a record $14 billion of design wins in 2024, up more than 25% year-over-year, as customer adoption of our industry-leading adaptive computing platforms expands and we won large new embedded processor designs. In summary, we ended 2024 with significant momentum, delivering record quarterly and full-year revenue. EPYC and Ryzen processor share gains grew throughout the year, and we are well positioned to continue outgrowing the market based on having the strongest CPU portfolio in our history. We established our multi-billion dollar data center AI business and accelerated both our Instinct hardware and ROCm software roadmaps. For 2025, we expect the demand environment to drive double-digit percentage revenue and EPS growth year-over-year. Looking further ahead, the recent announcements of significant AI infrastructure investments like Stargate and latest model breakthroughs from DeepSeek and the Allen Institute highlight the incredibly rapid pace of AI innovation across every layer of the stack, from silicon to algorithms to models, systems, and applications. These are exactly the types of advances we want to see as the industry invests in increased compute capacity while pushing the envelope on software innovation to make AI more accessible and enable breakthrough generative and agentic AI experiences that can run on virtually every digital device across data center, edge, and client. We have made outstanding progress building the foundational product, technology, and customer relationships needed to capture a meaningful portion of this market, and we believe this places AMD on a steep long-term growth trajectory led by the rapid scaling of our data center AI franchise from more than $5 billion of revenue in 2024 to tens of billions of dollars of annual revenue over the coming years. Now I'd like to turn the call over to Jean to provide some additional color on our fourth quarter and full year results.
Thank you, Lisa, and good afternoon everyone. I'll start with a review of our financial results and then provide our outlook. Our data center segment grew 52% and our client segment grew 58%, which more than offset headwinds in our gaming and embedded segments. We expanded gross margin by 300 basis points and achieved earnings per share growth of 25% while investing aggressively in AI to fuel our future growth. For the fourth quarter of 2024, revenue was a record $7.7 billion, growing 24% year-over-year as strong revenue growth in the data center and client segments was partially offset by lower revenue in our gaming and embedded segments. Gross margin was 54%, up 300 basis points year-over-year, driven by higher data center and client revenues and lower gaming revenue, partially offset by the impact of lower embedded revenues. Operating expenses were $2.1 billion, an increase of 23% year-over-year as we invested in R&D and marketing activities to address our significant growth opportunities. Operating income was a record $2 billion, representing 26% operating margin. Taxes, interest, and other were $249 million net expense for the fourth quarter of 2024. Diluted earnings per share was $1.09. For the full year, data center segment revenue was a record $12.6 billion, up 69% year-over-year, driven by strong growth in both AMD Instinct GPU and fourth- and fifth-generation AMD EPYC CPU sales. Data center segment operating income was $1.2 billion, or 30% of revenue, compared to $666 million, or 29%, a year ago. Client segment revenue was a record $2.3 billion, up 58% year-over-year, driven by strong demand for AMD Ryzen processors. Client segment operating income was $446 million, or 19% of revenue, compared to operating income of $55 million a year ago. Gaming segment revenue was $563 million, down 59% year-over-year. Gaming segment operating income was $50 million, or 9% of revenue, compared to $224 million, or 16%, a year ago. Embedded segment revenue was $923 million, down 13% year-over-year, as market demand continues to be mixed. Embedded segment operating income was $362 million, or 39% of revenue, compared to $461 million, or 44%, a year ago. Turning to the balance sheet and cash flow, during the quarter we generated $1.3 billion in cash from operations and a record $1.1 billion in free cash flow. We repurchased 1.8 million shares and returned $256 million to shareholders. For the year, we repurchased 5.9 million shares and returned $862 million to shareholders. We have $4.7 billion remaining in our share repurchase authorization. Before I turn to our financial outlook, let me cover our financial segment reporting. Beginning with our first quarter fiscal year 2025 financial statement disclosures, we plan to combine the client and gaming segments into one single reportable segment to align with how we manage the business. Therefore, we will provide restated historical segment information with our current reporting. Now turning to our first quarter of 2025 outlook, we expect revenue to be approximately $7.1 billion, plus or minus $300 million, up 30% year-over-year, driven by strong growth in our data center and client businesses more than offsetting a significant decline in our gaming business and a modest decline in our embedded business. We expect revenue to be down sequentially approximately 7%, driven primarily by seasonality across our businesses. In addition, we expect first quarter non-GAAP gross margin to be approximately 54%. Diluted share count is expected to be approximately 1.64 billion shares. In closing, 2024 was a strong year for AMD, demonstrating our disciplined execution to deliver revenue growth and expand earnings at a faster rate than revenue, all while investing in AI and innovation to fuel long-term growth. Looking ahead, we will build on the momentum to drive double-digit percentage revenue growth and further accelerate earnings in 2025 and beyond. With that, I'll turn it back to Matt for the Q&A session.
Thank you very much, Jean. We're now ready to start the Q&A session. As the operator polls for questions, we ask participants to press star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. As a reminder, please limit yourself to one question and one follow-up. Thank you. One moment while we poll for questions.
And the first question comes from the line of Aaron Rakers with Wells Fargo. Please proceed.
Yeah, thanks for taking the question. I guess I'll just ask it right out of the gate. As we think about the GPU business, I can appreciate you talked about delivering north of $5 billion of revenue, which is extremely impressive. As we think about the shape of revenue first half or second half, as we think about some of the product cycle dynamics, thank you.
Sure, Aaron. Thanks for the question. First of all, look, we were very pleased with how we finished 2024 in terms of the data center GPU business. I think the ramp was steep as we went throughout the year, and the team executed well. Going into 2025, as I mentioned in the prepared remarks, we're actually very happy with the progress that we're making on both the hardware roadmaps and the software roadmaps. On the hardware side, we launched MI325 at the end of the fourth quarter, started shipments then. We have new designs that have come on both MI300 and MI325 that will deploy in the first half of the year. And we have strong customer demand for MI350, so we are actually going to pull that production ramp into the middle of the year, which improves our relative competitiveness. As it relates to how data center overall will grow, the overall data center business will grow strong double digits. Certainly both the server product line as well as the data center GPU product line will grow strong double digits. From the shape of the revenue, you would expect that the second half would be stronger than the first half, just given MI350 will be a catalyst for the data center GPU business. But overall, I think we're very pleased with the trajectory of the data center business in both 2024 and then going into full year 2025.
Yeah, thank you very much. And as a follow-up, I'm curious about the data center GPU revenue in the first half of the year. You said it's going to be roughly consistent with the second half of 2024. How do I frame that relative to seasonality? Thank you.
Yeah, sure, Aaron. Let me give you some more color on the Q1 guide. Q1 guide was down 7% sequentially, as Jean mentioned. The way that breaks out in each of the segments: assume that data center would be down just about the corporate average. We would expect the client business and the embedded business to be down more than that, just given where seasonality is for those businesses. And then we would expect the gaming business will be down a little less than that, which is a little atypical from a seasonality standpoint, but we're coming off of a year when there was a lot of inventory normalization, and now that inventory has normalized, we would expect a more typical pattern.
Great. And then on the server CPU business, I think you have said in the past that core count is going to grow mid to high teens, and as long as your competitor is not super aggressive on pricing, that your business should grow roughly that much as well. Are you expecting or are you already seeing them become a little more aggressive on pricing as they attempt to shore up their share? It sounds like they're getting a bit more aggressive on pricing, so wondering if you still think that the server CPU business can grow in line with that core count of mid to high teens.
Yeah, first, we always assume server CPU is a very competitive market. But we currently have the best lineup of portfolio, not only from a unit perspective but also ASP perspective, and continue to gain share.
Thanks a lot. And then, Jean, can you just give us a sense of where data center GPU came in for December? I'm thinking it's probably in the $2 billion range. And then is it assumed to be down, flat, or up? Would you be willing to give a number for March? Thanks.
Yeah, I think the way to look at our Q4 performance is our data center business overall did really well. It actually is consistent with our expectations. Of course, when we look at the server and the data center GPU, server did better than data center GPU, but overall it's very consistent with our performance.
Yeah, maybe I'll just add on that we don't break out the specific numbers, but the data center GPU business grew nicely in Q4. And that's true for both businesses, on the server side as well as the data center GPU side.
