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SEC filingRevenue grew 32% YoY driven by Client and Data Center, but gross margin fell to 40% due to $800M export-control charges.
For the three months ended June 28, 2025, AMD reported net revenue of $7.685 billion, a 32% increase from $5.835 billion in the prior-year period. Gross profit rose to $3.059 billion (40% margin) from $2.864 billion (49% margin), with the margin compression driven by approximately $800 million in inventory and related charges resulting from U.S. government export controls on AMD Instinct MI308 Data Center GPU products. Operating income swung to a loss of $134 million from a gain of $269 million, reflecting the lower gross margin and higher operating expenses. Net income surged to $872 million from $265 million, primarily due to an $853 million income tax benefit from the release of uncertain tax positions following IRS approval of reasonable cause relief for dual consolidated losses. On a per-share basis, EPS was not explicitly disclosed but net income implies significant growth.
Management highlighted the acquisition of ZT Systems (closed March 31, 2025) and the planned sale of its manufacturing business to Sanmina Corporation for $3.0 billion, expected to close near end of 2025. No specific quantitative guidance was provided for upcoming quarters. The company cited seasonal trends where second-half revenue is typically higher. Key strategic priorities include advancing AI capabilities via the ZT acquisition and managing headwinds from export restrictions. International sales comprised 71% of revenue in Q2 2025, up from 60% a year ago, reflecting broadening global demand.
AMD's balance sheet as of June 28, 2025 shows total assets of $74.820B, with cash and cash equivalents of $4.442B and short-term investments of $1.425B, providing solid liquidity. Total debt increased to $3.218B (net) from $1.721B at year-end 2024, primarily due to the issuance of $1.5B in senior notes in March 2025. Stockholders' equity grew to $59.665B, supported by net income and stock issuances. Inventory rose to $6.677B, driven by higher work-in-process and finished goods. The company also holds $4.326B in assets held for sale related to the ZT Manufacturing Business divestiture.
Total future unconditional purchase commitments as of June 28, 2025 were $9.438B, primarily for wafer and substrate purchases. The near-term obligation is substantial: $5.482B due within the remainder of 2025, with declining amounts in subsequent years (2026: $1.152B; 2027: $910M; 2028: $861M; 2029: $729M; thereafter: $304M). These commitments reflect AMD's aggressive supply chain investments to support growth. Additionally, the company has a $3.0B revolving credit facility and a commercial paper program (none outstanding), providing further financial flexibility.
Share repurchases totaled $478M in Q2 2025 (5M shares), and $1.2B for the first half. On May 13, 2025, the board approved a new $6B share repurchase program, increasing total authority to $14B, with $9.5B remaining. No dividends are paid. Debt issuance of $1.5B was partly offset by $950M commercial paper repayment. Capital expenditures were $494M for the six months (3.3% of sales), plus $333M accrued but unpaid. The ZT Systems acquisition contributed $4.4B in total consideration, including $3.188B cash and stock, and $361M contingent consideration.
Segment data for Q2 2025 reveals strong growth in Client and Gaming, with revenue up 69% YoY to $3.621B and operating income of $767M (21.2% margin). Data Center revenue grew 14% to $3.240B but posted an operating loss of $155M, impacted by $800M in inventory charges related to export controls. Embedded revenue declined 4.3% to $824M, with operating income of $275M (33.4% margin). The All Other category included $1.021B in unallocated costs (amortization, stock-based compensation). No geographic mix is disclosed in the notes.
Operating cash flow (CFO) of $2,950M significantly exceeded net income of $1,581M, reflecting strong cash generation. The cash conversion is supported by non-cash charges (depreciation and amortization of $1,499M, stock-based compensation of $733M) and a net tax benefit. A notable one-time item was the release of reserves for uncertain tax positions of $853M, which boosted CFO.
Working capital changes provided a net $284M inflow, driven by a $1,078M decrease in accounts receivable (favorable) offset by inventory build of $943M and other changes. This suggests improved collections but increasing inventory levels.
Capital expenditures of $494M represent a 67% increase year-over-year, reflecting investments in capacity. The resulting free cash flow (not explicitly stated but implied as CFO minus capex) would be $2,456M, providing ample coverage for share repurchases of $1,227M and debt repayments of $950M.
Investing activities were heavily negative due to the $1,716M acquisition of ZT Systems and increased strategic investments. Financing activities provided net $347M from debt issuance partially offset by repurchases and repayments.
Overall, cash flow quality is strong, with operating cash flows comfortably funding capital expenditures and shareholder returns, despite elevated working capital needs.