AMD Reports First Quarter 2022 Financial Results

Q1 2022

Q1 2021

Y/Y

Q4 2021

Q/Q

Revenue ($M)

$5,887

$3,445

Up 71{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$4,826

Up 22{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Gross profit ($M)

$2,818

$1,587

Up 78{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$2,426

Up 16{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Gross margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

48{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

46{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Up 190 bps

50{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Down 240 bps

Operating expenses ($M)

$1,950

$929

Up 110{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$1,223

Up 59{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Operating income ($M)

$951

$662

Up 44{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$1,207

Down 21{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Operating margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

16{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

19{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Down 3pp

25{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Down 9pp

Net income ($M)

$786

$555

Up 42{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$974

Down 19{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Earnings per share

$0.56

$0.45

Up 24{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$0.80

Down 30{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Q1 2022

Q1 2021

Y/Y

Q4 2021

Q/Q

Revenue ($M)

$5,887

$3,445

Up 71{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$4,826

Up 22{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Gross profit ($M)

$3,100

$1,588

Up 95{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$2,427

Up 28{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Gross margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

53{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

46{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Up 660 bps

50{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Up 240 bps

Operating expenses ($M)

$1,346

$830

Up 62{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$1,103

Up 22{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Operating income ($M)

$1,837

$762

Up 141{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$1,328

Up 38{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Operating margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

31{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

22{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Up 9pp

27{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Up 4pp

Net income ($M)

$1,589

$642

Up 148{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$1,122

Up 42{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Earnings per share

$1.13

$0.52

Up 117{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$0.92

Up 23{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Q1 2022

Q1 2021

Y/Y

Q4 2021

Q/Q

Revenue ($M)

$5,328

$3,445

Up 55{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$4,826

Up 10{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Gross profit ($M)

$2,712

$1,588

Up 71{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$2,427

Up 12{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Gross margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

51{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

46{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Up 480 bps

50{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Up 60 bps

Operating income ($M)

$1,604

$762

Up 110{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$1,328

Up 21{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Operating margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

30{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

22{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Up 8pp

27{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Up 3pp

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in millions, except per share data) (Unaudited)

Three Months Ended

March 26,
2022

December 25,
2021

March 27,
2021

GAAP gross profit

$

2,818

$

2,426

$

1,587

GAAP gross margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

48

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

50

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

46

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Stock-based compensation

4

1

1

Acquisition-related costs ⁽¹⁾

92

—

—

Amortization of acquired intangible assets

186

—

—

Non-GAAP gross profit

$

3,100

$

2,427

$

1,588

Non-GAAP gross margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

53

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

50

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

46

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

GAAP operating expenses

$

1,950

$

1,223

$

929

GAAP operating expenses/revenue {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

33

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

25

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

27

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Stock-based compensation

170

111

84

Acquisition-related costs ⁽¹⁾

141

9

15

Amortization of acquired intangible assets

293

—

—

Non-GAAP operating expenses

$

1,346

$

1,103

$

830

Non-GAAP operating expenses/revenue {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

23

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

23

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

24

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

GAAP operating income

$

951

$

1,207

$

662

GAAP operating margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

16

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

25

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

19

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Stock-based compensation

174

112

85

Acquisition-related costs ⁽¹⁾

233

9

15

Amortization of acquired intangible assets

479

—

—

Non-GAAP operating income

$

1,837

$

1,328

$

762

Non-GAAP operating margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

31

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

27

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

22

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Three Months Ended

March 26,
2022

December 25,
2021

March 27,
2021

GAAP net income / earnings per share

$

786

$

0.56

$

974

$

0.80

$

555

$

0.45

Loss on debt redemption/conversion

—

—

—

—

6

0.01

(Gains) losses on equity investments, net

44

0.03

(4

)

—

8

0.01

Stock-based compensation

174

0.12

112

0.09

85

0.07

Equity income in investee

(3

)

—

—

—

(2

)

—

Acquisition-related costs ⁽¹⁾

233

0.17

9

—

15

0.01

Amortization of acquired intangible assets

479

0.34

—

—

—

—

Income tax provision

(124

)

(0.09

)

31

0.03

(25

)

(0.03

)

Non-GAAP net income / earnings per share

$

1,589

$

1.13

$

1,122

$

0.92

$

642

$

0.52

(1

)

Acquisition-related costs primarily comprised of transaction costs, purchase price adjustments for inventory and certain compensation charges

Three Months Ended March 26, 2022

Revenue

Gross
Profit

Gross
Margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Operating
Income

Operating
Margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

AMD GAAP

$

5,887

$

2,818

48{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$

951

16{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Stock-based compensation

—

4

174

Acquisition-related costs ⁽¹⁾

—

92

233

Amortization of acquired intangible assets

—

186

479

AMD Non-GAAP

5,887

3,100

53{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

1,837

31{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Xilinx segment

559

388

233

AMD Non-GAAP Excluding Xilinx

$

5,328

$

2,712

51{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

$

1,604

30{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

(1

)

Acquisition-related costs primarily comprised of transaction costs, purchase price adjustments for inventory and certain compensation charges

Three Months Ended
March 26, 2022

Revenue

Xilinx Segment ⁽¹⁾

$

559

Xilinx Pre-Acquisition ⁽²⁾

477

Xilinx Pro Forma ⁽³⁾

$

1,036

(1

)

Represents unaudited Xilinx revenue from the date of acquisition, February 14, 2022, through March 26, 2022

(2

)

Represents unaudited Xilinx revenue from January 2, 2022 to February 13, 2022

(3

)

The unaudited Xilinx pro forma revenue represents the three-month period beginning January 2, 2022 through March 26, 2022. The pro forma revenue is presented for informational purposes only.

(*)

In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP earnings per share. AMD uses a normalized tax rate in its computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2022, AMD uses a projected non-GAAP tax rate of 13{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, which excludes the tax impact of pre-tax non-GAAP adjustments, reflecting currently available information. AMD also provided adjusted EBITDA and free cash flow as supplemental non-GAAP measures of its performance. These items are defined in the footnotes to the selected corporate data tables provided at the end of this earnings press release. In addition, AMD provided non-GAAP financial measures excluding Xilinx, including revenue, gross profit and operating income, and Xilinx pro forma revenue for the three months ended March 26, 2022 as supplemental information. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. The non-GAAP financial measures disclosed in this earnings press release should be viewed in addition to and not as a substitute for or superior to AMD’s reported results prepared in accordance with GAAP and should be read only in conjunction with AMD’s Consolidated Financial Statements prepared in accordance with GAAP. These non GAAP financial measures referenced are reconciled to their most directly comparable GAAP financial measures in the data tables at the end of this earnings press release. This earnings press release also contains forward-looking non-GAAP gross margin concerning AMD’s financial outlook, which is based on current expectations as of May 3, 2022 and assumptions and beliefs that involve numerous risks and uncertainties. AMD undertakes no intent or obligation to publicly update or revise its outlook statements as a result of new information, future events or otherwise, except as may be required by law.

Three Months Ended

March 26,
2022

December 25,
2021

March 27,
2021

Net revenue

$

5,887

$

4,826

$

3,445

Cost of sales

2,883

2,400

1,858

Amortization of acquisition-related intangibles

186

—

—

Total cost of sales

3,069

2,400

1,858

Gross profit

2,818

2,426

1,587

Gross margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

48

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

50

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

46

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Research and development

1,060

811

610

Marketing, general and administrative

597

412

319

Amortization of acquisition-related intangibles

293

—

—

Licensing gain

(83

)

(4

)

(4

)

Operating income

951

1,207

662

Interest expense

(13

)

(8

)

(9

)

Other income (expense), net

(42

)

4

(11

)

Income before income taxes and equity income

896

1,203

642

Income tax provision

113

229

89

Equity income in investee

3

—

2

Net income

$

786

$

974

$

555

Earnings per share

Basic

$

0.56

$

0.81

$

0.46

Diluted

$

0.56

$

0.80

$

0.45

Shares used in per share calculation

Basic

1,393

1,208

1,213

Diluted

1,410

1,222

1,231

March 26,
2022

December 25,
2021

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

4,740

$

2,535

Short-term investments

1,792

1,073

Accounts receivable, net

3,677

2,706

Inventories

2,431

1,955

Receivables from related parties

4

2

Prepaid expenses and other current assets

725

312

Total current assets

13,369

8,583

Property and equipment, net

1,406

702

Operating lease right-of use assets

416

367

Goodwill

23,083

289

Acquisition-related intangibles, net

26,832

—

Investment: equity method

72

69

Deferred tax assets

32

931

Other non-current assets

1,705

1,478

Total Assets

$

66,915

$

12,419

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

1,476

$

1,321

Payables to related parties

205

85

Accrued liabilities

3,070

2,424

Short-term debt

312

312

Other current liabilities

518

98

Total current liabilities

5,581

4,240

Long-term debt, net

1,475

1

Long-term operating lease liabilities

370

348

Deferred tax liabilities

3,109

—

Other long-term liabilities

1,047

333

Stockholders’ equity:

Capital stock:

Common stock, par value

16

12

Additional paid-in capital

56,925

11,069

Treasury stock, at cost

(941

)

(2,130

)

Accumulated deficit ⁽¹⁾

(665

)

(1,451

)

Accumulated other comprehensive income

(2

)

(3

)

Total stockholders’ equity

$

55,333

$

7,497

Total Liabilities and Stockholders’ Equity

$

66,915

$

12,419

(1)

During the first quarter of 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, using the modified retrospective adoption method, which resulted in $8 million of deferred tax liability associated with book-tax differences in a foreign equity method investment recognized in Accumulated deficit.

Three Months Ended

March 26,
2022

December 25,
2021

March 27,
2021

Net cash provided by (used in)

Operating activities

$

995

$

822

$

898

Investing activities

$

3,158

$

—

$

(722

)

Financing activities

$

(1,948

)

$

(727

)

$

(8

)

Three Months Ended

March 26,
2022

December 25,
2021

March 27,
2021

Segment and Category Information ⁽¹⁾

Computing and Graphics

Net revenue

$

2,802

$

2,584

$

2,100

Operating income

$

723

$

566

$

485

Enterprise, Embedded and Semi-Custom

Net revenue

$

2,526

$

2,242

$

1,345

Operating income

$

881

$

762

$

277

Xilinx

Net revenue

$

559

$

—

$

—

Operating income

$

233

$

—

$

—

All Other

Net revenue

$

—

$

—

$

—

Operating loss

$

(886

)

$

(121

)

$

(100

)

Total

Net revenue

$

5,887

$

4,826

$

3,445

Operating income

$

951

$

1,207

$

662

Other Data

Capital expenditures

$

71

$

86

$

66

Adjusted EBITDA ⁽²⁾

$

1,967

$

1,446

$

857

Cash, cash equivalents and short-term investments

$

6,532

$

3,608

$

3,116

Free cash flow ⁽³⁾

$

924

$

736

$

832

Total assets

$

66,915

$

12,419

$

10,047

Total debt

$

1,787

$

313

$

313

(1)

The Computing and Graphics segment primarily includes desktop and notebook processors and chipsets, discrete and integrated graphics processing units (GPUs), data center and professional GPUs and development services.

The Enterprise, Embedded and Semi-Custom segment primarily includes server and embedded processors, semi-custom System-on-Chip (SoC) products, development services and technology for game consoles.

The Xilinx segment primarily includes Field Programmable Gate Arrays (FPGAs), adaptive System-on-Chips (SoCs), and Adaptive Compute Acceleration Platform (ACAP) products.

From time to time, the Company may also sell or license portions of its IP portfolio.

All Other category primarily includes certain expenses and credits that are not allocated to any of the operating segments. Also included in this category are acquisition-related intangible asset amortization expense, stock-based compensation expense and acquisition-related costs.

(2)

Reconciliation of GAAP Net Income to Adjusted EBITDA

Three Months Ended

March 26,
2022

December 25,
2021

March 27,
2021

GAAP net income

$

786

$

974

$

555

Interest expense

13

8

9

Other (income) expense, net

42

(4

)

11

Income tax provision

113

229

89

Equity income in investee

(3

)

—

(2

)

Stock-based compensation

174

112

85

Depreciation and amortization

130

118

95

Amortization of acquired intangible assets

479

—

—

Acquisition-related costs

233

9

15

Adjusted EBITDA

$

1,967

$

1,446

$

857

The Company presents “Adjusted EBITDA” as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting GAAP net income for interest expense, other income (expense), net, income tax provision, equity income in investee, stock-based compensation, depreciation and amortization expense and acquisition-related costs. The Company also included amortization of acquired intangible assets for the three months ended March 26, 2022. The Company calculates and presents Adjusted EBITDA because management believes it is of importance to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. In addition, the Company presents Adjusted EBITDA because it believes this measure assists investors in comparing its performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company’s calculation of Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view Adjusted EBITDA as an alternative to the GAAP operating measure of income or GAAP liquidity measures of cash flows from operating, investing and financing activities. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities that can affect cash flows. The Company has provided reconciliations within the earnings press release of these Non-GAAP financial measures to the most directly comparable GAAP financial measures.

(3)

Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow

Three Months Ended

March 26,
2022

December 25,
2021

March 27,
2021

GAAP net cash provided by operating activities

$

995

$

822

$

898

Operating cash flow margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

17

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

17

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

26

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

Purchases of property and equipment

(71

)

(86

)

(66

)

Free cash flow

$

924

$

736

$

832

Free cash flow margin {cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

16

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

15

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

24

{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

The Company also presents free cash flow as a supplemental Non-GAAP measure of its performance. Free cash flow is determined by adjusting GAAP net cash provided by operating activities for capital expenditures. The Company calculates and communicates free cash flow in the financial earnings press release because management believes it is of importance to investors to understand the nature of these cash flows. The Company’s calculation of free cash flow may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view free cash flow as an alternative to GAAP liquidity measures of cash flows from operating activities. The Company has provided reconciliations within the earnings press release of these Non-GAAP financial measures to the most directly comparable GAAP financial measures.