AMD Reports Second Quarter 2019 Financial Results

[btarunr]

AMD (NASDAQ:AMD) today announced revenue for the second quarter of 2019 of $1.53 billion, operating income of $59 million, net income of $35 million and diluted earnings per share of $0.03. On a non-GAAP basis, operating income was $111 million, net income was $92 million and diluted earnings per share was $0.08.

"I am pleased with our financial performance and execution in the quarter as we ramped production of three leadership 7nm product families," said Dr. Lisa Su, AMD president and CEO. "We have reached a significant inflection point for the company as our new Ryzen, Radeon and EPYC processors form the most competitive product portfolio in our history and are well positioned to drive significant growth in the second half of the year."



Q2 2019 Results

• Revenue was $1.53 billion, down 13 percent year-over-year due to lower revenue in both segments. Revenue was up 20 percent quarter-over-quarter due to higher revenue in both segments.
• Gross margin was 41 percent, up 4 percentage points year-over-year, primarily driven by increased Ryzen and EPYC processor sales. Gross margin was flat quarter-over-quarter
• Operating income was $59 million compared to $153 million a year ago and $38 million in the prior quarter. Non-GAAP operating income was $111 million compared to $186 million a year ago and $84 million in the prior quarter. The year-over-year decline was primarily due to lower revenue and higher operating expenses.
• Net income was $35 million compared to $116 million a year ago and $16 million in the prior quarter. Non-GAAP net income was $92 million compared to $156 million a year ago and $62 million in the prior quarter.
• Diluted earnings per share was $0.03, compared to $0.11 a year ago and $0.01 in the prior quarter. Non-GAAP diluted earnings per share was $0.08, compared to $0.14 a year ago and $0.06 in the prior quarter.
• Cash, cash equivalents and marketable securities were $1.1 billion at the end of the quarter.

Quarterly Financial Segment Summary

• Computing and Graphics segment revenue was $940 million, down 13 percent year-over-year and up 13 percent quarter-over-quarter. Revenue was lower year-over-year primarily due to lower graphics channel sales, partially offset by increased client processor and datacenter GPU sales. The quarterover-quarter increase was primarily due to higher GPU sales.
  o Client processor average selling price (ASP) was up year-over-year driven by Ryzen processor sales. Client processor ASP was down quarter-over-quarter due to a higher mix of mobile processor sales.
  o GPU ASP increased year-over-year primarily driven by datacenter GPU sales. GPU ASP was down slightly quarter-over-quarter due to lower datacenter GPU sales and higher graphics channel sales.
  o Operating income was $22 million, compared to $117 million a year ago and $16 million in the prior quarter. The year-over-year decrease was primarily due to lower revenue. The quarter-over-quarter increase was due to higher GPU sales.
• Enterprise, Embedded and Semi-Custom segment revenue was $591 million, down 12 percent yearover-year and up 34 percent sequentially. The year-over-year revenue decrease was primarily due to lower semi-custom product revenue, partially offset by higher EPYC processor sales. The quarter-over-quarter increase was driven by higher semi-custom and EPYC processor revenue.
  o Operating income was $89 million, compared to $69 million a year ago and $68 million in the prior quarter. The year-over-year and quarter-over-quarter increases were primarily driven by higher EPYC processor sales.
• All Other operating loss was $52 million compared to $33 million a year ago and $46 million in the prior quarter.

Q2 2019 PR Highlights

• AMD launched its highly anticipated client and graphics processors based on advanced new architectures and leading-edge 7nm process technology
  o The "Zen 2" CPU core delivers up to an estimated 15 percent instructions per clock (IPC) uplift over the "Zen" architecture, outperforming the historical generational performance improvement industry trend.
  o AMD Ryzen Desktop Processors are available now with up to 12 cores and 24 threads based on the new "Zen 2" core architecture to deliver leadership performance for gamers, creators and everyday PC users.
  o AMD unveiled the new X570 chipset for AMD Socket AM4, enabling the world's first PCIe 4.0 ready platform for consumers. Motherboard manufacturers are expected to introduce more than 50 models using the new AMD X570 chipset by year end, creating the widest selection of motherboards at launch in AMD history.
  o AMD introduced RDNA, a new foundational gaming architecture designed to drive the future of PC, console and cloud gaming. RDNA provides up to 1.25X higher performance-per-clock and up to 1.5X higher performance-per-watt compared to AMD's previous generation Graphics Core Next architecture.
  o AMD Radeon RX 5700 series graphics cards, built on the new AMD RDNA gaming architecture, deliver superior visual fidelity, performance and advanced features for the latest AAA and eSports titles at their respective price points.
• AMD announced that it is working with Cray, the U.S. Department of Energy and Oak Ridge National Laboratory to build what is expected to be the world's fastest supercomputer - Frontier. Based on future-generation high performance custom AMD EPYC CPUs and Radeon Instinct GPUs optimized for artificial intelligence (AI), Frontier is expected to deliver greater than 1.5 exaflops of processing performance.
• 2nd Gen EPYC processors are advancing the use of AI across diverse research fields on Indiana University's Cray Shasta supercomputer
• Microsoft announced that AMD will power its upcoming next generation game console, codenamed Project Scarlett, with a custom, high performance SoC combining the AMD Ryzen "Zen 2" CPU core and a next generation GPU based on the Radeon RDNA gaming architecture including hardware-accelerated ray tracing.
• Samsung and AMD announced a multi-year strategic partnership through which Samsung will license AMD graphics IP to advance graphics technologies and solutions for mobile applications including smartphones.
• Apple announced an all-new Mac Pro featuring AMD Radeon Pro Vega II GPUs that deliver exceptional computational performance by harnessing the power of the 7nm process technology, "Vega" graphics architecture and AMD Infinity Fabric Link GPU interconnect technology.
• Acer announced the upcoming availability of the new Acer Nitro 5 and Swift 3 laptops, based on 2nd Gen AMD Ryzen Mobile processors, adding to the more than 40 new consumer and commercial notebooks based on the latest Ryzen Mobile and Ryzen Mobile PRO processors launched this year from all leading global OEMs.

Current Outlook
For the third quarter of 2019, AMD expects revenue to be approximately $1.8 billion, plus or minus $50 million, an increase of approximately 18 percent sequentially and approximately 9 percent year-over-year. The sequential and year-over-year increases are expected to be driven by Ryzen, EPYC and Radeon product sales. AMD expects non-GAAP gross margin to be approximately 43 percent in the third quarter of 2019.

For full year 2019, AMD now expects revenue to increase a mid-single digit percent over 2018 driven by significant sales growth of our new Ryzen, EPYC and Radeon processors, partially offset by lower than expected semi-custom revenue. Revenue excluding semi-custom is expected to grow approximately 20 percent year over year. AMD expects non-GAAP gross margin to be approximately 42 percent for 2019.



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[laszlo]

still a fraction compared to intel but they're doing well

 

[Fluffmeister]

still a fraction compared to intel but they're doing well

That's putting it mildly, Intel's net profit for Q2 was over 4 BILLION. Still at least they aren't losing money.

 

[ssdpro]

Net income of 35 million? I mean, 35 million would be a lot to me... but in terms of corporate net earnings on a global scale? I guess they aren't losing money and that is a good thing but this really isn't even close or competitive with Intel.

 

[Jozsef Dornyei]

Something is wrong here. They should have not lost revenue YTY.
AMD has better product portfolio YTY and generally improved in every respect and still was not able to improve revenue.
The whole thing just doesn't make sense.

Possibly 1 year ago the mining was still strong and that pushed AMDs base quarter strong and they just returned to the "business as normal" state. Except they will not always be ahead of intel in tech level (probably)

 

[Caqde]

Something is wrong here. They should have not lost revenue YTY.
AMD has better product portfolio YTY and generally improved in every respect and still was not able to improve revenue.
The whole thing just doesn't make sense.

Possibly 1 year ago the mining was still strong and that pushed AMDs base quarter strong and they just returned to the "business as normal" state. Except they will not always be ahead of intel in tech level (probably)

Well one year ago the Ryzen 2x00 was released during the second quarter driving CPU sales. Not to mention PS4/Xbox sales were stronger last year driving revenue for their enterprise/custom side. This year though AMD released the Ryzen 3x00 and RX5x00 series during the third quarter so they won't see sales on those until the Q3 results instead of the Q2 results last year. Although there was no real GPU releases last year during the 2nd quarter. (I don't consider the OEM 5x0X releases new cards and they weren't something we saw in the retail market).

 

[HD64G]

Me thinks that the next Q will show the gains from the launches in 7/7/2019

 

[kapone32]

Well one year ago the Ryzen 2x00 was released during the second quarter driving CPU sales. Not to mention PS4/Xbox sales were stronger last year driving revenue for their enterprise/custom side. This year though AMD released the Ryzen 3x00 and RX5x00 series during the third quarter so they won't see sales on those until the Q3 results instead of the Q2 results last year. Although there was no real GPU releases last year during the 2nd quarter. (I don't consider the OEM 5x0X releases new cards and they weren't something we saw in the retail market).

There was nothing new on the consumer side with the exception of Vega 7. There is also the fact that not just mining but GPU prices started to come back down from the stratosphere around the middle of 2018 Q2 and GPUs were once again "affordable" so it created a second wave of revenue for AMD. I am confident that we will see very strong results for Q3. There are reports all over the net of R3000 chips selling like hotcakes.

 

[medi01]

Q3 looks a tad conservative to me, given how well 3000 series Ryzen is rolling and how good Navi is.

 

[64K]

Me thinks that the next Q will show the gains from the launches in 7/7/2019

It should be better results for Q3. Besides AMD making a profit again for a while now instead of big losses in the past they have also gotten their debt down to a little over 1 billion dollars. Their debt was choking them in the past. A few years ago they owed more than they had in assets. Now their assets are 5 times greater than their debt.

 

[kapone32]

Q3 looks a tad conservative to me, given how well 3000 series Ryzen is rolling and how good Navi is.

You might be right I forgot that they are releasing pro version of the 3600-3900.

 

[Xaled]

Something is wrong here. They should have not lost revenue YTY.
AMD has better product portfolio YTY and generally improved in every respect and still was not able to improve revenue.
The whole thing just doesn't make sense.

Possibly 1 year ago the mining was still strong and that pushed AMDs base quarter strong and they just returned to the "business as normal" state. Except they will not always be ahead of intel in tech level (probably)

1 year ago there was the crypto-mining thing and they were selling their horrible GPUs for wealth. That's why they were earning, not because the release of Ryzen.
And yes it is still early to harvest of Ryzen 2 lineup but they still need to get back into competition in the GPU segment to earn more

 

[kings]

Net income of 35 million? I mean, 35 million would be a lot to me... but in terms of corporate net earnings on a global scale? I guess they aren't losing money and that is a good thing but this really isn't even close or competitive with Intel.

Intel is much larger, there is no comparison! In addition to CPUs, they have businesses in many other markets, like networking, NAND, etc... and now they are preparing to enter the dedicated GPUs market as well!

To think that AMD could have similar values to Intel's is a complete illusion!

 

[kapone32]

1 year ago there was the crypto-mining thing and they were selling their horrible GPUs for wealth. That's why they were earning, not because the release of Ryzen.
And yes it is still early to harvest of Ryzen 2 lineup but they still need to get back into competition in the GPU segment to earn more

They already did that with Navi

 

[Xaled]

They already did that with Navi

Yes but it is just one step, in the right direction though

 

[kapone32]

Yes but it is just one step, in the right direction though

If you think this Navi is their only step be prepared to be surprised. For me Navi is the direct replacement for Polaris. With AMD's chiplet design and LIsa Su's comments I am confident that we will see smaller and larger Navi based GPUs. I honestly believe that they are only waiting for Polaris and Vega to clear inventory.

 

[Xaled]

Intel is much larger, there is no comparison! In addition to CPUs, they have businesses in many other markets, like networking, NAND, etc... and now they are preparing to enter the dedicated GPUs market as well!

To think that AMD could have similar values to Intel's is a complete illusion!

İt is larger but not much. More than 55% of their revenue is still related to their desktop/laptop CPUs. All other things Intel is selling are not even close to what nvidia is earning. So technically, if AMD does good on both sides, it can win even more that what intel is earning

If you think this Navi is their only step be prepared to be surprised. For me Navi is the direct replacement for Polaris. With AMD's chiplet design and LIsa Su's comments I am confident that we will see smaller and larger Navi based GPUs. I honestly believe that they are only waiting for Polaris and Vega to clear inventory.

I didn't say it's their only step, I am just saying they are in the right direction but they still have much hardwork to do. First realese custom-cooled 5700x then 5800s. Let's hope they do it fast and we'll.

 

[medi01]

horrible GPUs

Horrible 570. As opposed to wonderful and slower to much much much slower 1050/1050Ti/1650.

 

[kapone32]

İt is larger but not much. More than 55% of their revenue is still related to their desktop/laptop CPUs. All other things Intel is selling are not even close to what nvidia is earning. So technically, if AMD does good on both sides, it can win even more that what intel is earning


I didn't say it's their only step, I am just saying they are in the right direction but they still have much hardwork to do. First realese custom-cooled 5700x then 5800s. Let's hope they do it fast and we'll.

Agreed, especially one that compete with the 2080TI.

 

[Xaled]

Horrible 570. As opposed to wonderful and slower to much much much slower 1050/1050Ti/1650.

İsn't it horrible when your 2nd-3rd best GPU is competing with your opponent's 10th best GPU?

 

[Mephis]

If you think this Navi is their only step be prepared to be surprised. For me Navi is the direct replacement for Polaris. With AMD's chiplet design and LIsa Su's comments I am confident that we will see smaller and larger Navi based GPUs. I honestly believe that they are only waiting for Polaris and Vega to clear inventory.

I hate to break it to you but it will be quite a while until we see a MCM style GPU.

AMD MCM Plans

 

[kings]

İt is larger but not much. More than 55% of their revenue is still related to their desktop/laptop CPUs. All other things Intel is selling are not even close to what nvidia is earning. So technically, if AMD does good on both sides, it can win even more that what intel is earning

Not much?

AMD´s 2018 revenue was 6,5 billion.
Intel´s 2018 revenue was 70.8 billion.

 

[Xaled]

Not much?

AMD´s 2018 revenue was 6,5 billion.
Intel´s 2018 revenue was 70.8 billion.

Technically I said, as AMD can do CPU and GPU at the same time

 

[Easo]

At least it is not falling and they are in the green, even if by relatively little. Going to guess that ongoing engineering research is sucking it all up.

 

[B-Real]

Net income of 35 million? I mean, 35 million would be a lot to me... but in terms of corporate net earnings on a global scale? I guess they aren't losing money and that is a good thing but this really isn't even close or competitive with Intel.

Man, have you seen Intel's budget? How many people work for them compared to AMD?