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HPC & AI Wall StreetSANTA CLARA, Calif., April 26, 2018 — AMD (NASDAQ:AMD) today announced revenue for the first quarter of 2018 of $1.65 billion, operating income of $120 million, net income of $81 million, and diluted earnings per share of $0.08. On a non-GAAP(1) basis, operating income was $152 million, net income was $121 million, and diluted earnings per share was $0.11.
GAAP Financial Results
Year-over-Year and Quarter-over-Quarter
| Q1 2018 | Q1 2017 | Y/Y | Q4 2017 | Q/Q | |||||||
| Revenue | $1.65B | $1.18B | Up 40% | $1.34B | Up 23% | ||||||
| Gross Margin % | 36% | 32% | Up 4 pp | 34% | Up 2 pp | ||||||
| Operating Expense | $477M | $394M | Up $83M | $454M | Up $23M | ||||||
| Operating Expense % | 29% | 33% | Down 4 pp | 34% | Down 5 pp | ||||||
| Operating income (loss) | $120M | $11M | Up $109M | $(2)M | Up $122M | ||||||
| Net income (loss) | $81M | $(33)M | Up $114M | $(19)M | Up $100M | ||||||
| Earnings (loss) per share | $0.08 | $(0.04) | Up $0.12 | $(0.02) | Up $0.10 | ||||||
Non-GAAP Financial Results(1)
Year-over-Year and Quarter-over-Quarter
| Q1 2018 | Q1 2017 | Y/Y | Q4 2017 | Q/Q | |||||||
| Revenue | $1.65B | $1.18B | Up 40% | $1.34B | Up 23% | ||||||
| Gross Margin % | 36% | 32% | Up 4 pp | 34% | Up 2 pp | ||||||
| Operating Expense | $446M | $371M | Up $75M | $433M | Up $13M | ||||||
| Operating Expense % | 27% | 31% | Down 4 pp | 32% | Down 5 pp | ||||||
| Operating income | $152M | $34M | Up $118M | $19M | Up $133M | ||||||
| Net income | $121M | $2M | Up $119M | $8M | Up $113M | ||||||
| Earnings per share | $0.11 | $0.00 | Up $0.11 | $0.01 | Up $0.10 | ||||||
“The first quarter was an outstanding start to 2018 with 40 percent year-over-year revenue growth,” said Dr. Lisa Su, AMD president and CEO. “PC, gaming and datacenter adoption of our new, high-performance products continues to accelerate. We are excited about our long-term roadmaps and focused on delivering sustained revenue growth and profitability.”
Q1 2018 Results
- All AMD financial results are reported under the new revenue recognition accounting standard, ASC 606, with prior period financial results adjusted for comparison purposes.
- Revenue was $1.65 billion, up 40 percent year-over-year and 23 percent quarter-over-quarter, driven primarily by higher revenue in the Computing and Graphics segment.
- Gross margin was 36 percent, up 4 percentage points year-over-year and 2 percentage points quarter-over-quarter. The gross margin percentage increase was driven by a greater percentage of revenue from Ryzen, Radeon and EPYC products.
- On a GAAP basis, operating income was $120 million compared to operating income of $11 million a year ago and an operating loss of $2 million in the prior quarter.
- Net income was $81 million compared to net losses of $33 million a year ago and $19 million in the prior quarter. Diluted earnings per share was $0.08, compared to losses per share of $0.04 a year ago and $0.02in the prior quarter.
- On a non-GAAP(1) basis, operating income was $152 million compared to operating income of $34 million a year ago and $19 million in the prior quarter.
- Non-GAAP net income was $121 million compared to net income of $2 million a year ago and $8 millionin the prior quarter. Non-GAAP diluted earnings per share was $0.11, compared to break even from a year ago and diluted earnings per share of $0.01 in the prior quarter.
- Cash and cash equivalents were $1.04 billion at the end of the quarter.
Quarterly Financial Segment Summary
- Computing and Graphics segment revenue was $1.12 billion, up 95 percent year-over-year and 23 percent quarter-over-quarter, primarily driven by strong sales of Radeon and Ryzen products.
◦ Client processor average selling price (ASP) increased year-over-year and quarter-over-quarter due to a greater percentage of revenue from our Ryzen products.
◦ GPU ASP increased year-over-year and quarter-over-quarter driven by a greater percentage of revenue from our new Radeon products.
◦ Operating income was $138 million, compared to an operating loss of $21 million a year ago and operating income of $33 million in the prior quarter. Operating income improvement was driven by higher revenue. - Enterprise, Embedded and Semi-Custom (EESC) segment revenue was $532 million, down 12 percent year-over-year due to lower semi-custom revenue, partially offset by higher server and embedded revenue. EESC segment revenue was up 23 percent quarter-over-quarter, driven by semi-custom, embedded and EPYC processor revenue.
◦ Operating income was $14 million, compared to operating income of $55 million a year ago and an operating loss of $13 million in the prior quarter. The year-over-year decrease was primarily due to a licensing gain that occurred in Q1 2017. The quarter-over-quarter increase was primarily due to higher revenue. - All Other operating loss was $32 million compared with operating losses of $23 million a year ago and $22 million in the prior quarter.
Q1 2018 Highlights
- AMD continued returning innovation and excitement to the PC market with the introduction of new consumer-focused desktop processors.
◦ AMD introduced the first AMD Ryzen desktop APUs, combining the high-performance Radeon “Vega” graphics architecture with revolutionary “Zen” CPU cores on a single chip.
◦ AMD also delivered the next products in the Company’s strong multi-generational roadmap with thelaunch of its 2nd Generation Ryzen desktop CPUs just over one year after bringing the first Ryzen processors to market. The new 2nd Generation Ryzen processors can deliver up to 15% higher gaming performance compared to 1st Generation Ryzen processors, with the Ryzen 7 2700X processor delivering the highest multiprocessing performance available on a mainstream desktop PC. - Adoption of AMD products for the datacenter continued with new AMD EPYC processor-powered platforms and deployments.
◦ Dell EMC introduced three new PowerEdge platforms powered by AMD EPYC 7000 series server processors.
◦ Yahoo Japan Corporation and Packet joined the expanding list of global businesses deploying EPYC processors to enhance the performance and efficiency of their datacenters.
◦ Supercomputing leader Cray announced that it added EPYC processors to its Cray CS500 line of HPC offerings. - AMD brought the powerful “Zen” architecture to a variety of new embedded markets with the launch of EPYC Embedded and Ryzen Embedded processors.
- AMD released new Radeon Software Adrenalin Edition updates to optimize the performance of some of the most popular PC games and improve the eSports experience for Radeon graphics card owners.
- AMD and Microsoftannounced support for Radeon FreeSync™ technology in Microsoft’s Xbox One™ S and Xbox One™ X consoles, bringing the exceptional tear-free gaming experience to a broader base of gamers.
- Adobe announced a new version of Adobe® Premiere Pro® CC with native support for AMD Radeon Pro SSG graphics to dramatically accelerate 4K and 8K workflows for popular native camera formats.
- Steam launched support for AMD TrueAudio Next in Steam Audio, offering Steam users a more immersive audio experience.
- AMD was included in Fast Company’s “World’s Most Innovative Companies” 2018 edition, ranking in the top ten Most Innovative Companies in the Consumer Electronics sector.
Current Outlook
AMD’s outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.
For the second quarter of 2018, AMD expects revenue to be approximately $1.725 billion, plus or minus $50 million, an increase of 50 percent year-over-year, and non-GAAP gross margin of approximately 37 percent.
AMD Teleconference
AMD will hold a conference call for the financial community at 2:30 p.m. PT (5:30 p.m. ET) today to discuss its first quarter 2018 financial results and forward looking financial guidance. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com. The webcast will be available for 12 months after the conference call. A slide presentation of quarterly financial results can be found atir.amd.com.
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||
| (In millions, except per share data) | Three Months Ended | |||||||||||
| March 31, 2018 |
December 30, 2017 |
April 1, 2017 |
||||||||||
| GAAP Gross Margin | $ | 597 | $ | 452 | $ | 378 | ||||||
| GAAP Gross Margin % | 36 | % | 34 | % | 32 | % | ||||||
| Stock-based compensation | 1 | — | — | |||||||||
| Non-GAAP Gross Margin | $ | 598 | $ | 452 | $ | 378 | ||||||
| Non-GAAP Gross Margin % | 36 | % | 34 | % | 32 | % | ||||||
| GAAP operating expenses | $ |
477 | $ |
454 | $ |
394 | ||||||
| Stock-based compensation | 31 | 21 | 23 | |||||||||
| Non-GAAP operating expenses | $ |
446 | $ |
433 | $ |
371 | ||||||
| GAAP operating income (loss) | $ | 120 | $ | (2 | ) | $ | 11 | |||||
| Stock-based compensation | 32 | 21 | 23 | |||||||||
| Non-GAAP operating income | $ | 152 | $ | 19 | $ | 34 | ||||||
| Three Months Ended | ||||||||||||||||||||||||
| March 31, 2018 |
December 30, 2017 |
April 1, 2017 |
||||||||||||||||||||||
| GAAP net income (loss) /earnings (loss) per share | $ | 81 | $ | 0.08 | $ | (19 | ) | $ | (0.02 | ) | $ | (33 | ) | $ | (0.04 | ) | ||||||||
| Loss on debt redemption | 1 | — | 3 | — | 4 | — | ||||||||||||||||||
| Non-cash interest expense related to convertible debt | 6 | — | 5 | — | 6 | 0.01 | ||||||||||||||||||
| Stock-based compensation | 32 | 0.03 | 21 | 0.02 | 23 | 0.02 | ||||||||||||||||||
| Gain on sale of 85% of ATMP | — | — | (3 | ) | — | — | — | |||||||||||||||||
| Tax provision related to sale of 85% of ATMP JV | — | — | 1 | — | — | — | ||||||||||||||||||
| Equity loss in investee | 1 | — | — | — | 2 | — | ||||||||||||||||||
| Non-GAAP net income / earnings per share | $ | 121 | $ | 0.11 | $ | 8 | $ | 0.01 | $ | 2 | $ | 0.00 | ||||||||||||
| Q1 2018 non-GAAP diluted EPS is calculated based on 1,140 million shares, which include 100.6 million shares related to the Company’s 2026 Convertible Notes and a $5 million cash interest expense add-back to net income under the “if converted” method. | ||||||||||||||||||||||||
About AMD
For more than 45 years, AMD has driven innovation in high-performance computing, graphics, and visualization technologies – the building blocks for gaming, immersive platforms, and the datacenter. Hundreds of millions of consumers, leading Fortune 500 businesses, and cutting-edge scientific research facilities around the world rely on AMD technology daily to improve how they live, work, and play. AMD employees around the world are focused on building great products that push the boundaries of what is possible.
Source: AMD
