Tuesday, July 26th 2016

AMD Reports Second Quarter 2017 Financial Results

AMD today announced revenue for the second quarter of 2017 of $1.22 billion, operating income of $25 million, and net loss of $16 million, or $(0.02) per share. On a non-GAAP basis, operating income was $49 million, net income was $19 million, and earnings per share was $0.02.

"Our second quarter results demonstrate strong growth driven by leadership products and focused execution," said Dr. Lisa Su, AMD president and CEO. "Our Ryzen desktop processors, Vega GPUs, and EPYC datacenter products have received tremendous industry recognition. We are very pleased with our improved financial performance, including double digit revenue growth and year-over-year gross margin expansion on the strength of our new products."
Q2 2017 Results
  • On a GAAP basis, revenue was $1.22 billion, up 19 percent year-over-year, driven by higher revenue in the Computing and Graphics segment. Revenue was up 24 percent sequentially, driven by increased sales in both business segments. Gross margin was 33 percent, up 2 percentage points year-over-year due to a richer product mix and a higher percentage of revenue from the Computing and Graphics segment, driven by the first full quarter of Ryzen processor sales. On a sequential basis, gross margin declined 1 percentage point due to a higher percentage of revenue from the Enterprise, Embedded and Semi-Custom segment. Operating income was $25 million compared to an operating loss of $8 million a year ago and an operating loss of $29 million in the prior quarter. Net loss was $16 million compared to net income of $69 million a year ago and a net loss of $73 million in the prior quarter. Loss per share was $0.02 compared to diluted earnings per share of $0.08 a year ago (which included a pre-tax gain of $150 million related to our ATMP JV transaction) and a loss per share of $0.08 in the prior quarter.
  • On a non-GAAP(1) basis, operating income was $49 million compared to operating income of $3 million a year ago and an operating loss of $6 million in the prior quarter. Net income was $19 million compared to a net loss of $40 million a year ago and a net loss of $38 million in the prior quarter. Diluted earnings per share was $0.02 compared to a loss per share of $0.05 a year ago and a loss per share of $0.04 in the prior quarter.
  • Cash, cash equivalents, and marketable securities were $844 million at the end of the quarter, compared to $943 million in the prior quarter.
Quarterly Financial Segment Summary
  • Computing and Graphics segment revenue was $659 million, up 51 percent year-over-year, driven by demand for graphics and Ryzen desktop processors.
  • Operating income was $7 million, compared to an operating loss of $81 million in Q2 2016. The year-over-year improvement was driven primarily by higher revenue and improved product mix.
  • Client average selling price (ASP) increased significantly year-over-year, as desktop processor ASP increased due to the first full quarter of Ryzen processor shipments.
  • GPU ASP increased year-over-year.
  • Enterprise, Embedded and Semi-Custom segment revenue was $563 million, down 5 percent year-over-year primarily due to lower semi-custom SoC sales. In the quarter, AMD reached an important milestone by recognizing initial revenue from EPYC datacenter processor shipments.
  • Operating income was $42 million, compared to operating income of $84 million in Q2 2016. The year-over-year decrease was primarily due to lower revenue and higher datacenter related R&D investments.
  • All Other operating loss was $24 million compared with an operating loss of $11 million in Q2 2016. The year-over-year difference in operating loss was related to stock-based compensation charges and a $7 million restructuring credit in Q2 2016.
Q2 2017 Highlights
  • AMD launched its new "Zen" architecture-based EPYC 7000 series processors, returning innovation and choice to the x86 server market with record setting single and dual-socket performance and product introductions from 10 of the world's largest server manufacturers.
  • AMD introduced its upcoming high-end desktop solution targeted at the world's fastest ultra-premium desktop systems, the Ryzen Threadripper CPU.
  • AMD unveiled new details about its upcoming Ryzen 3 desktop CPUs.
  • AMD launched its Ryzen PRO desktop processors, designed to bring reliability, security, and performance to enterprise desktops.
  • AMD announced that Radeon Instinct accelerators, including Radeon Instinct MI25, MI8, and MI6, together with AMD's open ROCm 1.6 software platform, will ship in Q3 2017.
  • AMD launched the Radeon Vega Frontier Edition graphics card which expands the capacity of traditional GPU memory to 256TB by leveraging system memory.
  • AMD introduced the Radeon RX 580 and Radeon RX 570 graphics cards, engineered using the 2nd generation Polaris architecture for smooth gaming in leading AAA games at HD resolutions and higher.
  • Microsoft unveiled new details and branding for its Xbox One X (formerly "Project Scorpio"), which features an AMD semi-custom chip.
  • AMD announced that it has been selected by the Department of Energy's Exascale Computing Project (ECP) to accelerate critical computing technology research for the development of the nation's first exascale supercomputers.
  • At Financial Analyst Day, AMD detailed the next phase of its long-term growth strategy focused on delivering products and technologies for a combined $60 billion market for PCs, immersive devices, and datacenters.
  • AMD announced the appointment of Abhi Y. Talwalkar to its board of directors.
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 third quarter of 2017, AMD expects revenue to increase approximately 23 percent sequentially, plus or minus 3 percent. The midpoint of guidance would result in third quarter 2017 revenue increasing approximately 15 percent year-over-year. AMD now expects annual revenue to increase by a mid to high-teens percentage, compared to prior guidance of low double digit percentage revenue growth.
Add your own comment

43 Comments on AMD Reports Second Quarter 2017 Financial Results

#1
ShurikN
Considering Epyc just launched and TR is around the corner, I believe revenue will jump even higher for the next quarter.
The problem is Vega, and how much profit (loss) can be had with it.
Posted on Reply
#2
bug
Wth, not even Ryzen could pull them out of the red?
Posted on Reply
#3
Prima.Vera
How much can they go on RED ??? Hope they won't bankrupt soon....
Posted on Reply
#4
opojare
I don't think there is single soul in AMD that could spell 'profit'.
Posted on Reply
#5
notb
bug said:
Wth, not even Ryzen could pull them out of the red?
Why would it? It's a low profit product. They most likely need way more volume.
Posted on Reply
#6
the54thvoid
bug said:
Wth, not even Ryzen could pull them out of the red?
It's a long road to recovery but the financials show a positive debt slowdown.
Posted on Reply
#7
FrustratedGarrett
Even with Ryzen out and selling they're losing money. I don't see how they can survive in the long term. They should sell their graphics division to Intel and their CPU division to Nvidia and call it a day already.
Posted on Reply
#8
bug
notb said:
Why would it? It's a low profit product. They most likely need way more volume.
It's also possible they're still in the red because of investments (I don't know the detailed situation), but after milking Polaris for a year and Ryzen for about a quarter, I'm a little surprised to see those numbers. Not that AMD exists to avoid surprising me or anything ;)
Posted on Reply
#9
Easo
It seems that most of the commenters here don't understand that you cannot reverse negative bilance for years into green within less than half a year. Please stop the doom and gloom, it's tiring. AMD made sure via Ryzen that they won't kick the bucket just yet, which should be obvious when looking at that chart.
Posted on Reply
#10
deu
Some people wondering about why they are in the red: If you want marketshare as a underdog you will have to invest. Right now AMD is producing more CPU that they have done in a decade and pushing on all cpu markets. Do you think that stuff comes cheap? A company will push their economy to the max for marketshare and SHOULD go to 0 or minus (if not they have not invested enough. Reestablishing infrastructure and reputation at sellers is not free! :)
Posted on Reply
#11
bug
deu said:
Some people wondering about why they are in the red: If you want marketshare as a underdog you will have to invest. Right now AMD is producing more CPU that they have done in a decade and pushing on all cpu markets. Do you think that stuff comes cheap? A company will push their economy to the max for marketshare and SHOULD go to 0 or minus (if not they have not invested enough. Reestablishing infrastructure and reputation at sellers is not free! :)
You're mostly right, but I'd add one correction: they're not into mobile/laptops which is a growing market, so raw quantity may not be what they're after. They followed up Ryzen with Epyc, which means they're going for higher margins first (which is a valid approach).
Posted on Reply
#12
Frick
Fishfaced Nincompoop
FrustratedGarrett said:
Even with Ryzen out and selling they're losing money. I don't see how they can survive in the long term. They should sell their graphics division to Intel and their CPU division to Nvidia and call it a day already.
Ryzen is still very new, and I count three OEM computers (in a few different configurations) with Ryzen in my country, and Newegg has precious few of them as well. From the OEMs that matter (HP and so on).

AMD really need them some APUs.
Posted on Reply
#13
JATownes
Most of these comments are laughable and show a sad understanding of how to read a companies financials. Basic understanding of economics and how the financial markets work would really help people understand that these are phenomenal numbers coming from AMD and show a clear path toward long term growth and profitability.

But by all means, listen to Goldman-Sachs if you would prefer...their last few analysts predictions have helped them increase their holdings in AMD for cheap.

JAT
Posted on Reply
#14
TheinsanegamerN
notb said:
Why would it? It's a low profit product. They most likely need way more volume.
I can almost guarantee that the ryzen 7 chips have far higher margins then any radeon product. Heck, the ryzen 5 lineup stands a very high chance of having higher margins then the 8GB 580 does. It certainly is not "low profit" margin wise.

The bigger issue was ryzen's launch date, early supply issues with motherboards, lack of different model mobos to choose from, ece. Ryzen hasnt been out long enough to make a huge dent, ryzen 5 is barely a month old, ece.
Posted on Reply
#15
XiGMAKiD
Frick said:
AMD really need them some APUs.
...that's not crippled by OEMs
Posted on Reply
#16
bug
JATownes said:
Most of these comments are laughable and show a sad understanding of how to read a companies financials. Basic understanding of economics and how the financial markets work would really help people understand that these are phenomenal numbers coming from AMD and show a clear path toward long term growth and profitability.

But by all means, listen to Goldman-Sachs if you would prefer...their last few analysts predictions have helped them increase their holdings in AMD for cheap.

JAT
So... companies that end up in black are stupid?
Posted on Reply
#17
JATownes
AMD is looking for GROWTH to sustain long term profitability. Revenue growth 19% for the year; Gross margins 2% increase year to year; Computing and graphics revenue up an astonishing 51% year over year. What about this looks bad?

And for clarity, the market has reflected these numbers with a jump of almost 20% since close yesterday afternoon. The fundamentals for AMD look absolutely amazing over the last 2 quarters, and revenue is only expected to increase. But I guess someone that does not invest regularly and understand how to read fundamentals of a stock analysis would see this as a bad thing.

I see this as nothing but pure win, and the market does too.

JAT
Posted on Reply
#18
btarunr
Editor & Senior Moderator
ShurikN said:
Considering Epyc just launched and TR is around the corner, I believe revenue will jump even higher for the next quarter.
The problem is Vega, and how much profit (loss) can be had with it.
Threadripper may be high-margin, but it's a very low-volume product. It won't have a direct tangible impact on AMD's revenues, but improve its overall PR. You'd want to buy budget CPUs from a company that's capable of making ultra-high-end CPUs like Threadripper.

We kinda already know from Pro Vega Frontier Edition's performance that RX Vega may suck, unless AMD shocks with pricing, which is unlikely given the exotic tech AMD used to make Vega, and the Ethereum madness.
Posted on Reply
#19
Steevo
I fucked up and only made decent money and sold stock before this. For some reason a loss now equals higher stock price when historically it drops...

Still made money though.

btarunr said:
Threadripper may be high-margin, but it's a very low-volume product. It won't have a direct tangible impact on AMD's revenues, but improve its overall PR. You'd want to buy budget CPUs from a company that's capable of making ultra-high-end CPUs like Threadripper.

We kinda already know from Pro Vega Frontier Edition's performance that RX Vega may suck, unless AMD shocks with pricing, which is unlikely given the exotic tech AMD used to make Vega, and the Ethereum madness.
Vega as a consumer graphics card will not be a profit center either, it's cost to manufacture, engineer, and support for its price to performance will probably make it a loss leader. AMD has probably done better with plain Ryzen chips and Polaris dies than anything, and considering they have other obligations to MS and Sony it's little wonder they can't keep up with demand.

Lastly, companies like AMD are trying to get rid of long term debt coming due before it starts to cost them, so "overspending" to come out in the black during a profitable time is normal, they have been dumping assets for a few years to control costs and reduce long term debt at the expense of their cash or liquid assets for a few years as well. In the long run they may be able to buy back more shares for a few key shareholders at lower prices and come out with a cleaner balance sheet on the debts and liabilities... except those outstanding shares to themselves...
Posted on Reply
#20
Dave65
It's fair to say, most here don't understand business.. AMD is on a good road right now!
Posted on Reply
#21
bug
Dave65 said:
It's fair to say, most here don't understand business.. AMD is on a good road right now!
I don't think anyone said AMD is not doing well. I myself only said I'm surprised they're still in the red, while at the same time ackowledged Idk their position in detail.
Posted on Reply
#22
phanbuey
bug said:
I don't think anyone said AMD is not doing well. I myself only said I'm surprised they're still in the red, while at the same time ackowledged Idk their position in detail.
How are they still in the red? - the income statement shows they made 49 mil / 19 mil GAAP and 2 cents a share...
Posted on Reply
#23
LogitechFan
Pathetic. Even with mining and new products they are bleeding $$. I was right about overstock, see prices drop further.

PS. Up 9% on the fact that "we're still alive", well, it does not take much nowadays eh?
Posted on Reply
#24
bug
phanbuey said:
How are they still in the red? - the income statement shows they made 49 mil / 19 mil GAAP and 2 cents a share...
That's non-GAAP. GAAP shows their net income is negative.
Posted on Reply
#25
Captain_Tom
bug said:
So... companies that end up in black are stupid?
Have you watched the show Silicon Valley? LOL
Posted on Reply
Add your own comment