AMD Reports First Quarter 2018 Financial Results
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.
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$0.02 in 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 million in 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 the launch 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
Microsoft announced 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
AMD Teleconference
AMD will hold a conference call for the financial community at
| 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. For more information about how AMD is enabling today and inspiring tomorrow, visit the AMD (NASDAQ:AMD) website, blog,
Cautionary Statement
This document contains forward-looking statements concerning
| 1. | In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP gross margin, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP earnings (loss) per share. These non-GAAP financial measures reflect certain adjustments as presented in the tables in this earnings press release. 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. 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. Refer to the data tables at the end of this earnings press release. |
AMD, the AMD Arrow logo, EPYC, Radeon, Radeon Instinct, Ryzen, and combinations thereof, are trademarks of
| ADVANCED MICRO DEVICES, INC. | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (Millions except per share amounts and percentages) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, 2018 |
December 30, 2017 |
April 1, 2017 |
||||||||
| Net revenue | $ | 1,647 | $ | 1,340 | $ | 1,178 | ||||
| Cost of sales | 1,050 | 888 | 800 | |||||||
| Gross margin | 597 | 452 | 378 | |||||||
| Gross margin % | 36 | % | 34 | % | 32 | % | ||||
| Research and development | 343 | 320 | 271 | |||||||
| Marketing, general and administrative | 134 | 134 | 123 | |||||||
| Licensing gain | - | - | (27 | ) | ||||||
| Operating income (loss) | 120 | (2 | ) | 11 | ||||||
| Interest expense | (31 | ) | (31 | ) | (32 | ) | ||||
| Other income (expense), net | 1 | 2 | (5 | ) | ||||||
| Income (loss) before equity loss and income taxes | 90 | (31 | ) | (26 | ) | |||||
| Provision (benefit) for income taxes | 8 | (12 | ) | 5 | ||||||
| Equity loss in investee | (1 | ) | - | (2 | ) | |||||
| Net Income (loss) | $ | 81 | $ | (19 | ) | $ | (33 | ) | ||
| Earnings (loss) per share | ||||||||||
| Basic | $ | 0.08 | $ | (0.02 | ) | $ | (0.04 | ) | ||
| Diluted | $ | 0.08 | $ | (0.02 | ) | $ | (0.04 | ) | ||
| Shares used in per share calculation | ||||||||||
| Basic | 968 | 965 | 939 | |||||||
| Diluted | 1,039 | 965 | 939 | |||||||
| ADVANCED MICRO DEVICES, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Millions) | ||||||||
| March 31, 2018 |
December 30, 2017 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,045 | $ | 1,185 | ||||
| Accounts receivable, net | 738 | 454 | ||||||
| Inventories, net | 715 | 694 | ||||||
| Prepayment and other receivables - related parties | 18 | 33 | ||||||
| Prepaid expenses | 67 | 77 | ||||||
| Other current assets | 168 | 191 | ||||||
| Total current assets | 2,751 | 2,634 | ||||||
| Property, plant and equipment, net | 290 | 261 | ||||||
| Goodwill | 289 | 289 | ||||||
| Investment: equity method | 57 | 58 | ||||||
| Other assets | 376 | 310 | ||||||
| Total Assets | $ | 3,763 | $ | 3,552 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Short-term debt, net | $ | 223 | $ | 70 | ||||
| Accounts payable | 456 | 384 | ||||||
| Payables to related parties | 374 | 412 | ||||||
| Accrued liabilities | 485 | 555 | ||||||
| Other current liabilities | 159 | 92 | ||||||
| Total current liabilities | 1,697 | 1,513 | ||||||
| Long-term debt, net | 1,165 | 1,325 | ||||||
| Other long-term liabilities | 186 | 118 | ||||||
| Stockholders' equity: | ||||||||
| Capital stock: | ||||||||
| Common stock, par value | 10 | 9 | ||||||
| Additional paid-in capital | 8,502 | 8,464 | ||||||
| Treasury stock, at cost | (108 | ) | (108 | ) | ||||
| Accumulated deficit | (7,692 | ) | (7,775 | ) | ||||
| Accumulated other comprehensive income | 3 | 6 | ||||||
| Total Stockholders' equity | 715 | 596 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 3,763 | $ | 3,552 | ||||
| ADVANCED MICRO DEVICES, INC. | |||
| SELECTED CASH FLOW INFORMATION | |||
| (Millions) | |||
| Three Months Ended | |||
| March 31, 2018 |
|||
| Net cash provided by (used in) | |||
| Operating activities | $ | (86 | ) |
| Investing activities | $ | (46 | ) |
| Financing activities | $ | (8 | ) |
| ADVANCED MICRO DEVICES, INC. | |||||||||||||||
| SELECTED CORPORATE DATA | |||||||||||||||
| (Millions) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| Segment and Category Information | March 31, 2018 |
December 30, 2017 |
April 1, 2017 |
||||||||||||
| Computing and Graphics (1) | |||||||||||||||
| Net revenue | $ | 1,115 | $ | 908 | $ | 573 | |||||||||
| Operating income (loss) | $ | 138 | $ | 33 | $ | (21 | ) | ||||||||
| Enterprise, Embedded and Semi-Custom (2) | |||||||||||||||
| Net revenue | $ | 532 | $ | 432 | $ | 605 | |||||||||
| Operating income (loss) | $ | 14 | $ | (13 | ) | $ | 55 | ||||||||
| All Other (3) | |||||||||||||||
| Net revenue | - | - | - | ||||||||||||
| Operating loss | $ | (32 | ) | $ | (22 | ) | $ | (23 | ) | ||||||
| Total | |||||||||||||||
| Net revenue | $ | 1,647 | $ | 1,340 | $ | 1,178 | |||||||||
| Operating income (loss) | $ | 120 | $ | (2 | ) | $ | 11 | ||||||||
| Other Data | |||||||||||||||
| Capital expenditures | $ | 46 | $ | 44 | $ | 23 | |||||||||
| Adjusted EBITDA (4) | $ | 196 | $ | 58 | $ | 68 | |||||||||
| Cash, cash equivalents and marketable securities | $ | 1,045 | $ | 1,185 | $ | 943 | |||||||||
| Free cash flow (5) | $ | (132 | ) | $ | 339 | $ | (322 | ) | |||||||
| Total assets | $ | 3,763 | $ | 3,552 | $ | 3,353 | |||||||||
| Total debt | $ | 1,388 | $ | 1,395 | $ | 1,408 | |||||||||
| See footnotes on the next page | |||||||||||||||
| (1) | The Computing and Graphics segment primarily includes desktop and notebook processors and chipsets, discrete and integrated graphics processing units (GPUs) and professional GPUs. The Company also licenses portions of its intellectual property portfolio. | ||||||
| (2) | 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 Company also licenses portions of its intellectual property portfolio. | ||||||
| (3) | All Other category primarily includes certain expenses and credits that are not allocated to any of the operating segments. Also included in this category is stock-based compensation expense. | ||||||
| (4) | Reconciliation of GAAP Operating Income (Loss) to Adjusted EBITDA* | ||||||
| Three Months Ended | |||||||||||
| March 31, 2018 |
December 30, 2017 |
April 1, 2017 |
|||||||||
| GAAP operating income (loss) | $ | 120 | $ | (2 | ) | $ | 11 | ||||
| Stock-based compensation | 32 | 21 | 23 | ||||||||
| Depreciation and amortization | 44 | 39 | 34 | ||||||||
| Adjusted EBITDA | $ | 196 | $ | 58 | $ | 68 | |||||
| (5) | Free Cash Flow Reconciliation** | ||||||||||
| Three Months Ended | |||||||||||
| March 31, 2018 |
December 30, 2017 |
April 1, 2017 |
|||||||||
| GAAP net cash provided by (used in) operating activities | $ | (86 | ) | $ | 383 | $ | (299 | ) | |||
| Purchases of property, plant and equipment | (46 | ) | (44 | ) | (23 | ) | |||||
| Free cash flow | $ | (132 | ) | $ | 339 | $ | (322 | ) | |||
| * | The Company presents “Adjusted EBITDA” as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting operating income (loss) for depreciation and amortization and stock-based compensation expense. The Company calculates and communicates Adjusted EBITDA because the Company’s 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 operating income (loss) 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 as well as interest and income taxes that can affect cash flows. |
| ** | 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 (used in) 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. |
Media Contact
512-602-4425
drew.prairie@amd.com
Investor Contact
408-749-5467
laura.graves@amd.com
Source: Advanced Micro Devices