Today AMD announced their third quarter earnings for the 2019 fiscal year, and AMD has not seen revenue like this for a long time – in fact this is the highest quarterly revenue since 2005 for the company. AMD’s revenue jumped 9% year-over-year to $1.8 billion, and at least as importantly, AMD had gross margins of 43%, which is up 3% over last year, and the highest margins they’ve seen since 2012. Operating income was up 24% to $186 million, and net income was up 18% to $120 million. This resulted in earnings-per-share of $0.11, up 22% from Q3 2018.

AMD Q3 2019 Financial Results (GAAP)
  Q3'2019 Q2'2019 Q3'2018
Revenue $1801M $1531M $1653M
Gross Margin 43% 41% 40%
Operating Income $186M $59M $150M
Net Income $120M $35M $102M
Earnings Per Share $0.11 $0.03 $0.09

This is the first full quarter for AMD since the launch of their 7 nm Zen 2 processor, and AMD attributes the revenue growth to the Computing and Graphics, but offset by lower revenue in Enterprise, Embedded, and Semi-Custom. Revenue for the Computing and Graphics segment was up 36% year-over-year to $1.28 billion, thanks to both increased volume and Average Selling Price (ASP) for Ryzen on the desktop. GPU ASP also increased year-over-year thanks to higher channel sales. The Computing and Graphics segment had operating income of $179 million, which is up 79% from a year ago.

AMD Q3 2019 Computing and Graphics
  Q3'2019 Q2'2019 Q3'2018
Revenue $1276M $940M $938M
Operating Income $179M $22M $100M

Enterprise, Embedded, and Semi-Custom had revenue of $525 million for the quarter, down 27% year-over-year, mostly attributed to semi-custom sales, which makes sense since a large chunk of that is for the AMD APU powering both the Sony PlayStation 4 and Microsoft Xbox One, both of which are scheduled for new models in the next calendar year. Offsetting this was higher EPYC processor sales, although not enough of an offset to cover the semi-custom drop. Operating income for this segment was $61 million, down 29% from a year ago.

AMD Q3 2019 Enterprise, Embedded and Semi-Custom
  Q3'2019 Q2'2019 Q3'2018
Revenue $525M $591M $715M
Operating Income $61M $89M $86M

Finally, AMD’s All Other category reported an operating loss of $54 million, which is a 50% larger loss than a year ago.

AMD had some big news in Q3, with multiple design wins for both Ryzen and EPYC, including Cray’s Shasta supercomputer leveraging 2nd Generation EPYC, and AMD getting a big design win in the PC space with the Microsoft Surface Laptop 3.

Looking ahead to Q4, AMD is expecting revenue of $2.1 billion, plus or minus $50 million, with a Non-GAAP gross margin of approximately 44%.

Source: AMD Investor Relations

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  • Samus - Wednesday, October 30, 2019 - link

    Sure, but AMD GPU's are substantially better than Intel's. And you can't compare AMD to nVidia without comparing AMD to Intel, because they uniquely compete against BOTH. Reply
  • ET - Wednesday, October 30, 2019 - link

    In a company that invests money into future growth, net income will naturally be small. Assuming that AMD has been putting more money into R&D, this is actually good. Reply
  • SaberKOG91 - Wednesday, October 30, 2019 - link

    One of the biggest things in the earnings report was that AMD now has more cash-at-hand than debt so they are definitely going to be able to start investing even more into R&D soon. 30% of their debt wiped away in 12 months, after carrying most of it for more than a decade. Reply
  • Targon - Wednesday, October 30, 2019 - link

    Considering that AMD is paying down that debt, rather than holding the revenues and sticking money in the bank, that's a part of the issue. $200 million worth of debt removed from second to third quarter. OEMs are still not putting a lot of AMD based machines out there as well. The new generation of Ryzen processors are not going into OEM machines as well(too soon, it takes a minimum of three to six months for a new processor to show up in a machine from HP, Dell, or Lenovo, because inventories have to be above a given point before they even start doing assembly. Reply
  • stephenho - Thursday, October 31, 2019 - link

    paying down debts, invest heavily in R&D, invest in go to market, hire new talents, that is more important than showing a net profit. Gaining market share back is a priority. I own AMD from $2, $3 etc. all the way up to $28..... never look back, never sell, it is here to stay, watching the best yet to come, and stay to play the whole game, the WHOLE multi-year plans. It is not as easy as it looks, AMD teams are sweating~! Reply
  • ABR - Wednesday, October 30, 2019 - link

    Going by the segment revenue either Epyc's got a long way to go in ramping market share, or the enterprise / data center market overall is only a fraction of desktop, which is surprising. Reply
  • yeeeeman - Wednesday, October 30, 2019 - link

    Both Reply
  • duploxxx - Wednesday, October 30, 2019 - link

    EPYC1 market share is single digit, it was an intro to get back into the enterprise business.
    EPYC2 wil get double digit market share but those are shipping only recently in volume. Dont forget that business cycles always take a long time to implement.

    I hope AMD will focus now a bit more on Workstation business. It is a huge market where a lot of sales are. It is 100% owned by Intel business right now and that is visible in pricing.
    Reply
  • zepi - Wednesday, October 30, 2019 - link

    Where the hell is all the EPYC revenue? People are claiming that Intel is dead in the water with the onslaught of 64-core EPYC, but Enterprise segment revenue just keeps sinking? Sure, Console cycle is at the lowest point of revenue just before the release of next generation, but surely $5000 unit-price server chips should compensate? And even previous EPYC's were quite competitive.

    2018 Q4 Total Revenue was $1.4B so guidance of $2.1B shows nice Y/Y growth, but it doesn't really feel like representative of the technology shift that has happened.

    GPU space looks tight with Nvidia is getting an easy upgrade to 7nm process, but AMD should at least get nice PS5 / Xbox revenue towards the end of the year.
    Reply
  • Alien959 - Wednesday, October 30, 2019 - link

    It takes time. AMD in realy is competitive with Intel in the last 2 years. The biggest money makers like enterprise/ workstation markets usually make huge orders years in advance so they probably ordered intel based equipment so we still can't see the impact there. In the next quater or two the numbers will show up. AMD needs to continue to itrate and be on track with it's new products and results will be there. Reply

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