As part of this morning’s announcement from AMD that the company would be buying FPGA maker Xilinx for $35 billion in stock, the company also released its Q3 earnings report alongside the buyout news. An atypical earnings release to say the least, an early-morning release allowed AMD investors and others to get a look at the very latest in AMD’s financials while also digesting the decision to use the company’s sizable market capitalization to buy another company – and ultimately to help AMD justify why they’re in such a good position now to make the transaction. Coming on the heels of a record Q2 for the company, AMD closed out the third quarter of the year setting revenue records once again all the while trebling its profits.

For the third quarter of 2020, AMD reported $2.8B in revenue, a 56% jump over the same quarter a year ago. As a result, AMD has once again set new revenue records for the company, posting both their best Q3 ever, and their best single quarter period. Driving this was further growth in both of AMD’s major segments, with everything from consumer CPU sales to EPYC and semi-custom sales reported as being on the rise.

AMD Q3 2020 Financial Results (GAAP)
  Q3'2020 Q3'2019 Q2'2020
Revenue $2.8B $1.8B $1.93B
Gross Margin 44% 43% 44%
Operating Income $449M $186M $173M
Net Income $390M $120M $157M
Earnings Per Share $0.32 $0.11 $0.13

Most eye-popping, perhaps, has been AMD’s net income, which more than trebled over the year-ago quarter. For Q3’20, AMD booked $390M in GAAP net income, a 225% increase that dwarfs the $120M they took home at this point last year. Even on a quarterly basis AMD’s revenues and profits were up significantly across the board, with AMD again more than doubling its net income versus Q2. In fact the only aspect of AMD’s financials not showing significant growth at the moment is AMD’s gross margin, which at 44% is only up 1% over last year. According to the company, GM growth is being limited by relatively low margin semi-custom sales, with the PS5/XSX ramp-up counterbalancing the increase in CPU sales.

Breaking down the numbers by segment, AMD’s Computing and Graphics segment enjoyed a strong quarter based in large part on an increase in Ryzen processor sales. Overall the segment booked $1.67B in revenue, which is up 31% over the year-ago quarter. Carrying the segment were sizable increases in both AMD’s desktop and notebook CPU shipments, with AMD reporting double-digit growth in both and setting a new record for notebook processor shipments. AMD’s graphics division was the odd man out, however; the run-up to the RX 6000 series means that graphics revenue was down versus Q3’19.

AMD Q3 2020 Computing and Graphics
  Q3'2020 Q3'2019 Q2'2020
Revenue $1667M $1276M $1367M
Operating Income $384M $179M $200M

As for product average selling prices (ASPs), AMD is reporting that both client processor and graphics ASPs have taken a hit on a yearly basis. Graphics ASPs were down due to AMD’s current-generation RX 5000 products approaching the end of their lifecycle, while CPU ASPs declined due to higher sales of mobile chips, which tend to carry lower prices. Both of these should change for AMD in the next quarter, as the launch of Zen 3 and the Radeon RX 6000 series will put a fresh round of products on the market that can fetch higher prices.

Meanwhile, AMD’s Enterprise, Embedded, and Semi-Custom segment saw another greater quarter with Q3, with shipments of everything from EPYC processors to console SoCs on the rise. With the former, AMD has continued to grow its market share in the server space, and on the company’s earnings call CEO Dr. Lisa Su confirmed that server sales have more than doubled over Q3’19, citing improved cloud and enterprise adoption. Meanwhile the ramp-up for the Playstation 5 and Xbox Series X has pushed semi-custom sales higher as well, and that’s expected to grow even more in Q4.

AMD Q3 2020 Enterprise, Embedded and Semi-Custom
  Q3'2020 Q3'2019 Q2'2020
Revenue $1134M $525M $565M
Operating Income $141M $61M $33M

And, like the consumer side of AMD’s business, the enterprise side is about to benefit as well from the launch of next-generation products. AMD has confirmed that their Zen 3 architecture-based EPYC “Milan” processors will begin shipping this quarter as previously promised, with the initial chips going out to cloud and “select HPC” customers. Meanwhile general OEM availability will follow in the first quarter of 2021.

Overall, AMD has a lot to be happy about for Q3, and even more to look forward to in Q4. With AMD posting record revenue and their traditionally strongest quarter still to come, the company is expecting an even better Q4. The combination of Zen 3 CPUs for desktops and servers, along with new Radeon hardware will mean that AMD has momentum and new products on their side. All of which comes at a critical time for the industry, as AMD seeks to use its technology advantages to carve a larger piece of the x86 processor market from an uncharacteristically dazed Intel.

Source: AMD

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  • Rictorhell - Tuesday, October 27, 2020 - link

    This is very good news to start my day with. I'm thrilled for AMD and I hope that the positive momentum and growth continues into the future. I want them to continue to grow as a company and continue innovating and investing in R&D, so that they can remain competitive with other companies in this segment.

    My next computer build will use AMD hardware, if I ever get around to it.
  • meacupla - Tuesday, October 27, 2020 - link

    part of me feels that they can make more money by ditching radeon.
    the other part of me feels that they can make radeon and its drivers much better if they would put more money into it.
  • PeachNCream - Tuesday, October 27, 2020 - link

    I think they need to keep their graphics going because it's vital to landing sales in large volume production parts like laptops. Also they need to have graphics capabilities to land design wins on the console side where Sony and Microsoft can keep the supply chain complexity down by getting processor and graphics from a one source. I don't think AMD would let Radeon go given what it enables in their product portfolio despite their current success in the enterprise space with EPYC.
  • senttoschool - Tuesday, October 27, 2020 - link

    No, they won't. Radeon is strategically extremely important to AMD. They're winning huge supercomputer contracts with a combined CPU + GPU solution. And cloud GPUs will probably be a huge growth driver for them once they release their CDNA line.
  • T1beriu - Wednesday, October 28, 2020 - link

    Ditch Radeon? LOL! That's a major key assets that makes AMD the only x86 CPU + GPU owning company. Without Radeon there would be no consoles, laptops, cloud gaming, GPU HPC and so on.
  • TEAMSWITCHER - Wednesday, October 28, 2020 - link

    Their console strategy of making no money to keep Nvidia at bay is working brilliantly... Unfortunately, it's killing PC gaming. I can't think of a reason to own a PC right now. That's why I got a 16" MacBook Pro instead. I get awesome portable hardware for work, and can still game on a giant TV from the comfort of my sofa. Win-Win!
  • Spunjji - Wednesday, October 28, 2020 - link

    "Unfortunately, it's killing PC gaming" - citation needed on that one?!

    "I can't think of a reason to own a PC right now" - this is what's known as a failure of imagination
  • jospoortvliet - Saturday, October 31, 2020 - link

    You DO know PC gaming is a huge growth market right?

    The consoles are what have kept amd alive to develop Zen, I dont think it was much more strategic than that. You are right that it does give them some benefits beyond that, indeec. Every bit helps. Nvidia is not in trouble yet, though.
  • Spunjji - Wednesday, October 28, 2020 - link

    Fingers crossed this new release plays to your latter suspicions, there.
  • versesuvius - Tuesday, October 27, 2020 - link

    "Settings Records ..." ?

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