This afternoon, AMD announced their earnings for the first quarter of their 2018 fiscal year, and their recent trend of performance has continued, with revenues for the quarter up 40% to $1.65 billion. Even more importantly, they’ve finally gotten to the point where they are able to achieve solid margins, which were 36% for this quarter, up 4% from last year. This lead to operating incomes of $120 million, compared to just $11 million a year ago. Net income was $81 million for the quarter, compared to a $33 million loss last year. Earnings per share were $0.08, up from a $0.04 loss per share last year.
| AMD Q1 2018 Financial Results (GAAP) | |||||
| Q1'2018 | Q4'2017 | Q1'2017 | |||
| Revenue | $1647M | $1340M | $1178M | ||
| Gross Margin | 36% | 34% | 32% | ||
| Operating Income | +$120M | -$2M | +$11M | ||
| Net Income | +$81M | -$19M | -$33M | ||
| Earnings Per Share | +$0.08 | -$0.02 | -$0.04 | ||
AMD has been in a situation where they’ve been relying on Non-GAAP measures to show the underlying business in the midst of restructuring debt, and losses due to changing their wafer agreement, but these results are all GAAP, and all good. The big gains are thanks to the Computing and Graphics segment, which almost doubled in revenue compared to the same quarter last year. This group had revenues of $1115 million, compared to $573 million a year ago, which is a 94.6% increase. There’s likely no surprise here, but that increase is thanks to strong sales of both Radeon graphics, and Ryzen processors. Processor average selling price (ASP) increased thanks to more sales of Ryzen, and GPU ASP also increased, thanks to Vega, and likely the cryptocurrency craze which has definitely driven up prices. Operating income for this segment was $138 million for the quarter, compared to an operating loss of $21 million a year ago. Basically, there’s nothing but good news here, after far too long of struggling in this segment.
| AMD Q1 2018 Computing and Graphics | |||||
| Q1'2018 | Q4'2017 | Q1'2017 | |||
| Revenue | $1115M | $908M | $573M | ||
| Operating Income | +$138M | +$33M | -$21M | ||
AMD’s other segment is their Enterprise, Embedded, and Semi-Custom segment, and this group is the ones that really carried them through the lean years, with AMD diversifying quite a bit into semi-custom SoCs, and it certainly helped that they got design wins in both the Sony PlayStation 4, and the Microsoft Xbox One. Revenue for this segment wasn’t quite as rosy as the Computing and Graphics, with quarterly revenues of $532 million, which was down 12% compared to Q1 2017. The revenue decline is attributed to lower semi-custom revenue, but somewhat offset by higher server and embedded revenue. EPYC processor revenue has helped, but not enough to offset the loss of revenue in semi-custom. Operating income for this segment was $14 million, compared to $55 million a year ago, but AMD attributed the majority of the operating income decrease to a licensing gain in Q1 2017 which inflated the numbers.
| AMD Q1 2018 Enterprise, Embedded, and Semi-Custom | |||||
| Q1'2018 | Q4'2017 | Q1'2017 | |||
| Revenue | $532M | $432M | $605M | ||
| Operating Income | +$14M | -$13M | +$55M | ||
All Other had an operating loss of $32 million, compared to a loss of $23 million a year ago.
Overall, there’s little to be disappointed with here. Likely AMD is hoping for stronger EPYC sales to improve its segment, but the Computing and Graphics segment was strong enough to carry the day easily. Looking forward to next quarter, AMD is expecting revenues of $1.725 billion, plus or minus $50 million, which would be a 50% increase from Q2 2017.
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