10-KPeriod: FY2018

ADVANCED MICRO DEVICES INC Annual Report, Year Ended Dec 29, 2018

Filed February 8, 2019For Securities:AMD

Summary

In fiscal year 2018, Advanced Micro Devices, Inc. (AMD) demonstrated significant financial recovery and growth, reporting a net revenue of $6.5 billion, a 23% increase year-over-year. This growth was driven by strong adoption of their new high-performance products, which accounted for over 65% of their annual revenue. The company saw improved profitability, with gross margin increasing to 38% and a shift from a net loss in 2017 to a net income of $337 million in 2018. The company's product roadmap execution, particularly in the Computing and Graphics segment, was a key driver, with Ryzen processors and Radeon graphics products showing strong performance. The Enterprise, Embedded, and Semi-Custom segment also saw modest growth, primarily supported by EPYC server products. AMD's financial health improved, with a decrease in total debt and sufficient cash reserves to fund operations, indicating a positive outlook for their strategic investments and product development.

Financial Highlights

54 data points
Beta

Revenue

$6.47B

37.8% Gross Margin

Net Income

$337.00M

5.2% Net Margin

EPS (Diluted)

$0.32

Total Assets

$4.56B

Cash & Equivalents

$1.08B

Free Cash Flow

-$129.00M

Financial Statements
Beta
Revenue$6.47B
Cost of Revenue$4.03B
Gross Profit$2.45B
R&D Expenses$1.43B
SG&A Expenses$562.00M
Operating Income$451.00M
Interest Expense$121.00M
Net Income$337.00M
EPS (Basic)$0.34
EPS (Diluted)$0.32
Shares Outstanding (Basic)982.00M
Shares Outstanding (Diluted)1.06B

Key Highlights

  • 1Net revenue increased by 23% to $6.5 billion in 2018.
  • 2Gross margin improved to 38% in 2018, up from 34% in 2017.
  • 3The company achieved net income of $337 million in 2018, a significant improvement from a net loss of $33 million in 2017.
  • 4New products accounted for over 65% of 2018 revenue, highlighting successful product cycle execution.
  • 5The Computing and Graphics segment saw a 39% revenue increase, driven by Ryzen processors and Radeon graphics.
  • 6Total debt decreased to $1.5 billion, and the company maintained a cash balance of $1.16 billion, indicating improved financial stability.
  • 7AMD's EPYC server processors and Ryzen embedded processors showed growth in the Enterprise, Embedded, and Semi-Custom segment.

Frequently Asked Questions

AMD's revenue growth in 2018 was primarily driven by the strong adoption of its new high-performance products, particularly within the Computing and Graphics segment. The Ryzen processors and Radeon graphics products saw increased demand, contributing significantly to the 23% year-over-year revenue increase.

AMD's profitability saw a substantial improvement in 2018. Gross margin increased to 38% from 34% in the prior year, and the company reported a net income of $337 million, a significant turnaround from a net loss of $33 million in 2017. This improvement is attributed to better product mix and higher sales of newer, higher-margin products.

AMD's financial position strengthened in 2018. Total debt was reduced to approximately $1.5 billion, and the company ended the year with $1.16 billion in cash, cash equivalents, and marketable securities. This improved liquidity and reduced debt burden provide flexibility for future investments and operational needs.

AMD highlighted several key risks, including intense competition, particularly from Intel Corporation, reliance on third-party manufacturers like GlobalFoundries (GF) and TSMC, potential product demand fluctuations, cybersecurity threats, and the cyclical nature of the semiconductor industry. Managing their supply chain and product introductions effectively are also critical risks.