01—Abstract
Summary
Summary of the 10-K filed February 8, 2019. Cited figures are marked; the original filing is the authoritative source.
In fiscal year 2018, Advanced Micro Devices, Inc. (AMD) demonstrated significant financial recovery and growth, reporting a net revenue of $6.5 billiona, 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 millionb 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.
02—Key points
Key Highlights
- Net revenue increased by 23% to $6.5 billion in 2018.
- Gross margin improved to 38% in 2018, up from 34% in 2017.
- The company achieved net income of $337 million in 2018, a significant improvement from a net loss of $33 million in 2017.
- New products accounted for over 65% of 2018 revenue, highlighting successful product cycle execution.
- The Computing and Graphics segment saw a 39% revenue increase, driven by Ryzen processors and Radeon graphics.
- Total debt decreased to $1.5 billion, and the company maintained a cash balance of $1.16 billion, indicating improved financial stability.
- AMD's EPYC server processors and Ryzen embedded processors showed growth in the Enterprise, Embedded, and Semi-Custom segment.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Advanced Micro Devices Inc kept $0.05.
- Revenue$6.47B100.0%
- Cost of revenue−$4.03B62.2%
- Gross profit$2.45B37.8%
- Operating costs−$2.00B30.8%
- Operating income$451.0M7.0%
- Interest, other & tax−$114.0M1.8%
- Net income$337.0M5.2%
Where FY2018 revenue went
$6.47B- Cost of revenue: $4.03B, 62% of revenue
- R&D: $1.43B, 22% of revenue
- Net income: $337.0M, 5.2% of revenue
- SG&A: $562.0M, 8.7% of revenue
- Interest, other & tax: $114.0M, 1.8% of revenue
Kept 5.2% as net incomeNet income $337.0M · 5.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 8, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $6.47B$5.33B | +21.5% |
| Cost of Revenue | $4.03B$3.51B | +14.9% |
| Gross Profit | $2.45B$1.79B | +36.9% |
| R&D Expenses | $1.43B$1.20B | +19.9% |
| SG&A Expenses | $562.00M$516.00M | +8.9% |
| Operating Income | $451.00M$127.00M | +255.1% |
| Interest Expense | $121.00M$126.00M | −4.0% |
| Net Income | $337.00M-$33.00M | +1121.2% |
| EPS (Basic) | $0.34$-0.03 | +1233.3% |
| EPS (Diluted) | $0.32$-0.03 | +1166.7% |
| Shares Outstanding (Basic) | 982.00M952.00M | +3.2% |
| Shares Outstanding (Diluted) | 1.06B952.00M | +11.8% |
05—Questions
Frequently Asked Questions
What were the key drivers of AMD's revenue growth in 2018?
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.
How has AMD's profitability improved?
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.
What is AMD's financial position regarding debt and liquidity?
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.
What are the main risks AMD highlighted in its filing?
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.
06—Continue