01—Abstract
Summary
Summary of the 10-Q filed August 3, 2017. Cited figures are marked; the original filing is the authoritative source.
Advanced Micro Devices, Inc. (AMD) reported its second quarter and first half fiscal year 2017 results.
For the second quarter, net revenue increased by 19% year-over-year to $1.22 billiona, driven by a significant 51% increase in the Computing and Graphics segment, largely due to higher sales of graphics processors and AMD Ryzen desktop processors. This growth, coupled with improved product mix, led to a gross margin of 33%, up from 31% in the prior year's quarter. The company swung to an operating income of $25 million from an operating loss of $8 million in the same period last year.
However, the six-month period presented a mixed picture. While net revenue grew 19% to $2.21 billionb, the company incurred an operating loss of $4 million compared to a loss of $76 million in the prior year. This was influenced by increased R&D expenses, particularly in the Enterprise, Embedded, and Semi-Custom segment, and a decrease in revenue from semi-custom SoC products.
The company's cash position decreased to $760 millionc from $1.26 billion, primarily due to working capital changes, including significant wafer purchases. AMD continues to invest heavily in product development, anticipating future growth from its new product lines.
02—Key points
Key Highlights
- Net revenue for the second quarter of 2017 increased 19% year-over-year to $1.22 billion.
- The Computing and Graphics segment saw a significant 51% revenue increase, driven by graphics processors and AMD Ryzen desktop processors.
- Gross margin improved to 33% from 31% year-over-year, reflecting a richer product mix and higher revenue from the Computing and Graphics segment.
- The company achieved operating income of $25 million in Q2 2017, a significant improvement from an operating loss of $8 million in Q2 2016.
- Despite revenue growth, the six-month period resulted in an operating loss of $4 million, with increased R&D expenses impacting profitability.
- Cash, cash equivalents, and marketable securities decreased to $844 million from $1.26 billion at the end of 2016, largely due to working capital changes and inventory build-up.
- AMD launched new products including Ryzen 5 and Ryzen PRO desktop processors, Radeon 500 series graphics cards, and EPYC 7000 series datacenter processors.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2017, Advanced Micro Devices Inc lost $0.03.
- Revenue$1.22B100.0%
- Cost of revenue−$836.0M68.4%
- Gross profit$386.0M31.6%
- Operating costs−$387.0M31.7%
- Operating income−$1.0M0.1%
- Interest, other & tax−$41.0M3.4%
- Net income−$42.0M3.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2017filed August 3, 2017Financial Statements
Q3 FY2017 against Q3 FY2016
| Line item | Q3 FY2017Q3 FY2016 | Change |
|---|---|---|
| Revenue | $1.22B$1.31B | −6.5% |
| Cost of Revenue | $818.00M$1.25B | −34.5% |
| Gross Profit | $386.00M$59.00M | +554.2% |
| R&D Expenses | $285.00M$259.00M | +10.0% |
| SG&A Expenses | $127.00M$117.00M | +8.5% |
| Operating Income | -$1.00M-$293.00M | +99.7% |
| Interest Expense | $32.00M$41.00M | −22.0% |
| Net Income | -$42.00M-$406.00M | +89.7% |
| EPS (Basic) | $-0.04$-0.50 | +92.0% |
| EPS (Diluted) | $-0.04$-0.50 | +92.0% |
| Shares Outstanding (Basic) | 945.00M815.00M | +16.0% |
| Shares Outstanding (Diluted) | 945.00M815.00M | +16.0% |
05—Questions
Frequently Asked Questions
What drove the revenue growth in the second quarter of 2017?
Revenue growth was primarily driven by a 51% increase in the Computing and Graphics segment, fueled by higher sales of graphics processors and the newly launched AMD Ryzen desktop processors, which saw increased average selling prices and unit shipments.
Why did the company's cash position decrease significantly?
The cash balance decreased from $1.26 billion at the end of 2016 to $844 million by July 1, 2017. This was primarily due to net cash used in operating and investing activities, particularly changes in working capital related to increased wafer purchases to support anticipated third-quarter sales, and investments in property, plant, and equipment.
What is the outlook for the Enterprise, Embedded, and Semi-Custom segment?
This segment experienced a 5% decrease in net revenue for the second quarter, primarily due to lower sales of semi-custom SoC products and a decline in non-recurring engineering (NRE) revenue. While it contributed positively to operating income, the decline in revenue and increased operating expenses led to lower operating income compared to the prior year.
What are the key risks highlighted by AMD in this report?
Key risks include intense competition, particularly from Intel, reliance on third-party manufacturers like GlobalFoundries, failure to achieve manufacturing yields, dependence on timely product introductions, potential cash shortfalls, significant indebtedness, restrictions from debt agreements, and the impact of global economic uncertainty and geopolitical events on demand and supply chains.
06—Continue