10-QPeriod: Q3 FY2018

ADVANCED MICRO DEVICES INC Quarterly Report for Q3 Ended Sep 29, 2018

Filed October 31, 2018For Securities:AMD

Summary

Advanced Micro Devices, Inc. (AMD) reported strong financial results for the third quarter and first nine months of 2018, showcasing a return to profitability and revenue growth. For the third quarter of 2018, net revenue increased 4% year-over-year to $1.65 billion, driven by a 12% increase in the Computing and Graphics segment, partially offset by a 5% decrease in the Enterprise, Embedded and Semi-Custom segment. Net income for the quarter was $102 million, a significant improvement from $61 million in the prior year's quarter. This performance reflects the successful ramp-up of new products and expanding market adoption, particularly with the Ryzen and EPYC processor lines. The company's financial health has improved substantially, with net cash used in operating activities decreasing from $312 million in the first nine months of 2017 to $36 million in the same period of 2018. This demonstrates improved operational efficiency and working capital management. AMD ended the quarter with $1.06 billion in cash, cash equivalents, and marketable securities, indicating a solid liquidity position to fund ongoing operations and strategic investments.

Financial Highlights

51 data points
Beta

Revenue

$1.65B

40.0% Gross Margin

Net Income

$102.00M

6.2% Net Margin

EPS (Diluted)

$0.09

Total Assets

$4.35B

Cash & Equivalents

$1.05B

Free Cash Flow

$43.00M

Financial Statements
Beta
Revenue$1.65B
Cost of Revenue$992.00M
Gross Profit$661.00M
R&D Expenses$363.00M
SG&A Expenses$148.00M
Operating Income$150.00M
Interest Expense$30.00M
Net Income$102.00M
EPS (Basic)$0.10
EPS (Diluted)$0.09
Shares Outstanding (Basic)987.00M
Shares Outstanding (Diluted)1.08B

Key Highlights

  • 1Net revenue for Q3 2018 increased 4% to $1.65 billion, driven by a 12% increase in the Computing and Graphics segment.
  • 2Net income for Q3 2018 was $102 million, a significant increase from $61 million in Q3 2017, indicating improved profitability.
  • 3Gross margin percentage improved to 40% in Q3 2018 from 36% in Q3 2017, attributed to new product ramps with higher margins.
  • 4Research and Development expenses increased by 13% in Q3 2018 to $363 million, reflecting continued investment in product innovation.
  • 5Enterprise, Embedded and Semi-Custom segment revenue saw a slight decrease of 5% in Q3 2018, primarily due to lower semi-custom product revenue.
  • 6Cash, cash equivalents, and marketable securities stood at $1.06 billion as of September 29, 2018, providing a healthy liquidity position.
  • 7The company is actively managing its debt, with $87 million of 6.75% Notes and $10 million of 7.50% Notes settled using treasury stock during the quarter.

Frequently Asked Questions

The primary driver of revenue growth was the Computing and Graphics segment, which saw a 12% increase in net revenue. This was mainly due to strong demand for AMD's Ryzen desktop and mobile processors.

AMD has shown significant improvement in profitability. Net income for Q3 2018 was $102 million, up from $61 million in Q3 2017. The gross margin percentage also improved to 40% from 36% year-over-year.

AMD ended the quarter with $1.06 billion in cash, cash equivalents, and marketable securities. Management believes this, along with their Secured Revolving Line of Credit, is sufficient to fund operations over the next 12 months and expects to access capital markets if needed.

Research and Development expenses increased by 13% to $363 million in Q3 2018, primarily due to increased product engineering and design costs in the Computing and Graphics segment, as well as higher employee incentives driven by improved financial performance.