01—Abstract
Summary
Summary of the 10-Q filed October 31, 2018. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 millionb 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.
02—Key points
Key Highlights
- Net revenue for Q3 2018 increased 4% to $1.65 billion, driven by a 12% increase in the Computing and Graphics segment.
- Net income for Q3 2018 was $102 million, a significant increase from $61 million in Q3 2017, indicating improved profitability.
- Gross margin percentage improved to 40% in Q3 2018 from 36% in Q3 2017, attributed to new product ramps with higher margins.
- Research and Development expenses increased by 13% in Q3 2018 to $363 million, reflecting continued investment in product innovation.
- Enterprise, Embedded and Semi-Custom segment revenue saw a slight decrease of 5% in Q3 2018, primarily due to lower semi-custom product revenue.
- Cash, cash equivalents, and marketable securities stood at $1.06 billion as of September 29, 2018, providing a healthy liquidity position.
- The 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2018, Advanced Micro Devices Inc kept $0.06.
- Revenue$1.65B100.0%
- Cost of revenue−$992.0M60.0%
- Gross profit$661.0M40.0%
- Operating costs−$511.0M30.9%
- Operating income$150.0M9.1%
- Interest, other & tax−$48.0M2.9%
- Net income$102.0M6.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2018filed October 31, 2018Financial Statements
Q3 FY2018 against Q3 FY2017
| Line item | Q3 FY2018Q3 FY2017 | Change |
|---|---|---|
| Revenue | $1.65B$1.22B | +35.3% |
| Cost of Revenue | $992.00M$818.00M | +21.3% |
| Gross Profit | $661.00M$386.00M | +71.2% |
| R&D Expenses | $363.00M$285.00M | +27.4% |
| SG&A Expenses | $148.00M$127.00M | +16.5% |
| Operating Income | $150.00M-$1.00M | +15100.0% |
| Interest Expense | $30.00M$32.00M | −6.2% |
| Net Income | $102.00M-$42.00M | +342.9% |
| EPS (Basic) | $0.10$-0.04 | +350.0% |
| EPS (Diluted) | $0.09$-0.04 | +325.0% |
| Shares Outstanding (Basic) | 987.00M945.00M | +4.4% |
| Shares Outstanding (Diluted) | 1.08B945.00M | +13.9% |
05—Questions
Frequently Asked Questions
What is the primary driver of revenue growth in Q3 2018?
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.
How has AMD's profitability changed?
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.
What is the company's outlook on liquidity?
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.
Are there any significant changes in R&D spending?
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.
06—Continue