01—Abstract
Summary
Summary of the 10-Q filed May 1, 2019. Cited figures are marked; the original filing is the authoritative source.
Advanced Micro Devices (AMD) reported a decrease in net revenue for the first quarter of 2019, with revenue falling to $1.27 billiona from $1.65 billion in the prior year period, a 23% decline.
This downturn was primarily attributed to lower sales in the Computing and Graphics segment, affected by reduced demand for Radeon products due to a decline in blockchain-related activity, although partially offset by increased demand for Ryzen processors and datacenter GPUs. The Enterprise, Embedded, and Semi-Custom segment also saw a revenue decrease, mainly due to lower semi-custom revenue, though EPYC server product revenue showed improvement. Despite the revenue decline, AMD reported a gross margin percentage of 41%b for the quarter, an improvement from 36% in the prior year, driven by higher-margin Ryzen products.
However, operating income decreased to $38 millionc from $120 million year-over-year, and net income dropped to $16 million from $81 million. The company's financial position remained stable, with cash, cash equivalents, and marketable securities totaling $1.19 billion.
Significant financing activities included $449 milliond from warrant exercise, partially offset by debt repayments. Management anticipates sufficient liquidity to fund operations over the next 12 months.
02—Key points
Key Highlights
- Net revenue decreased by 23% to $1.27 billion compared to the prior year period.
- Computing and Graphics segment revenue declined 26%, impacted by reduced demand for Radeon products.
- Enterprise, Embedded, and Semi-Custom segment revenue decreased by 17%, primarily due to lower semi-custom revenue.
- Gross margin percentage improved to 41% from 36% year-over-year, driven by higher-margin Ryzen products.
- Operating income decreased to $38 million from $120 million.
- Net income fell to $16 million from $81 million.
- Cash, cash equivalents, and marketable securities stood at $1.19 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2019, Advanced Micro Devices Inc kept $0.01.
- Revenue$1.27B100.0%
- Cost of revenue−$751.0M59.0%
- Gross profit$521.0M41.0%
- Operating costs−$483.0M38.0%
- Operating income$38.0M3.0%
- Interest, other & tax−$22.0M1.7%
- Net income$16.0M1.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2019filed May 1, 2019Financial Statements
Q1 FY2019 against Q1 FY2018
| Line item | Q1 FY2019Q1 FY2018 | Change |
|---|---|---|
| Revenue | $1.27B$1.65B | −22.8% |
| Cost of Revenue | $751.00M$1.05B | −28.5% |
| Gross Profit | $521.00M$597.00M | −12.7% |
| R&D Expenses | $373.00M$343.00M | +8.7% |
| SG&A Expenses | $170.00M$134.00M | +26.9% |
| Operating Income | $38.00M$120.00M | −68.3% |
| Interest Expense | $27.00M$31.00M | −12.9% |
| Net Income | $16.00M$81.00M | −80.2% |
| EPS (Basic) | $0.01$0.08 | −87.5% |
| EPS (Diluted) | $0.01$0.08 | −87.5% |
| Shares Outstanding (Basic) | 1.04B968.00M | +7.9% |
| Shares Outstanding (Diluted) | 1.09B1.04B | +5.3% |
05—Questions
Frequently Asked Questions
What caused the significant year-over-year revenue decline in the first quarter of 2019?
The primary driver of the 23% year-over-year revenue decline was a 26% decrease in the Computing and Graphics segment, largely due to lower sales of Radeon products. This was mainly attributed to a decline in blockchain-related demand. Additionally, the Enterprise, Embedded, and Semi-Custom segment saw a 17% revenue decrease, mainly from lower semi-custom revenue.
How did the company's profitability change compared to the previous year?
Profitability decreased significantly. Operating income dropped to $38 million from $120 million in the prior year. Net income also saw a substantial decrease, falling to $16 million from $81 million in the same period. This was driven by the lower revenue and increased operating expenses, despite an improvement in gross margin percentage.
What were the key financing activities during the quarter?
Financing activities were highlighted by a significant cash inflow of $449 million from a warrant exercise by West Coast Hitech L.P. (WCH). This was partially offset by debt repayments, including $164 million for the redemption of 6.75% Senior Notes and repurchases of 7.50% and 7.00% Senior Notes.
Does the company have sufficient liquidity to meet its short-term obligations?
Yes, AMD's management believes its cash, cash equivalents, and marketable securities balance of $1.19 billion, along with its Secured Revolving Line of Credit, will be sufficient to fund operations, including capital expenditures, over the next 12 months. The company also believes it can access capital markets if additional funds are required.
06—Continue