ADVANCED MICRO DEVICES INC Quarterly Report for Q1 Ended Mar 30, 2019

Summary

Advanced Micro Devices (AMD) reported a decrease in net revenue for the first quarter of 2019, with revenue falling to $1.27 billion 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% for the quarter, an improvement from 36% in the prior year, driven by higher-margin Ryzen products. However, operating income decreased to $38 million 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 million from warrant exercise, partially offset by debt repayments. Management anticipates sufficient liquidity to fund operations over the next 12 months.

Key Highlights

• 1Net revenue decreased by 23% to $1.27 billion compared to the prior year period.
• 2Computing and Graphics segment revenue declined 26%, impacted by reduced demand for Radeon products.
• 3Enterprise, Embedded, and Semi-Custom segment revenue decreased by 17%, primarily due to lower semi-custom revenue.
• 4Gross margin percentage improved to 41% from 36% year-over-year, driven by higher-margin Ryzen products.
• 5Operating income decreased to $38 million from $120 million.
• 6Net income fell to $16 million from $81 million.
• 7Cash, cash equivalents, and marketable securities stood at $1.19 billion.

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