Summary
Advanced Micro Devices (AMD) reported its third quarter 2019 results, showing a 9% year-over-year increase in net revenue to $1.8 billion. This growth was primarily driven by a 36% surge in the Computing and Graphics segment, fueled by strong Ryzen processor sales, which more than offset a 27% decline in the Enterprise, Embedded and Semi-Custom segment. The company's gross margin improved to 43% from 40% in the prior year period, reflecting a more favorable product mix. While operating expenses, particularly in R&D and Marketing, General & Administrative, saw an increase, the overall operating income grew to $186 million from $150 million. Net income for the quarter was $120 million, an increase from $102 million in the same period last year. Diluted earnings per share stood at $0.11. The company's balance sheet remains solid with $1.21 billion in cash, cash equivalents, and marketable securities. AMD also successfully managed its debt, reducing its outstanding debt obligations. The company continues to achieve product milestones, including the launch of its 2nd Gen EPYC processors and new Ryzen Pro and Athlon Pro desktop processors, positioning it for future growth. Investors should note the continued strength in the Computing and Graphics segment driven by Ryzen processors, and the strategic importance of new EPYC server processor launches. While the decline in the Enterprise, Embedded and Semi-Custom segment due to lower semi-custom revenue is a point of observation, the growth in EPYC server processors provides a counterbalancing positive trend. The improved gross margin is a positive indicator of product mix and pricing power. Management expressed confidence in sufficient liquidity for the next 12 months.
Financial Highlights
50 data points| Revenue | $1.80B |
| Cost of Revenue | $1.02B |
| Gross Profit | $777.00M |
| R&D Expenses | $406.00M |
| SG&A Expenses | $185.00M |
| Operating Income | $186.00M |
| Interest Expense | $24.00M |
| Net Income | $120.00M |
| EPS (Basic) | $0.11 |
| EPS (Diluted) | $0.11 |
| Shares Outstanding (Basic) | 1.10B |
| Shares Outstanding (Diluted) | 1.12B |
Key Highlights
- 1Net revenue increased 9% year-over-year to $1.8 billion, driven by a 36% increase in the Computing and Graphics segment.
- 2Gross margin improved to 43% from 40% year-over-year, attributed to higher sales of Ryzen and EPYC processors.
- 3Net income rose to $120 million from $102 million in the prior year period.
- 4Operating income increased to $186 million from $150 million year-over-year.
- 5The company launched its 2nd Gen EPYC processors based on the 'Zen 2' core architecture.
- 6Cash, cash equivalents, and marketable securities totaled $1.21 billion as of September 28, 2019.
- 7The Enterprise, Embedded and Semi-Custom segment revenue decreased by 27%, primarily due to lower semi-custom product revenue, partially offset by higher EPYC server processor revenue.