AMD Reports Record Quarterly Revenue but Forecast That Falls Short of Estimates
Advanced Micro Devices Inc. (AMD) reported a record Q4 revenue a a result of strong sales in the company's Computing and Graphics segment, which was partially offset by lower revenue in the Enterprise, Embedded and Semi-Custom segment.
However, the company gave a lackluster forecast for the current period, suggesting gains against larger chip rival Intel may take longer than investors had hoped.
Revenue in the first three months of 2020 will be about $1.8 billion, plus or minus $50 million, an increase of approximately 42 percent year-over-year and a decrease of approximately 15 percent sequentially, Santa Clara, California-based AMD said Tuesday in a statement. AMD also projected sales in 2020 will increase 28% to 30%.
AMD expects the year-over-year increase to be driven by strong growth of Ryzen, EPYC and Radeon product sales. The sequential decrease is driven primarily by negligible semi-custom revenue which continues to soften in advance of the ramp of next generation products, in addition to seasonality.
For the full year 2020, AMD expects revenue growth of approximately 28 to 30 percent over 2019 driven by strength across all businesses.
AMD has said it’s targeting double-digit market share in servers by the middle of this year.
Intel’s server chip unit grew 19% in the fourth quarter and revenue from cloud-service providers, which offer computing power and storage via the internet, surged 48%. Intel’s data center business gets more revenue in a quarter than the whole of AMD reports in year.
Both companies have benefited from persistently strong demand for personal computers. Global PC shipments rose 2.3% from a year earlier in the fourth quarter as companies upgraded to a new version of Microsoft’s Windows operating system, according to research firm Gartner Inc. AMD has an even greater ability to cash in on this as it’s also the second-largest maker of chips used in computer graphics cards.
AMD also said fourth-quarter net income rose to $170 million, or 15 cents a share, compared with $38 million, or 4 cents, a year earlier. Excluding certain items, profit in the period was 32 cents a share. Revenue gained 50% to $2.13 billion.
“2019 marked a significant milestone in our multi-year journey as we successfully launched and ramped the strongest product portfolio in our 50-year history,” said Dr. Lisa Su, AMD president and CEO. “We delivered significant margin expansion and increased profitability as we gained market share with our Ryzen and EPYC processors. Our focused execution and the investments we made in our high-performance computing roadmaps position us well for continued growth in 2020 and beyond.”
Lisa Sue also confirmed that the successor to the RDNA architecture is coming in GPUs in 2020, and that some new products for the data center GPU side, will launch in the second half of this year.
Quarterly Financial Segment Summary
- Computing and Graphics segment revenue was $1.66 billion, up 69 percent year-over-year and 30 percent compared to the prior quarter driven primarily by strong sales of Ryzen processors and Radeon gaming GPUs.
- Operating income was $360 million compared to $115 million a year ago and $179 million in the prior quarter. Operating income improvements were primarily driven by higher revenue from Ryzen processor sales.
- Client processor average selling price (ASP) was up year-over-year and sequentially driven by Ryzen processor sales.
- GPU ASP was up year-over-year and sequentially primarily driven by higher channel sales
- Enterprise, Embedded and Semi-Custom segment revenue was $465 million, up 7 percent year-over-year driven by significantly higher EPYC™ processor sales, partially offset by lower semi-custom sales. Revenue declined 11 percent compared to the prior quarter due to lower semi-custom sales, partially offset by strong EPYC processor sales.
- Operating income was $45 million compared to an operating loss of $6 million a year ago and operating income of $61 million in the prior quarter. The year-over-year improvement was primarily driven by higher EPYC processor revenue. The decrease compared to the prior quarter was due to lower semi-custom sales.
- All Other operating loss was $57 million compared to operating losses of $81 million year-over-year and $54 million in the prior quarter.2019
- Revenue of $6.73 billion was up 4 percent year-over-year driven by higher revenue in the Computing and Graphics segment partially offset by lower revenue in the Enterprise, Embedded and Semi-Custom segment.
- Gross margin was 43 percent compared to 38 percent and non-GAAP gross margin was 43 percent compared to 39 percent in the prior year. Gross margin expansion was primarily driven by Ryzen and EPYC products.
- Operating income was $631 million compared to $451 million and non-GAAP operating income was $840 million compared to $633 million in the prior year. The operating income improvement was primarily driven by higher revenue and gross margin expansion.