AMD (NASDAQ:AMD) today announced revenue for the fourth quarter of
2019 of $2.13 billion, operating income of $348 million, net income
of $170 million and diluted earnings per share of $0.15. On a
non-GAAP(*) basis, operating income was $405 million, net income
was $383 million and diluted earnings per share was $0.32.
For fiscal year 2019, the company reported revenue of $6.73
billion, operating income of $631 million, net income of $341
million and diluted earnings per share of $0.30. On a non-GAAP(*)
basis, operating income was $840 million, net income was $756
million and diluted earnings per share was $0.64.
GAAP Quarterly Financial
Results
|
Q4 2019 |
Q4 2018 |
Y/Y |
Q3 2019 |
Q/Q |
Revenue ($B) |
$ |
2.13 |
|
$ |
1.42 |
|
Up 50% |
$ |
1.80 |
|
Up 18% |
Gross margin |
|
45 |
% |
|
38 |
% |
Up 7pp |
|
43 |
% |
Up 2pp |
Operating expense ($M) |
$ |
601 |
|
$ |
509 |
|
Up $92 |
$ |
591 |
|
Up $10 |
Operating income ($M) |
$ |
348 |
|
$ |
28 |
|
Up $320 |
$ |
186 |
|
Up $162 |
Net income ($M) |
$ |
170 |
|
$ |
38 |
|
Up $132 |
$ |
120 |
|
Up $50 |
Earnings per share |
$ |
0.15 |
|
$ |
0.04 |
|
Up $0.11 |
$ |
0.11 |
|
Up $0.04 |
Non-GAAP(*) Quarterly Financial
Results
|
Q4 2019 |
Q4 2018 |
Y/Y |
Q3 2019 |
Q/Q |
Revenue ($B) |
$ |
2.13 |
|
$ |
1.42 |
|
Up 50% |
$ |
1.80 |
|
Up 18% |
Gross margin |
|
45 |
% |
|
41 |
% |
Up 4pp |
|
43 |
% |
Up 2pp |
Operating expense ($M) |
$ |
545 |
|
$ |
474 |
|
Up $71 |
$ |
539 |
|
Up $6 |
Operating income ($M) |
$ |
405 |
|
$ |
109 |
|
Up $296 |
$ |
240 |
|
Up $165 |
Net income ($M) |
$ |
383 |
|
$ |
87 |
|
Up $296 |
$ |
219 |
|
Up $164 |
Earnings per share |
$ |
0.32 |
|
$ |
0.08 |
|
Up $0.24 |
$ |
0.18 |
|
Up $0.14 |
Annual Financial Results
|
GAAP |
Non-GAAP(*) |
|
|
2019 |
|
|
2018 |
|
Y/Y |
|
2019 |
|
|
2018 |
|
Y/Y |
Revenue ($B) |
$ |
6.73 |
|
$ |
6.48 |
|
Up 4% |
$ |
6.73 |
|
$ |
6.48 |
|
Up 4% |
Gross margin |
|
43 |
% |
|
38 |
% |
Up 5pp |
|
43 |
% |
|
39 |
% |
Up 4pp |
Operating expense ($B) |
$ |
2.30 |
|
$ |
2.00 |
|
Up $0.30 |
$ |
2.09 |
|
$ |
1.86 |
|
Up $0.23 |
Operating income ($M) |
$ |
631 |
|
$ |
451 |
|
Up $180 |
$ |
840 |
|
$ |
633 |
|
Up $207 |
Net income ($M) |
$ |
341 |
|
$ |
337 |
|
Up $4 |
$ |
756 |
|
$ |
514 |
|
Up $242 |
Earnings per share |
$ |
0.30 |
|
$ |
0.32 |
|
Down $0.02 |
$ |
0.64 |
|
$ |
0.46 |
|
Up $0.18 |
“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.”
Q4 2019 Results
- Revenue of $2.13 billion was up 50 percent year-over-year
primarily driven by the Computing and Graphics segment. Revenue was
up 18 percent compared to the prior quarter as a result of higher
revenue in the Computing and Graphics segment partially offset by
lower revenue in the Enterprise, Embedded and Semi-Custom
segment.
- Gross margin was 45 percent compared to 38 percent a year ago
and 43 percent in the prior quarter. Non-GAAP gross margin was 45
percent compared to 41 percent a year ago and 43 percent in the
prior quarter. Gross margin improvements were primarily driven by
the ramp of 7nm products.
- Operating income was $348 million compared to $28 million a
year ago and operating income of $186 million in the prior quarter.
Non-GAAP operating income was $405 million compared to $109 million
a year ago and $240 million in the prior quarter. Operating income
improvements were primarily driven by revenue growth and the ramp
of higher margin products.
- Net income was $170 million compared to $38 million a year ago
and net income of $120 million in the prior quarter. Non-GAAP net
income was $383 million compared to $87 million a year ago and $219
million in the prior quarter.
- Diluted earnings per share was $0.15 compared to $0.04 a year
ago and $0.11 in the prior quarter. Non-GAAP diluted earnings per
share was $0.32 compared to $0.08 a year ago and $0.18 in the prior
quarter.
- Cash, cash equivalents and marketable securities were $1.50
billion at the end of the quarter as compared to $1.21 billion at
the end of the prior quarter.
- Principal debt was reduced by $524 million resulting in a GAAP
loss of $128 million.
- Free cash flow was $400 million in the quarter compared to $79
million a year ago and $179 million in the prior quarter.
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 Annual Results
- 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.
- Net income was $341 million compared to $337 million and
non-GAAP net income was $756 million compared to $514 million in
the prior year.
- Diluted earnings per share was $0.30 compared to $0.32 in 2018.
Non-GAAP diluted earnings per share was $0.64 compared to $0.46 in
the prior year.
- Cash, cash equivalents and marketable securities were $1.50
billion at the end of the year compared to $1.16 billion at the end
of 2018.
- Principal debt was reduced by $965 million resulting in a GAAP
loss of $176 million.
- Free cash flow was $276 million for the year compared to
negative $129 million in 2018.
Recent PR Highlights
- AMD announced new mobile processors for upcoming ultrathin,
gaming and mainstream laptops from Acer, Asus, Dell, HP, Lenovo and
other OEMs.
- The AMD Ryzen™ 4000 Series Mobile Processor family includes the
world’s highest performance and only 8 core processor available for
ultrathin laptops. Built on the groundbreaking 7nm-based “Zen 2”
architecture and featuring optimized high-performance Radeon™
graphics, the 4000 Series provides incredible performance and power
efficiency.
- AMD announced the AMD Athlon™ 3000 Series Mobile Processor
family, bringing consumers more choice and enabling modern
computing experiences for mainstream notebooks.
- The first AMD Ryzen 4000 Series and Athlon 3000 Series powered
laptops are expected to be available starting in Q1 2020, with more
than 100 systems expected to launch throughout 2020.
- AMD unveiled new high-performance desktop processors designed
to deliver the best experiences for gamers and creators.
- AMD introduced the world’s most powerful desktop processors,
the 3rd Gen AMD Ryzen™ Threadripper™ family, including the 24-core
AMD Ryzen™ Threadripper™ 3960X, 32-core AMD Ryzen™ Threadripper™
3970X and the world’s first 64-core desktop processor, the AMD
Ryzen™ Threadripper™ 3990X.
- AMD launched the AMD Ryzen™ 9 3950X, the fastest and most
powerful 16-core consumer desktop processor.
- AMD continued to expand its presence in the data center and
high-performance computing markets with new AMD EPYC™ processor
customers and platforms.
- AWS and Microsoft Azure announced new cloud instances for
high-performance computing powered by 2nd Gen EPYC processors.
- New supercomputers powered by 2nd Gen AMD EPYC processors
include the Expanse system at the San Diego Supercomputer Center
and the latest extension of France’s GENCI Joliot-Curie
supercomputer.
- Fujitsu, Gigabyte, HPE, Penguin, Synopsys and Tyan announced
new platforms based on 2nd Gen AMD EPYC processors, bringing the
total number of AMD EPYC processor-powered platforms to more than
100.
- AMD expanded its gaming and professional graphics card
offerings:
- AMD unveiled the AMD Radeon™ RX 5600 Series for ultimate
1080p gaming, including the AMD Radeon™ RX 5600 XT, the AMD Radeon™
RX 5600 and the AMD Radeon™ RX 5600M for laptop PCs. The AMD
Radeon™ RX 5600 Series offers up to 20 percent faster performance
on average across select AAA games compared to competitive
offerings.
- AMD announced the AMD Radeon™ RX 5500 XT graphics card. Built
on the AMD RDNA architecture and industry-leading 7nm process
technology, the AMD Radeon RX 5500 XT provides up to 13 percent
faster performance on average in today’s top AAA games than the
competition.
- Apple announced the latest Apple MacBook Pro, featuring the new
AMD Radeon™ Pro 5500M and 5300M mobile GPUs. Leveraging the
powerful AMD RDNA architecture, AMD Radeon™ Pro 5000M series GPUs
deliver groundbreaking levels of graphics performance for video
editing, 3D content creation and macOS-based game development.
- AMD launched the world’s first 7nm professional PC workstation
graphics card for 3D designers, architects and engineers, the AMD
Radeon™ Pro W5700 graphics card. The Radeon Pro W5700 harnesses the
high-performance, energy-efficient AMD RDNA architecture to deliver
new levels of performance.
- AMD announced that the AMD Radeon™ Pro W5700X GPU is a
configuration option in the latest Apple Mac Pro, alongside the AMD
Radeon™ Pro Vega II and AMD Radeon™ Pro 580X GPUs.
Current OutlookAMD’s outlook statements are
based on current expectations. The following statements are
forward-looking and actual results could differ materially
depending on market conditions and the factors set forth under
“Cautionary Statement” below.
For the first quarter of 2020, AMD expects revenue to be
approximately $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. The year-over-year increase
is expected 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. AMD expects non-GAAP gross margin to be approximately
46 percent in the first quarter of 2020.
For the full year 2020, AMD expects revenue growth of
approximately 28 to 30 percent over 2019 driven by strength across
all businesses. AMD expects non-GAAP gross margin to be
approximately 45 percent for 2020.
AMD TeleconferenceAMD will hold a conference
call for the financial community at 2:30 p.m. PT (5:30 p.m. ET)
today to discuss its fourth quarter and fiscal year 2019 financial
results. AMD will provide a real-time audio broadcast of the
teleconference on the Investor Relations page of its website at
www.amd.com. The webcast will be available for 12 months after the
conference call.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES |
|
|
|
|
(In millions, except per
share data) (Unaudited) |
|
Three Months Ended |
|
Year Ended |
|
|
December 28, 2019 |
|
September 28, 2019 |
|
December 29, 2018 |
|
December 28, 2019 |
|
December 29, 2018 |
GAAP gross
margin |
|
$ |
949 |
|
|
$ |
777 |
|
|
$ |
537 |
|
|
$ |
2,868 |
|
|
$ |
2,447 |
|
GAAP gross margin
% |
|
45 |
% |
|
43 |
% |
|
38 |
% |
|
43 |
% |
|
38 |
% |
Impairment of technology licenses |
|
— |
|
|
— |
|
|
45 |
|
|
— |
|
|
45 |
|
Stock-based compensation |
|
1 |
|
|
2 |
|
|
1 |
|
|
6 |
|
|
4 |
|
Non-GAAP gross
margin |
|
$ |
950 |
|
|
$ |
779 |
|
|
$ |
583 |
|
|
$ |
2,874 |
|
|
$ |
2,496 |
|
Non-GAAP gross margin
% |
|
45 |
% |
|
43 |
% |
|
41 |
% |
|
43 |
% |
|
39 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses |
|
$ |
601 |
|
|
$ |
591 |
|
|
$ |
509 |
|
|
$ |
2,297 |
|
|
$ |
1,996 |
|
Stock-based compensation |
|
56 |
|
|
52 |
|
|
35 |
|
|
191 |
|
|
133 |
|
Loss contingency on legal matter |
|
— |
|
|
— |
|
|
— |
|
|
12 |
|
|
— |
|
Non-GAAP operating
expenses |
|
$ |
545 |
|
|
$ |
539 |
|
|
$ |
474 |
|
|
$ |
2,094 |
|
|
$ |
1,863 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
income |
|
$ |
348 |
|
|
$ |
186 |
|
|
$ |
28 |
|
|
$ |
631 |
|
|
$ |
451 |
|
Impairment of technology licenses |
|
— |
|
|
— |
|
|
45 |
|
|
— |
|
|
45 |
|
Stock-based compensation |
|
57 |
|
|
54 |
|
|
36 |
|
|
197 |
|
|
137 |
|
Loss contingency on legal matter |
|
— |
|
|
— |
|
|
— |
|
|
12 |
|
|
— |
|
Non-GAAP operating
income |
|
$ |
405 |
|
|
$ |
240 |
|
|
$ |
109 |
|
|
$ |
840 |
|
|
$ |
633 |
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 28, 2019 |
|
September 28, 2019 |
|
December 29, 2018 |
|
December 28, 2019 |
|
December 29, 2018 |
GAAP net income/
earnings per share |
|
$ |
170 |
|
|
$ |
0.15 |
|
|
$ |
120 |
|
|
$ |
0.11 |
|
|
$ |
38 |
|
|
$ |
0.04 |
|
|
$ |
341 |
|
|
$ |
0.30 |
|
|
$ |
337 |
|
|
$ |
0.32 |
|
Loss on debt redemption/conversion |
|
128 |
|
|
0.10 |
|
|
40 |
|
|
0.03 |
|
|
5 |
|
|
— |
|
|
176 |
|
|
0.15 |
|
|
12 |
|
|
0.01 |
|
Non-cash interest expense related to convertible debt |
|
4 |
|
|
— |
|
|
6 |
|
|
— |
|
|
6 |
|
|
0.01 |
|
|
22 |
|
|
0.02 |
|
|
24 |
|
|
0.02 |
|
Stock-based compensation |
|
57 |
|
|
0.05 |
|
|
54 |
|
|
0.04 |
|
|
36 |
|
|
0.03 |
|
|
197 |
|
|
0.16 |
|
|
137 |
|
|
0.11 |
|
Impairment of technology licenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
45 |
|
|
0.04 |
|
|
— |
|
|
— |
|
|
45 |
|
|
0.04 |
|
Equity (income) loss in investee |
|
— |
|
|
— |
|
|
(1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2 |
|
|
— |
|
Loss contingency on legal matter |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
12 |
|
|
0.01 |
|
|
— |
|
|
— |
|
Provision for income taxes |
|
24 |
|
|
0.02 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
8 |
|
|
— |
|
|
— |
|
|
— |
|
Withholding tax refund including interest |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(43 |
) |
|
(0.04 |
) |
|
— |
|
|
— |
|
|
(43 |
) |
|
(0.04 |
) |
Non-GAAP net income /
earnings per share |
|
$ |
383 |
|
|
$ |
0.32 |
|
|
$ |
219 |
|
|
$ |
0.18 |
|
|
$ |
87 |
|
|
$ |
0.08 |
|
|
$ |
756 |
|
|
$ |
0.64 |
|
|
$ |
514 |
|
|
$ |
0.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used and net
income adjustment in earnings per share calculation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per share
calculation (GAAP) |
|
1,188 |
|
|
1,117 |
|
|
1,079 |
|
|
1,120 |
|
|
1,064 |
|
Interest expense add-back to
GAAP net income |
|
$ |
4 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Shares used in per share calculation (Non-GAAP)(1) |
|
1,216 |
|
|
1,212 |
|
|
1,180 |
|
|
1,209 |
|
|
1,165 |
|
Interest expense add-back to
Non-GAAP net income(1) |
|
$ |
2 |
|
|
$ |
4 |
|
|
$ |
5 |
|
|
$ |
16 |
|
|
$ |
18 |
|
(1 |
) |
The three months ended December
28, 2019, GAAP diluted EPS calculation includes the 31 million
shares related to the Company's 2026 Convertible Notes and the
associated $4 million interest expense add-back to net income under
the "if converted" method. The three months and year ended
December 28, 2019, Non-GAAP diluted EPS calculation includes the 59
million and 89 million shares, respectively, related to the
Company's 2026 Convertible Notes and the associated $2 million and
$16 million interest expense add-back to net income, respectively,
under the "if converted" method. The three months ended
September 28, 2019, Non-GAAP diluted EPS calculation includes the
95 million shares related to the Company's 2026 Convertible Notes
and the associated $4 million interest expense add-back to net
income under the "if converted" method. The three months and
year ended December 29, 2018, Non-GAAP diluted EPS calculation
includes the 100.6 million shares related to the Company's 2026
Convertible Notes and the associated $5 million and $18 million,
respectively, interest expense add-back to net income under the "if
converted" method. |
About AMDFor 50 years, AMD has
driven innovation in high-performance computing, graphics and
visualization technologies – the building blocks for gaming,
immersive platforms and the data center. Hundreds of millions of
consumers, leading Fortune 500 businesses and cutting-edge
scientific research facilities around the world rely on AMD
technology daily to improve how they live, work and play. AMD
employees around the world are focused on building great products
that push the boundaries of what is possible. For more information
about how AMD is enabling today and inspiring tomorrow, visit the
AMD (NASDAQ: AMD) website, blog, Facebook and Twitter pages.
Cautionary StatementThis
document contains forward-looking statements concerning Advanced
Micro Devices, Inc. (AMD) such as the features, functionality,
availability, timing and expected benefits of AMD’s future products
and technologies; AMD’s high-performance computing roadmaps
positioning AMD well for continued growth in 2020 and beyond; and
AMD’s expected first quarter 2020 and fiscal 2020 financial outlook
including, revenue along with the expected drivers of such revenue
and non-GAAP gross margin, which are made pursuant to the Safe
Harbor provisions of the Private Securities Litigation Reform Act
of 1995. Forward looking statements are commonly identified by
words such as "would," "may," "expects," "believes," "plans,"
"intends," "projects" and other terms with similar meaning.
Investors are cautioned that the forward-looking statements in this
document are based on current beliefs, assumptions and
expectations, speak only as of the date of this document and
involve risks and uncertainties that could cause actual results to
differ materially from current expectations. Such statements are
subject to certain known and unknown risks and uncertainties, many
of which are difficult to predict and generally beyond AMD's
control, that could cause actual results and other future events to
differ materially from those expressed in, or implied or projected
by, the forward-looking information and statements. Material
factors that could cause actual results to differ materially from
current expectations include, without limitation, the following:
Intel Corporation’s dominance of the microprocessor market and its
aggressive business practices may limit AMD’s ability to compete
effectively; AMD relies on third parties to manufacture its
products, and if they are unable to do so on a timely basis in
sufficient quantities and using competitive technologies, AMD’s
business could be materially adversely affected; failure to achieve
expected manufacturing yields for AMD’s products could negatively
impact its financial results; AMD has a wafer supply
agreement with GF with obligations to purchase all of its
microprocessor and APU product requirements, and a certain portion
of its GPU product requirements at nodes larger than 7 nanometer
from GF with limited exceptions. If GF is not able to satisfy AMD’s
manufacturing requirements, AMD’s business could be adversely
impacted; the success of AMD’s business is dependent upon its
ability to introduce products on a timely basis with features and
performance levels that provide value to its customers while
supporting and coinciding with significant industry transitions; if
AMD cannot generate sufficient revenue and operating cash flow or
obtain external financing, it may face a cash shortfall and be
unable to make all of its planned investments in research and
development or other strategic investments; the loss of a
significant customer may have a material adverse effect on AMD;
AMD’s receipt of revenue from its semi-custom SoC products is
dependent upon its technology being designed into third-party
products and the success of those products; global economic
uncertainty may adversely impact AMD’s business and operating
results; AMD’s worldwide operations are subject to political, legal
and economic risks and natural disasters, which could have a
material adverse effect on it; government actions and regulations
such as export administration regulations, tariffs, and trade
protection measures may limit our ability to export our products to
certain customers; AMD’s products may be subject to security
vulnerabilities that could have a material adverse effect on AMD;
IT outages, data loss, data breaches and cyber-attacks could
compromise AMD’s intellectual property or other sensitive
information, be costly to remediate and cause significant damage to
its business and reputation; AMD’s operating results are subject to
quarterly and seasonal sales patterns; AMD may not be able to
generate sufficient cash to service its debt obligations or meet
its working capital requirements; AMD has a large amount of
indebtedness which could adversely affect its financial position
and prevent it from implementing its strategy or fulfilling its
contractual obligations; the agreements governing AMD’s notes and
the Secured Revolving Facility impose restrictions on AMD that may
adversely affect AMD’s ability to operate its business; the markets
in which AMD’s products are sold are highly competitive; the
conversion of the 2.125% Convertible Senior Notes due 2026 (2.125%
Notes) may dilute the ownership interest of AMD’s existing
stockholders, or may otherwise depress the price of its common
stock; uncertainties involving the ordering and shipment of AMD’s
products could materially adversely affect it; the demand for AMD’s
products depends in part on the market conditions in the industries
into which they are sold. Fluctuations in demand for AMD’s products
or a market decline in any of these industries could have a
material adverse effect on its results of operations; AMD’s ability
to design and introduce new products in a timely manner is
dependent upon third-party intellectual property; AMD depends on
third-party companies for the design, manufacture and supply of
motherboards, software and other computer platform components to
support its business; if AMD loses Microsoft Corporation’s support
for its products or other software vendors do not design and
develop software to run on AMD’s products, its ability to sell its
products could be materially adversely affected; AMD’s reliance on
third-party distributors and add-in-board (AIB) partners subjects
it to certain risks; AMD may incur future impairments of goodwill
and technology license purchases; AMD’s inability to continue to
attract and retain qualified personnel may hinder its business; in
the event of a change of control, AMD may not be able to repurchase
its outstanding debt as required by the applicable indentures and
its Secured Revolving Facility, which would result in a default
under the indentures and its Secured Revolving Facility; the
semiconductor industry is highly cyclical and has experienced
severe downturns that have materially adversely affected, and may
continue to materially adversely affect its business in the
future; acquisitions, divestitures and/or joint ventures could
disrupt its business, harm its financial condition and operating
results or dilute, or adversely affect the price of, its common
stock; AMD’s business is dependent upon the proper functioning of
its internal business processes and information systems and
modification or interruption of such systems may disrupt its
business, processes and internal controls; if essential equipment,
materials or manufacturing processes are not available to
manufacture its products, AMD could be materially adversely
affected; if AMD’s products are not compatible with some or all
industry-standard software and hardware, it could be materially
adversely affected; costs related to defective products could have
a material adverse effect on AMD; if AMD fails to maintain the
efficiency of its supply chain as it responds to changes in
customer demand for its products, its business could be materially
adversely affected; AMD outsources to third parties certain
supply-chain logistics functions, including portions of its product
distribution, transportation management and information technology
support services; AMD’s stock price is subject to volatility;
worldwide political conditions may adversely affect demand for
AMD’s products; unfavorable currency exchange rate fluctuations
could adversely affect AMD; AMD’s inability to effectively control
the sales of its products on the gray market could have a material
adverse effect on it; if AMD cannot adequately protect its
technology or other intellectual property in the United States and
abroad, through patents, copyrights, trade secrets, trademarks and
other measures, it may lose a competitive advantage and incur
significant expenses; AMD is a party to litigation and may become a
party to other claims or litigation that could cause it to incur
substantial costs or pay substantial damages or prohibit it from
selling its products; AMD’s business is subject to potential tax
liabilities; and AMD is subject to environmental laws, conflict
minerals-related provisions of the Dodd-Frank Wall Street Reform
and Consumer Protection Act as well as a variety of other laws or
regulations that could result in additional costs and liabilities.
Investors are urged to review in detail the risks and uncertainties
in AMD's Securities and Exchange Commission filings,
including but not limited to AMD's Quarterly Report on Form 10-Q
for the quarter ended September 28, 2019.
(*) |
In this earnings press release,
in addition to GAAP financial results, AMD has provided non-GAAP
financial measures including non-GAAP gross margin, non-GAAP
operating expenses, non-GAAP operating income, non-GAAP net income
and non-GAAP earnings per share. These non-GAAP financial measures
reflect certain adjustments as presented in the tables in this
earnings press release. AMD also provided adjusted EBITDA
and free cash flow as supplemental non-GAAP measures of its
performance. These items are defined in the footnotes to the
selected corporate data tables provided at the end of this earnings
press release. AMD is providing these financial measures
because it believes this non-GAAP presentation makes it easier for
investors to compare its operating results for current and
historical periods and also because AMD believes it assists
investors in comparing AMD’s performance across reporting periods
on a consistent basis by excluding items that it does not believe
are indicative of its core operating performance and for the other
reasons described in the footnotes to the selected data tables.
Refer to the data tables at the end of this earnings press
release. |
AMD, the AMD Arrow logo, EPYC, Radeon,
Ryzen, Threadripper and combinations thereof, are trademarks of
Advanced Micro Devices, Inc. Other names are for informational
purposes only and used to identify companies and products and may
be trademarks of their respective owner.
|
|
|
|
ADVANCED MICRO
DEVICES, INC. |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Millions
except per share amounts and percentages) (Unaudited) |
|
Three Months Ended |
|
Year Ended |
|
December 28,2019 |
September 28,2019 |
December 29,2018 |
|
December 28,2019 |
December 29,2018 |
Net revenue |
$ |
2,127 |
|
$ |
1,801 |
|
$ |
1,419 |
|
|
$ |
6,731 |
|
$ |
6,475 |
|
Cost of sales |
|
1,178 |
|
|
1,024 |
|
|
882 |
|
|
|
3,863 |
|
|
4,028 |
|
Gross
margin |
|
949 |
|
|
777 |
|
|
537 |
|
|
|
2,868 |
|
|
2,447 |
|
Gross margin
% |
|
45 |
% |
|
43 |
% |
|
38 |
% |
|
|
43 |
% |
|
38 |
% |
Research and development |
|
395 |
|
|
406 |
|
|
371 |
|
|
|
1,547 |
|
|
1,434 |
|
Marketing, general and administrative |
|
206 |
|
|
185 |
|
|
138 |
|
|
|
750 |
|
|
562 |
|
Licensing gain |
|
- |
|
|
- |
|
|
- |
|
|
|
(60 |
) |
|
- |
|
Operating income |
|
348 |
|
|
186 |
|
|
28 |
|
|
|
631 |
|
|
451 |
|
Interest expense |
|
(18 |
) |
|
(24 |
) |
|
(29 |
) |
|
|
(94 |
) |
|
(121 |
) |
Other income (expense), net |
|
(125 |
) |
|
(36 |
) |
|
4 |
|
|
|
(165 |
) |
|
- |
|
Income before income taxes and equity income (loss) |
|
205 |
|
|
126 |
|
|
3 |
|
|
|
372 |
|
|
330 |
|
Provision for (benefit from) for income taxes |
|
35 |
|
|
7 |
|
|
(35 |
) |
|
|
31 |
|
|
(9 |
) |
Equity income (loss) in investee |
|
- |
|
|
1 |
|
|
- |
|
|
|
- |
|
|
(2 |
) |
Net
Income |
$ |
170 |
|
$ |
120 |
|
$ |
38 |
|
|
$ |
341 |
|
$ |
337 |
|
Earnings per
share |
|
|
|
|
|
|
Basic |
$ |
0.15 |
|
$ |
0.11 |
|
$ |
0.04 |
|
|
$ |
0.31 |
|
$ |
0.34 |
|
Diluted |
$ |
0.15 |
|
$ |
0.11 |
|
$ |
0.04 |
|
|
$ |
0.30 |
|
$ |
0.32 |
|
Shares used in per share calculation |
|
|
|
|
|
|
Basic |
|
1,140 |
|
|
1,097 |
|
|
1,002 |
|
|
|
1,091 |
|
|
982 |
|
Diluted |
|
1,188 |
|
|
1,117 |
|
|
1,079 |
|
|
|
1,120 |
|
|
1,064 |
|
|
ADVANCED MICRO DEVICES, INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(Millions) (Unaudited) |
|
|
|
|
|
|
|
December 28,2019(1)(2) |
|
December 29,2018(2) |
|
Assets |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
$ |
1,466 |
|
|
$ |
1,078 |
|
|
Marketable securities |
|
37 |
|
|
|
78 |
|
|
Accounts receivable, net |
|
1,859 |
|
|
|
1,235 |
|
|
Inventories, net |
|
982 |
|
|
|
845 |
|
|
Prepayment and receivables - related parties |
|
20 |
|
|
|
34 |
|
|
Prepaid expenses and other current assets |
|
233 |
|
|
|
270 |
|
|
Total current assets |
|
4,597 |
|
|
|
3,540 |
|
|
Property and
equipment, net |
|
500 |
|
|
|
348 |
|
|
Operating
lease right-of use assets |
|
205 |
|
|
|
- |
|
|
Goodwill |
|
289 |
|
|
|
289 |
|
|
Investment:
equity method |
|
58 |
|
|
|
58 |
|
|
Other assets |
|
379 |
|
|
|
321 |
|
|
Total Assets |
$ |
6,028 |
|
|
$ |
4,556 |
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term debt, net |
$ |
- |
|
|
$ |
136 |
|
|
Accounts payable |
|
988 |
|
|
|
834 |
|
|
Payables to related parties |
|
213 |
|
|
|
207 |
|
|
Accrued liabilities |
|
1,084 |
|
|
|
783 |
|
|
Other current liabilities |
|
74 |
|
|
|
24 |
|
|
Total current liabilities |
|
2,359 |
|
|
|
1,984 |
|
|
Long-term
debt, net |
|
486 |
|
|
|
1,114 |
|
|
Long-term
operating lease liabilities |
|
199 |
|
|
|
- |
|
|
Other
long-term liabilities |
|
157 |
|
|
|
192 |
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
Capital stock: |
|
|
|
|
Common stock, par value |
|
12 |
|
|
|
10 |
|
|
Additional paid-in capital |
|
9,963 |
|
|
|
8,750 |
|
|
Treasury stock, at cost |
|
(53 |
) |
|
|
(50 |
) |
|
Accumulated deficit |
|
(7,095 |
) |
|
|
(7,436 |
) |
|
Accumulated other comprehensive loss |
|
- |
|
|
|
(8 |
) |
|
Total Stockholders' equity |
$ |
2,827 |
|
|
$ |
1,266 |
|
|
Total Liabilities and Stockholders' Equity |
$ |
6,028 |
|
|
$ |
4,556 |
|
|
|
|
|
|
(1) |
During the first quarter of 2019, the Company adopted the new lease
accounting standard, ASC 842, Leases, which resulted in an increase
to assets and liabilities for leases primarily related to office
buildings. The adoption of this standard had no impact to the
Company's results of operations or cash flows. |
|
|
(2) |
During the second quarter of 2019, GLOBALFOUNDRIES Inc. (GF) ceased
being a related party of the Company. All prior period GF related
party balances have been reclassified to conform to the current
period presentation. |
ADVANCED MICRO DEVICES, INC. |
SELECTED CASH FLOW INFORMATION |
(Millions) (Unaudited) |
|
Three Months Ended |
|
Year Ended |
|
December 28,2019 |
|
December 28,2019 |
Net cash provided by (used in) |
|
|
|
Operating activities |
$ |
442 |
|
|
$ |
493 |
|
Investing activities |
$ |
(26 |
) |
|
$ |
(149 |
) |
Financing activities |
$ |
(107 |
) |
|
$ |
43 |
|
ADVANCED MICRO
DEVICES, INC. |
SELECTED
CORPORATE DATA |
(Millions)
(Unaudited) |
|
|
Three Months
Ended |
|
|
|
Year Ended |
|
Segment and Category Information |
|
December 28,2019 |
|
|
September 28,2019 |
|
|
December 29,2018 |
|
|
|
December 28,2019 |
|
|
December 29,2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computing and Graphics (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
$ |
1,662 |
|
|
|
$ |
1,276 |
|
|
|
$ |
986 |
|
|
|
|
$ |
4,709 |
|
|
|
$ |
4,125 |
|
|
Operating income |
|
$ |
360 |
|
|
|
$ |
179 |
|
|
|
$ |
115 |
|
|
|
|
$ |
577 |
|
|
|
$ |
470 |
|
|
Enterprise, Embedded and Semi-Custom (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
$ |
465 |
|
|
|
$ |
525 |
|
|
|
$ |
433 |
|
|
|
|
$ |
2,022 |
|
|
|
$ |
2,350 |
|
|
Operating income |
|
$ |
45 |
|
|
|
$ |
61 |
|
|
|
$ |
(6 |
) |
|
|
|
$ |
263 |
|
|
|
$ |
163 |
|
|
All Other (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
|
- |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
- |
|
|
Operating loss |
|
$ |
(57 |
) |
|
|
$ |
(54 |
) |
|
|
$ |
(81 |
) |
|
|
|
$ |
(209 |
) |
|
|
$ |
(182 |
) |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
$ |
2,127 |
|
|
|
$ |
1,801 |
|
|
|
$ |
1,419 |
|
|
|
|
$ |
6,731 |
|
|
|
$ |
6,475 |
|
|
Operating income |
|
$ |
348 |
|
|
|
$ |
186 |
|
|
|
$ |
28 |
|
|
|
|
$ |
631 |
|
|
|
$ |
451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
42 |
|
|
|
$ |
55 |
|
|
|
$ |
41 |
|
|
|
|
$ |
217 |
|
|
|
$ |
163 |
|
|
Adjusted EBITDA (4) |
|
$ |
469 |
|
|
|
$ |
300 |
|
|
|
$ |
152 |
|
|
|
|
$ |
1,062 |
|
|
|
$ |
803 |
|
|
Cash, cash equivalents and marketable securities |
|
$ |
1,503 |
|
|
|
$ |
1,209 |
|
|
|
$ |
1,156 |
|
|
|
|
$ |
1,503 |
|
|
|
$ |
1,156 |
|
|
Free cash flow (5) |
|
$ |
400 |
|
|
|
$ |
179 |
|
|
|
$ |
79 |
|
|
|
|
$ |
276 |
|
|
|
$ |
(129 |
) |
|
Total assets |
|
$ |
6,028 |
|
|
|
$ |
5,253 |
|
|
|
$ |
4,556 |
|
|
|
|
$ |
6,028 |
|
|
|
$ |
4,556 |
|
|
Total debt |
|
$ |
486 |
|
|
|
$ |
872 |
|
|
|
$ |
1,250 |
|
|
|
|
$ |
486 |
|
|
|
$ |
1,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The Computing and Graphics segment primarily includes desktop and
notebook processors and chipsets, discrete and integrated graphics
processing units (GPUs), data center and professional GPUs, and
development services. The Company also licenses portions of its
intellectual property portfolio. |
|
|
(2) |
The Enterprise, Embedded and Semi-Custom segment primarily includes
server and embedded processors, semi-custom System-on-Chip (SoC)
products, development services and technology for game consoles.
The Company also licenses portions of its intellectual property
portfolio. |
|
|
(3) |
All Other category primarily includes certain expenses and credits
that are not allocated to any of the operating segments. Also
included in this category is stock-based compensation expense. |
|
|
|
(4) |
Reconciliation of GAAP Net Income to Adjusted
EBITDA* |
|
|
|
Three Months
Ended |
|
Year Ended |
|
|
December 28,2019 |
September 28,2019 |
December 29,2018 |
|
December 28,2019 |
December 29,2018 |
|
GAAP net income |
$ |
170 |
|
$ |
120 |
|
$ |
38 |
|
|
$ |
341 |
|
$ |
337 |
|
|
Interest expense |
|
18 |
|
|
24 |
|
|
29 |
|
|
|
94 |
|
|
121 |
|
|
Other (income) expense, net |
|
125 |
|
|
36 |
|
|
(4 |
) |
|
|
165 |
|
|
- |
|
|
Provision (benefit) for income taxes |
|
35 |
|
|
7 |
|
|
(35 |
) |
|
|
31 |
|
|
(9 |
) |
|
Equity (income) loss in investee |
|
- |
|
|
(1 |
) |
|
- |
|
|
|
- |
|
|
2 |
|
|
Impairment of technology licenses |
|
- |
|
|
- |
|
|
45 |
|
|
|
- |
|
|
45 |
|
|
Stock-based compensation |
|
57 |
|
|
54 |
|
|
36 |
|
|
|
197 |
|
|
137 |
|
|
Depreciation and amortization |
|
64 |
|
|
60 |
|
|
43 |
|
|
|
222 |
|
|
170 |
|
|
Loss contingency on legal matter |
|
- |
|
|
- |
|
|
- |
|
|
|
12 |
|
|
- |
|
|
Adjusted
EBITDA |
$ |
469 |
|
$ |
300 |
|
$ |
152 |
|
|
$ |
1,062 |
|
$ |
803 |
|
|
|
|
|
|
|
|
|
(5) |
Free Cash Flow Reconciliation** |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 28,2019 |
September 28,2019 |
December 29,2018 |
|
December 28,2019 |
December 29,2018 |
|
GAAP net
cash provided by operating activities |
$ |
442 |
|
$ |
234 |
|
$ |
120 |
|
|
$ |
493 |
|
$ |
34 |
|
|
Purchases of property and equipment |
|
(42 |
) |
|
(55 |
) |
|
(41 |
) |
|
|
(217 |
) |
|
(163 |
) |
|
Free cash
flow |
$ |
400 |
|
$ |
179 |
|
$ |
79 |
|
|
$ |
276 |
|
$ |
(129 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
The Company presents “Adjusted EBITDA” as a supplemental measure of
its performance. Adjusted EBITDA for the Company is determined by
adjusting GAAP net income for interest expense, other income
(expense), net, provision (benefit) for income taxes, equity income
(loss) on investee, stock-based compensation, and depreciation and
amortization expense. In addition, the Company included a loss
contingency on legal matter in the year ended December 28, 2019 and
an impairment of technology licenses in the three months and the
year ended December 29, 2018. The Company calculates and presents
Adjusted EBITDA because management believes it is of importance to
investors and lenders in relation to its overall capital structure
and its ability to borrow additional funds. In addition, the
Company presents Adjusted EBITDA because it believes this measure
assists investors in comparing its performance across reporting
periods on a consistent basis by excluding items that the Company
does not believe are indicative of its core operating performance.
The Company’s calculation of Adjusted EBITDA may or may not be
consistent with the calculation of this measure by other companies
in the same industry. Investors should not view Adjusted EBITDA as
an alternative to the GAAP operating measure of income or GAAP
liquidity measures of cash flows from operating, investing and
financing activities. In addition, Adjusted EBITDA does not take
into account changes in certain assets and liabilities that can
affect cash flows. |
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The Company also presents free cash flow as a supplemental Non-GAAP
measure of its performance. Free cash flow is determined by
adjusting GAAP net cash provided by (used in) operating activities
for capital expenditures. The Company calculates and communicates
free cash flow in the financial earnings press release because
management believes it is of importance to investors to understand
the nature of these cash flows. The Company’s calculation of free
cash flow may or may not be consistent with the calculation of this
measure by other companies in the same industry. Investors should
not view free cash flow as an alternative to GAAP liquidity
measures of cash flows from operating activities. All periods
presented conform to the current period presentation. |
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The Company has provided reconciliations within the earnings press
release of these Non-GAAP financial measures to the most directly
comparable GAAP financial measures. |
Media Contact:Drew
PrairieAMD
Communications512-602-4425drew.prairie@amd.com
Investor ContactLaura
GravesAMD Investor
Relations408-749-5467laura.graves@amd.com
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