AMD Reports Fourth Quarter and Yearly 2019 Financial Earnings
AMD Reports EPYC Revenue and Ryzen Cash Balance
AMD recently reported its fourth quarter and annual 2019 earnings in a press release and conference call on Tuesday. While its stock price has since slumped from its 2019 highs ($47.51 at time of writing, market closed), it did see growth of 148.4% over 2019 making it the best performer of the S&P 500 bunch. The rise in stock price is not the only good thing AMD has going for it, however, with the company reporting record quarterly and yearly revenue numbers, a decreased debt load, and a sizable increase in on-hand cash. AMD has been working steadily at improving its balance sheet, and in 2019 (especially Q4) the company made respectable progress to that end.
AMD saw Q4 2019 revenue of $2.13 billion (up 18% versus the previous quarter and 50% year-over-year) and yearly revenue of $6.73 billion (up 4% YoY). AMD further reported Q4 2019 operating income of $348 million (up 87% vs Q3’19 and up 1,143% vs Q4’18) and net income of $170 million (up 42% QoQ and 347% YoY).
Yearly results included operating income of $631 million (up 40%) and net income of $341 million. While AMD saw a rise in Earnings-Per-Share QoQ, yearly EPS decreased 6% YoY at 30 cents per share. Quarterly gross margin sat at 45% while yearly gross margin rounded out to 43%.
Additionally, AMD reportedly that has managed to pay off a hefty amount of debt bringing it’s Q3 2019 balance of $1,087 million down to a mere $563 million in Q4. The company also reportedly its highest net cash balance since 2006 at just over $1.5 billion. The underdog CPU maker is in a much better position than years past, at least on paper.
While AMD does not get too granular with its divisions when reporting financial results, it does break things down into the “Computing and Graphics” and “Enterprise, Embedded, and Semi-Custom” divisions. The Computing and Graphics division did best of the two with revenue up 69% hitting $1,662 million and operating income increased due to higher margin Ryzen CPU parts being sold. On the Enterprise, Embedded, and Semi-Custom (ESSC) side of things, AMD realized higher EPYC processor sales which were balanced out by weaker semi-custom silicon sales as current generation consoles approach their end-of-cycle point. While revenue was up 7% versus 2018, it fell versus the previous quarter at $465 million. AMD has managed to increase operating income to $45 million versus a $6 million loss versus 2018.
The consumer products seem to have helped AMD the most in 2019 with the company seeing the most market share and revenue growth from consumer processors and graphics as the C&G group made up most of the revenue for the company. With more competitive chips AMD has also been able to be more aggressive on pricing allowing the company to increase margins. Interestingly, AMD noted that it derived approximately half of its 2019 revenue from its 7nm product portfolio.
Looking forward, AMD expects 28% to 30% revenue growth over this year with slower growth in the first half and a faster pace over the second half as products ramp and market share grows. Q1 2020 is expected to see revenue of ~$1.8 billion (+/- $50 million) up 42% year-over-year. AMD plans to continue ramping 7nm production and will launch 7nm/7nm+ GPUs including refreshed Navi (RDNA) and next-generation RDNA products. The semi-custom business is expected to be mostly flat until the second half of 2020 where it will then quickly ramp up (Q3 peak) coinciding with next generation consoles and as much as 80% of yearly revenue from the semi-custom division happening in the second half of the year. While AMD remains confident in its consumer portfolio, it really emphasized its efforts to grow its enterprise portfolio and expand its server market share in 2020.
At least at a high level and on paper, AMD appears to be in much better financial shape then it has been in years, and with its strong CPU products and roadmaps the underdog may well continue putting up a respectable fight versus Intel – especially if its troubles with 10nm and security vulnerabilities continue. It will be interesting to see how the server market share wars end up working out with both companies claiming expected growth there. I think the weakest part of AMD right now is its graphics where it really needs big Navi and next generation RDNA to work out.
AMD needs design wins in the mobile space as well with reportedly 100+ notebooks and other products coming throughout this year and hopefully its Ryzen 4000 Mobile and Athlon 3000 Mobile chips will help with that. 2020 will also be an interesting year to see how it all works out as the various chip makers press onward to smaller process nodes utilizing EUV for products that will launch in 2021 and beyond.
What are your thoughts on AMD’s financials and future roadmaps?
“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.”