This afternoon, AMD announced their second quarter results for their fiscal year 2017, and the news is promising. AMD still has some work to do in order to get back to profitability, but that work has been helped tremendously by successful product launches earlier this year. Ryzen has shown exciting potential, and a diverse and strong product lineup has helped AMD’s bottom line. For the second quarter, AMD’s revenue was up 19% year-over-year to $1.22 billion, and operating income was $25 million for the quarter. Net income was still in the red with a loss of $16 million, resulting in a loss per share of $0.02 on a GAAP basis. Gross margin was 33%, hovering right around that 35% range that AMD wants to hit for profitability.

AMD Q2 2017 Financial Results (GAAP)
  Q2'2017 Q1'2017 Q2'2016
Revenue $1220M $984M $1030M
Gross Margin 33% 34% 31%
Operating Income +$25M -$29M -$8M
Net Income -$16M -$73M +$69M
Earnings Per Share -$0.02 -$0.08 +$0.08

AMD also releases Non-GAAP results which exclude results such as restructuring charges, debt fees, and stock based compensation. Sometimes Non-GAAP results can help you look at an underlying business when there is restructuring charges affecting results either positively or negatively, but in this quarter for AMD, the Non-GAAP results are almost exclusively the result of not factoring in stock-based compensation which amounted to $24 million. On a Non-GAAP basis, revenue for the quarter was the same $1.22 billion, but operating income is now $49 million, compared to just $3 million a year ago. Net income was $19 million, and earnings-per-share results in $0.02.

AMD Q1 2017 Financial Results (Non-GAAP)
  Q2'2017 Q1'2017 Q2'2016
Revenue $1220M $984M $1030M
Gross Margin 33% 34% 31%
Operating Income +$49M -$6M +$3M
Net Income +$19M -$38M -$40M
Earnings Per Share +$0.02 -$0.04 -$0.05

The year-over-year results may seem a bit skewed, since Q2 2016 was actually a profitable quarter for AMD, but that was due to a $150 million infusion of cash from a joint-venture with Nantong Fujitsu Microelectronics. This quarter doesn’t have any large cash deals involved, and AMD is very close to breaking even, with strong gains across its product line.

The star of the show is undoubtedly Ryzen, and the Computing and Graphics segment had a very strong quarter, with revenues of $659 million, up 51% compared to Q2 last year. AMD attributes this jump to demand for graphics and Ryzen desktop processors. Operating income for the Computing and Graphics group was $7 million, compared to an $81 million loss last year, and much of that was driven due to higher average selling prices for its processors. Although AMD is not yet able to charge the premium of Intel, it can at least charge a lot more than it did for the last generation of CPUs.

AMD Q2 2017 Computing and Graphics
  Q2'2017 Q1'2017 Q2'2016
Revenue $659M $593M $435M
Operating Income +$7M -$15M -$81M

Enterprise, Embedded, and Semi-Custom had a 5% drop in revenue, to $563 million, mostly due to a softening in semi-custom SoC sales. This segment is where AMD’s EPYC CPU line will impact though, so the next couple of quarters should be interesting to see here, with the launch of the Xbox One X, and EPYC.

AMD Q2 2017 Enterprise, Embedded, and Semi-Custom
  Q2'2017 Q1'2017 Q2'2016
Revenue $563M $391M $592M
Operating Income $42M $9M $84M

All Other had an operating loss of $24 million, compared with a loss of $11 million in Q2 2016, with this primarily being stock-based compensation, as well as a $7 million restructuring credit in Q2 2016 helping out that quarter.

AMD has a lot to be excited about, and they’ve delivered a strong product in Ryzen already, which will branch out to enterprise with EPYC where the higher margins are. On the GPU side, Vega has launched as well with workstation graphics cards available now. Add in the custom SoC market that they’ve worked hard to establish, and the future seems just a little bit brighter than before. For Q3, AMD is expecting a 23% increase in revenue compared to this quarter, plus or minus 3%.

Source: AMD Investor Relations

 

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  • Yojimbo - Tuesday, July 25, 2017 - link

    You are overestimating the strength of the Epyc CPUs. During AMD's conference call today they said that they hoped to eventually win 10% of the server CPU market (Intel currently has well over 90% of the market), but that that would take time. They said inventory for Epyc is building much more slowly than for Ryzen because they don't expect significant Epyc sales in the coming quarter or two.

    AMD is going to have to win server customers over, and that will take more than just iron. It will take a stable platform. Winning enterprise customers over may be a long, tough slog.

    The fact that the hyperscalers are apparently not jumping at Epyc is not very good news, because they are the ones that have the power to switch architectures at the drop of a hat and move all their software over to it. It seems like they have already decided on Intel's Purley this generation. Probably AMD will have to wait for their second generation Ryzen to have a chance at winning real significant revenue from the hyperscalers.

    And even besides platform stability and cost to change software, I myself don't know the competitiveness of Epyc processors in real world server workloads. Everybody has to do their own benchmarking of their actual use case and their own cost analysis to be sure.
    Reply
  • deltaFx2 - Wednesday, July 26, 2017 - link

    "The fact that the hyperscalers are apparently not jumping at Epyc is not very good news": What's the source of this 'fact'? MS and Baidu have publicly announced deployment (the former was more emphatic on this). It's not unreasonable for them to wait for the platform to mature a bit: over at "serve the home(STH)", they've said that the latest firmware supporting DDR 2666 was only recently available, so I think it's still being tuned. It's a new architecture, new platform, and system software hasn't been tested on AMD for a while, so it's not unreasonable for them to be more cautious.

    "And even besides platform stability and cost to change software, I myself don't know the competitiveness of Epyc processors in real world server workloads": Epyc's best use case is a 1P system with lots of I/O and memory capacity, which Intel has nothing to compete. What would've required a gold/silver 2P Skylake to get memory and I/O might get folded into a 1P Epyc. I don't believe AMD will beat intel across the board on all workloads; that's too much to expect. If it does well in certain areas like multi-VMs, storage, GPGPU for ML/HPC, web servers, certain distributed-system workloads. Anandtech's review shows that there are certain scenarios in which it excels. They are unlikely to do well -- based on prima facie evidence -- on traditional databases or HPC. It seems like a conscious choice. Time will tell.
    Reply
  • Yojimbo - Wednesday, July 26, 2017 - link

    "What's the source of this 'fact'?"
    The source of the fact is AMD, as well as the hyperscalers themselves.

    "MS and Baidu have publicly announced deployment (the former was more emphatic on this)"
    I am not talking about the public cloud. It's easy for them to make some instances available, just as Microsoft has done with AMD Radeon. I'm talking about hyperscalers adopting Epyc for their own use.

    "Epyc's best use case is a 1P system with lots of I/O and memory capacity, which Intel has nothing to compete."
    So you expect Epyc to be competing with ARM servers in the storage space? That's not very optimistic.
    Reply
  • Alexvrb - Wednesday, July 26, 2017 - link

    MS and others (like Baidu) ARE adopting Epyc for their own use. MS will be deploying them in Azure.

    Also, while I think Epyc spans a wide range of scenarios: what 1P ARM solution are you referring to that supports as many PCIe lanes, memory channels, and capacity as 1P Epyc?
    Reply
  • deltaFx2 - Wednesday, July 26, 2017 - link

    I'd also add, what ARM solution has a hope of getting adopted for storage? There are none at the moment, all pie-in-the-sky. AFAIK, software defined storage still uses intel machines, often 2P to get the PCIe lanes required.

    STH has done a good pros-and-cons of Epyc for the interested: https://www.servethehome.com/amd-epyc-v-intel-xeon...
    Reply
  • andychow - Wednesday, July 26, 2017 - link

    Intel currently has 99% of the server market. Every percentage point means $200 million of revenue. If AMD can capture%5, it means a billion in fresh revenue. Reply
  • Yojimbo - Wednesday, July 26, 2017 - link

    You guys aren't really replying to what I am saying when you say it's reasonable for buyers of servers to change slowly or that if AMD can capture 5% of the server market it's 1 billion dollars in revenue. You're just creating ghosts to disbelieve.

    My post was a direct reply to the statement, "intel has no counter in the server space in about 4 months due to epic cpu's." The user that made this statement is saying that AMD has the upper hand and Intel has no counter. He's saying it's gonna happen in 4 months. AMD eventually capturing 5% of the market or capturing the storage server market is in no way a confirmation of his statement. Not even close.
    Reply
  • Alexvrb - Wednesday, July 26, 2017 - link

    So just to clarify, Yojimbo-san: You believe that if Intel starts losing market share in servers to AMD that this somehow means Intel doesn't need to react? Of course they need to respond... but it will take them some time to do so.

    "And even besides platform stability and cost to change software, I myself don't know the competitiveness of Epyc processors in real world server workloads"

    Oh, so you purport to know that Epyc will not have a stable platform, and doesn't run the same software? Tell us more, Sensei.
    Reply
  • stockolicious - Saturday, July 29, 2017 - link

    EPYC is very good technology and its going to do well over time as AMD executes into the next year or so - but i dont think it happens quickly - link https://www.youtube.com/watch?v=osSMJRyxG0k&t=...

    inserting that Link I am not implying that Intel is going to do what they did here but that there will probably be some of it. Intel is not going to let customers go - they will offer rebates and do what they can to hold onto share. Intel is not a pushover and will do what they can - also they have been the only player for so long that they have embedded relationships in advertising ect. AMD is different that last time though:
    they dont do their own manufacturing and have redundancy
    they have a GPU business that creates an opportunity for attach rate
    they also have an great CPU design with a mind blowing cost structure in workstations and servers.
    AMD is back but this will take some time IMHO.
    Reply
  • vanilla_gorilla - Tuesday, July 25, 2017 - link

    >RyZen wasn't the real reason for that profit, and a 2% increase in margin from last year when AMD was literally selling bad retreads of its 2012 product lineup is no miracle.

    You should consider reading the article.

    "The year-over-year results may seem a bit skewed, since Q2 2016 was actually a profitable quarter for AMD, but that was due to a $150 million infusion of cash from a joint-venture with Nantong Fujitsu Microelectronics. "
    Reply

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