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

    That $150 million in Q2 2016 did not affect their Q2 2016 gross margin. It was recorded as "other income" and not part of net revenue. So AMD really did see a 2% y/y increase in gross margins.

    And the point CajunArson made about the strong results this quarter possibly being mostly attributable to a temporary cryptocurrency craze is valid, as is his point that year over year this quarter is being compared to a Q2 2016 quarter with a weak product lineup.

    However, I have to say that AMD's Q2 2016 computing and graphics only decreased 5% sequentially from Q1 2016, and at the time people were wondering if AMD's GPU business was turning around. But although they had picked up market share in GPUs, if I remember, their average selling price went down. My guess was that the revenue increase had to do with how AMD recorded sales for Polaris chips entering the channel or something. In any case, in Q3 2016 NVIDIA's GPU revenue went through the roof with Pascal and AMD's went nowhere (up only 9% sequentially over Q2 even though Q3 is seasonally a much stronger quarter). My point is that Q2 2016 was not really as bad for their GPU revenue as CajunArson made it out to be. They had only recently introduced Polaris so most of the cards sold in retail were probably pre-Polaris. But somehow I think they had counted Polaris revenue in Q2.
    Reply
  • haukionkannel - Wednesday, July 26, 2017 - link

    Miners did not affect amd income at all. The retal sellers did take the profit! Amd did sel normal amounth of graphic cards at normal price. The retalers did get all the extra money when the prices spiked!
    The Computer sales has declined all the time, so getting close to even is "ok" but all in all amd needs to get to green and that is not easy. They should increase margings (more expensive to consumer) but can not do it if it affect the sales too much. And people will buy Intel even if They cost considerably more because it is Intel, so the situation is still dire...
    Reply
  • yankeeDDL - Wednesday, July 26, 2017 - link

    Miners did not affect margins, as AMD sold at their MSRP, but it did affect teh income, as AMD sold "everything" they had. Reply
  • Threska - Sunday, July 30, 2017 - link

    "And people will buy Intel even if They cost considerably more because it is Intel, so the situation is still dire..."

    "Nobody ever got fired for buying IBM." ;-)
    Reply
  • beginner99 - Wednesday, July 26, 2017 - link

    You have a point but also is it that surprising? Ryzen 5 and 7 might be great for DIY builds and some high priced gaming prebuilts. All in all a fairly small market. The real volume and hoepfully for AMD income should happen with the APU and EPYC. APU for volume and EPYC for margins. Both are not out yet. Reply
  • Cooe - Wednesday, July 26, 2017 - link

    EPYC's technically out; actually has been for a few weeks now (Anandtech here already had their hands on hardware for benchmarking). Rollouts at the very major partners (MS, Baidu, etc...) are likely underway, or will be in the very near future, but other than that, generally anything server/data center moves slower than molasses. It'll be a good while before parts start showing up in the off-channels where average consumers can buy them. Reply
  • Lolimaster - Wednesday, July 26, 2017 - link

    The yields are high and AMD wants more marketshare a mindshare. If the arch let's them sell for an even more attractive price to exceed meet the agenda, why not? Reply
  • silverblue - Wednesday, July 26, 2017 - link

    People are buying 1700s instead of 1800Xs, and 1600s instead of 1600Xs, plus the Ryzen 3s aren't out yet. That can't be helping AMD's bottom line. They still have Threadripper, EPYC and the Zen-based APUs to launch over the next six to nine months as well as Ryzen 3, and Ryzen Pro has just launched, but I don't imagine that Vega is going to help based off initial reports so I expect their graphics business to flounder for a bit.

    What I'm saying is, they stand to do better than they are currently doing, financially speaking.
    Reply
  • Kvaern1 - Thursday, July 27, 2017 - link

    I'm not sure why anyone would expect the X models to sell better than their much better price/performance siblings? Reply
  • stockolicious - Wednesday, July 26, 2017 - link

    @CajunArson - ridiculous - the first quarter of a "Desktop" CPU launch - no server revs yet, no APU out yet, threadripper not out yet and you think AMD is peaking? its just beginning. Reply

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