AMD's 4Q/FY19 Financial Report: Revenue up 50% from 4Q18, Debt Halved
by Dr. Ian Cutress on January 28, 2020 4:51 PM EST- Posted in
- CPUs
- AMD
- GPUs
- Financial Results
AMD Conference Call CFO Prepared Remarks
Following Dr. Su, AMD's CFO, Devinder Kumar, also had prepared remarks:
2019 was an outstanding year for AMD. Our competitive product portfolio and market share gains drove the highest annual and highest quarterly revenue in AMD history. We achieved our highest annual gross margin percentage and annual free cash flow since 2011. We improved non-GAAP earnings per share by 39% year-on-year. In short, we are very pleased with our financial performance.
Fourth quarter revenue was $2.13 billion up 50% from a year ago, and up 18% from the prior quarter driven by strong sales of Ryzen and EPYC processors, and Radeon on GPUs, partially offset by softer semi-custom sales. Gross Margin was 45%, up 360 basis points from a year ago, driven primarily by sales of our leadership 7nm products. Operating Expenses were $545 million, with increased investments in go-to-market activities and R&D, compared to $474 million a year ago. Operating Income was $405 million, up $296 million from a year ago, driven by revenue growth and higher gross margin. Operating margin was 19% as compared to 8% a year ago. That income was $383 million, up $296 million from a year ago. Diluted earnings per share were 32 cents per share, compared to eight cents per share a year ago.
Business Segment Results
The Computing and Graphics segment revenue was $1.66 billion, up 69% year over year, driven by Ryzen processor and Radeon gaming GPU sales growth. The Computing and Graphics segment operating income was $360 million or 22% of revenue, compared to $115 million a year ago, driven by higher revenue.
Enterprise Embedded and Semi-Custom (EESC) segment revenue was $465 million, up 7% from $433 million the prior year. The continued growth of EPYC processes was partially offset by softer semi-custom revenue. EPYC processor revenue grew by a strong double digit percentage sequentially driven by robust shipments of our second generation EPYC processors. EESC segment operating income was $45 million, or 10% of revenue, driven by EPYC process sales, compared to an operating loss of $6 million a year ago.
During the quarter, we reduced gross debt by $524 million, which resulted in a GAAP loss of $128 million. These debt reductions result in an annualized interest expense saving of approximately $16 million. Free cash flow was positive $400 million in the fourth quarter, and cash flow from operation was $442 million. Inventory was $1 billion down 6% from the prior quarter. Fourth quarter adjusted EBITDA was $469 million compared to $152 million a year ago, driven by higher quarterly earnings.
Full Year Results
2019 revenue was $6.73 billion, up 4% YoY driven by strong growth in Computing and Graphics segment and sales of second generation EPYC processors, partially offset by a decline in semi-custom sales. Excluding semi-custom, revenue was up more than 20% year over year. Gross Margin of 43% was up 420 basis points from the prior year, driven by our current generation of Ryzen and EPYC products. Operating expenses were 31% of revenue, as we increase go-to-market activities and investments in R&D. 2019 operating income was up 33% from a year ago to $840 million, or 12% of revenue. Net income was $756 million, up 47% from the prior year.
Turning to the balance sheet, I'm extremely pleased with our progress on the strengthening balance sheet. Cash, cash equivalents and marketable securities total $1.5 billion at year end, while gross debt was $563 million. This represents our highest net cash position since the third quarter of 2006. Full year free cash flow was $276 million. We reduced principal debt by almost $1 billion in 2019, and ended the year with less than $600 million of gross debt. On a trailing 12 month basis, adjusted EBITDA was $1.1 billion, resulting in gross leverage of 0.5x, down from 1.9x at the end of 2018.
Outlook for 1Q 2020
We expect revenue to be approximately $1.8 billion, plus or minus $50 million, an increase of approximately 42% year over year, and a decrease of approximately 15% sequentially. The year over year increase expected to be driven by strong growth in 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.
In addition, for Q1 2020, we expect non-GAAP gross margin to be approximately 46%. [We expect] Non-GAAP operating expenses to be approximately $580 million, non-GAAP interest, expense, taxes, and other to be approximately $18 million, and the first quarter diluted share count is expected to be approximately 1.22 billion shares.
Outlook for FY2020
For the full year 2020, we expect revenue growth of approximately 28 to 30%, driven by strength across all businesses. We expect non-GAAP gross margin, to be approximately 45%, non-GAAP operating expenses to be approximately 28% of revenue, and a non-GAAP tax rate of approximately 3% of pre-tax income.
In closing, we had an excellent fourth quarter, and an excellent 2019. Our full year financial results highlight the strength of our business model. I look forward to what we have in store for 2020 as we expect to further expand and ramp our leadership portfolio of high performance products to drive revenue growth, gross margin expansion, market share gains and financial momentum.
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TheJian - Sunday, February 2, 2020 - link
LOL. It means a lot. Not everything as there are a TON of numbers you should be looking at if you're serious or care about losses. The PE today tells me run for the hills with a bad year prediction that won't drop it. They should be at ~65 PE today with this Q report, and heading for teens with next Q or two as they ramp higher margin stuff (64c hedt/servers will do it). But it looks like they may be planning ramps of console crap instead of REAL chips ;) So single or barely double digit crap instead of REAL margin products that make REAL NET INCOME. TTM of 200m NET on 6B Rev in your best product year in a decade should have all of management fired...LOL. Your $500 console isn't worth squat compared to a 7K chip (even that massively priced wrong), so why do you keep chasing poor people AMD?Stop reading tech sites for stock analysis. READ STOCK sites. Problem solved. Make sure it's not just some dumb contributor (like me getting paid nothing, knowing nothing about me?...LOL Trust but VERIFY everything in money), instead of someone REAL with credentials and years of a record you can look at. If you want to make money in semi, you should probably have access to something like JPR/MPR or you will be doing a lot more work than needed (or translate a lot of asian stuff). 100K in NVDA today will get you 20K free in the next year. JPR at $5K is cheap if you do it with a few people from say, your work, who also trade stocks or MPR for a year at $1500 ($375 split 4 ways with co-workers). Never mind if you knew what you were doing a few years ago and bought at ~12-22 like we did (but ran way early...ROFL)...Heck nvida was $150 in the last 6 months multiple times and over 1/2 off a year ago again. PE and a few other numbers are all you needed to run at the highs ~year ago. NVDA/MU/AMD should all be stocks people run in and out of every few years if numbers allow it. They all basically long term channel all the time. Between the 3 of them you can be in or out of something making wads yearly. They usually don't all run in tandem for more than a short period of time. Look at a 5yr-10yr chart on all of them. If you're reading tech sites (product into) and stock sites (reports etc!), it is easy to make money on these and many more every few years in not yearly (they all have cycles to some extent easily seen. and they all have hype stories too). IE, NV about to release new gen on new fab tech and profit already reversed and will likely reach old net levels this Q and set records from here on for a bit at least (AMD has to answer with big navi and win or no stopping the train). If you thought it was worth $290 before it's not hard to see $300 coming this time. I'll say likely more in a few weeks probably as I do expect a record, but wouldn't be on it this time. The next Q will have 3 months of 7nm in it probably (piling up launch chips now no doubt), and we will see a record for net income. I'll be shocked if we don't see $300 by Q1 or before next year (I expect more, but will wait for product info before saying buy on that). Only a war or nature can derail this IMHO.
Watch for NV's PE to go to teens shortly as NET income goes back to records. I predict a record for the quarter after next (if not this coming Q). Sell AMD (last week...LOL) and buy NVDA. Collect 20%+ in a year or less. You're welcome. AMD will lose to whatever NV puts out on 7nm watt/heat/noise and perf wise, so clear for a year from NVDA. Intel not on the map until maybe rev 3. Rev 1 Intel is already dead on arrival...LOL. See linus facepalm vid recently about their gpu. Raja is not capable of making a gpu that beats NV engineers (or money?, both?). AMD keeps choosing HBM which kills every big consumer card margin also. If you choose expensive and useless, you make nothing. NV went GDDR5x and rockets to record quarters because it was EASY to make, in quantity, and fast enough for victory without risks of shortages or costs! SMART. AMD should not be using HBM unless the product actually warrants the use for REAL. If the competition is beating you with cheaper stuff you're doing it wrong (stop using HBM on anything consumer!). Repeating said mistake should=FIRED.
Again, not saying PE is everything, just one of many things you should be looking at. If you think it is absolutely meaningless, you should not be buying stocks. You only need a few numbers with that PE in this case to tell you RUN like mad from AMD (for a while? LOL), they don't deserve current valuation with future predictions they made for a year! In a year I'll be wondering why you are at 200+PE still apparently. I'll have to see if the next round of products are priced FAR better before I go back into AMD. If they had not priced so dumb for the last year, this whole report would have been massively different and so would the PE, and the stock would not dive on your Q report.
It moves for a reason, lots of them if you know what you're looking at and it isn't hard to predict given all the data you have per Q on companies today (and their competition). I'm reading text not even in my language much of the time for shipping info, fab info, etc etc. You can literally read to death on any stock these days. If you pick badly today 90% of the time it's lack of homework. No trailing stop on NVDA for a while (290? maybe then depending on AMD response to NVDA march gpus) :) I expect 7nm to push NV well above 1.2B net for a Q shortly, and that will cause $300 on that report or weeks after. Nothing to stop new records coming and teens PE ratio. AMD on the other hand, all baked in, according to themselves. You can see it in the questions too...But, but, margin, uh, er, console, uh, all new products, uh, what, why, how...uhmmm....? Where 1B Q net? NV pulls 1B a quarter now on GPU only (tegra makes nothing still), do the math on AMD. You are pricing wrong. NO, looking at Intel, market share for all, you are retarded AMD. The guy should have just asked if you are mentally handicapped or something yammering "how could you F this up?" as he walks off. :) Fire your "modeler" for pricing. Revenue up 30% next year, but pricing? You added 2B in revenue the last 2yrs and gained nearly NOTHING in NET INCOME. Last 3yrs and TTM 209m last 3yrs 337,000, 43,000, -497,000. Why the drop TTM? Aren't you ramping all your new stuff? WTF?
I'm going to have to see some price hikes at this point or the next rev pricing leaked. I feel like they'll be worth current value (well, last weeks value) in a year. So not much point in the next 12 months when I can make 20% in NV easily etc. Maybe I change that opinion as we find out what is going to happen with apple's share of TSMC 7nm silicon in more details. Sold most MU until the Q report too. If they don't guide much higher (back to old levels) they will get hit on the report for a recovery that STILL hasn't come quite yet. It's coming (mass profits again) but you can only promise and not deliver a few times before they make you pay even if the reality is changing just around the corner. Big fund managers do this on purpose every chance they get and jump right back in after they tank it and force small runs on a stock so to speak. Long termers like me just ride that crap out usually.
Sorry to disappoint you. I have never worked in fast food. That is a job for teenagers, illegals and people with no skills.
You don't seem to understand what a stockholder is. Naked rage? Weirdo? Raping their customer would be charging massively more than the competition. In this case we literally have the ceo saying they are charging below market value. You are a retard if you don't get the point here.
You don't seem to understand "what the market will bear" and that it is exactly what ALL companies are trying to guess if run by good management. If you are "raping" your customers, by definition you would not SELL a product to many people correct? Only the people who could “afford” to get raped would buy correct? It sounds like you are just sad you're poor and a probably working in fast food and have to beg for cheaper prices :) Start following my stock advice and you'll get FREE PC parts. Like the guy with the FREE CAR in this comment section. He's not complaining about the cpu prices, as it's free anyway along with his next 6 cars apparently (nice work!). Why are you still paying for parts? LOL.
IE, if Intel was raping customers, they would not set record quarter after record quarter correct? I mean, who buys rape? You don't seem to understand the point of owning stock...ROFL.
Wow, no point in calling you ignorant. You are straight up stupid. You think I'm weird for commenting ABOUT the stock, on a stock report mind you, while YOU just attack me and act like the article and the data I put out doesn't even exist :) Don't think you're stupid? OK. Yeah, stupid is, as stupid does. But I just believe you're stupid period :)
Someone like you leads to 20T in debt. Someone like me leads to profit, as close to what they market will bear as I can get :) PERIOD. That is your job as a company leader. The market should dictate how "NICE" you need to be, not your dumb CEO. I didn't say rip people off, I said charge what you are WORTH or change your product mix. You are just too dumb to get it.
Dumping junk is not ripping people off. Switching to a higher margin mix is just good business if silicon is short. Stop working at a fast food joint and none of these prices are raping you. I can afford Titan's every year (waste of money, but I can) and I'm not rich; at least not my definition of it anyway. Do you buy stock to lose money? Again, stupid. At least learn to debate:
Google paul graham's hierarchy of disagreement. Wake me when you learn to debate.
https://en.wikipedia.org/wiki/Paul_Graham_(program...
For the lazy among us, and fast food managers too. Ah wait, they are by definition lazy, as in too lazy to find better work or skills. I want to be a fast food manager when I grow up...Said nobody.
You're giving smart people a bad name...Wait, you didn't claim to be one. OK, all forgiven. So no comment on the data then...Your loss if you ignore it. I lobbed a grenade to see if anyone could stop it from blowing up, yet you didn't get it. Consider my post a trump tweet, or "trial balloon" against my data. He floats a balloon to start a conversation about important stuff, then moves to where he really wanted us to go to begin with as people get it. Smart traders realize what just happened (hopefully gain insight from it, good or bad). Thanks to all for removing any FUD I had about selling...LOL. If you follow my posts (here and elsewhere, stock sites etc), you have been making money time after time. PERIOD.
Jeez, we have presidential candidates (and all fake news, MM) calling the current president a nazi, racist, murderer, comparing him to actual mass murderers, and every other name in the book, unfit for office and on and on. All of this despite the highest economy ever, lowest unemployment for all, highest stock market ever, TWO trade deals nobody could get done, moved embassy, recognized Israel, fighting Iran/China/Russia with ECONOMY rather than war etc etc. But you have a problem with harping on dumb CEO's when a bad report warrants it (I'm not alone, it went down for a reason)? ROFLMAO. SJW's crack me up. For the record though, I'd rather trump make everyone pissed and America rich (I get richer then too), than make everyone happy and USA broke so you can feel good as I couldn’t care less about your feelings. Need a safe space now? LOL. So tight (WTF? So 12yr old) to see all these SJW's attack me and have NOTHING to say about data (in or out of the article...).
I made money. Did you? Not even trying? Why are you here? Go back to reading reviews, this is a quarterly report for stock holders. You just keep working, I'll keep trying to make my money work for me so I can avoid being you. ;) I'll take weird over dumb. I'll take rape over bankruptcy too :) I can recover from rape, not so sure about the bankruptcy. If I have money I can afford therapy for the rape right? ROFL. Some SJW just blew a gasket...One less SJW? Yippee. Back to stock hunting, and bartiromo about to come on :) You've wasted enough of my time and I can type 50
+wpm (60+ on a good day).
Korguz - Monday, February 3, 2020 - link
what the heck did this all say ?????Spunjji - Monday, February 3, 2020 - link
It said he loves the Trump and doesn't brain good.Spunjji - Monday, February 3, 2020 - link
What an asbolute pile. Some highlights for those who understandably don't want to wade through this junk:"...they may be planning ramps of console crap instead of REAL chips..."
"...why do you keep chasing poor people AMD?"
"Sorry to disappoint you. I have never worked in fast food. That is a job for teenagers, illegals and people with no skills."
"You are a retard if you don't get the point here."
"I can afford Titan's every year (waste of money, but I can)..."
"You're giving smart people a bad name...Wait, you didn't claim to be one. OK, all forgiven."
"Consider my post a trump tweet, or "trial balloon" against my data."
"Jeez, we have presidential candidates (and all fake news, MM) calling the current president a nazi, racist, murderer..."
"I can recover from rape, not so sure about the bankruptcy."
In short, standard Trump supporter: unwarranted confidence in own intelligence, inability to stay on topic, thinks bragging about being awesome is the same as being awesome, thinks being offensive is the same as being smart, projecting like IMAX.
My favourite bit was where he came to a tech site to rant about stocks and then told people not to come to tech sites for stock info. A++ goonery.
ballsystemlord - Sunday, February 9, 2020 - link
Thanks for the summation, Spunjji. I find you to be correct.Incidentally, TheJian, if someone doesn't start "chasing poor people" then poor people will not have computers. And I at least value that moral quality of AMD, which they are sadly loosing over time. :cry:
Zoolook - Wednesday, January 29, 2020 - link
AMD could be the largest TSMC customer on 7nm in 2020.Apple, HS and Qcomm has moved on to 5nm for new chips so their volumes will shift away from N7P and N7FF+.
TheJian - Sunday, February 2, 2020 - link
Agreed, I think AMD will be #1 on 7nm at tsmc this year (well at the end that is). I just hope all the silicon goes to higher margin kit, rather than single or barely double digit crap (console like junk). No point in wasting silicon on $100-125 parts that make you $10-15 if you're a player like AMD vs. NV/Intel. You should be making the high margin parts only until it doesn't sell (see Intel), then make junk to add to your bottom line because that is all that is left.I really wish AMD had passed on console like NV, and for the same reasons (let Intel or someone else take that crap on). IT robs from your CORE R&D. It did exactly what NV said it would; killed AMD profits for years, cost fabs, land, engineers, etc. They gave it all up to claim a console victory or two that keeps stealing R&D design after design...They could have been a contender in the cpu race years ago (instead of basically giving up for 5-6yrs), and should not have been dominated by NV for ages either. I hope they choose wisely for the new silicon. They claim gpus/cpus (not socs/apu junk), but we'll see.
$52+ last week. Hope people sold. Likely more down for most stocks as anti-trumpers try to kill his market over this virus crap, fake impeachment etc. Good to be in safer stocks (with no debt) with room to run and good report coming (nvda for example for a while, no loyalty to either stock...should hit 300+ easily in 12mo, likely far less time). I think NVDA will set a record this Q or next and head to 300 again. Easy money if you don't mind the virus ride. The Flu kills ~2500 a year in usa, so miles from this still but that won't stop trump haters from trying to down the market as usual on anything they can. Middle class got 40% on their 401k but dems keep trying to take it down or give it away before you get it. They give it to illegals, welfare, free college, etc etc...Whatever they can do to bankrupt you and put you on welfare for life is their goal (and voting for said welfare for life). Too bad 1/2 the public still watches fake news, although more appear to be waking up as ratings for impeachment etc show complete tanking for dems. Even the debates have terrible ratings.
Spunjji - Monday, February 3, 2020 - link
"I really wish AMD had passed on console like NV"They didn't "pass" on it - they lost the business because of their constant gouging.
"Likely more down for most stocks as anti-trumpers try to kill his market over this virus crap, fake impeachment etc."
LOL
"Middle class got 40% on their 401k but dems keep trying to take it down or give it away before you get it. They give it to illegals, welfare, free college, etc etc..."
Can an admin get a ban on this assclown now, please? He's very obviously just here to spread disinformation.
Lord of the Bored - Wednesday, January 29, 2020 - link
Please take your antipsychotics.You're fired.
haghands - Thursday, January 30, 2020 - link
He really needed this job man. Think of the kids. Oh god I hope he doesn't have kids lol.