Continuing our look at tech industry financial results, AMD this afternoon is celebrating setting some new records in its Q2’2020 financial results. Enjoying a continuing turn-around in its fortunes t hanks in big part to its Zen series of CPU architectures and resulting products, the company has just closed the books on the first year of sales of its Zen 2-based desktop processors, with EPYC following close behind. At this point AMD is now setting quarterly revenue records, and the company is expecting to grow its revenue further over the coming months.

For the second quarter of 2020, AMD reported $1.93B in revenue, a 26% jump over the same quarter a year ago. As a result, Q2’2020 was AMD’s best quarter ever, built on the back of record notebook and server revenue. Overall, all of AMD’s metrics have improved in a year-over-year basis, with net income up $122M (349%) to $157M, while the company’s all-important gross margin improved by 3 points to 44%. In fact the only real knock that can be made on AMD’s quarter is that they didn’t pass their Q1’2020 net income or gross margin, which was due to increased semi-custom shipments, which aren’t as profitable for the company.

AMD Q2 2020 Financial Results (GAAP)
  Q2'2020 Q2'2019 Q1'2020
Revenue $1.93B $1.53B $1.79B
Gross Margin 44% 41% 46%
Operating Income $173M $59M $177M
Net Income $157M $35M $162M
Earnings Per Share $0.13 $0.03 $0.14

Once again the flag bearer for AMD is their Computing and Graphics segment, which encompasses their desktop and notebook CPU sales, as well as their GPU sales. That division booked $1.37B in revenue for the quarter, $427M (45%) more than Q2 of 2019. The segment’s operating income as up significantly as well, jumping from just $22M a year ago to $200M this year.

These numbers come as AMD closes the book on their first year of Zen 2 product sales – the first retail chips hit store shelves at the very start of Q3’2019. Since then AMD has grown their desktop chip sales significantly, and combined with laptop sales the company is reporting their best client processor revenue in more than 12 years. As previously mentioned, laptop sales saw record revenue – doubling last year’s numbers – thanks in part to AMD shipping a record number of notebook chips.

AMD Q2 2020 Computing and Graphics
  Q2'2020 Q2'2019 Q1'2020
Revenue $1367M $940M $1438M
Operating Income $200M $22M $262M

As for product average selling prices (ASPs), AMD is reporting that client processor prices are up on a year-over-year basis (thanks again to Zen 2). However they have dropped on a quarterly basis due to a greater mix of Ryzen Mobile sales.

Meanwhile AMD’s GPU division looks to have once again been the laggard. While AMD doesn’t break out revenue numbers to specific divisions, on the subject of ASPs they note that GPU ASPs are down on both a year-over-year and quarterly basis, due to lower channel sales. On their earnings call, AMD has noted that while mobile GPU sales are up by double digits, this was more than offset by declines in desktop GPU sales. Overall, with AMD’s Q2’2019 being a somewhat soft quarter for GPU sales to begin with as consumers awaited their heavily-teased Navi architecture products, I’m surprised to see that AMD’s ASPs still slipped this year.

AMD Q2 2020 Enterprise, Embedded and Semi-Custom
  Q2'2020 Q2'2019 Q1'2020
Revenue $565M $591M $348M
Operating Income $33M $89M -$26M

Finally, AMD’s Enterprise, Embedded, and Semi-Custom segment saw a very solid Q2, as the group enjoyed an uptick in EPYC processor sales. In fact AMD has finally, albeit belatedly, finally captured a double-digit share of the server processor market, a major goal for the company. Fittingly, on a year-over-year basis, EPYC revenue has doubled.

None the less, the odd grouping of server CPUs with semi-custom (console) chips means that revenue actually dropped on a year-over-year basis thanks to lower semi-custom sales. The upshot, at least, is that it’s a significant improvement over Q1, where the group ended up in the red. Meanwhile AMD has started production of the PS5 and Xbox Series X SoCs, so revenues here should significantly improve next quarter, but those are still lower margin products.

Looking forward, like much of the rest of the tech industry AMD is looking towards a strong second-half of the year, as the company has been able to successfully weather the immediate challenges from the coronavirus pandemic. As a result, AMD is increasing its full-year projections, and the company is now calling for 32% revenue growth over 2019, and a gross margin of around 45%.

Driving this growth for AMD will be a mix of the slow expansion of server products, as well as new products launched in the second-half of the year. AMD is expecting EPYC sales to continue to grow and for the company to gain market share there as more server vendors further ramp up their EPYC server production. Meanwhile AMD is reiterating that it’s expecting to begin shipping its Zen 3-based “Milan” EPYC processors late this year. AMD’s upcoming CDNA-based data center GPUs are also set to launch around at time.

As for the consumer side of matters, AMD is expecting continued sales success with its consumer products, particularly Ryzen Mobile. None the less, all eyes are going to be on AMD’s future products, as AMD is reiterating their 2020 launch plans. The company reports that it’s on track to launch Zen 3 client CPUs in late 2020, and the company’s eagerly-anticipated RDNA2 products, which will eventually encompass a full stack refresh, will launch in late 2020 as well.

Source: AMD

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  • Spunjji - Wednesday, July 29, 2020 - link

    Maybe Samus meant "larger as a proportion of the company"? Not sure that's a particularly worthwhile point to make either, though 😅
  • dotjaz - Wednesday, July 29, 2020 - link

    That's incorrect, Intel called its implementation IA32e, EM64T, then settled on Intel 64. The term x86-64 or x64 are vendor neutral terms. As a matter of fact, when the extension was introduced, AMD called it x86-64, later renamed AMD64.
  • rahvin - Sunday, August 2, 2020 - link

    It's correctly called AMD64 on the linux side because it was created, specified by and submitted to the kernel by AMD.
  • Spunjji - Wednesday, July 29, 2020 - link

    I see some variant of this nonsense posted every year, and every year it fails to become true.

    It's the hardware variant of "this year will be the year of Linux on desktop".
  • trivik12 - Tuesday, July 28, 2020 - link

    Good increase in DC side for Q2 but slightly less than year ago. Client side has enormous growth from year ago but slight dip from Q1. Overall excellent and Q3 guidance is excellent. These are good times for AMD.
  • TristanSDX - Tuesday, July 28, 2020 - link

    "finally captured a double-digit share of the server processor market, a major goal for the company" - really ? Intel server CPU sales are 7.2B, so AMD sales are 8%. After excluding chips for consoles, this share drop below 5% probably.
  • martinw - Tuesday, July 28, 2020 - link

    I believe it is market share by units, not by revenue.
  • Ryan Smith - Tuesday, July 28, 2020 - link

    Correct. AMD now at at least 10% of the server CPU market in units sold.
  • GreenReaper - Tuesday, July 28, 2020 - link

    I can believe it. EPYC is entering the mix at a price and with scalability that makes it a great choice for cloud and high-density VM providers, and they've clearly been snapping them up. I use three AMD VMs myself - one is on a 3900X, which probably isn't even included on the server side.

    We're still rely mainly on Intel VMs for our CDN, but that's because old Intel CPUs are still out there. It's really rare for us to use current-gen hardware, but with AMD's price point we suddenly are.
  • rahvin - Sunday, August 2, 2020 - link

    AMD's market share predictions on the server side were very conservative. Lisa has been trying to provide consistency to wall street and meetable goals.

    One of the problems with AMD stock (and the management) in the past was always the unpredictability and the constantly missing goals and Lisa is trying to change that whole culture at AMD. It didn't just hurt their stock either, constantly missing goals and failing to meet releases damaged them greatly with the OEM's who have to invest lots of money to prepare products that don't show up or dramatically under perform the predictions.

    Lisa has made AMD a much better company, one of the reasons I invested several years ago when Ryzen showed she was making these changes successfully.

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