AMD announced their second quarter earnings for the 2019 fiscal year, and the company’s revenue was $1.53 billion for the quarter. This is down 13% from the same quarter last year. Gross margin improved from 37% to 41% year-over-year. Operating income was $59 million, down from $153 million a year ago, and net income was down $81 million to $35 million. This resulted in earnings-per-share of $0.03.

AMD Q2 2019 Financial Results (GAAP)
  Q2'2019 Q1'2019 Q2'2018
Revenue $1531M $1272M $1756M
Gross Margin 41% 41% 37%
Operating Income $59M $38M $153M
Net Income $35M $16M $116M
Earnings Per Share $0.03 $0.01 $0.12

Although AMD was in the black for yet another quarter, this is certainly a dip that AMD does not expect to last. Their forecast for Q3 2019 is a 9% year-over-year increase in revenue to $1.8 billion, and they’ve recently launched new products that could help them achieve those goals.

AMD Q2 2019 Computing and Graphics
  Q2'2019 Q1'2019 Q2'2018
Revenue $940M $831M $1086M
Operating Income $22M $16M $117M

Looking back at Q2 though, Computing and Graphics revenue was down 13% to $940 million, and AMD attributes this drop to lower graphics channel sales. This drop was slightly offset though by higher client CPU and datacenter GPU sales. Also good for AMD and their investors is that their average selling price for client processors has increased thanks to more Ryzen sales, and GPU average selling price has also increased thanks to datacenter GPU sales. The Computing and Graphics segment had an operating income of $22 million for the quarter, compared to $117 million a year ago.

AMD Q2 2019 Enterprise, Embedded and Semi-Custom
  Q2'2019 Q1'2019 Q2'2018
Revenue $591M $441M $670M
Operating Income $89M $68M $69M

AMD’s other major segment is their Enterprise, Embedded, and Semi-Custom, and this product group also saw revenues fall 12% to $591 million for the quarter. AMD attributes this drop to lower semi-custom product revenue, which you can more or less read as console sales, and that makes sense since the current generation consoles are reaching the end of their life, but both Microsoft and Sony have both committed to AMD platforms for their next generation consoles, so expect this segment’s fortunes to get a bit better soon. Operating income was $89 million for this group, which was up from $69 million last year. The higher operating income is thanks to higher EPYC processor sales, which is also a great sign for this segment.

Although this quarter’s revenue certainly saw a dip, AMD did just launch their latest third generation Ryzen this month, which wouldn’t be reported in their Q2 earnings which ended June 29th. As we saw in our review, this is a great step forward for AMD’s processor designs, and they have also launched their Navi based GPUs in July, so it makes some sense to see a dip prior to a major product launch. We’ll keep our eye on their results for Q3, but as previously mentioned they are expecting this to be a short-term drop, and with their new product lineup, that seems like a safe bet.

Source: AMD Investor Relations

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  • bobhumplick - Wednesday, July 31, 2019 - link

    well they were actually losing money for years until the first zen came out. amd are coming from way behind. itll get better for them if they keep things going well. thats the story of amd. boom and bust.

    plus something that has been and still is holding back is global foundries. they used to be a part of amd but amd sold them so they wouldnt be liable for the risk of running a foundry. but they have wafer supply aggreements with them so its basically like they still are taking the risk.

    amd has to pay for so many wafers every year from them whether they buy them or not. that means that even if they have to sell something for nothing thats what they have to do. its really holding them back to an extent. the reason for the io die being on 14nm (or 12 or whatever) and the reason that 580 gpus are selling so cheap along with vega is because they made to many for the crypto boom but also because they have to keep buying wafers from glofo. most of the production has been moved over to tsmc which is a good move but they still have to buy wafers from glofo. what do you do with all those?
  • CiccioB - Wednesday, July 31, 2019 - link

    They have chosen the path of selling at low margins to get market share (that seems to be what everyone loos at when deciding the win or fail of a strategy).
    However the conditions that allow them to offer better CPU than Intel will not last forever.
    Seen that Intel has the laptop market in its hands (AMD's APUs are not a threat there) and is heavily concentrated in loosing as small as possible room in datacenter market, the only real win AMD is getting is on the desktop market which is shrinking.
    Yet, few % market share points are going to gave them a bit of money (while Intel is loosing almost nothing as seen in their own quarter report) but this is the time for AMD to make money. really. This is their most favorable period in the last 20 years seen the fails Intel has accumulated with their 10nm PP. When their 7nm will arrive the party will abruptly end for AMD.
  • Rudde - Wednesday, July 31, 2019 - link

    Okay, Intel 7nm will arrive in 2022, or something. That should give AMD multiple years of partying.
    Intel has snatched the mobile market, though I was suprised to see Ryzen mobile 3000 in a local store. AMD has their main strength in desktop. The competition is about servers. 'Rome' servers from AMD should come soon and are very competive against 'Cascade lake.'
  • CiccioB - Wednesday, July 31, 2019 - link

    7nm will simply bring AMD where it was 2 years ago, that is in nowhere land.
    10nm, when fully deployed, are enough to stop AMD "expansion". Unless before Intel actions AMD shareholders will ask the company to stop trading market share for revenues.
  • Yojimbo - Wednesday, July 31, 2019 - link

    Intel's 7 nm is more like TSMC's 5 nm. Intel's 10 nm is more like TSMC's 7 nm. Don't expect Intel to continue to falter with their fabrication. They bit off more than they could chew and couldn't economically solve the yield issues they were having with 10 nm with the way they were going about it. 7 nm is likely to be a different ball game and it won't be delayed by their 10 nm struggles.

    It's AMD which is in trouble going forward. They have another year+ of good times before things start to get rough for them. They are going to have to execute flawlessly to match the expectations the market has for them according to their share price.

    Consider that Intel will most likely recover from their fabrication mishaps, that Intel is coming out with a series of improved cores, and that Intel is coming out with a discrete GPU that if successful could put pressure on AMD's GPU sales and margins. Intel can provide many things that AMD cannot, such as networking and storage, so I think there is a reasonable cap on what share AMD is likely to win in the data center market without having markedly superior processor options. And I don't expect AMD to maintain superiority in data center processing through 2020.
  • willis936 - Wednesday, July 31, 2019 - link

    “Don’t expect that thing that has been promised thisYearTM for the past 4 years to be delayed forever”

    The current expected state is that intel will never reach 10nm. Obviously they will but the chance they will get there at any given year is less than half.
  • Yojimbo - Wednesday, July 31, 2019 - link

    They are already there.
  • CiccioB - Wednesday, July 31, 2019 - link

    Intel is already sending 10nm CPU for the laptop we are going to see in holidays period.
    These new CPUs will simply oversell AMD offer 20:1 which is enough for Intel to protect its laptop market against any discount AMD will do with its APUs for the rest of 2020, that is until the new architecture will be released.
  • eva02langley - Wednesday, July 31, 2019 - link

    4 cores laptop parts with poor yield maxing out at 3.9GHz with a boost around 4GHz. 10nm will never be high end. I doubt we are ever going to see server chips using it. It will cost a fortune for intel to produce 32 cores + CPUs. As long as Intel is monolithic, they will never match AMD on cost.
  • CiccioB - Wednesday, July 31, 2019 - link

    As if 10nm today yields will be the same for the rest of its life...
    AMD offers 4 core CPU that can reach... 3.7GHz! They have a huge GPU so will have these new Ice lake.
    Intel use lower power (at same perf) and are going to be placed everywhere, from low end to high end 2in1, covering the entire market bu the workstation/gaming one where they have other products that AMD has not.
    Can't see how the introduction of the 10nm CPU are going to worsen Intel position that already is of almost a complete monopoly in laptop market.

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