AMD beats expectations with Q1 profit of $121 million

AMD posted its first-quarter financial results. The chip designer pulled in revenue of $1.65 billion and GAAP net income of $81 million. Revenue was up 40 percent year-over-year and 23 percent quarter-over-quarter. On an adjusted basis, AMD pulled in net income of $121 million, which comes down to 11 cents per share. These figures compare favorably to Wall Street estimates, which called for earnings per share of 9 cents and revenue of $1.57 billion.

Shares are currently up 9.58 percent to $10.64 in after-hours trading thanks to the earnings beat and positive guidance. Zooming in on the numbers, revenue from the Computing and Graphics segment was $1.12 billion, up 95 percent year-over-year and 23 percent quarter-over-quarter thanks to strong Radeon and Ryzen sales. Enterprise, Embedded and Semi-Custom (EESC) sales on the other hand were down 12 percent year-over-year due to lower semi-custom chip revenue.

For the current quarter, AMD anticipates revenue of $1.725 billion, plus or minus $50 million. We'll over the highlights from the conference call tomorrow morning.

AMD (NASDAQ:AMD) today announced revenue for the first quarter of 2018 of $1.65 billion, operating income of $120 million, net income of $81 million, and diluted earnings per share of $0.08. On a non-GAAP(1) basis, operating income was $152 million, net income was $121 million, and diluted earnings per share was $0.11.

“The first quarter was an outstanding start to 2018 with 40 percent year-over-year revenue growth,” said Dr. Lisa Su, AMD president and CEO. “PC, gaming and datacenter adoption of our new, high-performance products continues to accelerate. We are excited about our long-term roadmaps and focused on delivering sustained revenue growth and profitability.”

Q1 2018 Results

All AMD financial results are reported under the new revenue recognition accounting standard, ASC 606, with prior period financial results adjusted for comparison purposes.

Revenue was $1.65 billion, up 40 percent year-over-year and 23 percent quarter-over-quarter, driven primarily by higher revenue in the Computing and Graphics segment.

Gross margin was 36 percent, up 4 percentage points year-over-year and 2 percentage points quarter-over-quarter. The gross margin percentage increase was driven by a greater percentage of revenue from Ryzen™, Radeon™ and EPYC™ products.

On a GAAP basis, operating income was $120 million compared to operating income of $11 million a year ago and an operating loss of $2 million in the prior quarter.

Net income was $81 million compared to net losses of $33 million a year ago and $19 million in the prior quarter. Diluted earnings per share was $0.08, compared to losses per share of $0.04 a year ago and $0.02 in the prior quarter.

On a non-GAAP(1) basis, operating income was $152 million compared to operating income of $34 million a year ago and $19 million in the prior quarter.

Non-GAAP net income was $121 million compared to net income of $2 million a year ago and $8 million in the prior quarter.

Non-GAAP diluted earnings per share was $0.11, compared to break even from a year ago and diluted earnings per share of $0.01 in the prior quarter.

Cash and cash equivalents were $1.04 billion at the end of the quarter.

Quarterly Financial Segment Summary

Computing and Graphics segment revenue was $1.12 billion, up 95 percent year-over-year and 23 percent quarter-over-quarter, primarily driven by strong sales of Radeon and Ryzen products.

Client processor average selling price (ASP) increased year-over-year and quarter-over-quarter due to a greater percentage of revenue from our Ryzen products.

GPU ASP increased year-over-year and quarter-over-quarter driven by a greater percentage of revenue from our new Radeon products.

Operating income was $138 million, compared to an operating loss of $21 million a year ago and operating income of $33 million in the prior quarter. Operating income improvement was driven by higher revenue. Enterprise, Embedded and Semi-Custom (EESC) segment revenue was $532 million, down 12 percent year-over-year due to lower semi-custom revenue, partially offset by higher server and embedded revenue. EESC segment revenue was up 23 percent quarter-over-quarter, driven by semi-custom, embedded and EPYC processor revenue.

Operating income was $14 million, compared to operating income of $55 million a year ago and an operating loss of $13 million in the prior quarter. The year-over-year decrease was primarily due to a licensing gain that occurred in Q1 2017. The quarter-over-quarter increase was primarily due to higher revenue.

All Other operating loss was $32 million compared with operating losses of $23 million a year ago and $22 million in the prior quarter.

Current Outlook
AMD’s outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.

For the second quarter of 2018, AMD expects revenue to be approximately $1.725 billion, plus or minus $50 million, an increase of 50 percent year-over-year, and non-GAAP gross margin of approximately 37 percent.