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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  • CiccioB - Wednesday, July 31, 2019 - link

    I'm not denying that Intel more advance PP has given it a big help in the past.
    But actual PP are really expensive, both for production and for development, and AMD, even though using TSMC advanced PP, is not guaranteed to always have this advantage ove Intel.
    You are one of those forgetting that actual Intel offering is a restyling of something 4 years old, while 10nm is still not fully deployed and 7nm is coming.
    With those PP there will be changes bigger than simple shrinks.
    Intel has a new architecture to roll out (and it would already be here against Zen if 10nm were ok) and new interconnections allows for things that AMD cannot do even with a newer PP.
    So enjoy AMD small advantage when comparing its latest products with Intel 4 years old ones, but be prepared to a fast change of the market when Intel will strike back at full power.
  • RSAUser - Thursday, August 1, 2019 - link

    Most of Intel's advantages on their "old" architecture come from tweaking that 14nm so much that it will actually be difficult for their 7/10nm to compete against it for at least a generation on higher power parts.

    AMD will probably have the performance advantage till 2021 or so, there I expect it to even out again if AMD does not improve.

    We have yet to see all of AMD's architecture improvements with this generation, the 3950X will be quite interesting, and AMD will not release their best chips now as they don't need to. Most of the 3000 series gains seem to be from the improved process node, rather than the architecture, so I'm expecting good gains again from 4000 series.

    Verneer is rumored to bring 4 thread SMT, but I'd only expect them to implement this in the server environment if they do, doesn't really make sense in the consumer space. I bet on them splitting server and desktop with 4000 series.
  • MASSAMKULABOX - Thursday, August 1, 2019 - link

    Never say never..
  • willis936 - Wednesday, July 31, 2019 - link

    AMD is already on par with intel. They would need to keep their already built momentum for a few more years to make intel a totally irrelevant option.
  • Gondalf - Wednesday, July 31, 2019 - link

    Assuming Intel sleeping for few more years. Obviously this will not happen :).
    At some point Intel will do a check, can i manufacture?? yes? ok, no? ok i'll will begin to manufacture at TSMC and Samsung, leaving AMD in the dust.
    It takes only less than one year to convert strategical production at foundries thanks to actual advanced software tools developed by TSMC and others.
  • eva02langley - Wednesday, July 31, 2019 - link

    You need to work on your uarch to be manufactured at other foundries. It is not as simple as this. Also, Intel is investing massively in their fabs and these results will not bring process node forward, only production. If the product is not good, it will not matter anyway.
  • niva - Wednesday, July 31, 2019 - link

    I doubt Intel will stay behind AMD for long, and even though AMD is ahead of them now in terms of architecture design and manufacturing node, it won't stay that way for long. AMD has not made Intel obsolete even with it's newest chips, and when you factor in drivers/stability and years of conditioning that Intel is just better it's hard for me to call this a win. Intel products are not bad, now there's actual competition. It's good to see Intel on the receiving end of a price war, but AMD isn't banking yet and it's going to take a while for the money to really start flowing in, probably a lot longer for Intel to put out their next generation of CPUs and turn this around again.

    I've loved and used AMD chips since the 90s, but I'm shocked that the company has remained in business somehow. Now they're being squeezed from the other direction by Arm chips and the future is just as uncertain as it always has been.
  • eva02langley - Wednesday, July 31, 2019 - link

    At this pace, it will take 3 years for AMD to pay off their debt. I really hope they do so. If they crash again, I believe it will be the end for goods, however I don't think it will happens. They have promising uarchs and they are really getting momentum in a lot of markets. I am still really curious to see what Samsung will come out with RDNA.
  • CiccioB - Wednesday, July 31, 2019 - link

    Can you describe which math you used to calculate a 3 year debt repayment?
  • eva02langley - Wednesday, July 31, 2019 - link

    y/y 392M$ debt repaid --> 1300M$ in debt.

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