Advanced Micro Devices Inc · NASDAQ:AMD
Advanced Micro Devices — Q3 2019 Earnings Presentation
26 slides from Advanced Micro Devices's earnings presentation, Oct 29, 2019
Slide 1: Third Quarter 2019 Financial Results
THIRD QUARTER 2019 FINANCIAL RESULTS OCTOBER 29, 2019 1 | AMD Q3 2019 FINANCIAL RESULTS | OCTOBER 29, 2019
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT This presentation contains forward-looking statements concerning Advanced Micro Devices, Inc. (AMD) such as AMD’s strategy and focus; the features, functionality, performance, availability, timing and expected benefits of AMD products; that 2019 is the biggest and best year in A
Slide 3: Our Journey
OUR JOURNEY HIGH-PERFORMANCE GREAT AMBITIOUS FOCUSED TECHNOLOGIES PRODUCTS GOALS EXECUTION 3 | AMD Q3 2019 FINANCIAL RESULTS | OCTOBER 29, 2019
Slide 4: Our Strategy and Focus
OUR STRATEGY AND FOCUS GRAPHICS COMPUTE SOLUTIONS Gaming Compute Virtual & Client Infrastructure Semi- Vertical Partnerships & AI Augmented Systems & Cloud Custom Platforms Reality 4 | AMD Q3 2019 FINANCIAL RESULTS | OCTOBER 29, 2019
Slide 5: Financial Summary Q3 2019
FINANCIAL SUMMARY Q3 2019(1) ▪ Revenue of $1.80 billion, in-line with our expectations ▪ Up 9% y/y and 18% q/q due to higher revenue in the Computing and Graphics segment, partially offset by lower revenue in the Enterprise, Embedded and Semi-Custom segment ▪ Gross margin of 43% ▪ Up 3 percentage po
Slide 6: Computing and Graphics Segment Q3 2019
COMPUTING AND GRAPHICS SEGMENT Q3 2019 ▪ Revenue of $1.28 billion ▪ Up 36% both y/y and q/q primarily driven by increased Ryzen client processor sales ▪ Ryzen desktop and notebook processors delivered the highest quarterly client processor sales since 2011 ▪ Average Selling Price (ASP) ▪ Client proc
Slide 7: Enterprise, Embedded and Semi-Custom Segment Q3 2019
ENTERPRISE, EMBEDDED AND SEMI-CUSTOM SEGMENT Q3 2019 ▪ Revenue of $525 million ▪ Down 27% y/y and 11% q/q primarily due to lower semi-custom product revenue ▪ EPYC processor revenue and unit shipments grew more than 50 percent sequentially ▪ Operating income of $61 million ▪ Down $25 million y/y and
Slide 8: Revenue Trend ($ in Millions)
REVENUE TREND ($ IN MILLIONS) +9% y/y $1,801 $1,756 $1,647 $1,653 $1,531 $1,419 $1,340 $1,272 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Highest quarterly revenue since Q4 2005 8 | AMD Q3 2019 FINANCIAL RESULTS | OCTOBER 29, 2019
Slide 9: Gross Margin Trend
GROSS MARGIN TREND (AS A PERCENTAGE OF REVENUE, GAAP AND NON-GAAP)(1) +3pp y/y 41% 43% 40% 41% 41% 38% 36% 37% 34% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18(2) Q1'19 Q2'19 Q3'19 Highest quarterly gross margin since Q2 2012 1. See Appendices for GAAP to Non-GAAP reconciliation 2. Gross margin for both GAAP and N
Slide 10: Earnings Per Share Trend (GAAP)
EARNINGS PER SHARE TREND (GAAP) +$0.02 y/y $0.11 $0.11 $0.08 $0.09 $0.04 $0.01 $0.03 $(0.02) Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 10 | AMD Q3 2019 FINANCIAL RESULTS | OCTOBER 29, 2019
Slide 11: Earnings Per Share Trend (Non-GAAP)
EARNINGS PER SHARE TREND (NON-GAAP)(1) +$0.05 y/y $0.18 $0.14 $0.13 $0.11 $0.08 $0.08 $0.06 $0.01 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Highest quarterly earnings per share since Q4 2011 1. See Appendices for GAAP to Non-GAAP reconciliation 11 | AMD Q3 2019 FINANCIAL RESULTS | OCTOBER 29,
Slide 12: Q3 2019 Summary P&L – GAAP
Q3 2019 SUMMARY P&L – GAAP Q3 2019 Q3 2018 Y/Y Q2 2019 Q/Q Revenue $1,801M $1,653M Up 9% $1,531M Up 18% Gross Margin $777M $661M Up $116M $621M Up $156M Gross Margin % 43% 40% Up 3pp 41% Up 2pp Operating Expenses $591M $511M Up $80M $562M Up $29M Operating Expense/Revenue % 33% 31% Up 2pp 37% Down 4
Slide 13: Q3 2019 Summary P&L – Non-GAAP
Q3 2019 SUMMARY P&L – NON-GAAP(1) Q3 2019 Q3 2018 Y/Y Q2 2019 Q/Q Revenue $1,801M $1,653M Up 9% $1,531M Up 18% Gross Margin $779M $662M Up $117M $623M Up $156M Gross Margin % 43% 40% Up 3pp 41% Up 2pp Operating Expenses $539M $476M Up $63M $512M Up $27M Operating Expense/Revenue % 30% 29% Up 1pp 33%
Slide 14: Q3 2019 Segment Results
Q3 2019 SEGMENT RESULTS Q3 2019 Q3 2018 Y/Y Q2 2019 Q/Q Computing and Graphics Net Revenue $1,276M $938M Up 36% $940M Up 36% Operating Income $179M $100M Up $79M $22M Up $157M Enterprise, Embedded and Semi-Custom Net Revenue $525M $715M Down 27% $591M Down 11% Operating Income $61M $86M Down $25M $8
Slide 15: Q3 2019 Summary Balance Sheet Items
Q3 2019 SUMMARY BALANCE SHEET ITEMS Q3 2019 Q3 2018 Y/Y Q2 2019 Q/Q Cash, Cash Equivalents & $1,209M $1,056M Up $153M $1,128M Up $81M Marketable Securities Accounts Receivable, Net $1,393M $1,207M Up $186M $1,333M Up $60M Inventories, Net $1,040M $738M Up $302M $1,015M Up $25M Total Debt (principal
Slide 16: Total Cash Balance
TOTAL CASH BALANCE(1) ($ IN MILLIONS) $1,185 $1,194 $1,209 $1,156 $1,128 $1,045 $1,056 $983 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Strong, sustained cash balance 1. Cash, cash equivalents and marketable securities 16 | AMD Q3 2019 FINANCIAL RESULTS | OCTOBER 29, 2019
Slide 17: Debt and Leverage Trend
DEBT AND LEVERAGE TREND (DEBT PRINCIPAL AMOUNT, TRAILING TWELVE MONTHS ADJUSTED EBITDA AND NET INCOME TREND, $ IN MILLIONS)(1,2,3) $1,699 $1,686 $1,685 $1,588 $1,528 $1,363 4.6x $1,293 $1,087 3.4x $803 $737 $745 $666 $709 $672 $496 $368 2.5x 2.2x 1.9x 1.8x 1.9x 1.5x Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'
Slide 18: Q4 2019 and FY 2019 Financial Outlook – Non-GAAP
Q4 2019 AND FY 2019 FINANCIAL OUTLOOK – NON GAAP(1) Q4 2019 FY 2019 ~$2.1 Billion Up mid-single digit Revenue +/- $50 Million percentage y/y Gross Margin % ~44% ~43% Licensing Gain(2) - ~$60 Million Operating Expenses ~$535 Million ~31% Operating Expenses/Revenue % Interest Expense, Taxes and Other
Slide 19: Q3 2019 Summary
Q3 2019 SUMMARY REVENUE GREW STRENGTH IN CONTINUED Y/Y EXECUTING TO 9% Y/Y AND 18% Q/Q RYZEN AND EPYC GROSS MARGIN LONG-TERM PROCESSOR SALES IMPROVEMENT FINANCIAL MODEL 19 | AMD Q3 2019 FINANCIAL RESULTS | OCTOBER 29, 2019
Slide 20: 2019 The Biggest and Best Year in AMD History
2019 THE BIGGEST AND BEST YEAR IN AMD HISTORY 20 | AMD Q3 2019 FINANCIAL RESULTS | OCTOBER 29, 2019
Slide 21: Appendices: Reconciliation of GAAP to Non-GAAP Gross Margin
APPENDICES Reconciliation of GAAP to Non-GAAP Gross Margin (Millions) Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 GAAP gross margin $ 452 $ 597 $ 652 $ 661 $ 537 $ 521 $ 621 $ 777 GAAP gross margin % 34% 36% 37% 40% 38% 41% 41% 43% Impairment of technology licenses — — — — 45 — — — Stock-based c
Slide 22: Appendices: Operating Income and Adjusted EBITDA Reconciliation
APPENDICES Reconciliation of GAAP Operating Income to Non-GAAP Operating Income (Millions) Q3'19 Q3'18 Q2'19 GAAP operating income $ 186 $ 150 $ 59 Stock-based compensation 54 36 45 Loss contingency on legal matter — — 7 Non-GAAP operating income $ 240 $ 186 $ 111 Reconciliation of GAAP Net Income (
Slide 23: Appendices: Reconciliation of GAAP to Non-GAAP Net Income and EPS
APPENDICES Reconciliation of GAAP to Non-GAAP Net Income (Loss) / Earnings (Loss) Per Share (Millions, except per share data) Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 GAAP net income (loss) / earnings (loss) per share (1) $ (19) $ (0.02) $ 81 $ 0.08 $ 116 $ 0.11 $ 102 $ 0.09 $ 38 $ 0.04 $ 16
Slide 24: Appendices: Share Count Overview
APPENDICES Share Count Overview Shares (millions) (1) Q1'19 Q2'19 Q3'19 Q4'19 FY'19 Actual Actual Actual Estimate Estimate Basic Shares 1,044 1,084 1,097 1,114 1,086 Dilutive impact from: Employee Equity Grants (2) 23 25 20 15 21 75 million share Warrant (3) 27 — — — 7 Diluted Shares (without 2026 C
Slide 25: Appendices: Total Debt (Net)
APPENDICES Total Debt (Net) (Millions) Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 6.75% Senior Notes due 2019 $ 166 $ 153 $ 153 $ 66 $ 66 $ — $ — $ — 7.50% Senior Notes due 2022 347 347 347 337 337 312 312 312 7.00% Senior Notes due 2024 311 311 310 310 250 176 176 96 2.125% Convertible Senior
Slide 26: Disclaimers and Attributions
DISCLAIMERS AND ATTRIBUTIONS The information contained herein is for informational purposes only, and is subject to change without notice. Timelines, roadmaps, and/or product release dates shown in these slides are plans only and subject to change. “Polaris”, “Vega”, “Radeon Vega”, “Navi”, “Zen”, “R
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