Advanced Micro Devices Inc · NASDAQ:AMD
Advanced Micro Devices — Q4 2018 Earnings Presentation
33 slides from Advanced Micro Devices's earnings presentation, Jan 29, 2019
Slide 1: Fourth Quarter and FY 2018 Financial Results
FOURTH QUARTER AND FY 2018 FINANCIAL RESULTS JANUARY 29, 2019 | AMD Q4 AND FY 2018 FINANCIAL RESULTS | JANUARY 29, 2019
Slide 2: Forward-Looking Statements
This presentation contains forward-looking statements concerning Advanced Micro Devices, Inc. (AMD) such as AMD’s strategy and focus; AMD’s ability to achieve its long-term financial model; the features, functionality, availability, timing and expected benefits of AMD future products, including AMD’
Slide 3: High-Performance Technologies, Great Products, Ambitious Goals, Focused Execution
HIGH-PERFORMANCE GREAT AMBITIOUS FOCUSED TECHNOLOGIES PRODUCTS GOALS EXECUTION | AMD Q4 AND FY 2018 FINANCIAL RESULTS | JANUARY 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 | AMD Q4 AND FY 2018 FINANCIAL RESULTS | JANUARY 29, 2019
Slide 5: Financial Accomplishments FY 2018
FINANCIAL ACCOMPLISHMENTS FY 2018(1) ▪ 23% annual revenue growth, up more than $1.2 billion to $6.48 billion Annual Revenue ($M) ▪ 2nd straight year of double digit revenue growth, share gains and improved profits +23% ▪ Gross margin expansion driven by RyzenTM, EPYCTM and RadeonTM products $6,475 ▪
Slide 6: Financial Summary Q4 2018
FINANCIAL SUMMARY Q4 2018(1) ▪ Revenue of $1.42 billion, up 6% y/y primarily driven by Computing and Graphics segment ▪ Computing and Graphics segment revenue of $986 million, up 9% y/y, up 5% q/q ▪ Enterprise, Embedded and Semi-Custom (EESC) segment revenue of $433 million, flat y/y, down 39% q/q ▪
Slide 7: Computing and Graphics Q4 2018
COMPUTING AND GRAPHICS Q4 2018 ▪ Revenue of $986 million, up 9% y/y and 5% q/q driven by strong sales of Ryzen processors ▪ Operating income of $115 million: ▪ Up $82 million y/y primarily driven by the ramp of Ryzen processors ▪ Up $15 million q/q primarily driven by Ryzen processors and datacenter
Slide 8: Enterprise, Embedded and Semi-Custom Q4 2018
ENTERPRISE, EMBEDDED AND SEMI-CUSTOM Q4 2018 ▪ Revenue of $433 million, flat y/y and seasonally down 39% q/q driven by lower-semi- custom sales, as expected ▪ Operating loss of $6 million: ▪ A $7 million improvement y/y primarily due to higher EPYC datacenter processor revenue, partially offset by l
Slide 9: Revenue Trend
REVENUE TREND ($ IN MILLIONS) $1,756 $1,647 $1,653 $1,584 +6% y/y $1,419 $1,340 $1,178 $1,151 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Revenue up 6% y/y driven by the Computing and Graphics segment | AMD Q4 AND FY 2018 FINANCIAL RESULTS | JANUARY 29, 2019
Slide 10: Gross Margin Trend
GROSS MARGIN(1) TREND (AS A PERCENTAGE OF REVENUE, GAAP AND NON-GAAP)(2) +7pp y/y (Non-GAAP) +4pp y/y (GAAP) 40% 41% 38% 36% 36% 37% 34% 34% 32% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q4'18 Y/Y improvement primarily driven by Ryzen and EPYC processor sales 1. Gross margin for both GAAP and
Slide 11: Earnings Per Share Trend (GAAP)
EARNINGS PER SHARE TREND (GAAP) $0.11 $0.08 $0.09 +$0.06 y/y $0.06 $0.04 $(0.04) $(0.04) $(0.02) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Growth of $0.06 y/y driven by higher revenue and gross margin expansion | AMD Q4 AND FY 2018 FINANCIAL RESULTS | JANUARY 29, 2019
Slide 12: Earnings Per Share Trend (Non-GAAP)
EARNINGS PER SHARE TREND (NON-GAAP)(1) $0.14 $0.13 +$0.07 y/y $0.11 $0.09 $0.08 $0.01 $0.00 $(0.01) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Growth of $0.07 y/y driven by higher revenue and gross margin expansion 1. See Appendices for GAAP to Non-GAAP reconciliation. | AMD Q4 AND FY 2018 FINA
Slide 13: 2018 Annual Summary P&L – GAAP
2018 ANNUAL SUMMARY P&L – GAAP 2018 2017 Y/Y Revenue $6,475M $5,253M Up 23% Gross Margin $2,447M $1,787M Up $660M Gross Margin % 38% 34% Up 4pp Operating Expenses $1,996M $1,712M Up $284M Operating Expense/Revenue % 31% 33% Down 2pp Operating Income $451M $127M Up $324M Net Income (Loss) $337M $(33M
Slide 14: 2018 Annual Summary P&L – Non-GAAP
2018 ANNUAL SUMMARY P&L – NON-GAAP(1) 2018 2017 Y/Y Revenue $6,475M $5,253M Up 23% Gross Margin $2,496M $1,789M Up $707M Gross Margin % 39% 34% Up 5pp Operating Expenses $1,863M $1,617M Up $246M Operating Expense/Revenue % 29% 31% Down 2pp Operating Income $633M $224M Up $409M Net Income $514M $103M
Slide 15: Q4 2018 Summary P&L – GAAP
Q4 2018 SUMMARY P&L – GAAP Q4 2018 Q4 2017 Y/Y Q3 2018 Q/Q Revenue $1,419M $1,340M Up 6% $1,653 M Down 14% Gross Margin $537M $452M Up $85M $661M Down $124M Gross Margin % 38% 34% Up 4pp 40% Down 2pp Operating Expenses $509M $454M Up $55M $511M Down $2M Operating Expense/Revenue % 36% 34% Up 2pp 31%
Slide 16: Q4 2018 Summary P&L – Non-GAAP
Q4 2018 SUMMARY P&L – NON-GAAP(1) Q4 2018 Q4 2017 Y/Y Q3 2018 Q/Q Revenue $1,419M $1,340M Up 6% $1,653M Down 14% Gross Margin $583M $452M Up $131M $662M Down $79M Gross Margin % 41% 34% Up 7pp 40% Up 1pp Operating Expenses $474M $433M Up $41M $476M Down $2M Operating Expense/Revenue % 33% 32% Up 1pp
Slide 17: Q4 and FY 2018 Segment Results
Q4 AND FY 2018 SEGMENT RESULTS Q4 2018 Q4 2017 Y/Y Q3 2018 Q/Q 2018 2017 Y/Y Computing and Graphics Net Revenue $986M $908M Up 9% $938M Up 5% $4,125M $2,977M Up 39% Operating Income $115M $33M Up $82M $100M Up $15M $470M $92M Up $378M Enterprise, Embedded and Semi-Custom Net Revenue $433M $432M Flat
Slide 18: 2018 Summary Balance Sheet Items
2018 SUMMARY BALANCE SHEET ITEMS Q4 2018 Q4 2017 Y/Y Q3 2018 Q/Q Cash, Cash Equivalents & $1,156M $1,185M Down $29M $1,056M Up $100M Marketable Securities Accounts Receivable, Net $1,235M $454M Up $781 $1,207M Up $28M Inventories, Net $845M $694M Up $151M $738M Up $107M Total Debt (principal amount)
Slide 19: Total Cash Balance
TOTAL CASH BALANCE(1) ($ IN MILLIONS) $1,185 $1,156 $1,045 $1,056 $943 $983 $844 $879 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Total cash balance above $1 billion 1. Cash, cash equivalents and marketable securities | AMD Q4 AND FY 2018 FINANCIAL RESULTS | JANUARY 29, 2019
Slide 20: Adjusted EBITDA Trend
ADJUSTED EBITDA TREND ($ IN MILLIONS, CALCULATED AS TRAILING TWELVE MONTHS)(1) $803 $709 $666 $496 $368 $176 Q4'16 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Business and financial strength driving strong increase in adjusted EBITDA 1. See Appendices for reconciliation. | AMD Q4 AND FY 2018 FINANCIAL RESULTS | J
Slide 21: Debt Trend
DEBT TREND (PRINCIPAL AMOUNT, $ IN MILLIONS, GROSS LEVERAGE TREND)(1,2) $1,767 $1,699 $1,686 $1,685 10.0x $1,588 $1,528 4.6x 3.4x 2.5x 2.2x 1.9x Q4'16 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Gross leverage reduced below 2.0x 1. See Appendices for reconciliation to Total Debt . 2. Leverage = Current + long-ter
Slide 22: Wafer Supply Agreement Update
WAFER SUPPLY AGREEMENT UPDATE ▪ AMD announced today it has entered into a seventh amendment to its wafer supply agreement with GLOBALFOUNDRIES, Inc. ▪ Full flexibility for wafer purchases from any foundry at the 7nm node and beyond without any one-time payments or royalties ▪ GLOBALFOUNDRIES continu
Slide 23: Q1 2019 and FY 2019 Financial Outlook – Non-GAAP
Q1 2019 AND FY 2019 FINANCIAL OUTLOOK – NON GAAP(1) Q1 2019 FY 2019 $1.25 Billion Up high single digit Revenue +/- $50 Million percentage y/y Gross Margin % ~41% >41% Licensing Gain $60 Million $60 Million Operating Expenses ~$480 Million ~29% Operating Expenses/Revenue % Interest Expense, Taxes and
Slide 24: 2018 Summary
2018 SUMMARY ANNUAL REVENUE GROSS MARGIN HIGHEST ON TRACK TO GROWTH OF 23%, UP 4 PP Y/Y; PROFITABILTY IN LONG-TERM UP MORE THAN NON-GAAP(1) UP 5 PP Y/Y 7 YEARS FINANCIAL MODEL $1.2 BILLION 1. See Appendices for GAAP to Non-GAAP reconciliation. | AMD Q4 AND FY 2018 FINANCIAL RESULTS | JANUARY 29, 201
Slide 25: Redefining High Performance Computing
R E D E F I N I N G HIGH PERFORMANCE COMPUTING | AMD Q4 AND FY 2018 FINANCIAL RESULTS | JANUARY 29, 2019
Slide 26: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS Laura Graves, Corporate Vice President Phone: 408-749-5467 Email: laura.graves@amd.com Jason Schmidt, IR Director Phone: 408-749-6688 Email: jason.schmidt@amd.com Janice Oh, Sr. IR Analyst Phone: 408-749-2113 Email: Janice.oh@amd.com | AMD Q4 AND FY 2018 FINANCIAL RESULTS
Slide 27: Appendices: Reconciliation of GAAP to Non-GAAP Gross Margin and Operating Expenses
APPENDICES Reconciliation of GAAP to Non-GAAP Gross Margin (Millions) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 2017 2018 GAAP gross margin $ 378 $ 386 $ 571 $ 452 $ 597 $ 652 $ 661 $ 537 $ 1,787 $ 2,447 GAAP gross margin % 32% 34% 36% 34% 36% 37% 40% 38% 34% 38% Impairment of technology licen
Slide 28: Appendices: Operating Income and Adjusted EBITDA Reconciliation
APPENDICES Reconciliation of GAAP Operating Income (loss) to Non-GAAP Operating Income (Millions) Q4'18 Q4'17 Q3'18 2018 2017 GAAP operating income (loss) $ 28 $ (2) $ 150 $ 451 $ 127 Impairment of technology licenses 45 — — 45 — Stock-based compensation 36 21 36 137 97 Non-GAAP operating income 109
Slide 29: Appendices: Net Income and EPS Reconciliation (Quarterly)
APPENDICES Reconciliation of GAAP to Non-GAAP Net Income (Loss) / Earnings (Loss) Per Share (Millions, except per share data) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 GAAP net income (loss) / earnings (loss) per share $ (33) $(0.04) $ (42) $(0.04) $ 61 $ 0.06 $ (19) $(0.02) $ 81 $ 0.08 $ 116
Slide 30: Appendices: Net Income and EPS Reconciliation (Annual)
APPENDICES Reconciliation of GAAP to Non-GAAP Net Income (Loss) / Earnings (Loss) Per Share (Millions, except per share data) 2017 2018 GAAP net income (loss) / earnings (loss) per share $ (33) $ (0.03) $ 337 $ 0.32 Loss on debt redemption 12 0.01 12 0.01 Non-cash interest expense related to convert
Slide 31: Appendices: Share Count Overview
APPENDICES Share Count Overview Shares (millions) (3) Q4'18 Q3'18 FY'18 Q1'19 FY'19 Actual Actual Actual Estimate Estimate Basic Shares 1,002 987 982 1,007 1,021 Dilutive impacts from: Employee Equity Grants (1) 23 34 33 23 20 75 million share Warrant (1) 54 55 49 54 55 Diluted Shares (without 2026
Slide 32: Appendices: Total Debt (Net)
APPENDICES Total Debt (Net) (Millions) Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 6.75% Senior Notes due 2019 $ 196 $ 191 $ 191 $ 191 $ 166 $ 153 $ 153 $ 66 $ 66 7.50% Senior Notes due 2022 350 347 347 347 347 347 347 337 337 7.00% Senior Notes due 2024 416 390 350 324 311 311 310 310 250
Slide 33: 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” and
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