Advanced Micro Devices Inc · NASDAQ:AMD
Advanced Micro Devices — Q1 2019 Earnings Presentation
28 slides from Advanced Micro Devices's earnings presentation, Apr 30, 2019
Slide 1: First Quarter 2019 Financial Results
FIRST QUARTER 2019 FINANCIAL RESULTS APRIL 30, 2019 1 | AMD Q1 2019 FINANCIAL RESULTS | APRIL 30, 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; AMD’s ability to achieve its long-term financial model; the timing and availability of AMD’s 7nm products; AMD’s financial outlook for the second
Slide 3: Our Journey
OUR JOURNEY HIGH-PERFORMANCE GREAT AMBITIOUS FOCUSED TECHNOLOGIES PRODUCTS GOALS EXECUTION 3 | AMD Q1 2019 FINANCIAL RESULTS | APRIL 30, 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 Q1 2019 FINANCIAL RESULTS | APRIL 30, 2019
Slide 5: Financial Summary Q1 2019
FINANCIAL SUMMARY Q1 2019(1) ▪ Revenue of $1.27 billion ▪ In-line with expectations, down 23% y/y primarily due to lower revenue in the Computing and Graphics segment ▪ Down 10% q/q primarily due to lower client processor sales ▪ RyzenTM and EPYCTM processor and datacenter GPU revenue more than doub
Slide 6: Computing and Graphics Q1 2019
COMPUTING AND GRAPHICS Q1 2019 ▪ Revenue of $831 million ▪ Down 26% y/y primarily due to lower graphics channel sales ▪ Down 16% q/q primarily due to lower client processor sales ▪ Average Selling Price (ASP) ▪ Client processor ASP up y/y primarily driven by Ryzen processor sales ▪ Client processor
Slide 7: Enterprise, Embedded and Semi-Custom Q1 2019
ENTERPRISE, EMBEDDED AND SEMI-CUSTOM Q1 2019 ▪ Revenue of $441 million ▪ Down 17% y/y primarily due to lower semi-custom product revenue ▪ Up 2% q/q primarily driven by higher semi-custom revenue ▪ Operating income of $68 million ▪ Up $54 million y/y and up $74 million q/q ▪ Improvements y/y and q/q
Slide 8: Revenue Trend ($ in Millions)
REVENUE TREND ($ IN MILLIONS) $1,756 $1,647 $1,653 $1,584 $1,419 -23% y/y $1,340 $1,272 $1,151 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Revenue down 23% y/y primarily due to lower revenue in the Computing and Graphics segment 8 | AMD Q1 2019 FINANCIAL RESULTS | APRIL 30, 2019
Slide 9: Gross Margin Trend
GROSS MARGIN(1) TREND (AS A PERCENTAGE OF REVENUE, GAAP AND NON-GAAP)(2) +5pp y/y 41% Non-GAAP 40% 41% 38% 36% 36% 37% 34% 34% Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 8 consecutive quarters of y/y gross margin expansion 1. Gross margin for both GAAP and Non-GAAP are the same for all periods
Slide 10: Earnings Per Share Trend (GAAP)
EARNINGS PER SHARE TREND (GAAP) $0.11 $0.08 $0.09 $0.06 -$0.07 y/y $0.04 $0.01 $(0.04) $(0.02) Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 EPS down y/y primarily due to lower revenue 10 | AMD Q1 2019 FINANCIAL RESULTS | APRIL 30, 2019
Slide 11: Earnings Per Share Trend (Non-GAAP)
EARNINGS PER SHARE TREND (NON-GAAP)(1) $0.14 $0.13 $0.11 -$0.05 y/y $0.09 $0.08 $0.06 $0.01 $(0.01) Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 EPS down y/y primarily due to lower revenue 1. See Appendices for GAAP to Non-GAAP reconciliation. 11 | AMD Q1 2019 FINANCIAL RESULTS | APRIL 30, 2019
Slide 12: Q1 2019 Summary P&L – GAAP
Q1 2019 SUMMARY P&L – GAAP Q1 2019 Q1 2018 Y/Y Q4 2018 Q/Q Revenue $1,272M $1,647M Down 23% $1,419M Down 10% Gross Margin $521M $597M Down $76M $537M Down $16M Gross Margin % 41% 36% Up 5pp 38% Up 3pp Operating Expenses $543M $477M Up $66M $509M Up $34M Operating Expense/Revenue % 43% 29% Up 14pp 36
Slide 13: Q1 2019 Summary P&L – Non-GAAP
Q1 2019 SUMMARY P&L – NON-GAAP(1) Q1 2019 Q1 2018 Y/Y Q4 2018 Q/Q Revenue $1,272M $1,647M Down 23% $1,419M Down 10% Gross Margin $522M $598M Down $76M $583M Down $61M Gross Margin % 41% 36% Up 5pp 41% Flat Operating Expenses $498M $446M Up $52M $474M Up $24M Operating Expense/Revenue % 39% 27% Up 12
Slide 14: Q1 2019 Segment Results
Q1 2019 SEGMENT RESULTS Q1 2019 Q1 2018 Y/Y Q4 2018 Q/Q Computing and Graphics Net Revenue $831M $1,115M Down 26% $986M Down 16% Operating Income $16M $138M Down $122M $115M Down $99M Enterprise, Embedded and Semi- Custom Net Revenue $441M $532M Down 17% $433M Up 2% Operating Income (Loss) $68M $14M
Slide 15: Q1 2019 Summary Balance Sheet Items
Q1 2019 SUMMARY BALANCE SHEET ITEMS Q1 2019 Q1 2018 Y/Y Q4 2018 Q/Q Cash, Cash Equivalents & $1,194M $1,045M Up $149M $1,156M Up $38M Marketable Securities Accounts Receivable, Net $1,241M $738M Up $503M $1,235M Up $6M Inventories, Net $955M $715M Up $240M $845M Up $110M Total Debt (principal amount
Slide 16: Total Cash Balance ($ in Millions)
TOTAL CASH BALANCE(1) ($ IN MILLIONS) $1,194 $1,185 $1,156 $1,045 $1,056 $983 $844 $879 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 1. Cash, cash equivalents and marketable securities. 16 | AMD Q1 2019 FINANCIAL RESULTS | APRIL 30, 2019
Slide 17: Adjusted EBITDA Trend
ADJUSTED EBITDA TREND ($ IN MILLIONS, CALCULATED AS TRAILING TWELVE MONTHS)(1) $803 $709 $737 $666 $496 $368 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Solid business and financial execution 1. See Appendices for reconciliation. 17 | AMD Q1 2019 FINANCIAL RESULTS | APRIL 30, 2019
Slide 18: Debt Trend and Gross Leverage
DEBT TREND (PRINCIPAL AMOUNT, $ IN MILLIONS, GROSS LEVERAGE TREND)(1,2) $1,699 $1,686 $1,685 $1,588 $1,528 $1,363 4.6x 3.4x 2.5x 2.2x 1.9x 1.8x Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Focused debt reduction activities 1. See Appendices for reconciliation to Total Debt . 2. Leverage = Current + long-term
Slide 19: Adoption of New Lease Accounting Standard
ADOPTION OF NEW LEASE ACCOUNTING STANDARD ▪ During Q1’19, AMD adopted the new lease accounting standard: ASC 842 Leases ▪ The standard resulted in leases being shown on the face of the balance sheet and an increase to: ▪ Assets of $214M ▪ Liabilities of $251M ▪ $213M in Long-term operating lease lia
Slide 20: Q2 2019 and FY 2019 Financial Outlook – Non-GAAP
Q2 2019 AND FY 2019 FINANCIAL OUTLOOK – NON GAAP(1) Q2 2019 FY 2019 $1.52 Billion Up high single digit Revenue +/- $50 Million percentage y/y Gross Margin % ~41% >41% Licensing Gain(2) - $60 Million Operating Expenses ~$510 Million ~29% Operating Expenses/Revenue % Interest Expense, Taxes and Other
Slide 21: Q1 2019 Summary
Q1 2019 SUMMARY SOLID BUSINESS GROSS MARGIN 7NM PRODUCT EXECUTING TO EXECUTION IMPROVEMENT - LAUNCHES LONG-TERM UP 5 PP Y/Y ON TRACK FINANCIAL MODEL 21 | AMD Q1 2019 FINANCIAL RESULTS | APRIL 30, 2019
Slide 22: 2019 The Biggest and Best Year in AMD History
2019 THE BIGGEST AND BEST YEAR IN AMD HISTORY 22| AMD Q1 2019 FINANCIAL RESULTS | APRIL 30, 2019
Slide 23: Appendices: Reconciliation of GAAP to Non-GAAP Gross Margin
APPENDICES Reconciliation of GAAP to Non-GAAP Gross Margin (Millions) Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 GAAP gross margin $ 386 $ 571 $ 452 $ 597 $ 652 $ 661 $ 537 $ 521 GAAP gross margin % 34% 36% 34% 36% 37% 40% 38% 41% Impairment of technology licenses — — — — — — 45 — Stock-based c
Slide 24: Appendices: Operating Income and Adjusted EBITDA Reconciliation
APPENDICES Reconciliation of GAAP Operating Income to Non-GAAP Operating Income (Millions) Q1'19 Q1'18 Q4'18 GAAP operating income $ 38 $ 120 $ 28 Impairment of technology licenses — — 45 Stock-based compensation 41 32 36 Loss contingency on legal matter 5 — — Non-GAAP operating income $ 84 $ 152 $
Slide 25: Appendices: Reconciliation of Net Income and EPS
APPENDICES Reconciliation of GAAP to Non-GAAP Net Income (Loss) / Earnings (Loss) Per Share (Millions, except per share data) Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 GAAP net income (loss) / earnings (loss) per share $ (42) $ (0.04) $ 61 $ 0.06 $ (19) $ (0.02) $ 81 $ 0.08 $ 116 $ 0.11 $ 102
Slide 26: Appendices: Share Count Overview
APPENDICES Share Count Overview Shares (millions) (1) Q4'18 Q1'19 Q2'19 FY'19 Actual Actual Estimate Estimate Basic Shares 1,002 1,044 1,084 1,082 Dilutive impact from: Employee Equity Grants (2) 23 23 23 19 75 million share Warrant (3) 54 27 0 7 Diluted Shares (without 2026 Convertible Notes) 1,079
Slide 27: Appendices: Total Debt (Net)
APPENDICES Total Debt (Net) (Millions) Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 6.75% Senior Notes due 2019 $ 166 $ 153 $ 153 $ 66 $ 66 $ — 7.50% Senior Notes due 2022 347 347 347 337 337 312 7.00% Senior Notes due 2024 311 311 310 310 250 176 2.125% Convertible Senior Notes due 2026 805 805 805 805 805
Slide 28: 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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