Advanced Micro Devices Inc · NASDAQ:AMD
Advanced Micro Devices — Q2 2019 Earnings Presentation
29 slides from Advanced Micro Devices's earnings presentation, Jul 30, 2019
Slide 1: Second Quarter 2019 Financial Results
SECOND QUARTER 2019 FINANCIAL RESULTS JULY 30, 2019 1 | AMD Q2 2019 FINANCIAL RESULTS | JULY 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; the features, functionality, performance, availability, timing and expected benefits of AMD products; AMD’s ability to achieve its long-term fina
Slide 3: Our Journey
OUR JOURNEY HIGH-PERFORMANCE GREAT AMBITIOUS FOCUSED TECHNOLOGIES PRODUCTS GOALS EXECUTION 3 | AMD Q2 2019 FINANCIAL RESULTS | JULY 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 Q2 2019 FINANCIAL RESULTS | JULY 30, 2019
Slide 5: Financial Summary Q2 2019
FINANCIAL SUMMARY Q2 2019(1) ▪ Revenue of $1.53 billion, in-line with our expectations ▪ Down 13% y/y due to lower revenue in both segments ▪ Up 20% q/q due to higher revenue in both segments ▪ Gross margin of 41% ▪ Up 4 percentage points y/y primarily driven by the ramp of RyzenTM and EPYCTM proces
Slide 6: Computing and Graphics Segment Q2 2019
COMPUTING AND GRAPHICS SEGMENT Q2 2019 ▪ Revenue of $940 million ▪ Down 13% y/y primarily due to lower graphics channel sales, partially offset by increased client processor and datacenter GPU sales ▪ Up 13% q/q primarily due to higher GPU sales ▪ Average Selling Price (ASP) ▪ Client processor ASP u
Slide 7: Enterprise, Embedded and Semi-Custom Segment Q2 2019
ENTERPRISE, EMBEDDED AND SEMI-CUSTOM SEGMENT Q2 2019 ▪ Revenue of $591 million ▪ Down 12% y/y primarily due to lower semi-custom product revenue, partially offset by higher EPYC processor sales ▪ Up 34% q/q driven by higher semi-custom and EPYC processor revenue ▪ Operating income of $89 million ▪ U
Slide 8: Revenue Trend
REVENUE TREND ($ IN MILLIONS) $1,756 $1,647 $1,653 +20% q/q $1,584 $1,531 $1,419 $1,340 $1,272 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Revenue grew 20% q/q due to higher revenue in both segments 8 | AMD Q2 2019 FINANCIAL RESULTS | JULY 30, 2019
Slide 9: Gross Margin Trend
GROSS MARGIN(1) TREND (AS A PERCENTAGE OF REVENUE, GAAP AND NON-GAAP)(2) +4pp y/y 41% Non-GAAP 40% 41% 41% 38% 36% 36% 37% 34% Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Continued y/y gross margin expansion each quarter 1. Gross margin for both GAAP and Non-GAAP are the same for all periods exc
Slide 10: Earnings Per Share Trend (GAAP)
EARNINGS PER SHARE TREND (GAAP) $0.11 $0.08 $0.09 +$0.02 q/q $0.06 $0.04 $0.01 $0.03 $(0.02) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 10 | AMD Q2 2019 FINANCIAL RESULTS | JULY 30, 2019
Slide 11: Earnings Per Share Trend (Non-GAAP)
EARNINGS PER SHARE TREND (NON-GAAP)(1) $0.14 $0.13 $0.11 +$0.02 q/q $0.09 $0.08 $0.08 $0.06 $0.01 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 1. See Appendices for GAAP to Non-GAAP reconciliation. 11 | AMD Q2 2019 FINANCIAL RESULTS | JULY 30, 2019
Slide 12: Q2 2019 Summary P&L – GAAP
Q2 2019 SUMMARY P&L – GAAP Q2 2019 Q2 2018 Y/Y Q1 2019 Q/Q Revenue $1,531M $1,756M Down 13% $1,272M Up 20% Gross Margin $621M $652M Down $31M $521M Up $100M Gross Margin % 41% 37% Up 4pp 41% Flat Operating Expenses $562M $499M Up $63M $543M Up $19M Operating Expense/Revenue % 37% 28% Up 9pp 43% Down
Slide 13: Q2 2019 Summary P&L – Non-GAAP
Q2 2019 SUMMARY P&L – NON-GAAP(1) Q2 2019 Q2 2018 Y/Y Q1 2019 Q/Q Revenue $1,531M $1,756M Down 13% $1,272M Up 20% Gross Margin $623M $653M Down $30M $522M Up $101M Gross Margin % 41% 37% Up 4pp 41% Flat Operating Expenses $512M $467M Up $45M $498M Up $14M Operating Expense/Revenue % 33% 27% Up 6pp 3
Slide 14: Q2 2019 Segment Results
Q2 2019 SEGMENT RESULTS Q2 2019 Q2 2018 Y/Y Q1 2019 Q/Q Computing and Graphics Net Revenue $940M $1,086M Down 13% $831M Up 13% Operating Income $22M $117M Down $95M $16M Up $6M Enterprise, Embedded and Semi- Custom Net Revenue $591M $670M Down 12% $441M Up 34% Operating Income $89M $69M Up $20M $68M
Slide 15: Q2 2019 Summary Balance Sheet Items
Q2 2019 SUMMARY BALANCE SHEET ITEMS Q2 2019 Q2 2018 Y/Y Q1 2019 Q/Q Cash, Cash Equivalents & Marketable Securities $1,128M $983M Up $145M $1,194M Down $66M Accounts Receivable, Net $1,333M $1,118M Up $215M $1,241M Up $92M Inventories, Net $1,015M $750M Up $265M $955M Up $60M Total Debt (principal am
Slide 16: Total Cash Balance
TOTAL CASH BALANCE(1) ($ IN MILLIONS) $1,185 $1,194 $1,156 $1,128 $1,045 $1,056 $983 $879 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Used $70 million in Q2’19 to pay off asset backed loan 1. Cash, cash equivalents and marketable securities. 16 | AMD Q2 2019 FINANCIAL RESULTS | JULY 30, 2019
Slide 17: Operating Income and Adjusted EBITDA Trend
OPERATING INCOME AND ADJUSTED EBITDA TREND ($ IN MILLIONS, CALCULATED AS TRAILING TWELVE MONTHS)(1) $803 $737 Operating EBITDA $709 Income $666 $672 $496 $451 $421 $368 $390 $369 $275 $236 $127 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 1. See Appendices for reconciliation 17 | AMD Q2 2019 FINANCIAL
Slide 18: Debt Trend
DEBT TREND (PRINCIPAL AMOUNT, $ IN MILLIONS, GROSS LEVERAGE TREND)(1,2) $1,699 $1,686 $1,685 $1,588 $1,528 $1,363 $1,293 4.6x 3.4x 2.5x 2.2x 1.9x 1.8x 1.9x Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Significant debt reduction 1. See Appendices for reconciliation to Total Debt. 2. Gross Leverage = Cur
Slide 19: AMD Q2'19 Product & Ecosystem Momentum
AMD Q2’19 PRODUCT & ECOSYSTEM MOMENTUM ▪ Ramped production of three leadership 7nm product families across PC, graphics & datacenter ▪ Ryzen 3000 desktop processors, Radeon 5700 series GPUs, 2nd Gen EPYC “Rome” datacenter CPUs (1) ▪ Released “Zen 2” CPU core with up to ~15% instructions per clock up
Slide 20: Q3 2019 and FY 2019 Financial Outlook – Non-GAAP
Q3 2019 AND FY 2019 FINANCIAL OUTLOOK – NON GAAP(1) Q3 2019 FY 2019 ~$1.80 Billion Up mid-single digit Revenue +/- $50 Million percentage y/y Gross Margin % ~43% ~42% Licensing Gain(2) - ~$60 Million Operating Expenses ~$525 Million ~30% Operating Expenses/Revenue % Interest Expense, Taxes and Other
Slide 21: Q2 2019 Summary
Q2 2019 SUMMARY REVENUE GREW CONTINUED Y/Y LAUNCHED NEW EXECUTING TO 20% Q/Q GROSS MARGIN 7NM PRODUCTS LONG-TERM IMPROVEMENT FINANCIAL MODEL 21 | AMD Q2 2019 FINANCIAL RESULTS | JULY 30, 2019
Slide 22: 2019 The Biggest and Best Year in AMD History
2019 THE BIGGEST AND BEST YEAR IN AMD HISTORY 22 | AMD Q2 2019 FINANCIAL RESULTS | JULY 30, 2019
Slide 23: Appendices: Reconciliation of GAAP to Non-GAAP Gross Margin
APPENDICES Reconciliation of GAAP to Non-GAAP Gross Margin (Millions) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 GAAP gross margin $ 571 $ 452 $ 597 $ 652 $ 661 $ 537 $ 521 $ 621 GAAP gross margin % 36% 34% 36% 37% 40% 38% 41% 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) Q2'19 Q2'18 Q1'19 GAAP operating income $ 59 $ 153 $ 38 Stock-based compensation 45 33 41 Loss contingency on legal matter 7 — 5 Non-GAAP operating income $ 111 $ 186 $ 84 Reconciliation of GAAP Operating Inco
Slide 25: Appendices: Net Income and EPS Reconciliation
APPENDICES Reconciliation of GAAP to Non-GAAP Net Income (Loss) / Earnings (Loss) Per Share (Millions, except per share data) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 GAAP net income (loss) / earnings (loss) per share (1) $ 61 $ 0.06 $ (19) $ (0.02) $ 81 $ 0.08 $ 116 $ 0.11 $ 102 $ 0.09 $ 38
Slide 26: Appendices: Share Count Overview
APPENDICES Share Count Overview Shares (millions) (1) Q1'19 Q2'19 Q3'19 FY'19 Actual Actual Estimate Estimate Basic Shares 1,044 1,084 1,093 1,081 Dilutive impact from: Employee Equity Grants (2) 23 25 19 21 75 million share Warrant (3) 27 — — 7 Diluted Shares (without 2026 Convertible Notes) 1,094
Slide 27: Appendices: Total Debt (Net)
APPENDICES Total Debt (Net) (Millions) Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 6.75% Senior Notes due 2019 $ 166 $ 153 $ 153 $ 66 $ 66 $ — $ — 7.50% Senior Notes due 2022 347 347 347 337 337 312 312 7.00% Senior Notes due 2024 311 311 310 310 250 176 176 2.125% Convertible Senior Notes due 2026 80
Slide 28: Endnotes
ENDNOTES Slide 19: AMD "Zen 2" CPU-based system scored an estimated 15% higher than previous generation AMD “Zen” based system using estimated SPECint®_base2006 results. SPEC and SPECint are registered trademarks of the Standard Performance Evaluation Corporation. See www.spec.org. RZ3-34. 28 | AMD
Slide 29: 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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