There was a lot to be bullish about in AMD's Q1 2017 financials, published today amidst plenty of market attention. The quarter, which includes Ryzen's launch month, was by some expected to be a major turn-around in their CPU division; an expectation which was largely priced in to their peak price above $14 a share this month. Unfortunately the markets are a harsh mistress, and analysts concerns of tighter margins in the future saw the share price tumble to $10.30 (-24.23%), their lowest level since January.
AMD Q1 2017 Results
- Revenue of $984 million was up 18 percent year-over-year, driven by higher revenue in both the Computing and Graphics and Enterprise, Embedded, and Semi-Custom business segments. Revenue was down 11 percent sequentially, due primarily to seasonality in both segments. However, Computing and Graphics segment revenue decline was better than seasonal due to the initial sales from high performance Ryzen desktop processors.
- On a GAAP basis, gross margin was 34 percent, up 2 percentage points year-over-year and sequentially due to a higher percentage of revenue from the Computing and Graphics segment, as well as a richer product mix within that segment. Operating loss of $29 million compared to operating losses of $68 million a year ago and $3 million in the prior quarter. Net loss of $73 million compared to net losses of $109 million a year ago and $51 million in the prior quarter. Loss per share of $0.08 compared to a loss per share of $0.14 a year ago and a loss per share of $0.06 in the prior quarter.
- On a non-GAAP basis, gross margin was 34 percent, up 2 percentage points year-over-year and sequentially. Operating loss of $6 million compared to an operating loss of $55 million a year ago and operating income of $26 million in the prior quarter. Net loss of $38 million compared to net losses of $96 million a year ago and $8 million in the prior quarter. Loss per share of $0.04 compared to a loss per share of $0.12 a year ago and a loss per share of $0.01 in the prior quarter.
- Cash, cash equivalents, and marketable securities were $943 million at the end of the quarter, down $321 million from the end of the prior quarter primarily due to the timing of sales and cash collections, debt interest payments, and increased inventory.
- Revenue of $984 million was up 18 percent year-over-year, driven by higher revenue in both the Computing and Graphics and Enterprise, Embedded, and Semi-Custom business segments. Revenue was down 11 percent sequentially, due primarily to seasonality in both segments. However, Computing and Graphics segment revenue decline was better than seasonal due to the initial sales from high performance Ryzen desktop processors.
- On a GAAP basis, gross margin was 34 percent, up 2 percentage points year-over-year and sequentially due to a higher percentage of revenue from the Computing and Graphics segment, as well as a richer product mix within that segment. Operating loss of $29 million compared to operating losses of $68 million a year ago and $3 million in the prior quarter. Net loss of $73 million compared to net losses of $109 million a year ago and $51 million in the prior quarter. Loss per share of $0.08 compared to a loss per share of $0.14 a year ago and a loss per share of $0.06 in the prior quarter.
- On a non-GAAP basis, gross margin was 34 percent, up 2 percentage points year-over-year and sequentially. Operating loss of $6 million compared to an operating loss of $55 million a year ago and operating income of $26 million in the prior quarter. Net loss of $38 million compared to net losses of $96 million a year ago and $8 million in the prior quarter. Loss per share of $0.04 compared to a loss per share of $0.12 a year ago and a loss per share of $0.01 in the prior quarter.
- Cash, cash equivalents, and marketable securities were $943 million at the end of the quarter, down $321 million from the end of the prior quarter primarily due to the timing of sales and cash collections, debt interest payments, and increased inventory.
The good news for AMD is that Revenue and Margins were up in Q1 2017 compared to the same period last year, no-doubt buoyed by the launch of Ryzen 7 CPUs. Operating loss is also down substantially, but the seasonality of the quarter take some of the lustre off when compared with the last quarter of 2016. It's important to note that Ryzen 5 CPU sales aren't significantly factored in to these figures, and these mainstream CPUs will instead first really make themselves known in the Q2 2017 results.
The following data from PassMark is currently doing the rounds showing a small narrowing of the gulf in x86 desktop CPU market share between Intel and AMD, but its applicability is being disputed. Nonetheless, any indication of a reversal of Intel's dominance will be seen as positive news by the Red Team.
Looking ahead, AMD CEO Dr. Lisa Su confirmed that the upcoming Vega GPU is on track for Q2 2017, stating:
"AMD's "Vega" GPU architecture is on track to launch in Q2, and has been designed from scratch to address the most data- and visually-intensive next-generation workloads with key architecture advancements including: a differentiated memory subsystem, next-generation geometry pipeline, new compute engine, and a new pixel engine."
Furthermore, rumours persist of a HEDT competitor to Intel's X99 (and expected X299), which may also be announced during Computex2017 at the end of the month.
Of course, the short-term market performance of AMD shouldn't be a factor in your day-to-day purchasing decisions, but it makes for interesting reading nonetheless.
Additional Information:
Dr. Lisa Su's Vega statement @ TechPowerUp
AMD Results Market Reaction @ MarketWatch
SOURCE AMD Q1 2017 Financial Results (Press Release)
