News AMD meets EPS, misses on revenue

[Hitman928]

TL;dr
{
Non-GAAP EPS of $0.08, matches expectations.

Revenue of $1.42B, $1.44B was expected. Revenue from semi-custom business and consumer GPU sales down, causing lower revenue. Strong Ryzen and Epyc sales offset much of the missing revenue as well as some data center GPU growth.

Projected high single digit revenue growth for 2019.
}

More details. . .

https://seekingalpha.com/pr/17395264-amd-reports-fourth-quarter-annual-2018-financial-results

For full year 2019, AMD expects high single digit percentage revenue growth driven by Ryzen, EPYC and Radeon datacenter GPU product sales

Developing. . .

 

[Hitman928]

Wafer Supply Agreement Update
Today AMD announced it entered into a seventh amendment to its wafer supply agreement with GLOBALFOUNDRIES Inc. (GF). GF continues to be a long-term strategic partner to AMD for the 12nm node and above and the amendment establishes purchase commitments and pricing at 12nm and above for the years 2019 through 2021. The amendment provides AMD full flexibility for wafer purchases from any foundry at the 7nm node and beyond without any one-time payments or royalties.

https://seekingalpha.com/pr/17395264-amd-reports-fourth-quarter-annual-2018-financial-results

• Computing and Graphics segment revenue was $986 million, up 9 percent year-over-year and 5 percent compared to the prior quarter driven by strong sales of Ryzen processors.
  
  • Operating income was $115 million compared to $33 million a year ago and $100 million in the prior quarter. The year-over-year improvement was primarily driven by the ramp of Ryzen processors. The improvement compared to the prior quarter was primarily driven by Ryzen processors and datacenter GPUs, which more than offset the benefit of IP-related revenue in the third quarter of 2018.
  • Client processor average selling price (ASP) was up year-over-year and sequentially driven by Ryzen processor sales.
  • GPU ASP was up year-over-year and sequentially primarily due to higher datacenter GPU sales.
• Enterprise, Embedded and Semi-Custom segment revenue was $433 million, flat year-over-year. Revenue declined 39 percent compared to the prior quarter driven by seasonally lower semi-custom sales, partially offset by strong EPYC datacenter processor sales.
  
  • Operating loss was $6 million compared to an operating loss of $13 million a year ago and operating income of $86 million in the prior quarter. The year-over-year improvement was primarily due to higher EPYC datacenter processor revenue partially offset by lower semi-custom sales and server-related investments. The decrease compared to the prior quarter was due to seasonally lower semi-custom sales, partially offset by higher EPYC datacenter processor revenue.

 

[linkgoron]

How did they miss on revenue? Their expectations were $1.45B +-50M, which is inline with their revenue results. $1.42B is inline with their expectations.

For the fourth quarter of 2018, AMD expects revenue to be approximately $1.45 billion, plus or minus $50 million

 

[Hitman928]

How did they miss on revenue? Their expectations were $1.45B +-50M, which is inline with their revenue results. $1.42B is inline with their expectations.

Yes, in line with AMD's guidance but from an investor/market perspective they go off of "consensus" analyst expectation which was revenue of $1.44B.

 

[Markfw]

Yes, in line with AMD's guidance but from an investor/market perspective they go off of "consensus" analyst expectation which was revenue of $1.44B.

OK, how is it that 1.45 is not bigger than 1.44 ? That would exceed expectations.

Anyway, it was a great report seeing as EPYC is not really in the picture until it ships.

 

[Hitman928]

OK, how is it that 1.45 is not bigger than 1.44 ? That would exceed expectations.

Anyway, it was a great report seeing as EPYC is not really in the picture until it ships.

AMD predicted $1.45B + or - $50M at the end of 3Q2018.
Leading up to this earnings report for 4Q2018, analysts gave a consensus estimate of $1.44B quarterly revenue.

AMD made $1.42B, slightly lower than analyst consensus but still within their projected guidance.

 

[Hitman928]

Some more tidbits before the full earnings call comes out:

Importantly, we more than doubled our EPYC processor shipments sequentially and delivered record GPU datacenter revenue in the quarter.

AMD forecasts 2019 sales to grow in the "high single digit percentage" range. Wall Street had forecast 2019 sales of $6.88 billion, which would represent year-over-year revenue growth of 6 percent.

AMD also expects adjusted gross margin to be more than 41 percent for the full year.

I think these quotes are the main reason why AMD popped after hours despite missing on revenue (also they already dropped on intel and Nvidia news so they had bad news priced in already). Whereas Intel and Nvidia gave lowered revenue forecasts for 2019 and mentioned a slowing Chinese economy, AMD gave a higher than expected revenue forecast with increased adoption rates in the Enterprise sector and no mention (so far) of a slowing China economy having an impact.

 

[Markfw]

Sorry, I thought I read it correctly, and obviously not. Anyway, I guess they did OK.

 

[trivik12]

If they are going to take major marketshare from Intel why such weak guidance. Only 6% Topline growth for 2019 means their bottom line wont grow much in 2019. Its already trading really expensive.

 

[piesquared]

Excellent results and guidance from AMD. Vega seems to be doing extremely well in the data center. There have been rumbles behind the scene that ROCm is a very good platform and that is likely a big contributor to the gaining popularity of Radeon Pro and Instict lines. That will likely continue as the 7nm Radeon products are beasts. And next Rome, Matisse and Castle Peak just around the corner, while Picasso is continuing AMD's leadership in the mobile space. Quite a turn around from AMD.
All due credit to Lisa Su and her team (bonus points for Mark Papermaster), but credit should also be given to where this all started, and who hired Lisa Su in the first place. The results we are seeing today started from Rory Reed's position at the helm. The Semi Custom business began under his leadership, which gave them the fighting chance. He had the vision to get this all started and handed the reigns off to Lisa Su when she was ready and when the time was right. Excellent execution by AMD and the AMD board.
2019 is looking real good for them. Momentum is with them while both their competitors are not looking very rosy.

 

[CHADBOGA]

while Picasso is continuing AMD's leadership in the mobile space.

Shouldn't "leadership" be reflected in sales numbers?

 

[Tuna-Fish]

If they are going to take major marketshare from Intel why such weak guidance.

Zen 2 Epycs will not be out in volume during next quarter. I'd expect the major growth in datacenter to come from those, so that's just going to have to wait for Q2/Q3.

 

[piesquared]

Shouldn't "leadership" be reflected in sales numbers?

Is that a real question?

 

[CHADBOGA]

Is that a real question?

Was Itanium or Larabee a leading product, or was it a dud?

What kind of sales numbers did it have?

 

[Furious_Styles]

Eh nothing to write home about. The crypto bubble bursting still has lingering effects for both amd and nvidia it seems.

 

[Phynaz]

Outstanding job by the CPU team.

RTG on the other hand is a complete dumpster fire.

 

[zinfamous]

This is actually really surprising considering what we got from Intel, NVidia, and the rest of the silicon industry, really. This is actually really good for AMD, IMO. They remain relatively neutral, with decent projections, and everyone else is talking about a bleak end to the year.

 

[trivik12]

Zen 2 Epycs will not be out in volume during next quarter. I'd expect the major growth in datacenter to come from those, so that's just going to have to wait for Q2/Q3.

6% growth aint that much. if intel loses 10% of datacenter business then AMD should show significant increase in Top line. Plus cloud and data center is ever expanding market. how can they justify a 50+ P/E with a single digit top line growth.

 

[scannall]

If they are going to take major marketshare from Intel why such weak guidance. Only 6% Topline growth for 2019 means their bottom line wont grow much in 2019. Its already trading really expensive.

Because under-promising and over delivering works much better than the other way around.

 

[piesquared]

Was Itanium or Larabee a leading product, or was it a dud?

What kind of sales numbers did it have?

lol.

 

[exquisitechar]

Looking at the poor Q1 guidance and then the full year guidance, it seems that there will be massive growth in 2H 2019. The WSA update is great news.

 

[PotatoWithEarsOnSide]

If they are going to take major marketshare from Intel why such weak guidance. Only 6% Topline growth for 2019 means their bottom line wont grow much in 2019. Its already trading really expensive.

Because those products won't be available to buy until further into the year than previous generations, thus less time to chalk up increased revenues.

 

[StinkyPinky]

Huh, was just reading about AMD and Nvidia and just noticed that Lisa Su is the niece of the Nvidia CEO. That would make an interesting family gathering.

 

[linkgoron]

Huh, was just reading about AMD and Nvidia and just noticed that Lisa Su is the niece of the Nvidia CEO. That would make an interesting family gathering.

Not true per her Wikipedia page. According to an article in Chosun, she stated that it's not true (Korean).

There are two well-known characters in Silicon Valley as Taiwanese CEOs. NVIDIA founder and CEO Jensen Huang, and Lisa Su. The Taiwanese media reported that the two were a distant relative, but she dismissed it as "not true."

 

[NTMBK]

Shouldn't "leadership" be reflected in sales numbers?

They didn't specify what category they were leading in- could be "highest power consumption"