AMD Reports Third Quarter 2018 Financial Results

Revenue, gross margin and profitability grew year-over-year for the fifth straight quarter; gross margin expanded to 40 percent

SANTA CLARA, Calif., Oct. 24, 2018 (GLOBE NEWSWIRE) -- AMD (NASDAQ:AMD) today announced revenue for the third quarter of 2018 of $1.65 billion, operating income of $150 million, net income of $102 million and diluted earnings per share of $0.09. On a non-GAAP(1) basis, operating income was $186 million, net income was $150 million and diluted earnings per share was $0.13. 

GAAP Financial Results

  Q3 2018 Q3 2017 Y/Y Q2 2018 Q/Q
Revenue$1.65B$1.58B Up 4%$1.76B Down 6%
Gross margin %40%36% Up 4 pp37% Up 3 pp
Operating expense$511M$452M Up $59M$499M Up $12M
Operating expense / revenue %31%29% Up 2 pp28% Up 3 pp
Operating income$150M$119M Up $31M$153M Down $3M
Net income$102M$61M Up $41M$116M Down $14M
Earnings per share$0.09$0.06 Up $0.03$0.11 Down $0.02

Non-GAAP(1) Financial Results

  Q3 2018 Q3 2017 Y/Y Q2 2018 Q/Q
Revenue$1.65B$1.58B Up 4%$1.76B Down 6%
Gross margin %40%36% Up 4 pp37% Up 3 pp
Operating expense $476M $424M Up $52M $467M Up $9M
Operating expense / revenue %29%27% Up 2 pp27% Up 2 pp
Operating income$186M$148M Up $38M$186M Flat
Net income$150M$100M Up $50M$156M Down $6M
Earnings per share$0.13$0.09 Up $0.04$0.14 Down $0.01

“We delivered our fifth straight quarter of year-over-year revenue and net income growth driven largely by the accelerated adoption of our Ryzen, EPYC and datacenter graphics products,” said Dr. Lisa Su, AMD president and CEO. “Client and server processor sales increased significantly although graphics channel sales were lower in the quarter. Looking forward, we believe we are well positioned for further market share gains as we continue making significant progress towards our long-term financial targets.”

Q3 2018 Results

  • Revenue was $1.65 billion, up 4 percent year-over-year and down 6 percent quarter-over-quarter. The year-over-year increase was driven by higher client revenue in the Computing and Graphics business segment. The sequential decrease was driven by lower graphics revenue in the Computing and Graphics business segment. Third quarter revenue included IP-related revenue, of which $86 million was related to our THATIC joint venture. Third quarter 2017 revenue also included IP-related revenue.
  • Gross margin grew to 40 percent, up 4 percentage points year-over-year, primarily driven by the ramp of new products, including RyzenTM and EPYCTM processors. On a sequential basis, gross margin was up 3 percentage points primarily driven by IP-related revenue and the ramp of new products.  Excluding IP-related revenue and memory and inventory related adjustments, gross margin would have been 2 percentage points lower.
  • On a GAAP basis, operating income was $150 million compared to operating income of $119 million a year ago and $153 million in the prior quarter.
  • Net income was $102 million compared to net income of $61 million a year ago and $116 million in the prior quarter. Diluted earnings per share was $0.09, compared to diluted earnings per share of $0.06 a year ago and $0.11 in the prior quarter.
  • On a non-GAAP basis, operating income was $186 million compared to operating income of $148 million a year ago and $186 million in the prior quarter.
  • Non-GAAP net income was $150 million compared to net income of $100 million a year ago and $156 million in the prior quarter. Non-GAAP diluted earnings per share was $0.13, compared to diluted earnings per share of $0.09 a year ago and $0.14 in the prior quarter.
  • Cash, cash equivalents and marketable securities were $1.06 billion at the end of the quarter. 
  • Cash flow from operating activities was $95 million as compared to $66 million a year ago. Free cash flow was $62 million, up from $32 million a year ago.

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