As the first quarter 2020 earnings period continues, up next is AMD, who has reported their earnings for the first three months of the year. The company, enjoying an accelerating turn-around in its fortunes thanks in big part to its Zen series of CPU architectures and resulting products, has closed the books on one of its best first quarters in years, with the company turning a tidy profit in the process.
For the first quarter of 2020, AMD reported $1.79B in revenue, a staggering 40% jump over the same quarter a year ago. Their best first quarter in almost 10 years saw all of AMD’s metrics improve; along with that revenue AMD’s net income jumped by $146M (over 900%) to $162M, coming in just behind a seasonally strong Q4. Meanwhile gross margins are up as well, with AMD hitting 46%, improving on Q4 and leaping 5 points higher than the year-ago quarter.
|AMD Q1 2020 Financial Results (GAAP)|
|Earnings Per Share||$0.14||$0.15||$0.01|
As always, the flag bearer for AMD is their Computing and Graphics segment, which encompasses their desktop and notebook CPU sales, as well as their GPU sales. That division booked $1.44B in revenue for the quarter, $607M (73%) more than Q1 2020. Accordingly, the segment’s operating income as up significantly as well, going from just $16M a year ago to $262M this year.
|AMD Q1 2020 Computing and Graphics|
AMD doesn’t provide a detailed breakout of information from this segment, but for this quarter they have provided some information on revenue and average selling prices (ASPs). Overall, client CPU sales were quite strong, with AMD recording record quarterly revenue for notebooks thanks in large part to the recent launch of its Renoir Ryzen 4000 APUs. The strength of the segment lead to higher ASPs on a year-over-year basis, though interestingly CPU ASPs dropped a bit over Q4 due to the higher notebook sales.
However, AMD’s graphics division ended up being a bit of a laggard here. GPU ASPs were down on both a yearly and quarterly basis, even though AMD has released numerous new Navi products in the last year. As always, it should be noted that ASPs don’t factor in production costs/profitability, but I am a bit surprised that AMD’s averages aren’t higher given their more conservative pricing strategy. Meanwhile graphics revenue was down on a quarterly basis, though this isn’t unexpected coming off of Q4; and unfortunately, AMD didn’t provide any year-over-year comparison data.
|AMD Q1 2020 Enterprise, Embedded and Semi-Custom|
Meanwhile AMD’s Enterprise, Embedded, and Semi-Custom segment saw a very mixed Q1, with the server CPU + semi-custom reporting group running a loss for the quarter. All told, the segment recorded $348M in revenue, $93M less than Q1’19. As a result the segment dipped into the red, recording an operating loss of $26M.
Breaking down the segment, AMD reported that semi-custom sales have dropped while EPYC processor sales are up, underscoring the unusual nature of the segment. Overall, EPYC sales have improved by “double digit” percentages over the previous quarter, an important development for AMD as it works to rebuild its server market share, but it ultimately wasn’t enough to offset the drop in semi-custom sales. AMD of course continues to be gung-ho on EPYC, while the semi-custom side of the segment should improve once AMD’s console customers start ramping up for their respective tenth-generation console launches.
Looking forward, like other hardware vendors, AMD is attempting the navigate the current coronavirus crisis. The company hasn’t taken any exceptional steps thus far (and is still reporting projections for the full year), but at the same time the pandemic can still potentially impact both supply and demand, and AMD has trimmed their revenue expectations for the second half of the year in response.
As for AMD’s product lineup, the company is still looking forward to releasing new hardware over the rest of the year, furthering its technological lead. Along with the obligatory release of Renoir APUs on the desktop, AMD is reiterating that products based on the Zen 3 CPU and RDNA2 GPU architectures will launch late this year. With that period still several months out – and still at risk of coronavirus-related delays – AMD still isn’t sharing more precise plans than that, but clearly the company is angling to at least start shipping these parts for revenue before the year is out.