AMD: “Vega GPU architecture is on track to launch in Q2”

Published: 1st May 2017, 19:27 GMT | Comments

Press Release

SUNNYVALE, CA — (Marketwired) — 05/01/17 — AMD (NASDAQ: AMD) today announced revenue for the first quarter of 2017 of $984 million, operating loss of $29 million, and net loss of $73 million, or $0.08 per share. On a non-GAAP(1) basis, operating loss was $6 million, net loss was $38 million, and loss per share was $0.04.

GAAP Financial Results
Q1-17Q4-16Q1-16
Revenue$984M$1.11B$832M
Operating loss$(29)M$(3)M$(68)M
Net loss$(73)M$(51)M$(109)M
Loss per share$(0.08)$(0.06)$(0.14)
Non-GAAP Financial Results(1)
Q1-17Q4-16Q1-16
Revenue$984M$1.11B$832M
Operating income (loss)$(6)M$26M$(55)M
Net loss$(38)M$(8)M$(96)M
Loss per share$(0.04)$(0.01)$(0.12)

“We achieved 18 percent year-over-year revenue growth driven by strong demand for our high performance Ryzen CPUs as well as graphics processors,” said Dr. Lisa Su, AMD president and CEO. “We are positioned for solid revenue growth and margin expansion opportunities across the business in the year ahead as we bring innovation, performance, and choice to an expanding set of markets.”

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(1) 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.

Quarterly Financial Segment Summary

  • Computing and Graphics segment revenue was $593 million, up 29 percent year-over-year and down 1 percent sequentially. The year-over-year increase was driven primarily by higher desktop and graphics processor sales. The sequential decrease was primarily due to a decrease in mobile and graphics processor sales largely offset by initial revenue from high performance Ryzen desktop processors.
    • Operating loss was $15 million, compared to operating losses of $70 million in Q1 2016 and $21 million in Q4 2016. The year-over-year improvement was driven primarily by higher revenue. The sequential improvement was driven primarily by lower operating expenses.
    • Client average selling price (ASP) increased year-over-year and sequentially driven by desktop processor ASP.
    • GPU ASP increased year-over-year and sequentially due primarily to higher desktop GPU ASP.
  • Enterprise, Embedded, and Semi-Custom segment revenue was $391 million, up 5 percent year-over-year driven primarily by higher semi-custom SoC sales. Sequentially, revenue decreased 23 percent primarily due to seasonally lower sales of semi-custom SoCs.
    • Operating income was $9 million, compared to an operating income of $16 million in Q1 2016 and an operating income of $47 million in Q4 2016. The year-over-year decrease was primarily due to higher server related R&D investments, partially offset by an increase in the THATIC JV licensing gain. The sequential decrease was primarily due to seasonally lower sales of semi-custom SoCs.
  • All Other operating loss was $23 million compared with operating losses of $14 million in Q1 2016 and $29 million in Q4 2016. The year-over-year and sequential differences in operating loss were related to stock-based compensation charges.

Q1 2017 Highlights

  • AMD launched its first high-performance x86 Ryzen desktop processor based on the entirely new “Zen” core microarchitecture, bringing leadership multi-core performance to PC gamers, creators, and hardware enthusiasts worldwide.
    • AMD Ryzen 7: These 8-core, 16-thread processors bring innovation and choice back to the enthusiast PC market and include the world’s highest performing, and lowest powered 8-core desktop PC processors.
    • AMD Ryzen 5: Mainstream processors designed to bring innovation to the high-volume, sub-$300 CPU market with a disruptive price-to-performance ratio for gamers and creators.
  • AMD shared new details about its upcoming server and high-end graphics solutions:
    • Launching in Q2 2017, AMD’s high-performance x86 server CPU, codenamed “Naples”, exceeds today’s top competitive offering on critical parameters, with 45 percent more cores, 60 percent more input / output capacity (I/O), and 122 percent more memory bandwidth. AMD also announced a collaboration with Microsoft to incorporate the cloud delivery features of “Naples” with Microsoft’s “Project Olympus” server platform.
    • 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.
  • AMD further strengthened its consumer and professional graphics offerings with new hardware and software solutions for gamers and creators:
    • Introduced the Radeon™ RX 500 series line of GPUs based on a refined, second-generation “Polaris” architecture to deliver an up to 57 percent performance improvement and higher clock speeds for modern games, smooth VR experiences, and the latest display technologies.
    • Announced the Radeon Pro Duo, the first “Polaris” architecture based dual-GPU graphics card, designed to excel at media and entertainment, broadcast, design, and manufacturing workflows. Slated for availability in late May 2017, the Radeon Pro Duo delivers up to 2 times faster performance than the closest competing professional graphics card on select professional applications and increased VR performance over single GPU solutions by up to 50%.
    • Demonstrated its continued focus on ensuring consumers and enterprise users have the software tools they need to get the most from their Radeon and Radeon Pro GPUs with regular updates to its Radeon Software Crimson ReLive Edition and Radeon Pro Software Enterprise Edition drivers, incorporating new features, performance and stability improvements.
  • AMD continued its close collaboration with game developers to help them leverage the full potential of AMD compute and graphics solutions and deliver breakthrough experiences for gamers.
    • AMD announced, in conjunction with game developers Stardock and Oxide Games, the completion of initial optimization of “Ashes of the Singularity” for AMD Ryzen desktop processors resulting in enhanced game play and an up to 30 percent increase in “Average Frames Per Second All Batches” in-game benchmark performance, placing the AMD Ryzen 7 1800X in elite performance levels for the game.
    • AMD and Bethesda Softworks formed a multi-title strategic partnership to rapidly advance game technology development, including harnessing the full potential of low-level APIs and maximizing the capabilities of the computing and graphics power of AMD’s multicore Ryzen CPUs, Radeon GPUs, and AMD server solutions across Bethesda’s existing franchises.
    • AMD unveiled that its “Vega”-architecture based GPUs have been selected to power LiquidSky’s cloud gaming platform, enabling gamers to enjoy the power of “Vega” from virtually anywhere, and affordably through LiquidSky’s low-cost and free subscription models.
  • Microsoft disclosed new information about its AMD-based “Project Scorpio” console. The new premium game console is expected to be available for holiday 2017 and will be powered by a highly-customized AMD SoC.

Current Outlook
AMD’s outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.

For the second quarter of 2017, AMD expects revenue to increase approximately 17 percent sequentially, plus or minus 3 percent. The midpoint of guidance would result in second quarter 2017 revenue increasing approximately 12 percent year-over-year. For additional details regarding AMD’s results and outlook please see the CFO commentary posted at quarterlyearnings.amd.com.

AMD Teleconference
AMD will hold a conference call for the financial community at 2 p.m. PDT (5 p.m. EDT) today to discuss its first quarter 2017 financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com. The webcast will be available for 12 months after the conference call.

Reconciliation of GAAP to Non-GAAP Gross Margin
(Millions except percentages)Q1-17Q4-16Q1-16
GAAP Gross Margin$331$351$269
GAAP Gross Margin %34%32%32%
Stock-based compensation11
Non-GAAP Gross Margin331352270
Non-GAAP Gross Margin %34%32%32%
Reconciliation of GAAP Operating Loss to Non-GAAP Operating Income (Loss)
(Millions)Q1-17Q4-16Q1-16
GAAP operating loss$(29)$(3)$(68)
Restructuring and other special charges, net(3)
Stock-based compensation232916
Non-GAAP operating income (loss)(6)26(55)
Reconciliation of GAAP Net Loss/Loss per Share to Non-GAAP Net Loss/Loss per Share
(Millions except per share amounts)Q1-17Q4-16Q1-16
GAAP net loss /loss per share$(73)$(0.08)$(51)$(0.06)$(109)$(0.14)
Loss on debt redemption470.01
Non-cash interest expense related to convertible debt60.0150.01
Restructuring and other special charges, net(3)
Stock-based compensation230.02290.03160.02
Equity loss in investee22
Non-GAAP net loss/ loss per share$(38)$(0.04)$(8)$(0.01)$(96)$(0.12)

1. In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP earnings (loss) per share. These non-GAAP financial measures reflect certain adjustments as presented in the tables in this earnings press release. AMD also provided adjusted EBITDA and non-GAAP free cash flow as supplemental measures of its performance. These items are defined in the footnotes to the selected corporate data tables provided at the end of this earnings press release. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. Refer to the data tables at the end of this earnings press release.

ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts and percentages)
Three Months Ended
April 1,
2017
December 31,
2016
March 26,
2016
Net revenue$984$1,106$832
Cost of sales653755563
Gross margin331351269
Gross margin %34%32%32%
Research and development266264242
Marketing, general and administrative121121105
Restructuring and other special charges, net(3)
Licensing gain(27)(31)(7)
Operating loss(29)(3)(68)
Interest expense(32)(34)(40)
Other expense, net(5)(7)
Loss before equity loss and income taxes(66)(44)(108)
Provision for income taxes551
Equity loss in investee(2)(2)
Net loss$(73)$(51)$(109)
Net loss per share
Basic$(0.08)$(0.06)$(0.14)
Diluted$(0.08)$(0.06)$(0.14)
Shares used in per share calculation
Basic939931793
Diluted939931793
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Millions)
Three Months Ended
April 1,
2017
December 31,
2016
March 26,
2016
Total comprehensive loss$(72)$(53)$(107)
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions)
April 1,
2017
December 31,
2016
Assets
Current assets:
Cash and cash equivalents$722$1,264
Marketable securities221
Accounts receivable, net494311
Inventories, net839751
Prepayment and other receivables – related parties3132
Prepaid expenses7363
Other current assets118109
Total current assets2,4982,530
Property, plant and equipment, net180164
Goodwill289289
Investment: equity method5859
Other assets274279
Total Assets$3,299$3,321
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$529$440
Payables to related parties329383
Accrued liabilities385391
Other current liabilities6769
Deferred income on shipments to distributors6263
Total current liabilities1,3721,346
Long-term debt, net1,4081,435
Other long-term liabilities110124
Stockholders’ equity:
Capital stock:
Common stock, par value99
Additional paid-in capital8,3798,334
Treasury stock, at cost(99)(119)
Accumulated deficit(7,876)(7,803)
Accumulated other comprehensive loss(4)(5)
Total Stockholders’ equity409416
Total Liabilities and Stockholders’ Equity$3,299$3,321
ADVANCED MICRO DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions)
Three Months Ended
April 1,
2017
Cash flows from operating activities:
Net loss$(73)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization34
Stock-based compensation expense23
Non-cash interest expense9
Loss on debt redemption4
Other5
Changes in operating assets and liabilities:
Accounts receivable(183)
Inventories(88)
Prepayment and other receivables – related parties1
Prepaid expenses and other assets(30)
Payables to related parties(54)
Accounts payable, accrued liabilities and other53
Net cash used in operating activities$(299)
Cash flows from investing activities:
Purchases of property, plant and equipment(23)
Purchases of available-for-sale securities(221)
Other(2)
Net cash used in investing activities$(246)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based compensation equity plans8
Other(5)
Net cash provided by financing activities$3
Net decrease in cash and cash equivalents(542)
Cash and cash equivalents at beginning of period$1,264
Cash and cash equivalents at end of period$722
ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Millions)
Three Months Ended
Segment and Category InformationApril 1,
2017
December 31,
2016
March 26,
2016
Computing and Graphics (1)
Net revenue$593$600$460
Operating loss$(15)$(21)$(70)
Enterprise, Embedded and Semi-Custom (2)
Net revenue$391$506$372
Operating income$9$47$16
All Other (3)
Net revenue
Operating loss$(23)$(29)$(14)
Total
Net revenue$984$1,106$832
Operating loss$(29)$(3)$(68)
Other Data
Depreciation and amortization$34$34$33
Capital expenditures (4)$23$21$26
Adjusted EBITDA (5)$28$60$(22)
Cash, cash equivalents and marketable securities$943$1,264$716
Non-GAAP free cash flow (6)$(322)$167$(68)
Total assets$3,299$3,321$2,981
Total debt$1,408$1,435$2,236
See footnotes on the next page

(1) The Computing and Graphics segment primarily includes desktop and notebook processors and chipsets, discrete graphics processing units (GPUs) and professional graphics.
(2) The Enterprise, Embedded and Semi-Custom segment primarily includes server and embedded processors, semi-custom System-on-Chip (SoC) products, development services, technology for game consoles. The Company also licenses portions of its intellectual property portfolio.
(3) All Other category primarily includes certain expenses and credits that are not allocated to any of the operating segments. Also included in this category are stock-based compensation expense and restructuring and other special charges, net.
(4) Starting in Q1 2017, the Company classifies production mask sets as property, plant and equipment.
(5) Reconciliation of GAAP Operating Loss to Adjusted EBITDA*

 

Three Months Ended
April 1,
2017
December 31,
2016
March 26,
2016
GAAP operating loss$(29)$(3)$(68)
Restructuring and other special charges, net(3)
Stock-based compensation232916
Depreciation and amortization343433
Adjusted EBITDA$28$60$(22)
(6)Non-GAAP Free Cash Flow Reconciliation**
Three Months Ended
April 1,
2017
December 31,
2016
March 26,
2016
GAAP net cash provided by (used in) operating activities$(299)$188$(42)
Purchases of property, plant and equipment(23)(21)(26)
Non-GAAP free cash flow$(322)$167$(68)

* The Company presents “Adjusted EBITDA” as a supplemental measure of its performance. Adjusted EBITDA for the Company is determined by adjusting operating income (loss) for depreciation and amortization, stock-based compensation expense and restructuring and other special charges, net. The Company calculates and communicates Adjusted EBITDA because the Company’s management believes it is of importance to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds. In addition, the Company presents Adjusted EBITDA because it believes this measure assists investors in comparing its performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company’s calculation of Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view Adjusted EBITDA as an alternative to the GAAP operating measure of operating income (loss) or GAAP liquidity measures of cash flows from operating, investing and financing activities. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows.

** The Company also presents non-GAAP free cash flow as a supplemental measure of its performance. Non-GAAP free cash flow is determined by adjusting GAAP net cash provided by (used in) operating activities for capital expenditures. The Company calculates and communicates non-GAAP free cash flow in the financial earnings press release because the Company’s management believes it is of importance to investors to understand the nature of these cash flows. The Company’s calculation of non-GAAP free cash flow may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view non-GAAP free cash flow as an alternative to GAAP liquidity measures of cash flows from operating activities. The Company has provided reconciliations within the earnings press release of these non-GAAP financial measures to the most directly comparable GAAP financial measures.


Press Release

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