Today, AMD has released its Q4 2019 financial results, meeting their goal of $2.1 billion in revenue. When looking at GAAP figures, their net income (revenue minus expenses) has risen from $38 million in Q4 2018 to $170 million a year later; this is largely thanks to much higher revenue and much higher gross margin. Though AMD did not beat their expectations like Intel (AMD almost never does), the results certainly are looking good for AMD.
Thanks to Zen 2 and Navi processors, AMD’s 2019 was a bit better than 2018. Revenue only went up by about 4%, but gross margin is up from 38% to 43%, which is a huge improvement for the company. Low margins have plagued AMD for years as they had the reputation of being a “budget brand”, but this seems to be changing; they are clearly trying to dispel this reputation by launching high end, several hundred dollar CPUs like the 3950X and the new Threadripper 3000 CPUs. Ryzen and Threadripper (and Radeon, to a lesser extent) must be selling very well, given that AMD’s “Computing and Graphics” segment was up 69% compared to 2018.
Meanwhile, the “Enterprise, Embedded and Semi-Custom” segment is also up against 2018, but only by 7%, and it’s actually down since last quarter. AMD explains that this is to do ever shrinking console sales but has been offset by strong Epyc server CPU sales. This is very similar to what was reported in Q3 of last year. Unfortunately, since these figures are all reported in this one segment, it’s hard to tell if AMD is actually being honest or is somewhat exaggerating how well Epyc is selling; it is, however, very easy to believe that console sales are lagging given that the Xbox Series X and PS5 are just right around the corner.
Finally, earning per share or EPS is also down, which is unusual given that AMD is making more money, but this seems to be due to a huge debt repayment of over $500 million. While not great for investors in the short term, this is certainly a rational move in the long term.
For Q1 2020, AMD expects $1.8 billion in revenue, much higher than their horrible Q1 of last year and even higher than their unusually good Q1 of 2018. Though AMD doesn’t specify why exactly this will be (they merely cite “Ryzen, Epyc, and Radeon product sales”), it’s likely down to Ryzen 4000 APU laptop sales and further Epyc sales. As for the rest of 2020, AMD is expected to launch Zen 3 based Ryzen 4000 desktop CPUs, Zen 3 based Epyc server CPUs, and Navi 20 based Radeon RX GPUs, all of which are already highly anticipated. AMD certainly has high expectations to live up to this year.
We are working on a more in depth analysis of AMD’s earnings in the wake of AMD’s financial Q and A (abridged summary here). You can also see AMD’s slide deck here via Anandtech.
