AMD Releases Q1 2017 Earnings, Confirms Vega and Naples Still On-Track for This Quarter
by Ryan Smith on May 2, 2017 7:00 AM EST- Posted in
- CPUs
- AMD
- GPUs
- Financial Results
AMD’s Q1 earnings are in, capping off a very important quarter for the company. For the first quarter of the year, AMD booked $984 million in revenue, a sizable 18% jump over Q1 last year. This revenue increase was enough to narrow the company’s losses, but not to wipe them out entirely. On a GAAP basis the company lost $73M for the quarter, leading to an overall loss of $0.08 per share. Q1 is also a relatively weak quarter for technology companies in general, and AMD is no exception, with revenue down and losses up slightly compared to their revenue-strong fourth quarter of 2016.
March of course saw the launch of their first CPUs based on the Zen architecture, kicking off AMD’s big comeback into the CPU space that has long been their core competency and biggest breadwinner. The Ryzen 7 launch in turn isn’t meant to turn AMD’s fortunes around overnight – especially when it was only on retail shelves for one month of the quarter – but it’s the start of something bigger for AMD. The impending launch of Naples – which AMD has reiterated is on track for this quarter – will be the second part of this turnaround.
| AMD Q1 2017 Financial Results (GAAP) | |||||
| Q1'2017 | Q4'2016 | Q1'2016 | |||
| Revenue | $948M | $1110M | $832M | ||
| Gross Margin | 34% | 32% | 32% | ||
| Operating Income | -$29M | -$3M | -$68M | ||
| Net Income | -$73M | -$51M | -$109M | ||
| Earnings Per Share | -$0.08 | -$0.06 | -$0.14 | ||
One bit of good news here is that AMD’s gross margin is up, and is now at 34%. AMD has structured their business to be able to operate with margins in the 30% range, but 35% has long been considered the soft floor for profitability, which means AMD is getting close to that. AMD’s cash flow is a bit less rosy though; the company has $943M in cash and short-term investments as of the end of Q1’17, versus $1.26B in the prior quarter. On an overall basis, AMD’s asset value is largely unchanged, with the difference in cash being offset by an increase in the company’s inventory and accounts receivable.
AMD’s non-GAAP results, which the company reports as a means to better show the state of the core business, show similar results. Non-GAAP results show a smaller loss overall, but the company is still in the red on operating income and net income. There is no single large factor this time around hurting GAAP results – AMD isn’t taking any large write-offs or the like – but rather it’s a number of smaller items, including the cost of employee stock-based compensation and charges related to AMD’s $1.41B in long-term debt.
| AMD Q1 2017 Financial Results (Non-GAAP) | |||||
| Q1'2017 | Q4'2016 | Q1'2016 | |||
| Revenue | $984 | $1110M | $832M | ||
| Gross Margin | 34% | 32% | 32% | ||
| Operating Income | -$6M | $26M | -$55M | ||
| Net Income | -$38M | -$8M | -$96M | ||
| Earnings Per Share | -$0.04 | -$0.01 | -$0.12 | ||
Breaking results down by segments, AMD’s situation in Q1’17 was fairly similar to past quarters. The Computing and Graphics segment is still the largest part of AMD’s two divisions, and outside of overall stock-based compensation, is still the division losing AMD money. Overall the Computing division booked $593M in revenue for the quarter, which is up 29% from Q1’16 and in fact is barely down from the always-strong Q4. The operating loss for the quarter was $15M, down significantly from Q1’16’s $70M loss, and even still better than Q4’16’s $21M loss.
The biggest factor here, of course, is Ryzen. With its high prices compared to AMD’s past desktop processors, it has been a big part in increasing AMD’s overall average selling price both on a quarterly and yearly basis. Similarly, GPU ASPs were up as well.
| AMD Q1 2017 Computing and Graphics | |||||
| Q1'2017 | Q4'2016 | Q1'2016 | |||
| Revenue | $593M | $600M | $460M | ||
| Operating Income | -$15M | -$21M | -$70M | ||
Meanwhile AMD’s Enterprise, Embedded, and Semi-Custom segment continued to stay in the black for the quarter, but revenue did drop from the previous quarter as holiday console sales tapered off. Revenue for the quarter was $391M, up slightly from the $372M of Q1’16, while the operating income was $9M, versus last year’s $16M. Otherwise the All Other segment booked a $23M loss due to the aforementioned stock-based compensation.
| AMD Q1 2017 Enterprise, Embedded, and Semi-Custom | |||||
| Q1'2017 | Q4'2016 | Q1'2016 | |||
| Revenue | $391M | $506M | $372M | ||
| Operating Income | $9M | $47M | $16M | ||
Looking towards the future, AMD a 17% revenue increase for Q2, while gross margins are expected to dip slightly to 33%. Besides enjoying a full quarter of Ryzen sales, AMD has once again confirmed that they will be launching both the Naples server CPU and the Vega GPU architecture in this quarter. Both are high-end, high-profit products that should significantly help AMD’s bottom line if they perform as expected. Though even with the Q2 launch, AMD won’t enjoy the full benefits of those launches until Q3 when they have further ramped up and collect revenue for those products over the whole quarter.
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mapesdhs - Thursday, May 4, 2017 - link
Check TheJian's past posts, he's more aware of most than non-gaming issues (I find his replies are some of the ones actually worth reading).Fact is, reviews did make a lot of the poor showing of Gen1 in gaming, and no amount of AMD or anyone else saying well it's not really meant for that (yet) is going to bring people back who've already decided to buy Intel instead. Nuanced factors such as having more than high enough frame rates anyway, or it being a non-issue at higher resolutions, are lost on most people; a great many people don't read these articles in full, they jump straight to the conclusions page, and there in many reviews one will find, ok so it's good for pro tasks, producitivity and media, but bummer about the gaming! Oh the gaming! They do ham it up a bit.
He's also absolutely right about the mbd/BIOS issues, it's why I decided not to buy a Ryzen system yet (I was on the verge of getting a 1700X, but got tired of trying to obtain info about which mbds actually existed, vendors were listing models that did not exist on manufacturer web sites, and forums were full of moaning about BIOS problems, especially RAM, the very thing that would help present sensible performance).
Lastly, AMD should have been open from the beginning about how the use of fast memory is important for Gen1 performance, though given the launch timing that might have highlighted the mbd/BIOS issues even more. Better that though than reviewers finding out on their own about CCX functionality, etc., as it all makes entry level and midrange RAM look horrible for Ryzen, which increases the cost of a system that has RAM fast enough to properly exploit what the chip can do.
All of which makes me wonder, why did AMD launch the chip when they did? What was on the cards in terms of competition that meant their waiting another month or two couldn't be tolerated?
Or was it more about just getting the thing out to help the perception of their financial position? Beats me.
Ian.
nirolf - Wednesday, May 3, 2017 - link
Full quarter you say? Have you read the article?"The Ryzen 7 launch in turn isn’t meant to turn AMD’s fortunes around overnight – especially when it was only on retail shelves for one month of the quarter"
zodiacfml - Thursday, May 4, 2017 - link
Yep, I saw the news of the stock price drop. I think it is probably due to the leaked Vega benchmark and the sales of the Ryzen might be settling down after the influx of early adopters who bought it.Timoo - Thursday, May 11, 2017 - link
"Fine? ROFL. A full quarter of your cpu comeback in sales and you can't break even? Margins up only 2%? Inventory blowing up? What kind of problems are you having here?"The thing you are missing here, is that Ryzen 7 only hit the market at the beginning of March. This means that sales only count for 1/3 of the period and revenues/cash flows for even less (30-day payment delays). Ryzen 5 only got launched on the 11th of April, so those revenues are not even reflected in these numbers.
So, if Ryzen impacts this balance sheet, it is only for their fair share: 30% of the period and only related to Ryzen 7.
edlee - Tuesday, May 2, 2017 - link
I agree that launch motherboards should have been tested and tuned better, but I would not exactly call Ryzen half baked at luanch. Most of the teething issues have been addressed. if I was building a new gaming rig, i would go Ryzen 5 1600 + Gigabyte G3 B350 + G.Skill Trident 16gb DDR4 3200mhz + nvidia GTX 1080Im still using an i7-3770k OC 4.9GHZ, but looking for a change this summer, when Vega hits
trparky - Tuesday, May 2, 2017 - link
What do you call the fact that motherboard manufacturers didn't have working BIOS for their boards? OK, they had "working" BIOS versions but they were buggier than a roach motel. I'd call that half-baked.Then let's not forget that IPC benchmark numbers are less than stellar, they only meet the equivalent of a two year old Intel chip (Haswell). For you, an owner of a 3770k, and me, an owner of a 3570k, would only see marginal improvements in single-threaded tasks. Sure, you'd see a huge boost in multi-threaded tasks but for single-threaded tasks there's really no improvement to speak of. AMD kind of screwed the pooch here.
Ryzen v2.0 seems like it's not going to be that much of an improvement over v1.0 since they are projecting only a 5% boost in IPC which is pretty pathetic since an Intel Kaby Lake chip wipes the floor with Ryzen in single-threaded tasks.
Face it, Ryzen didn't live up to the hype, that's all there is to it and it shows in how AMD's stock took a nose dive. Someone needs to buy AMD right now or they're done. Perhaps Samsung can buy them and infuse some serious amounts of cash into AMD's R&D budget.
Meteor2 - Tuesday, May 2, 2017 - link
Ryzen may not have lived up to 'hype' but it matched what AMD promised.Alexvrb - Tuesday, May 2, 2017 - link
The main issue at launch was low memory clocks. This has largely been resolved via microcode in the form of AGESA updates (which have been integrated by mainboard vendors into their BIOS releases with pretty good efficiency), but they're continuing to tune things and will be releasing more updates. Other than that, there's an extremely rare FMA3 bug (Intel has experienced similar bugs recently too) that probably will never occur in real-world usage, but they're fixing that in a microcode update as well.Was there any real stability concern that you wanted to mention, or just felt like beating up on AMD with a sideways and deceptive "general stability" comment?
prisonerX - Wednesday, May 3, 2017 - link
Looks like Intel is paying Russian troll armies to try to smear AMD now.Постарайся, товарищ!
prisonerX - Wednesday, May 3, 2017 - link
Yeah buy Intel, pay top dollar for an i7 that is 60% IGP, what a deal!