AMD reports healthy Q3 earnings despite crypto crash

AMD reported its earnings for the third quarter of 2018 today. The company took in revenue of $1.65 billion during the quarter, up 4% on the year, and operating income of $150 million, up 26% on the year. Gross margin rose to 40%, up four percentage points from this time last year, and net income grew to $102 million, up 67%.

Q3 2018 Q3 2017 Change
Revenue $1.65 billion $1.58 billion Up 4%
Operating income $150 million $119 million Up 26%
Net income $102 million $61 million Up 67%
Gross margin 40% 36% Up four percentage points

The Computing and Graphics business took in $938 million in revenue, up 12% year-on-year. The company said it enjoyed strong sales of its Ryzen desktop and mobile products, but that graphics revenue weakened from this time last year—almost certainly because of the cessation of graphics-card demand in the cryptomining community. In fact, the company called revenue from cryptomining sales "negligible" for the quarter, down from an "approximately high single digit" total of AMD's revenue this time last year.

The company says the Computing and Graphics unit experienced a 14% quarter-on-quarter decline in revenue, in part because of a high channel inventory of graphics products. That glut was offset by increased Ryzen processor revenue. The average selling price of AMD's client processors rose both year-on-year and quarter-on-quarter, while graphics product ASP fell both year on year and quarter on quarter thanks to lower channel sales of those products.

The division took in $100 million in operating profit, up from $73 million this time last year but down from $117 million last quarter. The company cites a "richer client product mix" and IP-related revenue, at least $86 million of which came from AMD's joint venture with THATIC. The company says lower graphics revenue was to blame for the quarter-on-quarter decline.

The Enterprise, Embedded, and Semi-Custom business took in $715 million in revenue, a 5% decrease on the year. The company says the decline came from lower semi-custom product and IP-related revenues, though increasing server sales offset that decline. Operating income for the division was $86 million, up from $74 million a year ago. The company says its "richer server and semi-custom product mix" helped boost its operating profits in the division. The All Other bucket got a $36 million hole in its bottom, a larger operating loss than the $28 million figure from a year ago.

For its fourth quarter of 2018, AMD expects revenue of $1.45 billion, plus or minus $50 million, which would represent an 8% increase year-on-year. The company further expects its non-GAAP gross margin to be 41% for the next quarter, an increase fueled by growth in Ryzen, Epyc, and data-center graphics products. That increase comes even without the "low-double-digit" percentage of crypto-related revenues that AMD says it recorded last year.

Comments closed
    • ronch
    • 1 year ago

    Intel’s numbers just came in and their net income is $6.4 billion, which is about 64 times as much as AMD’s. Even during the best of times for AMD, their income is a pittance compared to Intel. Why is this? Both make most of their money from pretty much the same products and Intel isn’t selling 64x as many CPUs as AMD. Yes Intel’s ASPs are higher but not 64x higher. And AMD doesn’t even have fabs to run and upgrade. The same is true with Nvidia, which makes tons of money every quarter. What is preventing AMD from going past the ~$100M mark? Debt servicing? Lack of high end products?

      • Action.de.Parsnip
      • 1 year ago

      Creamy very high margin stuff, basically. Think about how many xeons they shift and how overpriced they are.

      • Pancake
      • 1 year ago

      Intel don’t sell 64x (by $$$) as much product either. Maybe 15-20x for CPUs. But this also means that their R&D fixed costs are amortised over 15-20x more CPUs. So, for added insult to injury not only do Intel charge more for their CPUs than AMD their costs are also WAY LOWER per unit as seen by gross margins.

      It’s good to be the king.

      • Krogoth
      • 1 year ago

      Intel is riding entirely on brand name and sheer momentum right now. It remains to be seen how much of a long-term impact Meltdown/Spectre debacle on top of the whole 10nm process will bring.

      There’ a reason why Brian Krzanich got ousted and some shareholders have jumped ship.

      • DavidC1
      • 1 year ago

      You are looking at net income, not revenue. You can’t directly compare ASPs and income together. Revenue difference is only 12x.

      There are fixed costs and that makes it advantageous for large volume production.

    • Unknown-Error
    • 1 year ago

    Gross margin 40? I think it has been a long time since AMD hit 40.

    • shank15217
    • 1 year ago

    AMD needs to put more effort into it’s GPU business, they can’t keep riding ZEN.

      • NovusBogus
      • 1 year ago

      They’ve tried to, but still lose badly to NV at the high end and their big-accounts group consistently fails at scoring big public-academic complex deployments where the compute advantage matters (in addition to OEM deals, retail exclusives, and generally everything not involving consoles). Like Bulldozer, the only thing that will save them is a totally revamped GPU architecture–probably led by a talented outsider with a track record of getting the job done.

      • Anonymous Coward
      • 1 year ago

      No doubt they’re working on that, but anyway its good fortune for them that the CPU side started pulling its weight just as the GPU side faltered.

      • enixenigma
      • 1 year ago

      Agreed. Hopefully they can funnel more resources RTG’s way now that they have a competitive CPU arch and are getting good revs in.

      • Krogoth
      • 1 year ago

      Sorry to burst your bubble, but discrete gaming GPU market isn’t where the big money is anymore.

      2020s will make it much more apparent. That’s why Nvidia has been shifting their gears to towards non-graphical applications ever since Fermi.

      Why waste limited R&D budget on a market that is about to undergo demand destruction in the near-future, especially when you have no realistic chance to turn the tide?

        • ptsant
        • 1 year ago

        Discrete GPU is facing pressure from both “good enough” GPUs (both onboard and discrete) and also from consoles. Not only are high-end GPUs sliding over $1000, they are also more difficult to justify for non enthusiasts.

        Don’t misunderstand me: I would be very happy to get a 2080Ti. But I am aware that I am a minority.

        • psuedonymous
        • 1 year ago

        [quote<]Sorry to burst your bubble, but discrete gaming GPU market isn't where the big money is anymore.[/quote<]Guess it;s news to Nvidia. Despite years of "Gaming GPUs are dead!" and diversification to mobile SoCs, datacentre, autonomous driving, etc, it remains their most profitable segment by far at [url=https://techreport.com/news/34001/nvidia-marks-the-death-of-crypto-demand-in-q2-of-its-fiscal-2019<]85% of total revenue[/url<]. Nvidia's slice of the discrete GPU market is more than double AMD's entire total revenue. The market is very clearly there and lucrative, AMD are just not able to tap it with their current GPU offerings.

          • Krogoth
          • 1 year ago

          Enterprise/SMB CPU market completely dwarf the discrete gaming GPU market. AMD’s primary target has always been that market with their Zen family.

      • ptsant
      • 1 year ago

      Apparently, they had significant growth in the highly lucrative Instinct (Tesla equivalent) line of products and that contributed to the increase in the enterprise segment.

    • DancinJack
    • 1 year ago

    too bad their stock is down ~10 percent today (including after hours)

    sad face

      • chuckula
      • 1 year ago

      Buy on the rumor, sell on the news.

      I soldafter it broke 30.

      Thanks AMD!

      • blastdoor
      • 1 year ago

      It sounds like their guidance is below what analysts were expecting.

      • Klimax
      • 1 year ago

      Looks like AMD is not the only one.

    • Tristan
    • 1 year ago

    Very weak, as usual
    Now it is clear that Ryzen and Vega combo was flop
    Next combo is Ryzen 2/3 and Navi, but it won’t turn AMD either

      • Krogoth
      • 1 year ago

      I thought that blue-tinted glasses were going outta style.

        • MathMan
        • 1 year ago

        He’s not totally wrong though.

        A yoy growth of 4% is far from stellar, and pretty weak if you consider that Ryzen is such a huge improvement. Ryzen seems to remain a unfulfilled promise.
        The GPU situation is bleak, and they just said that they only see improvement in H2 next year.
        Vega 20 is just going to be a blip on the radar.
        Custom was weak.
        The forecast for next quarter is weak as well.

        Overall: weak.

          • Pancake
          • 1 year ago

          *BA BUMP TISH*… He’s done the math!

          Thank you, I’ll be here all week. Do try the veal!

          • Krogoth
          • 1 year ago

          This isn’t the 1990s anymore. The masses aren’t getting desktops en mass anymore. They are getting portable platforms. Intel still has that market hammered down. Ryzen Mobiles are just newcomers to the mobile scene. Epycs are just proving themselves in test systems in SMB/Enterprise markets, once that’s done. I expect a significant uptake for customers who in an upgrade cycle.

          • Eversor
          • 1 year ago

          It depends on how you look at adoption. Epyc is only now really ramping up and putting pressure on Intel to cut prices. Threadripper is dominant on the workstation & high end markets.

          Some people are also not looking at the fact that GF dropped out of the manufacturing race and that means AMD can use whoever can produce 7nm faster without paying penalties. TSMC has been producing 7nm in volume for a while now.

          The big downside is really that 7nm GPUs seem to be running late.

            • dragontamer5788
            • 1 year ago

            [quote<]Threadripper is dominant on the workstation & high end markets.[/quote<] I mean, I bought myself a Threadripper and I consider it better for my expected workflow. But is it really selling better than Intel? Do you have any numbers or surveys to back that statement up? I personally haven't seen any numbers for workstations / HEDT released.

        • Chrispy_
        • 1 year ago

        No, just production problems so you can’t buy them at the moment.

          • K-L-Waster
          • 1 year ago

          I understand that if you have a very specific need they might be able to ship you a blue tinted monocle.

      • pogsnet1
      • 1 year ago

      Did you read the article?

      • albundy
      • 1 year ago

      haha keep telling yourself that. i really do enjoy these thumbs downs.

      • ronch
      • 1 year ago

      Hey kids, look who’s here!! [b<]IT'S TRISTAN!!![/b<] For he's a jolly good fellow, for he's a jolly good fellow, for he's a jolly good fellow... which [s<]nobody[/s<] everybody can deny!!! 😀

      • Anonymous Coward
      • 1 year ago

      On one hand, thats so trollish its just boring. On the other, I think AMD should be doing even better, considering the products they’re shipping relative to Intel.

      • wingless
      • 1 year ago

      I read this in Trump’s voice….FAKE NEWS lol. He has a problem with facts.

    • Krogoth
    • 1 year ago

    THE END IS NIGH FOR INTEL!

    NOT EVEN THEIR MOST POWERFUL SHILLS CAN SAVE THEM!

    #PoorLavaLake
    #PoorNotOptane

      • chuckula
      • 1 year ago

      GAME OVER MAN! GAME OVER!

    • albundy
    • 1 year ago

    i would have thought that the end of crypto would signal price drops and move more old inventory.

      • LocalCitizen
      • 1 year ago

      what “old inventory” does amd have to move?

      • nanoflower
      • 1 year ago

      Price drops at retail but not really from the GPU manufacturers as their prices never really changed. Vega 64 and 56 were just too expensive when compared to their GTX counterparts through the Crypto craze. Though hopefully as the prices come back to MSRP, sales might pick up slightly but with Nvidia selling both the GTX and the RTX line it’s going to be hard for AMD to get traction without having new products to sell.

      • derFunkenstein
      • 1 year ago

      Not sure if you’re paying attention, but graphics card prices have dropped significantly.

      • Platedslicer
      • 1 year ago

      Usually prices rise BECAUSE supply can’t keep up with demand… GPU prices have dropped because demand went down sharply.

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