Revenue for the quarter was up 26% from last year to $1.93 billion, GAAP profit was $157 million, 349% from last year.
AMD’s first quarter was up from Q1 and year-to-year in sales. Revenue was $1.93 billion, up 26% year-over-year primarily driven by higher Computing and Graphics segment revenue. Net profit was down 7.8% quarter-over-quarter due to lower revenue in both segments and up 349% year-to-year.
“We delivered strong second-quarter results, led by record notebook and server processor sales as Ryzen and Epyc revenue more than doubled from a year ago,” said Dr. Lisa Su, AMD president, and CEO. “Despite some macroeconomic uncertainty, we are raising our full-year revenue outlook as we enter our next phase of growth driven by the acceleration of our business in multiple markets.”
Gross margin was 44%, up 3 percentage points year-over-year and down 2 percentage points quarter-over-quarter. The year-over-year increase was primarily driven by Ryzen and Epyc processor sales. The quarter-over-quarter decrease was due to increased semi-custom product sales.
Operating income was $173 million compared to operating income of $59 million a year ago and $177 million in the prior quarter. Non-GAAP operating income was $233 million compared to operating income of $111 million a year ago and $236 million in the prior quarter. Operating income improved year-over-year primarily driven by revenue growth and a greater percentage of Ryzen and Epyc processor sales.
Net income was $157 million compared to net income of $35 million a year ago and $162 million in the prior quarter. Non-GAAP net income was $216 million compared to net income of $92 million a year ago and $222 million in the prior quarter.
Computing and Graphics segment revenue was $1.37 billion, up 45% year-over-year and down 5% quarter-over-quarter. Revenue was higher year-over-year driven by strong Ryzen processor sales. The quarter-over-quarter decline was due to lower graphics processor sales.
Client processor average selling price (ASP) was up year-over-year driven by Ryzen processor sales. Client processor ASP was down quarter-over-quarter due to a higher percentage of Ryzen mobile processor sales.
GPU ASP was lower year-over-year and quarter-over-quarter due to lower channel sales.
Operating income was $200 million compared to $22 million a year ago and $262 million in the prior quarter. The year-over-year increase was driven by higher revenue. The quarter-over-quarter decline was due to higher operating expenses and lower revenue.
Enterprise, Embedded, and Semi-Custom
AMD’s Enterprise, Embedded, and Semi-Custom segment revenue was $565 million, down 4% year-over-year, and up 62% quarter-over-quarter. Revenue was lower year-over-year due to lower semi-custom product sales, largely offset by higher Epyc processor sales. The quarter-over-quarter increase was driven by higher Epyc processor and semi-custom product sales.
Operating income was $33 million compared to $89 million a year ago and an operating loss of $26 million in the prior quarter. The year-over-year decline was due to higher operating expenses and lower revenue. The quarter-over-quarter increase was driven by higher revenue.
All Other operating loss was $60 million compared to operating losses of $52 million a year ago and $59 million in the prior quarter.
AMD has been steadily improving its gross margin, but in this quarter it fell.
Datacenter adoption of 2nd Gen AMD Epyc processors continued to accelerate with unique cloud, enterprise, and high-performance computing (HPC) wins. Google announced new Confidential Virtual Machines for Google Compute Engine powered exclusively by AMD Epyc processors. Amazon Web Services (AWS) added its sixth AMD Epyc processor-powered cloud instance family, the new Amazon EC2 C5 instances for customers running compute-intensive workloads. And Oracle and AMD announced that AMD Epyc processors are bringing class-leading memory bandwidth and core count to the new Oracle Cloud Infrastructure Compute E3 platform for general purpose and high bandwidth workloads.
AMD expanded its desktop processor portfolio with the 3rd Gen AMD Ryzen 3000XT series desktop processors, featuring higher boost frequencies that deliver elite performance in gaming and content creation compared to the prior generations. Apple announced the latest 16-inch MacBook Pro featuring the AMD Radeon Pro 5600M mobile GPU, bringing desktop-class graphics performance to users on the go. And AMD announced the AMD Radeon Pro VII workstation graphics card with AMD Infinity Fabric Link technology, delivering exceptional graphics and computing performance for broadcast and engineering professionals.
With the usual cautions accompanying a public company’s forecasts. AMD provides the following:
For the third quarter of 2020, AMD expects revenue to be approximately $2.55 billion, plus or minus $100 million, an increase of approximately 42% year-over-year and 32% sequentially. The year-over-year and sequential increases are expected to be primarily driven by Ryzen and Epyc processor sales and next-generation semi-custom products. AMD expects non-GAAP gross margin to be approximately 44% in the third quarter of 2020. Gross margin is expected to increase year-over-year primarily driven by Ryzen and Epyc processor sales.
AMD now expects 2020 revenue to grow by approximately 32% compared to 2019 driven by strength in PC, gaming, and data center products. Non-GAAP gross margin is expected to be approximately 45%.
What do we think?
The Coronavirus has tossed everyone’s business plan and forecast out the window. Sales that would normally be expected in 2H have been pulled in to the 1H as consumers and workers sheltered at home.
AMD is fortunate in that it has such a diverse product line, the bumps and dips often average out over the year, and the company is expecting a strong 2H due to new console launches and pent up consumer demand, not to mention pent up consumers.
AMD has 54 declared notebook design wins and promises more are coming. Lisa Su said the company is under-represented in the commercial segment of the PC market but is encouraged by the design wins which she thinks will correct that.
And as the above chart shows, the stock market believes in AMD and has pushed the stock up to new highs.