AMD managed to score $1.222 Billion revenue or 19 percent year over a year from $1.027 Billion in the same quarter last year. Compared to the previous quarter, AMD had a 24 percent increase from $984 million to $1.222 billion. Traditionally, Q2 is not a fast quarter for CPU / GPU companies.
AMD had 33 percent non-GAAP gross margin. Non-GAAP operating expenses were at $381, 25 million in licensing gain and managed to decree its debt from $,.408 to $1,375 quarter to quarter. This is not a great difference quarter to quarter but year over year the debt dipped from $2,012 million to $1,375 in just a year.
This was enough to get AMD's share price to rise to $15.50 or 9.85 percent up from the previous close. The jump mainly is a result of an expectation that the third quarter revenue will increase about 15 percent year over year. This could imply revenue about $1.50 billion, beating Wall Street predictions of $1.39 billion. Once again, people who should know things are surprised and didn’t do their homework well.
Operating income of $25 million doesn’t seems like a lot but compared to a $29 million loss in Q1 2017 it does look like an improvement.
The revenue on computer and graphics increased 51 percent year over the year and this means one thing. Zen is working quite well for the company as both Ryzen and Epyc. GPU sales of R500 series to miners contributed a lot, let alone the normal demand from mainstream gamers.
Net revenue in computer and graphics jumped to $659 million with $7 million operating income in Q2 17. A year ago, in Q2 2016, AMD made $435 million from the same segment with an $81 million loss in the process. Quarter over quarter, AMD jumped 11 percent.
Fudzilla expects that in Q3 2017 these numbers will further increase as Threadripper, EPYC. Ryzen 3, EPYC and Vega will gain some traction too. All eyes are on Threadripper, EPYC as well as Ryzen 7 and 5 parts, that have a good chance of increasing profitability and gross margin.
AMD expects that the gross margin will rise from 33 percent in Q2 to 34 percent Q3 2017. The gross margin in financial 2016 was only 31 percent and you need higher margins to fuel your R&D and operations.
Quarter to quarter, AMD expects that Q3 might be 23 percent (plus or minus 3) and gross margin increase to 34 percent. Overall, 2017 can be up mid to high teens percent from $4.272 million revenue in financial 2016.
Lisa pointed out that AMD returned to non-GAAP net income profitability in the quarter, driven by strong growth in its Computing and Graphics segment.
The Enterprise, Embedded and Semi-Custom segment for AMD showed a slight revenue decline of five percent year-over-year and increased 44 percent sequentially, due to seasonality. Microsoft will start shipping Xbox One X in November, featuring the semi-custom SoC from AMD. AMD reminded us that Sony recently passed a milestone of 60 million PlayStation 4 consoles shipped, meaning things are good in the console business.
Mayor PC OEMS have announced premium Ryzen-based desktop systems with wide availability for the back-to-school and holiday seasons. Ryzen 3 should start shipping later this week while Ryzen Threadripper should be available in early August.
Ryzen Pro is schedule for availability in Q3 and Ryzen Mobile following later this year to complete the circle.
Overall AMD is improving, and competition is a good thing. 2018 will definitely be an interesting year but we expect a lot of pressure from Intel and Nvidia for back to school and the holiday season.