AMD Conference Call CEO Prepared Remarks

AMD's CEO, Dr. Lisa Su, started the financial call with the following report:

2019 marked another major milestone in our multi-year journey. We delivered record annual revenue of $6.73 billion and significantly increased both gross margin and net income as we successfully introduced and ramped the strongest product portfolio in our 50-year history. We grew client and server processor annual revenue by $1.5 billion in 2019, driven largely by the strong demand for our 7nm Ryzen and EPYC processors powered by our “Zen 2” processor core. Looking at the fourth quarter, we ended the year very strong with quarterly revenue increasing 50 percent year-over-year to a record $2.13 billion while also significantly increasing net income.

Computing and Graphics Segment

Fourth quarter revenue increased 69 percent year-over-year to $1.66 billion. Ryzen processor adoption accelerated sharply in 2019, helping to drive significant double-digit percentage increases in client processor annual unit shipments, ASP and revenue. We ended 2019 with our highest quarterly client processor unit shipments in more than six years based on strong demand for Ryzen desktop and mobile processors. In desktop, we had a very strong holiday period as our 2nd and 3rd generation Ryzen processors consistently held top sales spots at the largest global etailers and retailers. We launched our Ryzen 3950X processor and the 24 and 32 core versions of our 3rd generation Ryzen Threadripper processors in November. Our 16-core Ryzen 3950X processor is the world’s fastest mainstream desktop processor, while our latest Threadripper CPUs offer unmatched performance for the high-end desktop market. In January, we expanded our leadership position in the HEDT market with the launch of our flagship 64-core Ryzen Threadripper processor which is the world’s highest performance desktop processor.

In mobile, we had our eighth straight quarter of strong double-digit percentage year-over-year revenue growth as we expanded the number of AMD-powered laptops available from major OEMs. We began shipping our Ryzen 4000 mobile processors powered by our “Zen 2” core at the end of the fourth quarter. These new processors double the performance-per-watt of our prior generation and deliver leadership single threaded, multithreaded and graphics performance for thin and light notebooks, while enabling the industry’s first ultrathin laptops with 8 cores. Initial systems featuring the Ryzen 4000 processors are expected to launch later this quarter and more than 100 AMD-based consumer and commercial laptops are planned for 2020 from Acer, Asus, Dell, HP, Lenovo and other major OEMs.

In graphics, fourth quarter unit shipments grew by a strong double-digit percentage year-over-year, driven by sales of our Radeon RX 5000 series GPUs featuring our new RDNA architecture. We further expanded our portfolio of RDNA GPUs with the introductions of the 5500XT and 5600XT desktop graphics cards, highlighted by strong third-party reviews that clearly establish the 5600XT as the most powerful gaming GPU available for under $300. We launched our RadeonTM 5000M mobile GPUs in the quarter as well, and we are seeing solid design win momentum based on their strong performance and power efficiency. The first laptops powered by the new GPUs are available now – including the recently updated Apple MacBook Pro – and we expect many more notebooks featuring our Radeon 5000M GPUs to launch throughout 2020.

Data center GPU revenue increased sequentially driven by cloud VDI and game streaming deployments. We announced a major update to our open source GPU computing software stack in the fourth quarter featuring performance optimizations, expanded development tools and support for the most popular machine learning frameworks. We continue making strategic software investments to make it easier for developers to tap into the full capabilities of our Radeon Instinct accelerators for HPC and AI applications. For the year, data center GPU revenue grew by a strong double-digit percentage as we continued to make progress growing our presence in this important part of the market.

Enterprise, Embedded and Semi-Custom Segment

Revenue of $465 million increased 7 percent year-over-year as EPYC processor revenue growth offset declines in semi-custom revenue. Semi-custom sales continued to soften in the quarter in advance of the next-generation console launches from Sony and Microsoft planned this year. For 2020, we expect first quarter semi-custom revenue to be negligible and the ramp of next-generation semi-custom products to start in the second quarter with revenue to be heavily weighted towards the second half of the year.

In server, revenue grew by a strong double-digit percentage as unit shipments and ASP increased sequentially driven by demand for our 2nd Gen EPYC processors. Our 2nd gen EPYC processors are ramping significantly faster than the first generation as we see particularly strong pull for our higher core count models where our performance and TCO advantages are the most significant. Cloud adoption with the largest providers continues to accelerate, driven by the expanding use of EPYC processors to power their critical internal workloads as well as a significant increase in the number of AMD-powered instances publicly available. Shipments to cloud providers increased sequentially by a significant double-digit percentage to support expanding buildouts at Amazon, Google, Microsoft, Oracle and Tencent. Microsoft announced the availability of four new virtual machines and AWS announced two new EC2instances powered by 2nd Gen EPYC processors. In the enterprise, Dell began shipping their full portfolio of servers powered by our latest EPYC processors. We have doubled the number of EPYC processor platforms in market to more than 100 offerings in the quarter. These new platforms are driving increased enterprise customer engagements, broadening our sales pipeline considerably. In HPC, we secured multiple large wins in the quarter based on our unmatched performance and scalability, highlighted by French, German and UK national supercomputing center deployments as well as the San Diego Supercomputing center.

We are pleased with the significant traction and momentum in our server business and remain on track to achieve our goal of double-digit percentage unit share by mid-year based on the growing demand for our 2nd Gen EPYC processors.

Summary

I am very proud of our 2019 accomplishments as the successful ramps of our latest Ryzen, Radeon and EPYC processors resulted in record annual revenue and substantial increases in gross margin and net income. I want to take a moment to recognize the more than eleven thousand AMDers around the world whose focus and determination enabled us to achieve these results.

We enter 2020 well positioned to continue gaining share across the PC, gaming and server markets based on having an unmatched portfolio of leadership products spanning from desktops to laptops, data centers and game consoles. With more than twenty 7nm designs in production or development, we are very excited about our next wave of products that can accelerate our growth in 2020 and beyond.

We are still in the early stages of our journey and remain focused on meeting our commitments as we establish AMD as the high-performance computing and graphics leader.

AMD's FY2019 Financial Report AMD Conference Call CFO Prepared Remarks
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  • Haawser - Sunday, February 2, 2020 - link

    It's not only mobile that 7nm APUs could disrupt. Fact is that ~70% of all desktops rely entirely on integrated graphics. Truth is that things like the millions upon millions of 'OEM office boxes' that are sold to corporate buyers every year are probably 99% dependent on iGPUs.

    And the desktop versions of 8C/16T 7nm APUs will be gunning for those too.
    Reply
  • ballsystemlord - Sunday, February 9, 2020 - link

    Spelling and grammar errors:

    "There are some discussions about 'pockets of shortages', but as I said before we've been on this steady increase in market share now for the last eight quarters, and we believe we -->gain share in Q4 as well. So I think what we see is just the portfolio getting a lot stronger."
    Should be "gained" or "will gain".

    "LS: I think if you look at it, the predominant factor if you're talking about Q1 guided 46% versus full year at 45%, it's just as we wrap those consoles,
    there's some there's some impact of that."
    Might have been her mistake, but you have a duplicate set of words:
    "LS: I think if you look at it, the predominant factor if you're talking about Q1 guided 46% versus full year at 45%, it's just as we wrap those consoles, there's some impact of that."
    Reply

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