AMD - Earnings call transcript Q2 2018 | Advanced Micro Devices, Inc.

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Laura Graves

Thank you, and welcome to AMD's Second Quarter 2018 Conference Call. By now you should have had the opportunity to review a copy of our earnings release and slides.

If you have not reviewed these documents, they can be found on the Investor Relations page of AMD's website, www.amd.com. Participants on today's conference call are Dr. Lisa Su, our President and Chief Executive Officer; and Devinder Kumar, our Senior Vice President, Chief Financial Officer and Treasurer. call be live on via a website. her is and replayed will webcast This to couple highlight for like would I a you. of dates important and Hardware Marketing and Jim Manager Relations, XX. will Senior President Vice Jefferies Investor Infrastructure President Graphics; XXXX Summit the Computing August Semiconductor Vice Worldwide Anderson, Cotter, Communications and HR, and of attend Ruth and Senior of General on Vice present Conference Kumar, Senior President XX. at on Deutsche Devinder Financial will and Also, Officer, Technology the Bank September Chief quiet will XXXX. begin quarter close third business on XX, the XXXX September of our And time at Friday, the Today's discussion contains environment forward-looking as currently statements based it. on see we actual based Those to our from expectations. and are only such, differ as assumptions the current on statements cause and as expectations uncertainties speak results current beliefs, and involve materially date, current risks of could that

referenced metrics GAAP primarily our will for reported gross release in margin refer website. We which GAAP in posted financial The segment cautionary today's to non-GAAP basis. Please the on information. statements most non-GAAP reconciled revenue, for measure press on press the to are this except release results, more measures to operational their are and directly a comparable refer call during financial financial

factors find SEC, our detailed also report XX, our for March XXXX. risk discussions in the about with XX-Q You the particular, Form filings in and on quarterly AMD's quarter ended

the hand Lisa? Lisa. to I over that, call with will Now

Lisa T. Su

products. ended today. growth, fourth high-performance you, first to consecutive Thank in revenue demand double-digit those of We of year-over-year increased driven for the afternoon XXXX Laura; and delivering quarter good half listening by strong our our all

three in seven highest and XX% gross quarterly of net revenue margin percentage years. improved grew quarter in Second than our more income billion resulting points, year-over-year $X.XX

financial pleased our very across We with of year-over-year are both the business segments. performance

adoption new center of we to in customer PC, gaming by data gain share, products markets. and the our continue strong As driven

and Asus, a Ryzen sequentially Graphics processors. doubled shipments XX% strong Ryzen our growing for the quarter. significant increased shipments GPUs launched notebooks, mobile continue the Computing year-over-year, strong processor the sales, segment, more CG Samsung HP, ramp dozens quarter heading Ryzen to which mobile Ryzen Huawei, our as demand double-digit at we our mobile of and processor-based commercial mobile driven us commercial in by position and holiday seasons. than well and APUs launched into of Acer, Radeon Looking Ryzen Ryzen market, back-to-school the second PC our quarter. In unit PRO segment revenue Dell, in grew Lenovo

first in Dell, offer first the we major enterprise now For time strong as interest to HP desktops, CPU Continuing by powered our OEMs, our evaluate strong class desktop the all history, notebooks released. these just very second roadmap XX systems. Ryzen are April, and months new generation Lenovo we after positive and customers were our And processors commercial launched Ryzen three in reviews initial seeing AMD. execution, desktop

in the June, first public core market. of designed high-end XX Additionally, with Ryzen industry's desktop AMD processor PC first generation processors, demonstration Threadripper our second we for the the delivered

market our substantially on lower primarily series strong grew Ryzen-based customers RX driven revenue and year-over-year center consumer a processors. remain August the GPUs. of been desktops with in revenue this performance XX sales. and Sales Ryzen we performance on Overall, and Ryzen-based and to of based creation into year, adoption track by our channel demand systems leadership and notebooks market XX Graphics, of have commercial blockchain-related was content down total launched ASPs. Vega adoption offset our in XXX enthusiast drove processor portions with high-end and and In Radeon bring our by market stronger gaming XXXX. to pleased partially latest markets. sales, Sequentially, center on the in data second and track very generation year-over-year Graphics the significant the launch We data increases for are the Threadripper of to enthusiast are

AMD to every the partnerships of game quarter We drivers our new in continue Ubisoft, their published GPU graphics. best to Radeon next with strategy execute the Radeon major and software gaming launched to in provide for on and optimize Rebellion with industry, the expanded games Capcom generation experience

is Samsung On in our new they our AIB added the also and PC TVs XXX architecture many GPU adoption FreeSync ecosystem the technology smaller to form gaming introduction expand to AMD of and and of MIXX to-date. experience. Vega in broadest Vega-based by the their and Instinct ultimate industry of hardware more The Radeon gamers side, in screen cards more the revenue the Data TVs, systems significantly quarter, the market increased we continue OEM big in FreeSync with Radeon than mobile with driven console the factors. monitors shipments. high-end FreeSync-enabled giving announced center

the first includes sampling in quarter and second product learning track this intelligence hardware which next Our launch GPU, in the this are continued to of GPU solutions Computex our we and we in X-nanometer for the public engagements machine open product, the At first X-nanometer this optimized artificial expand and year, important of space. year. large with software demonstration cloud next features new generation GPU generation on Vega world's increased started Radeon showed markets. later as this this investments to We our we customers

processors growing Semi-Custom EPYC than segment, driven Enterprise, unit our XX% EPYC sequentially. processors. primarily increase and Turning center our with both greater shipments strong we Starting Server and with second our sales data by our in quarter to celebrated the and an of increased of segment adoption revenue year-over-year, revenue one-year anniversary of business, of our Semi-Custom Embedded server XX% launch

density Enterprise now market, EPYC-based their offering per who processors virtual lower server, in competitor. including Cisco machine delivers announced significantly dual-socket socket and We have server customer costs powered single the over EPYC highest who ever, first by their XX platforms than launched which ProLiant HP leading

partners XX% costs anticipation Service, providers VM significant per half brings. quarter, wave Tencent we of instances center production offering of second multiple also mega performance with momentum outstanding EPYC workloads. capability cloud X as mega preference data also with next and that Cloud towards single for We're more than Shipments service the seeing data the for doubled cloud providers announced across customers their in have Cloud the this year. of planned quickly made of in our availability as qualification deployments We lower saw Tier delivering key to center immediate noted progress progress the SAX in at value our that from with the socket ability ramp strong

we new of customers, dozens enterprise customers quarter. in large to end the added Turning

general-purpose HPC, and in environments. in strong data Our analytics virtualized value enterprise proposition continues like to be segments

accelerating second focused in are half on adoption the segments extremely year. targeted We processor these EPYC in of the

double and path milestone the server share. partners on competitive received end market position Finally, strengthening are sampling in the and against of processor has first of I'm gone generation on for quarter. near-term silicon very validation X-nanometer am recently the long-term EPYC remain to mid-single report track Rome unit very bring-up roadmap. market. that on in silicon happy achieving to our execution Zen pleased select XXXX, We launch our next well. to to in our of share digit digit quality our focused We second X, of I by And we midterm code-named early goal the with with our started XXXX our the already Rome, outstanding we've

increased Semi-Custom of Embedded in game sequentially our Sony Moving Microsoft on and to businesses, and and Semi-Custom consoles. revenue year-over-year support

embedded be continues proud shipped The industrial to current our the markets. on and that game and strong by IP are for the medical collectively in design million imaging increased term, are digit by market partnerships cycle. XXX across based year-over-year, Microsoft have and game console We driven Sony us double and Embedded we and the sales segment capabilities. an AMD-powered well-positioned over differentiated percentage well consoles growth long in important gaming,

product our wins also EPYC strong very believe our margin we bets growth following our We In launch our for delivered as technology second quarter. financial are We last new continued importantly, and Ryzen-embedded accelerate. closing, expansion initial Most revenue demand products saw to we long-term with their results. families for pleased new strong high-performance position We design quarter line the Several interest leadership market to GPU positioning CPU products. we see and us our opportunities the have upcoming for drive those we and of very future. customer sight coming to in node. at and to ago, ahead the X-nanometer based decisions years around incredible products made competitive X-nanometer now important our and well roadmaps on

with and profitability. confident We growth drive we that continued trajectory are market revenue excellent on gains an share to in execution, and are

XXXX as are even deliver to compelling hardware in on execution investments products our customers timeframe. and software continued and our to in that XXXX we make We focused roadmaps more the significant

Devinder? provide to on the financial over color Now I'd performance. quarter Devinder like turn our call to some second additional to

Devinder Kumar

driven gross earnings basis all lines. XX% products. of growing everyone. afternoon, as of down expenses Operating were year we Gross good and XX% by for margin year-over-year, revenue of was while by million to margins XXX a strength $XXX new points another up quarter revenue significantly was XX%, Quarterly revenue, per ago. revenue product share. Lisa; was billion you, across the expanded grew a and margin ramp Year-over-year, driven percentage from or strong XX% higher $X.XX year-over-year, Thank of QX AMD. and operating

million of debt trailing ago. double-digit million, $XXX both to XXXX a year income product compared half resulting in was Operating $XXX delivering and net was million percentage. This XXXX. while roadmaps. from of year quarterly million XX% XX-month operating a $XX roadmaps. leverage of product to to considerably per million ago. $XXX are our XX% $XX business is a using a making multi-generational significant of leverage first diluted compared year R&D and future million, highest ago. $X.XX, a Non-GAAP count on improvement segments Net investment our investments share the share our X,XXX operating million, products support our grown EBITDA million share first of margin $XXX earnings a from ago, was loss compared increased Operating one adjusted X.X We diluted grew a in half support basis, has EBITDA R&D $X.XX Adjusted income the to was since margin loss year strategic compared gross a $X reported new and of times. as per to of to launching in income XXXX

revenue one up purchase million $XX led licensing to in quarter Graphics to We The sales. and sales. for segment of to with QX was we EESC compared $X non-cancelable by than up believe stronger $XX up center both of X% income These and notebook year drove strong Strong Semi-Custom particular blockchain include quarter to sales our blockchain-related Graphics partially in mobile year-over-year, ago or of growth an with sales million billion, revenue revenue million, XX% processors Now segment due second was client primarily products. ramp. driven gain income operating in income of EPYC strong and coupled XX% income continued primarily driven of units Computing revenue processor or EPYC for data results saw $XXX in center as declined processor channel accounted operating Computing QX in Radeon Ryzen Semi-Custom million. approximately operating the our $X.X demand revenue was revenue first Graphics by and products increase and the with on Ryzen grew inventory the leverage. second due revenue Ryzen driven and greater segment XXXX higher-than-anticipated revenue. operating was center to Embedded of XX% mega turning sales. in approximately strength by XX% increases. higher ago. by XXX. the data quarter. Enterprise, revenue products $XXX was quarter-over-quarter, segment and business lower higher XX% primarily also XX% $XX revenue EESC income a orders operating expense and year-over-year, revenue results. by Graphics to significant of approximately XX% of operating Semi-Custom down year year-over-year revenue a Sequentially revenue, from from of accordance revenue was overall offset included improved segment data new million, million ASC

the sheet. Turning balance to

credit, equivalents $XXX second of totaled Free prior quarter. securities up billion. cash including cash secured growth. revolving Inventory cash, working in due of support the Our the the and quarter. $XXX to million recent capital debt, revenue flow marketable was was our requirements $X.X at negative million, slightly principal quarter end million of Total from in line $XX was

to turning Now outlook. our financial

partially and driven of quarter year-over-year, XXXX, AMD products, of primarily Ryzen minus plus in by an offset X% lower the For approximately with by Sequentially, $XX to $X.X X% the approximately revenue revenue expects of this EPYC GPU and third This lower million. by revenue. increase of offset be would approximately EPYC decrease sales or be Ryzen higher be blockchain sales processor higher market. would GPU a products billion,

now In Semi-Custom in higher-than-expected be lower expect addition, QX to sequentially following QX we revenue revenue.

for reminder, purposes, comparative XXX adjusted revenue QX billion, XXXX ASC a for accounting revenue As was standard. $X.XX

In gross sales; approximately ramp be up prior positive. addition, expenses non-GAAP expense, margin XX%, and for cash non-GAAP revenue; product expect XX% of operating by flow XX% be from free the the year, be approximately million; and interest EPYC to million, and driven Ryzen to QX, we taxes be in $XX approximately or other to non-GAAP to $XXX of

was am closing, excess continue our to XX% executing revenue is full-year and margin to high-performance the growth be We excellent remain cash quarter improved be mid-XXs-percent, business I execution positive. expansion growth, QX XXXX portfolio. and the a results, margin free strength expected with In gross in for long-term and we our of to revenue financial solid For focused XXXX, on expect an of financial year. of and by products pleased model driven our profitability. flow

back it Laura? turn Laura the session. I'll for to that, with Now question-and-answer

Laura Graves

we're in here our you, room. the question Thank first Operator, ready Devinder. for

Operator

with first Jefferies. comes the Our Lipacis line from question question. proceed your Mark with of Please

Mark Lipacis

for same seems XX-nanometer you, of your seems XX-nanometers. to think it as for And view question. their on into Code X-nanometer – Lisa, Hi. Thanks the have Intel of their lot foundry people XXXX. a volume pushed the taking kind ZIP I ramp-out my

change us with you color Thank your If this interest Intel, if with have context at mean? you on could products? ever before and/or does AMD with Intel? customers – give some that parity wondering terms has in the does in parity your I'm what So, at you're you. conversation of been And their

Lisa T. Su

question. for Yeah, Mark. the Thanks

X-nanometer. be both decisions important we X-nanometer. early the and we the heavily in industry look, X-nanometer important bet CPU some So, the of roadmaps, made side, node of our on big of couple on GPU would terms And in for us thought and would a be ago. adoption be for a technology to years it We

silicon looks today, look first CPU we we So on have side, the of when at it Rome good. you where especially very our are product;

have that also number technology. We good X improvements come architectural and enhancements in X-nanometer a will of Zen with

is have competitive with very I question your with current pleased I positioning are interested Naples in And we we say, it where to gotten would where we perceived? to understand So are are. think where our and we're our is. the to architecture. customers very about have certainly customers how Clearly, But execute. generation,

do With the we competitive excellent competitive is XXXX. think, Rome, into standpoint, interest, enhanced we improvements with that from there we a going I have X-nanometer believe an position positioning and into have going

about that. we So very excited are

Mark Lipacis

Thank you. may. I A if follow-up,

Thank to get – you. the bringing at year risks to to need next look servers, do is bogey that? we market? on what As that X the EPYC are double-digit for that on And you

Lisa T. Su

we as important goal goal. Mark, share view so, Yeah, an the share double-digit

I product. right? have. generations as the EPYC, now Zen that generation so view it We But of a of I certainly sort think X journey, the will have three second with come we it

We have Zen that's market in X today. the

X We phase, as into and roadmap we have well X have Zen productization that's a around then Zen very well. the strong

path share. So market we and the competitive feel our about double good to digit position

ramp. we're and quarter, working nice very, center mentioned the rate customers. very with is remarks accelerate mega in pace, saw acceleration think actually, our prepared I second we and of was about in I pleased. that the And this some the earlier closely customers to all that I very data

and and with saw progress customers. the large right an that's level than we're we engagement double, that indication our So of getting more there units

Mark Lipacis

Thank Very you. helpful.

Lisa T. Su

Thanks, Mark.

Operator

on X-nanometers, the question them strategy the And little comes do the Lisa, what having have does bit detail wafer flexibility on line Suisse your between John could your X-nanometer, give if Yeah, John I without Credit capacity of Securities you to with two extent Lisa, for at partners. Credit Please pay having Suisse. how of of more - if next you trouble ability Pitzer proceed with Pitzer us supply and much a from to foundry move the Our Devinder. give wafers? is question. strong you results. the into foundry one kind agreement William LLC to wonder just Congratulations (USA)

Lisa T. Su

Yeah, sure, John.

ago, did of It couple a So over agreement as years we long we supply the amend term. strategic agreement. wafer a very for was us look the

we we But feel with engaged roadmap process about product-by-product main would X-nanometer, is the foundries gate decisions side, a long-term those the how have, our we both and I GLOBALFOUNDRIES. at be GPU on do and say TSMC on product-by-product message of to it both technology a CPU we basis. and believe So we a going the terms that basis, choice are make the and don't for in on us. between is

better me lot the process a just improvements, to architectural second ability a increase John go you've of swath Securities my I server don't have of We working been your you aggressively then, LLC of lot our - roadmap. as with Suisse (USA) of technology Pitzer things of can after. the on broader William you a workloads, Credit gate architectural EPYC TAM can work, for is understand? And the but help a we and question, Lisa, one X cover is Because know launch believe

X as about broaden importantly, So like? do to me you here? go you from that to from X can EPYC continue looks in coverage burden to growth think And, EPYC how the R&D what out, you help quantify workload as we

Lisa T. Su

sure, Yeah, John.

in are some TAM TAM. workloads TAM. generation think kills XX% from some coverage So are yes, our second servicing the I standpoint, really will portion TAM. but But improvements large we expand we I EPYC go that do closer, the architecture that the there view are from of are generation workloads of are a not of the make we'll to And, the the when a that first and other as today limited. of EPYC, clean we

I of think in EPYC. But improvements think proposition the some made from From in XX% standpoint we architectural that of feel we've it Devinder R&D very about of I the remarks did way. But the year-on-year. we've done with generation increases think the good our we second made standpoint a I in prepared responsible an comment the value by increase R&D it. and that TAM,

So we business I key seeing then, we model. will our But go-to-market will our a which expansion, that of resources have R&D revenue effectively. And growth. we increase We're is piece very very, margin increase don't and ever OpEx of ahead revenue. believe

it's think each a balance I those lines. between of

– R&D, these roadmap have the particularly we'll side, increase at for I software have strong think opportunities we So a actually. to point and we this look on

we on the a think our side CPUs across to of GPUs lot of learning accelerate opportunity I software machine work. have some and

incremental would I a revenue over to as about William have today? part, help second you've represents X-nanometer that the next this GPU more And, where TAM GPU as if one should exploiting go. the LLC expectations, side, you in highlighted in I incremental bring row John data is I four in, you a the expectations sneak that - third guess, the are then, and just revenue Securities quarters quarters? what that or that's think to And Lisa, thinking center Credit the market Can eight on how (USA) we so or you data And importantly size the quarter of the percent R&D could Pitzer inside last of Suisse one center. gains

Lisa T. Su

that And center the the growing quickly, engagements, the GPU the on focus CPU there's on than on GPU very data our data for no demand question side so center sure. Yeah, faster side very side, in our are is GPUs cloud-centric. even for the

in places I lots customers, it and X-nanometer still business MIXX coming still GPU our there's So the the that's small, interest generation well-targeted. we later Vega But GPU our capability this large there's would can where to our small. year. of current say, be of but in so size even more growing, are interest market is is

And segment the overall, segment bit that grow to market, quarters as opportunity over four is an data expect growing next in you to we see eight the can a centers. GPU the quite quarters. So in

Pitzer Suisse it. area. continue And invest in so Securities you. this to Credit William heavily (USA) Thank John - LLC Appreciate we'll

Lisa T. Su

John. Thanks,

Laura Graves

Next question, please, operator?

Operator

from America of your comes Vivek the next Bank question. with line with Please Our question Merrill of Arya Lynch. proceed

Vivek Arya

year? the taking my with XXXX for And assumption just updated I and you revenue if overall growth? a an view I sales of QX What's question. then to follow-up. the for in for and Thanks start have wanted full blockchain have just clarification the

Lisa T. Su

Vivek. sure, Yeah,

me let and can that, then necessary. add Devinder take if So

we approximately X% were for of blockchain. So revenue QX, for

we're For very QX, little planning blockchain.

very So down be we little but expected second half, it we're QX. in the to planning in

full-year call. previously So lower the than update discussed on that a in we will XXXX if you basis blockchain had last for what be earnings

mid- So say high-single-digits. said we I would previously to

I over think mid-single-side. couple of would And the continue more on watch next the develop the we'll to this market quarters.

Vivek Arya

All so right. And far have from any you PCs then, either in competitive seen response Intel or Lisa, servers.

mix or should For some it decline. desktop in we just example, mind? Was some parts anything else Or that saw competition? your keep price ASP of

Lisa T. Su

Vivek. sure, Yeah,

So me of each the separately. segments let take

the increased the here the So APUs the product some look our if seen quarter into what portfolio. had second that percentage were is basically you the ramping desktop, desktop segment, where we of segment. in we channel we of in sold a mix have being Certainly PC at

saw products. say is and of bit that. But overall, you ensure about desktop when There I of We so competitive bit would look is a what good situation we product do little that I is And transition mix softer competition the to a that would expect. I ASPs. a there overall, see

make that managed to that would first second nothing we So call moved some But the channel generation. to sure we generation our we've inventory seen on Ryzen, when channel unusual. we from first Ryzen had our generation I programs

actually, notebook up. of notebook the pick we're please the really side, the business because seeing I'm On pretty side

the say EPYC I were And mobile And that the some seen that pricing second units is the the so again, relative as then that unusual workload mobile are us, And ASPs half fact, going our on Ryzen customers. side, with But we there in year. up, competition would were that's for really ASPs up do haven't see in are into of and up. And, continuing of the optimization ramps, we environment. anything I EPYC product-based. to percentage the

Vivek Arya

right. see expect And quarter When we the around for what's to should may. QX, I All breakout EPYC, one Will if one, visibility quick that Lisa? be the that? last QX,

Lisa T. Su

I think that are of the we unit XXXX. share on we focused very deliver ensuring mid-single-digit end at

go I as of think as year, quarter quarter into second fourth important the the half for us. we I would would it still see real a be

I key And think as when they see of we'll third cloud these know actually actually you ramps instances. important it's quarter. ramp into the some is partners, these larger with

visibility of lots on being exact our the ramps. so work done will timing depend and And customers' into

Vivek Arya

much. very Thanks Okay.

Operator

line your comes Cowen. question. Matt from the next of proceed with with Our Ramsay question Please

Matthew D. Ramsay

you afternoon. and In the Lisa, of do by of couple follow base have for granularity, like the couple questions already a volumes near obviously sampling And the demand around you cloud PC folks out process really you're mid-singles server, how versus this pushing I up node, some to walk and things. on that in maybe think seems laid term questions number of Rome bit be balance asked with end of Naples? Thank customer you within Rome. Good have what with the unit you. a us could a through of couple then of little the guys on And a server share business I'll year. high

manufacturing explicit that? Thank you. you're So about be where could maybe

Lisa T. Su

sure. Yeah,

So a questions couple Matt. of different here,

sales Naples. is Look, that. Naples On versus the Rome go-to-market EPYC, standpoint a how your we right and now and from our focus question is on manage

lot lot in EPYC, in a stages that ramp systems a we of second of various have labs, year. that XX ensuring on customers through There very Rome platforms market. of focused that in story. are over the a the we're market, have into First platforms is half see supporting that and really XXXX and their going generation we of qualification,

it's a customers up little into the timelines in qualification qualification longer sure too for story, there's I a perhaps much broadly. as want that sample a validation initial a of and of about you no expect we bit see hope Naples bit. we think our Rome, we make that question on as around work But that manage is And that. is will go side their I interest the tighten around little those our took customer before Naples. But XXXX, it we part to also And and work Rome. that do we good lot

I think news is just of and good other some And it's lot really cleanly quarters. the to Matt, a couple interest, execute of questions? next us had you there's Or... the through on

Matthew D. Ramsay

some improved sell-through and has of you about share there was from last the about about talk you you particularly mind then, guys of wanted program, steps The products. the of I making marketing share of Thank have perception there. could fundamentally? I Inside some is some one refresh down But PC with they've the and I'm team ask their a go the a portfolio thing most that control quickly adoption bit server and how little Yeah. getting dramatically, of around wound for Intel questions side, relative to from often of. maybe seems on that something you. your of manufacturing OEMs guys about Rome. bit the And opportunities it AMD winning sell-in you some investors Intel is just client to X-nanometer, Maybe products change as like is improves one on talk consumer notebooks, the as and to I again, the marketing think know maybe well, and have product consumer

Lisa T. Su

Yes. Absolutely.

working said question the and so as EPYC, I to relative your of on in the generation Matt, GLOBALFOUNDRIES manufacturing first X-nanometer. TSMC of both So, with we the second earlier, are

sell-in where As great have relationships And being in the PC we the share, look your a market, PSPC question Rome And a currently that great are question. at OEMs. about versus we're we sell-out for when manufactured it's TSMC. I sampling, the at market, that's with It's then X-nanometer actually second the question. great

that perception the platforms up. get have there's enterprise You no can perception we for out the to us see opportunity the consumer of it that commercial question there's and number there. But from

And go-to-market with expenses. that. comes so we've been And very focused additional on investment that in

some getting Ryzen So brand and key ensure signs there, sell how momentum out to And sell-out. in getting some see we Ryzen to retailers know know the out what the is. early what they Radeon they includes of additional that brand there, the is value training proposition it at clear

into of we've the here product. And So of as quite back-to-school past. in here have both of you'll had we in that the have saw year, the month I to of holiday our had out restock assortment and actually half that we as globally quickly. see outlets we few launched in we a our presence the platforms larger go in that June, the of sold a And second actually than they think

for So that's us the market. in focus a clear PC

Matthew D. Ramsay

Okay. Thank you very much.

Laura Graves

Thanks, Matt.

Lisa T. Su

Matt. Thanks,

Operator

of the question from with with next comes Our Research. Bernstein Rasgon Stacy question. Please your line proceed

Stacy Aaron Rasgon

my taking for Thanks questions. guys. Hi,

that's quarter I ask said about Ryzen it thought of thought I as wanted I your that you revenues was the First, in quarter. well. Ryzen was what I XX% CPU last you share. heard say

QX? the do color other Ryzen I sequential how So the reconcile around growth into that with of

Lisa T. Su

notebook, it had the on Stacy, in desktop more we Ryzen basis, notebook. an of so, overall and units you units in was And it when look saw in Particularly, approximately a Yeah, notebook. at quarter-on-quarter XX%. we acceleration mobile

it's exact So number, approximate but XX%. approximately it's number, it's not an an

that. that's business you some also see legacy saw We and why increase,

Stacy Aaron Rasgon

Okay.

XX%? like XX% a kind now around maybe and little but of was XX% like it basically, a above below little before So

Lisa T. Su

In exactly. that range,

Stacy Aaron Rasgon

Okay.

up more second XX% question, said you you sequentially. For than had my EPYC

you're any up So it that running, of of X%, quarter; there share. I it, doubled think this quarter. in kind But little a – think XX% ballpark call – maybe last it's still I is

business of like or EPYC the meet that the So the current going if actually probably I get of about important triple to X% year, a kind was rate to half I your to guess, QX thinking you're to of, more run an rate had QX. know into Is targets? got exiting the year quarter. rate And or order you you earlier ramp this kind you're the going run by in that be mentioned back

Lisa T. Su

Yes, Stacy.

we into some yes, these go half units. are as But the acceleration larger guys number there of significant of go I year, second into think we view the more production. particularly an as

a that. I accomplish can see just think we pipeline that

Stacy Aaron Rasgon

it. Got

one housekeeping. Just quick

did so the go receivable up why Just much? accounts

Lisa T. Su

Devinder?

Devinder Kumar

I get question, the Stacy? didn't

Stacy Aaron Rasgon

much. sorry. up I'm they Accounts why and go receivable so did

Lisa T. Su

Accounts receivable.

Devinder Kumar

– higher of up revenue it's that's collections, went timing main so reason. it the Yeah, and primarily

In XXX. as unbilled the addition, Those which, this, increase get under revenue in is that revenue. AR not And recognized an was Semi-Custom associated parts with ASC line. there under recognized AR as you but for unbilled sits they shipped, as know, AR have

Stacy Aaron Rasgon

Got you, it. Thank guys.

Lisa T. Su

Stacy. Thanks,

Operator

Moore with comes with question question. next the Our Please Stanley. Joe Morgan your of line proceed from

Joseph Moore

about Great. you competing Thank the Can could talk product see emerge? product should you you. little those the just with that to about when Are if to there about you how that And sort proper wins, of we JV how JV do about a within talk agnostic that's bit you that? AMD you think think Chinese customers? or who you've licensed. expect developed Chinese Wondering that the and being

Lisa T. Su

Joe. Sure,

gone idea years we portfolio. start whole has couple to to product of share product Chinese market. The partnership So current ago, the development did and is China JV well. the more well. in our this get domestic We view going the The complementary was as a

we will applications, that not And think for from into to have that. will So EPYC certain I exact China of product domestic standpoint, yet JV the AMD They sell market. be the announced available. China then, timing I continue China think the

the quite So think product as development it. I'll well. wait But far, the has expected. it's of so until I gone official gone announcement And

Joseph Moore

Great. Thank you very much.

Laura Graves

you, Thank Joe.

question? Next

Operator

Please Our question the comes of proceed line with from your question. Securities. with Rosenblatt Mosesmann next Hans

Hans Mosesmann

Lisa, of then the will that are months? timing. at questions. that after Just the XXXX? guys quarter many happen six timing engaged in Thanks. of mega when after the of EPYC, actually version of The or X-nanometer with couple center the the moment? And the is you Is Ryzen you. data question a Thank second how

Lisa T. Su

Yeah, okay.

the Hans, the X-nanometer EPYC. it X-nanometer I the just timing would So, keep it's on after of Ryzen, as

we it's say, And out, some are all of would them say So very and I in terms form launch shape engaged wouldn't centers, or with we'll but across first. EPYC data far it's then, after. CPU GPU. of mega X-nanometer in way, I

would I with heavily standpoint, engaged CPU say, are the five. On we

Hans Mosesmann

you. Thank

Operator

line with with Cassidy from comes next Please your proceed Stifel. Our the of Kevin question. question

Kevin Edward Cassidy

Question.

going are be EPYC Just a again, start clear quarters you of expect shorter X, amount on could EPYC, be qualification to place? about be Or was your it can we deployment. customers there very it'd that in any in With would that were before four programs before that time deployed?

Lisa T. Su

Yes, Kevin.

to there I waited evals that's some who they were for plays to customers course, But own market. us call we completely out. to how with qualify returning started, the their were have understood we'll this be before So of believe because I let's and to – and, it, EPYC, see think

would be I think second it, call own qualifications generation EPYC, with would qualifications. of one let's parallel some do, with there that the customers expect who our would

there think And to part overlap activity. of I the that's that an we've opportunity sampling that of parallelize and we certainly some is to as work that early reason as try to some have early started so of

Kevin Edward Cassidy

data processors? you're Okay. is getting your Great. Or center, attach in just And independent that on the traction? rate is with the traction high EPYC GPU an a there

Lisa T. Su

I would XXXX-type for engagements moment. independent at revenue, are moment they the the say, at

in as think of rate that more both will is more node interest, into be and frankly, move we X-nanometer with and X-nanometer, Vega our attach. there attach I there the an EPYC

Kevin Edward Cassidy

Thank you.

Operator

from Sachs. question. Our next of Hari your line question Toshiya comes proceed Goldman Please with the with

Toshiya Hari

range. we relatively the stay about taking been for XX%-plus several question. seems you've forward? stable? in Or that thanks going moderate Yeah, over we should How the should It that expect OpEx growing the next think OpEx quarters? growth like to Should

Devinder Kumar

we XX% the are first we've to target range revenue. basis, set This of XX% revenue we year, the those it the been model mid-XXs, that thing increased right, laid largely that think guiding we've OpEx and we've if R&D. within stay to long-term you're guide I have to you the about the in out, is in to Year-over-year given increases our at have with look model XX%.

OpEx first weighted half but If the towards R&D is of you largely first side. the up, of to is XXXX half XXXX, the look on

the with a revenue, roadmaps. pleased company investments are with the We operating vary leverage at the but time increase product that we the from targeted getting heavily same in are in standpoint

about the investing all that from and have to revenue, And talked we we the the that Lisa those increase of heard products things some in of levers are just multiple areas. definitely you

Toshiya Hari

been Great. But laid little a the EPS out And over since realize it a ex-crypto? a as track since a it's on $X.XX and bit financial crypto you above year number, your I follow-up, has is that long-term to then. are to model. guys say Lisa, you been fair hit sort of tailwind

Lisa T. Su

Yes.

you are some we financial the temporal we some the model. are towards model. track things, about aside In But, and feel financial look that where track. long-term model I think, if are long-term we we Tosh, financial places, I think In at put ahead. are on feel we long-term we on good overall, that towards places,

Toshiya Hari

you. Thank

Operator

Our from proceed next with of with your question. question Danely Citigroup. comes Please the line Chris

Wayne Loeb

This Hello. Thank is What for for over will have Danely. one? taking kind Loeb improvement my of performance Wayne Chris current you EPYC X-nanometer call. the

Lisa T. Su

Yeah, getting is Wayne, performance I of improvement EPYC. what the into think we're not X-nanometer of details yet the

in on have and details the where we'll are we performance architecture this think year. I So more later

Wayne Loeb

Okay.

talked what in EPYC your mid-single-digit and you would the think of year, you As by year. share of the the Exiting do end notebooks? a about follow-up, your be desktops for share goal

Lisa T. Su

notebooks. overall I the a expected. PC continue share people and notebook little is the year. half I in to go particular, most market progress better desktops will In as the doing second think we into bit we'll the we than Obviously, that make increase expect think, of

standpoint, share we'll our does. this We so a continue what we don't the in on market wins have from design But target gain have for out specific see end there we'll believe to to share of based And this see point. we how at year.

Wayne Loeb

much. Thank you very

Laura Graves

Thanks, Wayne.

Operator

Please BMO with question. from your with line the question comes next Our proceed of Ambrish Capital. Srivastava

Ambrish Srivastava

GPU if a I I'm is on NVIDIA with update on the And very on you. GPU? has timing Hi. much, moat, and related is on call. you it sorry earlier you in Specifically, the X-nanometer moat for the huge us CUDA. just the had ecosystem? could software Thank Thank what's question with addressed you my competition seemingly What then – built Lisa. the progress than the

Lisa T. Su

Sure, Ambrish.

year. launch GPU X-nanometer sampling our second this in we it later started will the So quarter here and

launch to will it launch it expect – XXXX. So in we

As that some this their guys to sense us in making it We're progress do the is have with in reason ability our the relates right and the allows by the who engage And efforts cloud in the we're vertical. to quarter. now focusing and incremental large us, work And we're software to to progress. center first. software our making vertical with strategy ecosystem, good data on – important thing each GPUs needs

some we momentum think it's are I invest that we a and a and So very in effort good going It's seen But clear making initial progress. to we're effort. have we're multi-year to positive this continue multiyear space.

priority investment the it's So us. number one for

Ambrish Srivastava

have center, a within So been just in? you learning, large the machine let areas a it's sorry, able in within where data gain to been Thank quick Lisa, to area traction follow-up. have specifically you. yourself able What and you – pretty

Lisa T. Su

their again, data vendors Yes, working several center. key in on with applications we're cloud

Laura Graves

Thanks, Ambrish. Operator, we two have time please. questions, for more

Operator

problem. No

Aaron question. line your Fargo. Please comes Wells of Our from with Rakers with proceed next question

Aaron Rakers

to just But in you've go curious ramp, in taking to of apologize think the that about for congratulations back the you were into in also shipping now I this how many have you over meaningful your Thank you quarter. I'm and turning just curious of expectation Yeah. questions, the to the volume, EPYC. as market. of be asked continue volumes? course we year through if what on of platforms to remainder characterize XX would those those were terms true mentioned the

Lisa T. Su

Yeah.

number to are thinking a about platforms, platforms a multiple of I customers. those of say, shipping I'm majority large would that. So those

specific cloud doing the are their course, way well all platforms. from the of count platforms more of OEMs from and And obviously number platforms as as volume, the platforms platforms, a guys So are we is own ODMs relative.

number of is customer-dependent. I customers, multiple would of large our shipping the say, would majority of is the have sort to production production the what a those, and scale So those of

of tens numbers. of So some of in scales are some of them of and them them some in of thousands are hundreds of of units, are units, units different thousands in

Aaron Rakers

follow-up. quick enough. And a as Fair then, Okay.

and it going margin you ramp that the to new to think about – of target think of targeted your remind some businesses XX% quickly margin? we XX%-plus As ramping? consider profile mix the us about was can the of of XX%, tie how we some gross that we we terms just platforms should of the of margin can again long-term gross of think your forward, I how new in And maybe

Lisa T. Su

of Well, product third portfolio. new gross quarter we're largely strength the on to margin. XX% guiding the That's

our Radeon from I before, our gross still holds products margin what a center our data Ryzen, is and XX% said EPYC, aggregate think we standpoint. in which all over are

well they're So the average. corporate above

to of starting mix accretion that new margin I the the products. and think we're see

we'll so of over next do that couple quarters. continue the to And

Aaron Rakers

So it's fair I to assume... guess,

Lisa T. Su

your answer Did question? that

Aaron Rakers

I that Yeah, guess, I'm assume I an here just given and from trend really higher? trying that could to margin guess, gross being around continues to EPYC fourth – commentary important quarter, we quarter the the

Lisa T. Su

revenue. of new products product our Well, is that will think second the into a fair the I a it's that half be to we standpoint. year, our larger say positive go percentage And margin as overall of from

Aaron Rakers

Great. Thank very you much.

Operator

Our with final comes question. Arcuri proceed line with Please your Tim from UBS. of question

Timothy Arcuri

ability guess, stock, look after. the is the to next – about is sure when of and targets a there's gain targets year I at there data I no the year about maybe not this lot But the some Thank I'm you. year. sustain share I had question two. those there

in visibility first I doing customers you you you. giving Opteron are this your more was done that the question not the Thank time guess, differently Are So to is roadmap? question what – cycle? your

Lisa T. Su

second in is like. first-generation that what we we do to five-year trying to going were We to to said out It what roadmap were have we and and a Tim, behind what certainly going doing wanted EPYC them came major little we than out really third-generation EPYC that. bit to generation expect And we they to for what exactly told are We differently were around And a as to we doing I laid would think we EPYC pleased said them servers. the I'm we're that do a better are that. expected. track do. say we look a We what thing when do. company on told we

provide really value a well the differentiation focus proposition as us partner. our to to So long-term and really, is execute consider customers a in

us happens the I we going not – And two done. the This journey EPYC. is to with do. next we've said about feel think are after good what entire a for it's we team We were quarters. extraordinarily we And delivering what over focused is what on

Timothy Arcuri

maybe beyond strategically that Got beyond it, think given you you. X-nanometer. But began really great, to will little I unexpected of do parts. really Lisa. it's when how time? around and you the Thank And you be Intel you roadmap for functionally I have that. last X-nanometer And is then, now where Clearly, going development Intel the question your Thank strategic just partner? to that with skip is bit foundry guess these think a at you over because a lead which is as move X-nanometer XX-nanometer,

Lisa T. Su

foundry the technologies. cadence very roadmap a in see of we nice is actually What

do believe will be X-nanometer of derivatives plus. node. X-nanometer we So large X-nanometer, a will be X-nanometer, There

X-nanometer we We have view X-nanometer, is competitive very as think seen of and well. the first

the market, differentiate then and in and positioning, architecture, So offer the use the those process and of again, on foundry best is goal product our technology can to kinds things.

Laura Graves

Thank you very much, Tim.

Operator

turn to this and our session. back Ladies Laura like I concludes for And the Graves gentlemen, call question-and-answer to would remarks. closing

Laura Graves

much. thank Q&A, your We again the our who to Thank everyone for call you you, operator, and joined today speak you appreciate soon. we'll and time, very

Operator

today's concludes teleconference. This

Thank your for your You time. at lines this may participation. you disconnect

Advanced Micro Devices (AMD) 25 Jul 182018 Q2 Earnings call transcript