AMD - Earnings call transcript Q2 2019 | Advanced Micro Devices, Inc.

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Operator

Greetings and welcome to the Advanced Micro Devices Second Quarter 2019 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce your host, Laura Graves. Please go ahead.

Laura Graves

Thank you and welcome to AMD's second quarter 2019 conference call. By now, you should've had the opportunity to review a copy of our earnings release and slides.

reviewed Relations they amd.com. page not on be have Investor the of you these can documents, found If AMD's website, on are call today's Participants Dr. conference Officer; Senior Lisa Devinder Officer Chief President Su, Executive our and Treasurer. Kumar, President, Vice our Chief Financial and and live website. is on a replayed webcast and call This be will via our

will August will Senior Wednesday, Communications Senior would our Deutsche second-generation to close Bank EPYC our the President present I begin, some XXth, August Summit we Manager Infrastructure Vegas; Data launch begin On On to Chicago. highlight Technology of Norrod, Devinder present XXXX Conference & important in the Jefferies Vice Center Tuesday, Solutions CPU on officially on XXth, XXXX, Financial dates and Kumar, General Chief Before and is Semiconductor XXth, Las like Friday, September at September for time expected Vice at Treasurer business. Group at Xth. Tuesday, you. Hardware President, and third the Forrest in and AMD our Datacenter will quiet quarter Embedded of Officer

only date Today's our beliefs, Those risks see expectations. and of on statements based from current could to the forward-looking current based and and current cause as as speak that as such, it. materially we uncertainties are expectations, this statements discussion environment results differ contains currently assumptions on involve actual

revenue except GAAP will segment financial basis. We call during results, for and non-GAAP which refer primarily on to operational this are a measures

is cautionary for our our Please information. The release most release, measure to today's directly on their non-GAAP more comparable website. are which financial measures the in press statements reconciled to financial GAAP press refer in today referenced posted

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

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

Lisa Su

the second today. listening first gaming Radeon and across first the of the our quarter high Laura, Company execution in and to made to CPUs, both advance launch all and we GPUs, pleased the in early to XXXX XXXX processors We good X-nanometer ramped extremely history afternoon quarter Thank the second-generation and as on those GPUs simultaneously as ramp and of am in you, CPUs performance production EPYC PCs, Ryzen processors launch. volumes I data quarter third our their in high-performance with center.

sequentially clients with business were declined at of Looking second and $X.XX and driven revenue. as quarter, lower both Revenue the billion graphics XX% our processor growth expectations segments. revenue server revenue semi-custom line channel in year-over-year our across by of increases increased by XX% offset

double-digit to a unit revenue by highest year-over-year our offset XX% processors, sequentially, by and quarterly response. higher Zen client lower XXXX driven Ryzen and we client year-over-year, processor industry-leading our percentage sales Mobile revenue years. Computing X five shipments featuring declined new segment, customer to overwhelmingly in increased processor graphics In core Graphics were our sales. positive desktop, by launched significantly channel as our Turning

Ryzen X-nanometer CPUs on in gain has both AMD of high strong the with we mobile of very less e-tailers outpacing and single number at share and the and by the expect competitive their latest our been applications, consuming global processors XXXX response point periods. commercial times and desktop reviews same generations Based three back-to-school third-party than more threaded previous and holiday the following volume to to consumer in retailers Ryzen while superior demand our market than respective powered launches. PCs, Ryzen sales customer threaded highlighted of offerings. the processor multi Numerous at performance and our power growing

a double-digit GPU our series launch series Graphics, offset sales, XXXX RDNA GPUs by previous Radeon sales in our center significant strong driven up increased our a the XXX increased sequentially partially sales. watt for data Radeon new channel by lower as of gaming new percentage price increase by Initial GPUs The by and revenue RX year-over-year, third-party at demand generation. family. decreased In of GPU driven channel largely have per has with our to architecture times our XXXX highlighted compared delivers our relevant more to performance points. been performance X.X reviewers leadership revenue

growth wins. We we positioned year our continue are driven half for We the growth, the family. quarter as Radeon strong GPU XXXX sales year-over-year of largely to HPC and data had second well cloud ramp of another in center GPU by

strategy of accretive our making part our progress on this continue working marquee customers. on business focus based expanding to We margin with closely

We future smartphone a for ecosystem drive across Radeon mobile and deep growing our leaders with architecture. their and graphics strategy partnership in The cloud partnership console, contribute to the the We to markets a to strategic PC, also with and game bring Radeon quarter engage now graphics industry our base developer to ecosystem announced SoCs. across have showcases everywhere. mobile Radeon partnerships the to installed Samsung that

year custom, power from Enterprise our AMD lower our have to ago SoCs next custom decreased we segment, Custom Semi game Turning generation Semi extended Embedded they announced will use game leadership have console Custom both and to consoles. a both due revenue. to revenue Microsoft now as their and XX% Sony In semi

highest to back proud the of to consoles. generations world's game power very performing are back We

lead reflected half processors of game into full year server, in OEM second As In driven revenue demand, and CPU significantly now cloud the grew is guidance. console look year, we sequentially of and next-generation seeing shipments we in are softness by initial our year-over-year customers. Rome which the to additional our

based deployments the continue EPYC generation increase to quarter. cloud in First processor

its virtual instances Microsoft and first workloads configurations. regions launched Azure customers processor of of run availability demanding powered ever HB than HPC cloud. expanded dozens XX in to new time And its EPYC machines availability the more for Amazon of that general to the enabled supercomputing

Customer performance development continues with set and expectations, grow. to the across TCO significantly platforms and of our to more processors, leadership in Compared our server have we expanded time delivering first-generation enterprise a Turning next-generation and Rome to larger than twice Rome number on number is processor, a partners. EPYC excitement of workloads. of exceeding cloud

have We more actively deployments times engaged to on customers launch. four enterprise cloud and also prior

result, track As on faster to processor. our Rome significantly EPYC ramp is than first-generation a

seeing University where in HPC leadership density we including offer are and National particular public had Norway's in strength quarter, compute wins Indiana the We IO. Network. supercomputing Research announcements We from multiple and

be Laboratory US their epic by Our supercomputing to Department both next-generation Rome and events at Ridge look supercomputer selecting details is the Xth. on and providing on our world’s the momentum Oak Radeon to built Frontier more CPUs National Cray. launches when instinct was August power computer GPUs Energy exascale expected launch fastest XXXX. it We to by of forward Frontier highlighted in

first competitive our the we inflection for XXXX, product a In the half in summary, growth of point have with Company as portfolio we the as of significant phase complete reached history. next most enter we our

We have In driven our customers quarter the seen US some US second concerns added entities shipping supply to uncertainties we trade by the to list. chain tariffs, stopped entities across in the list.

parts momentum been the the and While growing we given situation, remain by has offset of impact limited other our business. of to date cautious in fluidity the

the market well our plans center path in data coming share executing PC, markets the across and to gaming product significant portfolio are gains to and a quarters. for our We see

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

Devinder Kumar

afternoon you, Thank and Lisa, good everyone.

financial provide the results second for year. half with a pleased foundation We are half for the solid of the the first XXXX, of which

performance the year Second of increased margin products. quarter prior X revenue points strong percentage XX% high XX% of driven first over from ramp billion, our the the grew $X.XX of quarter. of Gross portfolio by

was lower and lower year than with channel semi-custom RX ago. sales and Radeon down EPYC graphics and sales revenue from Quarterly by associated Strong XXXX of sales our XX% a processor blockchain. offset new were more GPUs Ryzen

expenses a $XXX product million earnings primarily share due per compared $XXX XX% and year to Operating year million expenses. new X%, higher $X.XX ago, $X.XX lower million, compared $XXX income million a to Net primarily share from and income and $XX was activities million introductions. a operating go-to-market per year was grew from down was XX% was share ago. to revenue margin to Operating per diluted $XXX ago. Operating year-over-year by year a ago, down driven

segment more the segment lower million, client as of Computing quarter was blockchain-related the strong segment second sales revenue was and $XX XXXX. to primarily million due down income revenue due year-over-year, to $XXX turning compared than a results. year Graphics in offset $XXX revenue. operating Graphics were negligible by business million Computing sales and Now ago, lower processor XX% to graphics overall to

to $XX growth EESC down improvement In revenue revenue by center center segment a CPU Embedded offset was ago. the was was year from segment lower prior due partially XX% income CPU and to Enterprise and significant data in revenue. $XXX compared Semi-custom Semi-Custom largely year. million operating $XX growth in was million, data The million the revenue.

$XX cash, Free totaled in with $XX cash secured debt $XXX loan and was at million the we reduced was equivalents to have end we million million. facility quarter. flow our gross Turning flow a asset-backed million operations Year-over-year, of the line marketable replaced $XXX cash also in revolving sheet, from our the and cash second by credit. while securities $X.X the balance quarter, negative the of quarter, billion

to half accelerating end and was $XXX inventory billion, compared of the quarterly million times. year quarter products earnings. basis, up product year. a $X new was increased a EBITDA of $XXX On leverage our EBITDA was due to anticipation million $XXX in of lower primarily at ago of sequentially gross X-nanometer the million Inventory XX-month to million back X.X was due adjusted Adjusted $XX the in sales trailing the

outlook third Turning XXXX. to for of the quarter the

$XX than and billion are year-over-year semi-custom We and by increases $X.X X% product be expect sequentially. plus of approximately lower expected XX% sales. driven to to The Ryzen, be an EPYC million, Radeon and sequential approximately sales, offset minus by increase partially expected or year-over-year revenue

for expect non-GAAP diluted X.XX third XX%, count non-GAAP interest non-GAAP shares operating million is be margin gross In and approximately taxes approximately to be XXXX, million, approximately other expected to expenses $XXX expense, $XX and . addition, be quarter to to share billion approximately QX, we be

we now year, year mid-single a non-GAAP XXXX. expected For excluding significant of ramping closing, lower In to XX%. Ryzen and approximately over Ryzen, remain our offset revenue full to gross new of Radeon will the had be processors, and upcoming partially year increase by by remainder to revenue. year-over-year. well of strong semi-custom Revenue look expected percent expected our of as than we executing growth for We XX% the half semi-custom digit first EPYC to increase focused our Rome. plans is launch products new is XXXX, on approximately forward driven sales as the Full Radeon believe margin and the

to it question-and-answer Laura? for Laura done back has the session. that With

Laura Graves

Thank question please. for first you, our Devinder. Operator, we're ready

Operator

RBC Capital from [Operator Instructions] Our Steves is coming Markets. question first today Mitch from

is line now Your live.

Mitch Steves

Yes, sorry. Yeah.

is question really the first my So margin on side. gross just two,

so guys the mid a seeing I materially So server digit down if entire the are the reason kind more guess I margins aren't of coming the talking single on about gross growth the numbers, you traction why semi-custom pretty expanding and -- more, that's guess side? the bit little you're for

Devinder Kumar

think the approximately there in We've QX the towards you're did QX up are XX% at is with QX, XX%. I custom that's where it row mix, going the for and projecting the The overall ,in although guide the of can there the to the XXXX for in also quarter margin, and in gross ramping semi-custom Semi margin you and guidance third a tell non-semi QX our standpoint for is now decline products QX. right, if XX% the the product XX% Custom more with benefit with in in new is year an from in weighted you to and of are a especially also. from business XX% updated decline end richer benefit drive the margin is we I we gross benefit margin look XXXX. that margin

Mitch Steves

All I on guess Yes, right. to follow that. up just

the side. there the is So more share server by assumption the of 'XX have end that in you guys

server, keep for next you I assume up assumption so? year that gross the going just share going if to that in are I start fair a is as level well, So or margins gaining guess if XXXX high

Devinder Kumar

think business in to get I get very are say I the what see continues The closer progress pleased does XXXX businesses, to margin as mix the you so with product and mix right, the and being we would specifics, in margin. better, get mix client in we'll have on richer the benefits the -- the we of even product terms XXXX. we but other the is product are including made the richer

Mitch Steves

perfect. Okay, Thank you.

Operator

you. Thank

of America. Arya is question Bank from from next Our coming Vivek

Your live. is line now

Vivek Arya

whether see the give question, Rome, able to you color my but somewhat, targets could to wondering how you're from with seeing us the and and front pricing and the for any pressure Thanks was you more question from you're traction traction some importantly just traction, traction customers and outlined out Lisa with reach you market first the customers, it for to that if enterprise side? your are main -- my the I taking around product both you're seeing share, that is had good in the of if now cloud both the new think is quantify seeing products. there competitor and in I past the certain

Lisa Su

Yeah, question. absolutely the Vivek. for Thanks

that feedback both and is we're well We of performance second initial compelling, is So as quarter total ownership a look, Rome we the standpoint the and this customers. that did cloud The how a pleased performance coming up. from standpoint. with from both very are getting past very to cost customers ship quarter is shipments enterprise as

number gotten But on August the wins well we X. week launch obviously, good a customer HPC. customer pull. a our of and big for the from Rome side a us, cloud We've see we're going both standpoint, standpoint pull is officially on to as as week From enterprise next

environment about is pricing question Your pricing specifically the competitive. the environment, always

We terms is variable price of being expect the competitive. in servers not case decision. first be the buying it a to in That

that. a for see believe strong value environment we so, very that And standpoint Rome, the a we we is good proposition pricing have for from good and overall

Vivek Arya

percentage half give year? in I the you. outlook hoping it in you you given us quarter of had qualification Thanks, data the QX as on mid-teens color of Lisa. just center kind was what second of of for the the think was GPU my follow-up I sales. could and us CPU some the some sense around XXXX last and is what Thank And around that side, as, as or a

Lisa Su

last percentage the quarter. in so second quarters weighted business. GPU few percentage terms more were is the in Yeah, quarter second of to the our heavily similar versus CPU We the towards of in

saw data sequentially CPUs we expected. grew, GPU So expected. as center The declined as

center the half Rome. we the second the ramp As the you go expect as should data will of revenue through year, percentage our of into increase that we

Vivek Arya

Thank you.

Operator

you. Thank

Our next from is Hari coming question Sachs. Goldman Toshiya from

line now Your is live.

Toshiya Hari

making the Rome for a positive. based on the continues and from at least slow to a peers like half? so I commentary lot that pretty the going I thanks Lisa, Is impact taking your for the Great, much concern said a customers, seems of question. Could progress with environment your forward? obviously, feedback very guess. That's the seems second you it have hyperscale or Then you're ramp that into follow-up. initial overall be

Lisa Su

Sure.

have look, the certainly the So of we especially in half first around same the heard conversation, cloud year. environment the

come that the over a online heavily new second-half Our number Rome for engagement our always very plan significant weighted. was product we couple of will of we and installations quarters. pull a next see have from And seen standpoint, and customer the

out grow. that's I given are cloud also standpoint, that believe the there I digestion we some So cycle there. from are happening where is believe we positioned well product to that

Toshiya Hari

then I Frontier Got as hoping quarter P&L? next the learn should the about with the just was will you. perspective, it on IP how those bit Thank follow-up. win to deals to partnership a and from a two accretion more also little if couple in side, over Samsung, the and you EPC and the years the we think modeling about of the a

Lisa Su

Sure.

very announcements look, both. very with for we're significant both So us. pleased They're

portfolio a it's graphics side, mobile. across multigenerational have we Samsung that deal the multiyear, for On our

$XXX our that and revenue guidance some headwinds offset was This the In semi terms talked in not of be of approximately in China. would million, that about and it originally added. custom the we is XXXX, in

is the As should deal. it's that think part there that not some so are pure about way expenses that being specific you IP though, are it development is, of that

that. And so the portion those of of COGS be will part

a smaller again is that's then Frontier deal relates couple really the for next very, us. will the to infrastructure. and in As for get material. software number say it years I It's XXXX. be actual deployment Frontier, very relatively the to not of NRE would significant It

bulk of portion second CPU small XXXX. the with the revenue GPU XXXX and of half of will a the that the perhaps So in in be

Toshiya Hari

you. Thank

Operator

Thank you.

Matt from is question next & Our coming Ramsay Cowen from Company.

is now Your live. line

Matt Ramsay

Good Thank think PC half Rome -- afternoon. the portfolio seems bit into I year. wanted space, much. questions is Intel Lisam that to the is little you side your of later. portion very obviously XX-nanometer back X-nanometer there plenty going be momentum we'll The a the ask about week. desktop that going a I some it seems on your refresh business notebook hearing to next and of on for about

Yet I higher is think the SKU year and than coverage you've back-to-school it talked was XX% for holidays. about last

a could talk differences little in notebook? might between bit the you you. in business back momentum PC maybe about and half So the the see the into Thank desktop what you and

Lisa Su

Yeah. Matt. Sure,

second pleased well. look, In and to is notebook our We progress product due we of mobile quarter we additional that So second-generation very mentioned. ramp the PC with of the platforms a our that of had some we're perform business. the saw

desktop products the the on of our third-generation Going Ryzen are into positioned. very second the half year well side,

in lead we gains. We and expect to ramp third the production to expect significant that to quarter share here

mobile made and progress And products we're year. into on also feeling the good quite half consumer the both of commercial. the about second We've

are the strong we of have as always but number We year. on And half have side, platforms well. the in new commercial ramping into those second consumer, a been of the here

these. of the a for business gain think to us good half opportunity second to through be I overall, the continues So share PC

Matt Ramsay

the margin a things about rolling I X-nanometer new might before products margin just of Thank of wonder you talk take on the on some just the and products gross the that And XX, we that positive from either you're understanding so predecessor for you can as Company between that of some out versus congrats that couple even for me Devinder. -- -- some you. an of or [indiscernible] if or of were overall XX if differential it. Got magnitude get follow-up a cash

Devinder Kumar

are so Okay. XX% in previously we margin have Yeah, said the products, than side, aggregate margin. new the on as greater

of QX, on in from quarter in as are so that's new the and in see the launched X-nanometer margin, X-nanometer margin. the for with the not ramping, product And the accretive year. those updating terms particular just node, also products the why gross you gets we us the should richer more mix products standpoint And if the that but for that benefit guidance

Matt Ramsay

Thank you.

Operator

Thank you.

Our next question coming Securities. is from Rosenblatt Hans from Mosesmann

Your now line is live.

Hans Mosesmann

execution Thanks, the the terms you X-nanometer with Hey, guys, Lisa, are at congrats on constraints TSM? X-nanometer. in and guys of

Lisa Su

yes. Hans,

it have supported number ramping we se. X-nanometer at and or a X-nanometer and but so to we takes not say are of per we not are I more TSMC longer So do us will cycle in just well. of TSMC quite times constrained up, ramp time that constrained products has

Hans Mosesmann

Great, X-nanometer Thanks. mobile on a sense you can? CPUs, can And if and high-end us you you X-nanometer give if can Navi

Lisa Su

the say asked product are they would questions, I good you Hans, coming.

You announced we the should the upcoming beyond expect those that have a X-nanometer quarters. products in currently and our we execution portfolio on track rich that are on have

Hans Mosesmann

you. Thank

Operator

you. Thank

Lipacis is question coming next Jefferies. Our from from Mark

now is line Your live.

Mark Lipacis

Lisa, a lot thanks you Hi, my taking working of things for you for at. have question.

you getting surprise your where on original relative the biggest expectations? got that seen Rome, GPU the feedback to were You upside the you Ryzen, portfolio,

Lisa Su

performed Yes, think well. quite all so have really look, products Mark, I

both just we weeks. in market is, desktop, of Ryzen the it's reviews third three What see for only as -- been as third-generation well obviously, customer reviews, terms interest. the in party the think I

points seeing but watch share the we're desktop uptick globe, significant market. very the our sort And of in the so carefully, we data in across

out has and I very positioned well. think come Navi

our talk Navi we'll first and more We're very with going we much EPYC next and steps step more architecture. have is about of pleased RDNA a couple the week. then

the the I on schedule think products and at/or thing is been the key have performance. above

to half second that in course, into goal our growth the of turn revenue of So year. the is

Mark Lipacis

follow-up a I you. great That's if color. And may. Thank

sense, you've ramp, You when Can mentioned do differently previous profile? going on there as the the you at we and gross Microsoft should as to to console Is be you and book is wins these ramp? things. did give think be about revenues generation to -- what do the us these similar it past X had in inventory, When to margin going start the on build the they a game you anything you a Gen Sony.

some color on the Thank So, X just you. consoles? Gen game

Lisa Su

Sure.

Those So general as are are say years. and only Mark, specific wins us their expect proud the weighted, especially thing customers we're consumer is, ramp on weighted you profiles. The will many of We at for wins I holiday and can't second-half Microsoft. the in Sony ramps big comment over know season. you can that and towards

the relates margin expect semi-custom then corporate under I would the will business be margins you think with So it that. to And our the as average. model, gross profiles,

quite different. our However, actually business model is

If our is to Ryzen, across significant. see other look products Radeon business that our forward of EPYC, we you all actually model, the growth quite

will be And percentage as overall of semi-custom so percent of for in few example, last the business than, the years. lower the a

Mark Lipacis

helpful. very Thank That's you.

Operator

you. Thank

is Rasgon Bernstein Our Research. question from Stacy next from coming

now Your line live. is

Stacy Rasgon

Hi on numbers again. guys, that. up I some My for that want thanks behind my gross want to first margin question follow half questions. put to second I one, taking

QX. for XX% guiding you're So

only for XX% guiding revenue under, sequentially, flat it's up consoles guidance QX QX about XX% maybe implied is and to over falling to sequentially. XX% bps be up is have but year-over-year Your XX% and year-over-year you're to XXX like

with growing over that revenues in been sequentially, in are I products, up like XXX don't switching QX? new into -- gross QX, gross XX% So guided XX%. the to over lighter Why bps I massively given year-over-year the kind a just must have margins mix be than understand. revenue only quarter-over-quarter flat sequentially aggregate of trajectory over that a even margins

Lisa Su

Stacy. Yeah,

can then and add start to me Devinder it. Let maybe

product go to What should So as look points. mix is will expect get to QX margin that full better. the we guide approximately the we you from QX,

will and be semi-custom, sequentially to semi-custom we down QX. from will more expect products QX the standpoint of new So

and implying get XX you we should not as the will through get in margin we'll we -- QX guide expect as that the QX, down that the are days. be we to so And next

Stacy Rasgon

Okay.

million For that prior And from Samsung does wasn't is revenue the guidance? impact well? what gross that the year-over-year that $XXX include excluding my $XXX the XX% growth on in the as Samsung, of the semi-custom, follow-up, your margins million

Lisa Su

is the in Samsung and additional so revenue XX% we the included list. part to it the as weakness Yeah, of year-on-year some China. Due have that entities offsets

to As somewhat profile, you can for expect margin the average. to gross corporate be above that that,

Stacy Rasgon

So low over somewhat 'XXs?

Lisa Su

Somewhat above corporate average.

Stacy Rasgon

Okay. And it is in the XX%. appreciate Thank you it. very much. I

Operator

Thank you.

coming next question Our from Wells is from Aaron Fargo. Rakers

now Your line is live.

Aaron Rakers

for the question taking have a as I and thanks Yeah, follow-up question. well. one

kind that on building Just last of question.

I couple looks being It by somewhere plus of your as now XX% much math, think the down semi-custom in you've last maybe declines, quarters, range. it my XX% about business is your as assumption that talked like, plus. business

and all meaning parse that changed Samsung those so estimate through kind you ex at ex semi-custom ex has your also the incremental of your items, Has in you Samsung? the And factor million -- revenue. the revenue decline when million then relationship and $XXX $XXX the

Lisa Su

so me to help that with Aaron math. try you Yeah, let

was expect year when year of would more what see the call we And In call we semi-custom the originally, down, thought So let's the full down on be the mid based year, down, that. approximately it first would to started half look, let's than now XXs, XX%. we year-on-year. be today, we it

we close, if shipping and Samsung about they're have a it the I coming minus is pieces, China, be, do with the business, think new to of is If we're not the to that products about upside of rest think you and plus all or where close of in would of we you couple how business by rest some that percent the in. talk the moving customers thought offset and the the now

think thought close, factors. where I would or be So those we we ex we plus are pretty two minus

Aaron Rakers

into think helpful be you data very growth of then, could understand how of trajectory revenue actually better to you time that. trying a just curious the looking driver, that Is where of there can appreciate the going I'm that's you. segmentation, forward. GPU I'm forward? going Obviously, product see at incremental our about get business visibility we in but stream Thank your just center, lumpy, and some point I how can Okay, that

Lisa Su

year-over-year Yeah, we're It little nice it's I size and a across of I cloud as we customers. of as going customer bit good a momentum and because comment. couple see both is growth lumpy concentrated to that's this year think its see fairly that HPC. in will fair well a say very

On the we have others cloud side, it but as as a gaming let's machine win win, public it streaming, number the is as flash we're Frontier well on call the And cloud side, learning. HPC is both, of that a working well.

be think be few over business I will good but we go we that as a will give forward, more we growth to feel color So it continues a driver the next years.

Aaron Rakers

Thank you.

Operator

Thank you.

Wong Our next from from question David is coming today Instinet.

live. is now Your line

David Wong

million, a second revenue a special as or line Samsung or that One something? on the and it question. Thanks Clarification much. in $XXX statement item then another does with on come small very income as a clarification is

Devinder Kumar

revenue. It's

you above specific the average. in take development revenue said the offset, and COGS. and COGS it's cost some So then is somewhat corporate the offset when margin, And earlier, like Lisa revenue and by also

David Wong

terms Okay, PC sequential in any excellent. And give June of, can GPUs? notebook sales and for units unit growth the quarter, you numbers the and your processor growth desktop us in in

Lisa Su

see Let's David.

about question is the second -- quarter. the So your the -- in

David Wong

yes. correct, That's

Lisa Su

Yes.

very second to the in the preparing as the saw the somewhat quarter. well the end due up down in we as seasonality So generation for desktop as quarter and saw And the going at third we that launch units we units second desktop through is transition happened were mobile we were down. fact units the the which sequentially of quarter, product a

channel. double graphics In relates that terms and sequentially, revenue both statement units the was primarily digits were driven of by to, as graphics, up and and we it that's

David Wong

much. Great, thanks very

Operator

you. Thank

Moore Our coming Morgan next question from from today Stanley. Joe is

Your line is live. now

Joe Moore

Great, thank you.

-- your guidance I project like a if seasonality the there I guess quarter. to mid-single get still? literally billion that? digit, for in there's full understand we anything how of So of to terms should but would I for big $X.X a or the take year, just I should give number December need sort that kind digit X%, number, you seems product anything full mid-single of still understand things in you confidence that momentum, lot a of Is

Lisa Su

is to Joe, of think, happen. we product launches have that view I amount significant Yeah, our

So the server third side as on as fourth the the both on side. through we go quarter quarter, the side, well and PC as the GPU

it we of and growth, there. sort I think yes, about good So drivers significant the is feel

Joe Moore

had. I all Thank That's great. Okay, you.

Operator

you. Thank

Suisse. Our from next question today is coming from Credit John Pitzer

line live. is now Your

John Pitzer

Thanks letting congratulations me guys. on afternoon the for I good solid results. Lisa. missed if ask Yeah, this, Apologies and question

back million revenue going in or $XXX coming quarter all there September Samsung Just into fourth be will quarter some is calendar the well? as the that to the

Lisa Su

that in approximately the little $XXX is in and the a bit for Yes, John, rest was QX will then There QX? QX be million million year. $XXX and

John Pitzer

Is that there on between about it should QX we just it -- talk split or kind a linearity you is QX. evenly of can and

Lisa Su

that's think I close.

John Pitzer

as Okay QX to your and OpEx. of guide full bridging gap similar pertains and your between the year on it then just a sort guide question

should leverage and begin accelerate kind SG&A how line, as just but meaningful to to we full the you look which again? spend start of OpEx imply about thinking that you is or our thinking actually great giving to guide of are revenue flat If QX the how curious could R&D year on you're revenue I'm in sequentially at on down in understandable see you're pretty kind OpEx, be dollars growth, it the

Lisa Su

I through OpEx be flattish should of the Look, expect we rest the as should that go you year. think

the obviously a half We of OpEx was higher have the increased OpEx, percentage revenue. as of year first

the the right execution We I that. places think are product shows in investing and

picture, investments obviously revenue to continue evaluate what right we as OpEx. will look overall the do do But think I growth we've and we'll the so. made we'll XXXX through with We in

Devinder Kumar

John, consideration. And doing you at you if data take QX the looking approximately for XXXX, expect additional if you're be since XX% to are and QX math, OpEx we into

Operator

Thank you.

Ross Seymore question Our coming from next Bank. is Deutsche from

Your now line live. is

Ross Seymore

you goals. that half Lisa, will a the talked confident the Hey week me question. guys, sound this but Rome very aggregate, next thanks to this you in which second now letting launch, maybe the for A the share market address launch you on. ask in in about we're closer ago, much ramp, something year is

I to the X% sort think timing the share, that of on market was update hit four double-digit and/or any around target? it six after comfort quarters you market share hitting

Lisa Su

Yeah.

not about right feel update good yet. ready that target. think hitting Ross I I'm the to So we

market I quarter. of want We'd to in is here that, as is that as There get and helping and we platforms get customers think through. launch a like The fourth target. is possible. it's lot about we certainly the get but in the platforms feel the performing third target some soon right to of to now through product the quarter well our their to

Ross Seymore

think Got occur A follow whenever heard it. will it? is it build to. the recognize of Thanks you for revenue. answer that. question next same may so quick part It the the was for accounting You don't that far semi-custom ramp, I I in a prior up. the as, year But the

you etc., or guys second revenue of get ramp change stage half does be and something So than that the would that even no and wise consumer earlier that to if accounting year, true? longer and therefore, build that's customer obviously have tends in much the inventory the the to

Lisa Su

earlier the Yeah, the asked I responded accounting that was same. is don't But it. to and think I

I So a tend prior we The the though changes. would think qualification. not difference is don't we only -- product ramp accounting to

-- involved is there product, when a you're cycle. qualification more So brand some are new a doing there

shipments. And commensurate more so would actual I think there with be the product

Ross Seymore

is two happen more things you're [indiscernible] would what saying? simultaneously

Lisa Su

Correct.

Ross Seymore

you. thank Great,

Operator

Thank you.

Markets. BMO Srivastava from from Our Ambrish next question today is coming Capital

live. Your now line is

Ambrish Srivastava

thank delta I are that areas of semi-custom specific also then and product I sure the I EPYC you impact. an clarification. talked I'm you. Devinder. a you not understand. about that those is Lisa. having a that? also What is said for for and part then In China is Hi, also could had follow-up revenues, had And

Lisa Su

Yeah.

impact So small a we to have did China. due

and several are on the stopped shipping have we those entities the customers We quarter. to in US now that list second customers

positives the And so is that some the impact of is it's the a business. offset in rest small impact, there of but by

Ambrish Srivastava

and/or So both I'm right? assuming that desktop CPUs, server

Lisa Su

some there is some PC server There business are and business.

Ambrish Srivastava

you my Devinder, negative first gap million And year. between way earnings the If for but follow Can millions the that? you're guiding right you for around full put Can free massive. that. for his the per numbers free cash roughly I flow. or two tens to $XXX look on flow put you flow, quarters, per think that? at what's of that -- positive. Thank share thank cash free some Okay, up about is share, Is The you. cash

Devinder Kumar

year won't think, standpoint. cash if tens positive I flow positive you for a be and the ask flow from we me, year. are cash millions of QX free It free expect

the think going I'm pull I but give specific you number. digit, not a to it's

Ambrish Srivastava

helpful. Thank Okay, that's you.

Laura Graves

Two more Thank you, questions, operator. please.

Operator

Certainly.

next is from from question Curtis coming Our Barclays. Blayne

live. now is line Your

Blayne Curtis

for Hey, taking question. thanks good afternoon, my

year? on and market, was in if pull-ins, notebook you into seasonality was I that also you if Just so market those for I some and curious June the strong but wonder end out parse notebook in could of about any was, your talk the curious pretty items because ramping the impact short just product. the

Lisa Su

a secondary our that can Sure, say we're per of platforms. I pull-ins From and expecting to in uplift some think particular the seasonal half new Ryzen see due standpoint, still can't I Blayne. ramps were breath. ramped that of number se the any notebook our well year. point platform as a I We as we to platforms second chrome

Blayne Curtis

on to to In follow then to expect Graphics the one be just maybe which the looking you strongest? September And Thanks. the you highlight, a and you if wondering, your can just I'm do win guidance, if that. segments Compute between segment, three are

Lisa Su

they amongst then the their So the where and server graphics let's I that be in PCs strongest are ramp think expect to would see, cycle, say perhaps product you and what next. lines is the and would I

Blayne Curtis

you. Thank Okay.

Operator

you. Thank

is today from UBS. final Our Arcuri question coming Timothy from

line live. Your now is

Timothy Arcuri

effect but I exposed side. first just you've cannibalization of about its you? quite about sort how how Thanks the about question. And and a term? Lisa, over maybe wanted talk you of to of lot. think longer ask, my sort semi-custom so cloud gaming you some semi-custom Because coming done on potential on well launches with on the these one you're also to hand, some up, think big long-term

you So I'm factors? think two about how wondering those

Lisa Su

Yeah.

think sort gaming of look, overall. So I like we

We is is about to those segments. overall, our graphics ecosystem gaming. then there if you Radeon want believe PC architecture cloud a gaming, is So three there and rich question. is have there We about important. gaming cannibalization asked console across is the I've think gaming all been -- there

early important, access an talk to to really to it too say maybe is early think years. mean, thing I or about few a to more it's I in be users gaming it's additive, it's is but a that, getting cannibalization we whether going overall. think cloud too

sure make to very gaming. our is is architecture segments friendly to all goal a our that So of

Timothy Arcuri

then And back to question server that target. thanks. go about, Great, Ross asked just I the wanted share just to the on

Is you target are on you that that more reiterating when a update not, it's and you're well. here. think it? the about to right way us not So to going launch It's target that

Lisa Su

No.

Let we the stand target. me say do it this by way, think, I

six the So being target digit four double of after sort the to initial X%. quarters

feel I about until not target. that, than we get specific I'm think being good through the of that more ramp. we more

Timothy Arcuri

Thank so much. you Perfect.

Operator

further the over any or management floor We question-and-answer to our closing you. for session. of end back Thank turn to comments. like reached I'd

Lisa Su

August to you. Thank call. speaking Thank second we San call Francisco you you today. Company. your from support Xth that everyone us of to was AMD No, good and for for appreciate We joining look our on quarter forward a

Operator

does teleconference. conclude today's That

You may your participation disconnect this your thank We for you today. time. lines at

Advanced Micro Devices (AMD) 30 Jul 192019 Q2 Earnings call transcript