AMD’s full-year 2018 revenue
Advanced Micro Devices’ (AMD) earnings came in better than NVIDIA’s (NVDA) in the fourth quarter of 2018, as it gained share in the data center GPU (graphics processing unit) market. 2018 was strong for AMD. In the first half of 2018, it benefitted from crypto-related GPU and PC CPU (central processing units) sales, which more than offset seasonal declines from the game console.
In the second half of 2018, strong demand for server CPUs and GPUs more than offset declines in crypto-related sales. However, the second half was not strong for NVIDIA as slow adoption of its latest Turing-based gaming GPUs failed to offset declines from crypto.
For the full year 2018, AMD’s revenue rose 23% YoY to $6.48 billion, driven by 39% growth in the Computing and Graphics segment. Rival Intel’s (INTC) full-year 2018 revenue rose 13% YoY driven by stabilization in PC demand and strong demand in the data center market. Even NVIDIA is set to report 20.6% YoY revenue growth for fiscal 2019, but this growth rate is slower than its growth rate in the last two years of 37.9% and 40.6%. NVIDIA’s revenue growth slowed due to weak demand from data center customers and crypto miners.
The above data shows that AMD achieved its 2018 target of mid-20% revenue growth and even outperformed Intel and NVIDIA in revenue growth.
AMD’s profit margin
At the third-quarter 2018 earnings call, AMD estimated its full-year 2018 non-GAAP (generally accepted accounting principles) gross margin to expand to over 37% from 34% in 2017. The company exceeded its target with a gross margin of 39% driven by a higher mix of Ryzen, EPYC, and Radeon processors.
However, AMD missed its operating expense ratio target, as it invested a higher amount on go-to-market for its data center GPUs. Its operating expense ratio fell from 31% in 2017 to 29% in 2018, but it was higher than the targeted 28%.
AMD’s cash flow
AMD also missed its target of reporting positive FCF (free cash flow). Instead, its FCF fell further from -$105 million to -$129 million. Amid the weak macroeconomic environment, the company did not provide FCF guidance for 2019.
Next, we’ll see how 2019 will play out for AMD.
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