Continuing our earnings season coverage for Q3’21, today we have the yin to Intel’s yang, AMD. The number-two x86 chip and discrete GPU maker has been enjoying explosive growth ever since AMD kicked off its renaissance of sorts a couple of years ago, and that trend has been continuing unabated – AMD is now pulling in more revenue in a single quarter than they did in all of 2016. Consequently, AMD has been setting various records for several quarters now, and their latest quarter is no exception, with AMD setting new high water marks for revenue and profitability.

For the third quarter of 2021, AMD reported $4.3B in revenue, making a massive 54% jump over a year-ago quarter for AMD, when the company made just $2.8B in a then-record quarter. That makes Q3’21 both the best Q3 and the best quarter ever for the company, continuing a trend that has seen the company’s revenue grow for the last 6 quarters straight – and this despite a pandemic and seasonal fluctuations.

As always, AMD’s growing revenues have paid off handsomely for the company’s profitability. For the quarter, the company booked $923M in net income – coming within striking distance of their first $1B-in-profit quarter. This is a 137% increase over the year-ago quarter, underscoring how AMD’s profitability has been growing even faster than their rapidly rising revenues. Helping AMD out has been a strong gross margin for the company, which has been holding at 48% over the last two quarters.

AMD Q3 2021 Financial Results (GAAP)
  Q3'2021 Q3'2020 Q2'2021 Y/Y
Revenue $4.3B $2.8B $3.45B +54%
Gross Margin 48% 44% 48% +4pp
Operating Income $948M $449M $831M +111%
Net Income $923M $390M $710M +137%
Earnings Per Share $0.75 $0.32 $0.58 +134%

Breaking down AMD’s results by segment, we start with Computing and Graphics, which encompasses their desktop and notebook CPU sales, as well as their GPU sales. That division booked $2.4B in revenue for the quarter, $731M (44%) more than Q2 2021. Accordingly, the segment’s operating income is up quite a bit as well, going from $384M a year ago to $513M this year. Though, in a mild surprise, it is down on a quarterly basis, which AMD is ascribing to higher operating expenses.

As always, AMD doesn’t provide a detailed breakout of information from this segment, but they have provided some selective information on revenue and average selling prices (ASPs). Overall, client CPU sales have remained strong; client CPU ASPs are up on both a quarterly and yearly basis, indicating that AMD has been selling a larger share of high-end (high-margin) parts – or as AMD likes to call it, a “richer mix of Ryzen processor sales”. For their earnings release AMD isn’t offering much commentary on laptop versus desktop sales, but it’s noteworthy that the bulk of the company’s new consumer product releases in the quarter were desktop-focused, with the Radeon RX 6600 XT and Ryzen 5000G-series APUs.

Speaking of GPUs, AMD’s graphics and compute processor business is booming as well. As with CPUs, ASPs for AMD’s GPU business as up on both a yearly and quarterly basis, with graphics revenue more than doubling over the year-ago quarter. According to the company this is being driven by both high-end Radeon sales as well as AMD Instinct sales, with data center graphics revenue more than doubling on both a yearly and quarterly basis. AMD began shipping their first CDNA2-based accelerators in Q2, so for Q3 AMD has been enjoying that ramp-up as they ship out the high-margin chips for the Frontier supercomputer.

AMD Q3 2021 Reporting Segments
  Q3'2021 Q3'2020 Q2'2021
Computing and Graphics
Revenue $2398M $1667M $2250M
Operating Income $513M $384M $526M
Enterprise, Embedded and Semi-Custom
Revenue $1915M $1134M $1600M
Operating Income $542M $141M $398M

Moving on, AMD’s Enterprise, Embedded, and Semi-Custom segment has yet again experienced a quarter of rapid growth, thanks to the success of AMD’s EPYC processors and demand for the 9th generation consoles. This segment of the company booked $1.9B in revenue, $781M (69%) more than what they pulled in for Q3’20, and 20% ahead of an already impressive Q2’21. The gap between the CG and EESC groups has also further closed – the latter is now only behind AMD’s leading group by $483M in revenue.

And while AMD intentionally doesn’t separate server sales from console sales in their reporting here, the company has confirmed that both are up. AMD’s Milan server CPUs, which were launched earlier this quarter, have become the majority of AMD’s server revenue, pushing them to their 6th straight quarter of record server processor revenue. And semi-custom revenue – which is primarily the game consoles – is up not only on a yearly basis, but on a quarterly basis as well, with AMD confirming that they have been able to further expand their console APU production.

Looking forward, AMD’s expectations for the fourth quarter and for the rest of the year have been bumped up yet again. For Q4 the company expects to book a record $4.5B (+/- $100M) in revenue, which if it comes to pass will be 41% growth over Q4’20. AMD is also projecting a 49.5% gross margin for Q4, which if they exceed it even slightly, would be enough to push them to their first 50% gross margin quarter in company history. Meanwhile AMD’s full year 2021 projection now stands at a 65% year-over-year increase in revenue versus their $9.8B FY2020, which is 5 percentage points higher than their forecast from the end of Q2.

As for AMD’s ongoing Xilinx acquisition, while the company doesn’t have any major updates on the subject, they are confirming that they’re making “good progress” towards securing the necessary regulatory approvals. To that they, they are reiterating that it remains on-track to close by the end of this year.

Finally, taking a break from growing the company by 50% every year, AMD is scheduled to hold their AMD Accelerated Data Center Premiere event on Monday, November 8th. While AMD isn’t giving up too much information in advance, the company is confirming that we’ll hear more about their CDNA2 accelerator architecture, which along with the current Frontier supercomputer, will be going into their next generation Radeon Instinct products. As well, the company will also be delivering news on their EPYC server processors, which were just recently updated back in March with the launch of the 3rd generation Milan parts. As always, AnandTech will be virtually there, covering AMD’s announcements in detail, so be sure to drop by for that.

Source: AMD

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  • psyclist80 - Tuesday, October 26, 2021 - link

    So many Catalysts for AMD...they are hitting full stride. Looking forward to the future with them, both as a shareholder since 2013 and a PC Enthusiast! Go Lisa and team!
  • WaltC - Wednesday, October 27, 2021 - link

    Yes, AMD is going gangbusters even in this shortage. If the shortage breaks next year they'll push even higher numbers!
  • TheJian - Wednesday, October 27, 2021 - link

    Q's getting better, but still not Q4 2009 1b+ NET INCOME. Which means, IMHO, too many consoles that make single digit to mid teen margins, instead of more EPYC or HEDT etc chips that make mass MARGIN and sell for thousands EACH (and make thousands each in many cases).

    Stop making consoles, and you'll start hitting 1B+ NET INCOME Q's right and left. In a wafer shortage you don't make celerons or console socs etc. You make stuff that makes the MOST margin. That is why Intel made 6.8B this Q vs. 5.1B last Q. That is NET INCOME people. They made 7x AMD NET...Yeah, AMD is winning...I swear... /s I said they had about a year left, you're seeing it. Mkap 3/4 of Intel, yet NET 1/7'th. See the problem here? Never mind assets, shares outstanding, etc etc. if you don't own your own trade account somewhere (15yrs of data). Not saying AMD isn't going in the right direction, but 3/4 the mkap of Intel. Are they making 5B a Q NET INCOME? NO, not even 1B NET yet, not since 2009 Q4. Just saying people, I'd rather be in a company that looks to be making ~22B net this year vs. AMD trying to get to 3B NET (one time tax breaks don't count, so 1.3B out)?
  • scineram - Wednesday, October 27, 2021 - link

  • Teckk - Wednesday, October 27, 2021 - link

    Hey it’s Jian.
    Why don’t you compare Intel’s revenue to that of Apple? Do you know Apple is making better systems with their own designs after skipping Intel’s chips. Why not Intel follow Apple and come up with their own devices?
    Intel’s stock has performed really well in the last 10 years as well right?
  • Qasar - Wednesday, October 27, 2021 - link

    yep, another anti amd rant by thejian. what else is new ? only seems to post on here when intel and amd's earnings reports are announced. praise intel, bash amd, some old bs
  • Wrs - Wednesday, October 27, 2021 - link

    You do know Q4 2009 for AMD included a $1.24 billion court settlement from Intel? Net income includes taxes and special items. Operating income doesn't. So operating income is just more reliable in gauging a company's trend. In 2009 AMD wasn't doing so hot - slight negative op income.
  • Spunjji - Thursday, October 28, 2021 - link

    He does know that, he's just hoping nobody else notices why he cherry-picked that one date, because otherwise it rips the bottom out of his bullshit narratives.
  • Spunjji - Thursday, October 28, 2021 - link

    TL;DR: *fart noises*
  • mode_13h - Thursday, October 28, 2021 - link

    It's a good thing TheJian is just a day trader, because if he actually worked in one of these big corps he wouldn't last long. The corporate lawyers' heads would explode, after listening to him for even 5 minutes.

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