AMD reports earnings in the third quarter of 2021: records

Continuing to cover earnings season for Q3’21, today we have the yin for Intel’s yang, AMD. The manufacturer of x86 chips and discrete GPUs number two has enjoyed explosive growth since AMD began its kind of renaissance a few years ago, and this trend continues unabated – AMD now generates more revenue in one quarter than in the whole of 2016. Accordingly, AMD already several quarters set different records, and their last quarter is no exception, and AMD set new high ratings for revenue and profitability.

For the third quarter of 2021, AMD reported revenue of $ 4.3 billion, making a huge jump of 54% for AMD from a quarter a year ago, when the company earned just $ 2.8 billion in the then-record quarter. This makes Q3’21 both the best Q3 and the best quarter ever for the company, continuing the trend in which the company’s revenue has been growing for the last 6 quarters in a row – despite the pandemic and seasonal fluctuations.

As always, AMD’s growing revenues paid off well for the company’s profitability. For the quarter, the company generated $ 923 million in net revenue – close to their first quarter with a profit of $ 1 billion. This is a 137% increase over the same quarter last year, noting that AMD’s profitability is growing even faster than their rapid revenue growth. Helping AMD has been a strong gross margin for the company, holding at 48% in the last two quarters.

AMD Q3 2021 financial results (GAAP)
Q3’2021 Q3’2020 Q2’2021 Y / Y
Arrival $ 4.3 billion $ 2.8 billion $ 3.45 billion + 54%
Gross margin 48% 44% 48% + 4pp
Operating income $ 948 million $ 449 million $ 831 million + 111%
Net income $ 923 million $ 390 million $ 710 million + 137%
Earnings per share $ 0.75 $ 0.32 $ 0.58 + 134%

Breaking down AMD’s results into segments, we start with computing and graphics, which includes their sales of desktop and notebook CPUs, as well as their sales of GPUs. That department generated $ 2.4 billion in revenue for the quarter, $ 731 million (44%) more than in the second quarter of 2021. Accordingly, the segment’s operating revenue also rose significantly, from $ 384 million a year ago to $ 513 million. dollars this year. Although, to a slight surprise, the decline is on a quarterly basis, which AMD attributes to higher operating costs.

As always, AMD does not provide detailed information from this segment, but has provided some selective information on revenue and average selling prices (ASP). Overall, CPU sales to customers remained strong; Client CPU ASPs are growing on a quarterly and annual basis, indicating that AMD is selling a larger share of premium (high margin) parts – or as AMD likes to call it, a “richer combination of Ryzen processor sales”. As for their earnings announcement, AMD doesn’t offer much comment on laptop sales versus desktop, but it’s worth noting that most of the company’s new consumer products this quarter were focused on desktops, with the Radeon RX 6600 XT and Ryzen 5000G series APU.

Speaking of GPUs, AMD’s business with graphics and computer processors is also booming. As with CPUs, ASPs for AMD’s GPU business grew on both an annual and quarterly basis, with graphics revenue more than doubling from the same quarter last year. According to the company, this was driven by sales of high-end Radeon as well as sales of AMD Instinct, with revenues from graphics data centers more than doubling on both an annual and quarterly basis. AMD began shipping its first CDNA2-based accelerators in the second quarter, so in the third quarter AMD enjoyed that increase as it shipped high-margin chips for the Frontier supercomputer.

AMD Q3 2021 Reporting segments
Q3’2021 Q3’2020 Q2’2021

Computing and graphics

Arrival $ 2.398 million $ 1,667 million $ 2,250 million
Operating income $ 513 million $ 384 million $ 526 million

Enterprise, Embedded and Semi-Custom

Arrival $ 1915 million $ 1134 million $ 1,600 million
Operating income $ 542 million $ 141 million $ 398 million

Continuing on, AMD’s Enterprise, Embedded and Semi-Custom segments once again experienced a quarter of rapid growth, thanks to the success of AMD’s EPYC processors and the demand for 9th generation consoles. This segment of the company generated revenue of $ 1.9 billion, $ 781 million (69%) more than what they collected in the third quarter of 2020 and 20% ahead of the already impressive second quarter of 2021. The gap between the CG and EESC groups has also narrowed further – the latter is now just behind AMD’s leading group with $ 483 million in revenue.

And while AMD in its reports deliberately does not separate server sales from console sales, the company has confirmed that both have grown. AMD’s server processors in Milan, launched earlier this quarter, became the majority of AMD’s server revenues, pushing them to their 6th an equal quarter of the revenue from the recording server processor. And semi-adjusted revenues – which are primarily game consoles – are growing not only on an annual basis, but also on a quarterly basis, and AMD has confirmed that it was able to further expand its production of APU consoles.

Looking ahead, AMD’s expectations for the fourth quarter and the rest of the year have risen again. For the fourth quarter, the company expects to generate a record $ 4.5 billion (+/- $ 100 million) in revenue, which, if realized, will be a 41% increase over Q4’20. AMD also predicts 49.5% gross margin for Q4, which, if even slightly above, would be enough to push them to the first 50% gross margin in the company’s history. Meanwhile, AMD’s projection for the full 2021 now stands at a 65% increase in revenue from 2020 of $ 9.8 billion, which is 5 percentage points more than their forecast from the end of Q2.

As for AMD’s ongoing purchase of Xilinx, although the company does not have any significant updates on the subject, they confirm that they are making “good progress” towards securing the necessary regulatory approvals. At that, they repeat that it remains on the way to closing until the end of this year.

Finally, taking a break from the company’s 50% growth each year, AMD is scheduled to hold its AMD Accelerated Data Center Premiere event on Monday, November 8thth. While AMD doesn’t give up too much information in advance, the company confirms that we’ll hear more about their CDNA2 accelerator architecture, which along with the current Frontier supercomputer will enter their next-generation Radeon Instinct product. Also, the company will also publish news about its EPYC server processors, which were recently updated in March with the launch of 3rd generation of Milanese parts. As always, AnandTech will be practically there, covering AMD’s announcements in detail, so be sure to stop by for that.

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Naveen Kumar

Friendly communicator. Music maven. Explorer. Pop culture trailblazer. Social media practitioner.

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