AMD Reports Q2 2021 Earnings: Company-wide Growth Drives Doubled Revenue

Continuing our Q2 earnings coverage this month, AMD is next out the gate in reporting their earnings. And, has been the story now for most of the last year, AMD is enjoying explosive revenue growth across the company. CPU, GPU, and semi-custom sales are all up, pushing the limits of what AMD can do amidst the current chip crunch, and pushing the company to new levels of profitability in the process.

For the second quarter of 2021, AMD reported $3.85B in revenue, making for yet another massive jump over a year-ago quarter for AMD, when the company made just $1.93B in a then-record quarter. Now, half-way through 2021, AMD’s financial trajectory is all about setting (and beating) records for the company, as evidenced by the 99% leap in year-over-year revenue – falling just millions short of outright doubling their revenue.

AMD’s big run-up in revenue is also reflected in the company’s other metrics; along with that revenue AMD’s net income has grown by 352% year-over-year, now reaching $710M. And if not for an unusual, one-off tax benefit for AMD’s Q4’2020, this would have been AMD’s most profitable quarter ever – and indeed is on a non-GAAP basis. Meanwhile, as you might expect from such high net income figures, AMD’s gross margin has risen even further and now sits at 48%, up 4 percentage points from the year-ago quarter and 2 points from last quarter.

AMD Q2 2021 Financial Results (GAAP)
	Q2'2021	Q2'2020	Q1'2021	Y/Y	Q/Q
Revenue	$3.85B	$1.93B	$3.45B	+99%	+12%
Gross Margin	48%	44%	46%	+4pp	+2pp
Operating Income	$831M	$173M	$662M	+380%	+26%
Net Income	$710M	$157M	$555M	+352%	+28%
Earnings Per Share	$0.58	$0.13	$0.45	+346%	+29%

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 $2.25B in revenue for the quarter, $883M (65%) more than Q2 2020. Accordingly, the segment’s operating income is (once more) up significantly as well, going from $200M a year ago to $526M this year.

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. According to AMD this is the case for both desktop and laptop sales, and making this the fifth straight quarter of revenue share gains.

Meanwhile the company is reporting similarly good news from their GPU business. As with CPUs, ASPs for AMD’s GPU business as up on both a yearly and quarterly basis. According to the company this is being driven by demand for high-end Radeon 6000 video cards, as well as AMD Instinct (data center) sales. AMD began initial shipments of their first CDNA 2 architecture-based Instinct accelerators in Q2, opening the spigot there for data center GPU revenue going into Q3.

AMD Q2 2021 Reporting Segments
	Q2'2021	Q2'2020	Q1'2021
Computing and Graphics
Revenue	$2250M	$1367M	$2100M
Operating Income	$526M	$200M	$485M
Enterprise, Embedded and Semi-Custom
Revenue	$1600M	$565M	$1345M
Operating Income	$398M	$33M	$277M

Moving on, AMD’s Enterprise, Embedded, and Semi-Custom segment has once 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 $1.6B in revenue, $1035M (183%) more than what they pulled in for Q2’20, and 19% ahead of an already impressive Q1’21. The big jump in revenue also means that the segment is even further into the black on an operating income basis, continuing to close the gap with the Computing and Graphics segment even with the all-around growth.

Overall, both the enterprise and semi-custom sides of this segment are up on a yearly basis. AMD set another record for server processor revenue this quarter on the strength of EPYC processor sales. Meanwhile semi-custom revenue was up on both a yearly and a quarterly basis, reflecting the continued demand for the latest generation of consoles.

Looking forward, AMD’s expectations for the quarter and for the rest of the year have been bumped up once again. For Q3 the company expects to book $4.1B (+/- $100M) in revenue, which if it comes to pass will be 46% growth over Q3’20. Meanwhile AMD’s full year 2021 projection now stands at a 60% year-over-year increase in revenue versus their $9.8B FY2020, which is 10 percentage points higher than their forecast from the end of Q1.

Finally, while AMD doesn’t have any major updates on the ongoing Xilinx acquisition, the company has reiterated that it remains on-track. Which means that if all goes according to plan, it will close by the end of the year.

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