Chip designer Advanced Micro Devices, Inc (AMD) reported its earnings results for the second quarter of 2021 earlier today. The company earned $3.9 billion in revenue in the quarter, its highest to date as it marked an astounding 99% year-over-year growth in Q2, as it inches towards a preferred gross margin of 50%. After accounting for the cost of sales, AMD earned $1.8 billion in profit, posting a strong 48% gross margin, which is up by 4% year over year and 2% higher than the 46% that it posted at the end of the first quarter of 2021.
Strong Datacenter Sales Play Crucial Role In Propelling AMD To Record Revenue In Q2 2021
As the second quarter came to an end, AMD continued its strong growth trend across all operating segments. The company classifies its sales across two segments, personal computing and enterprise and embedded products. Both managed to significantly surpass the levels they stood at the end of the previous quarter and the year-ago quarter.
At the end of this year’s first quarter, AMD had pulled in $3.4 billion in revenue, with personal computing and enterprise and embedded bringing in $2.1 billion ad $1.3 billion revenue, respectively. At the end of the second quarter, total revenue grew by 12% sequentially, as the two segments raked in $2.2 and $1.5 billion, respectively. Sequential growth for the pair stood at 7% and 19%, highlighting the crucial role played by enterprise and embedded segment.
AMD attributes the strong personal computing revenue growth to strong sales of the Ryzen 6000 graphics processing unit (GPU) lineup and higher average selling prices (ASPs) for its processors and GPUs. According to the company, strong notebook and desktop CPU sales along with a growth in higher-priced, higher-end GPUs drove the personal computing sector; a factor that also explains AMD’s strong gross margins at the end of Q2 2021.
Gross margins, which measure the role played by the cost of product sales in a company’s profitability, stood at 48%, up by 4% annually and 2% over its previous high value of 46% in Q1 2021 and Q1 2020.
For AMD, the second quarter also proved to be a strong one for its data center products. Marketed as EPYC, these processors are used by server and other companies, and according to AMD, Q2 marked a “5th straight quarter of record server processor revenue, including demand for 2nd and 3rd Gen EPYC processors.”
The enterprise segment also includes revenue from sales of products AMD classifies as ‘semi-custom, which refers to the silicon powering gaming consoles from Microsoft and Sony Corporation. Console revenue also remained strong in Q2, with AMD explaining that demand grew both annually and sequentially. The strength of the console cycle was indicated by the segment’s operating income, which grew by a staggering 1,106% year-over-year and stood at $398 million following the launch of the PlayStation 5 and Xbox Series X.
AMD’s inventory and accounts receivables also grew during the quarter, highlighting the effects of the ongoing chip shortage and the strong revenue growth. Another crucial bumper metric during Q2 was its free cash flow, which stood at a record of $888 million after $64 million of capital expenditure. The company also repurchased $256 million of common stock in the second quarter.
For the current quarter or Q3, AMD expects its gross margin to stay flat at 48%. However, it also expects the current quarter to post another record revenue. The chip designer’s earnings guidance expects $4.1 billion in revenue for this quarter and overall revenue growth of 60% by the end of the fiscal year. Its shares flip-flopped in after-hours trading after the earnings release and are slightly up at the time of publishing.
The post AMD Bathes In Dollars As It Posts 99% Revenue Growth In Second Quarter 2021 by Ramish Zafar appeared first on Wccftech.
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