01—Abstract
Summary
Summary of the 10-Q filed July 27, 2017. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's (INTC) Q2 2017 10-Q filing shows a strong recovery and growth, with net revenue increasing by 9% year-over-year to $14.8 billiona, and by 14% when adjusted for the divested Intel Security Group (ISecG).
This growth was propelled by robust performance in the Client Computing Group (CCG) and significant expansion in data-centric businesses, including a notable 58% revenue surge in the Non-Volatile Memory Solutions Group (NSG). Profitability saw a substantial improvement, with operating income soaring by 190% to $3.8 billion and net income more than doubling to $2.8 billionb, translating to a diluted EPS of $0.58, up from $0.27 in the prior year. This improved financial performance was supported by an increased gross margin of 61.6% and effective cost management, with R&D and MG&A spending as a percentage of revenue decreasing.
The company also generated robust operating cash flow of $4.7 billionc in the quarter. Looking ahead, Intel is strategically positioning itself for future growth with the pending acquisition of Mobileye, a leader in autonomous driving technology, expected to close in Q3 2017. The company also continues its share repurchase program and dividend payments, demonstrating confidence in its financial health and commitment to returning value to shareholders.
02—Key points
Key Highlights
- Net revenue for Q2 2017 increased by 9% year-over-year to $14.8 billion, and 14% excluding the divested ISecG.
- Operating income surged by 190% to $3.8 billion, and net income more than doubled to $2.8 billion.
- Diluted earnings per share (EPS) rose significantly to $0.58 from $0.27 in the prior year's quarter.
- Gross margin improved to 61.6% from 58.9% in Q2 2016, driven by higher platform revenue and cost efficiencies.
- Client Computing Group (CCG) revenue grew 12% to $8.2 billion, supported by increased platform volumes and ASPs, especially in notebooks.
- Data-centric businesses collectively grew 16%, with Non-Volatile Memory Solutions Group (NSG) revenue up 58% year-over-year.
- The company generated strong operating cash flow of $4.7 billion in Q2 2017, supporting capital expenditures, dividends, and share repurchases.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2017, Intel Corp kept $0.31.
- Revenue$14.76B100.0%
- Cost of revenue−$4.70B31.8%
- Gross profit$10.06B68.2%
- Operating costs−$4.92B33.3%
- Operating income$5.14B34.8%
- Interest, other & tax−$625.0M4.2%
- Net income$4.52B30.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2017filed July 27, 2017Financial Statements
Q3 FY2017 against Q3 FY2016
| Line item | Q3 FY2017Q3 FY2016 | Change |
|---|---|---|
| Revenue | $14.76B$13.53B | +9.1% |
| Cost of Revenue | $6.08B$5.56B | +9.4% |
| Gross Profit | $10.06B$7.97B | +26.2% |
| R&D Expenses | $3.21B$3.15B | +2.0% |
| SG&A Expenses | $1.66B$2.01B | −17.2% |
| Operating Expenses | $4.92B$6.66B | −26.0% |
| Operating Income | $5.14B$1.32B | +290.1% |
| Interest Expense | $191.00M$187.00M | +2.1% |
| Net Income | $4.52B$1.33B | +239.5% |
| EPS (Basic) | $0.96$0.28 | +242.9% |
| EPS (Diluted) | $0.94$0.27 | +248.1% |
| Shares Outstanding (Basic) | 4.69B4.73B | −0.9% |
| Shares Outstanding (Diluted) | 4.82B4.87B | −0.9% |
05—Questions
Frequently Asked Questions
What is the main driver of Intel's revenue growth in Q2 2017?
Intel's revenue growth in Q2 2017 was primarily driven by strong performance in its Client Computing Group (CCG), which saw a 12% increase in revenue, and growth in its data-centric businesses, which grew 16% collectively. The divestiture of the Intel Security Group (ISecG) was a headwind, but excluding it, overall revenue grew by 14%.
How has Intel's profitability changed compared to the previous year?
Intel's profitability has significantly improved. Operating income increased by 190% to $3.8 billion, and net income more than doubled to $2.8 billion. This was largely due to revenue growth, improved gross margins, and a substantial decrease in restructuring and other charges compared to Q2 2016.
What are Intel's key strategic initiatives for future growth?
Intel is focusing on expanding its data-centric businesses and investing in future technologies. A major strategic move highlighted is the pending acquisition of Mobileye N.V. (Mobileye), a leader in autonomous driving technology, expected to close in Q3 2017. The company also continues to invest in research and development, particularly for new process technologies.
How is Intel managing its cash and returning capital to shareholders?
Intel generated robust operating cash flow of $8.6 billion in the first six months of 2017. The company is actively managing its liquidity, which includes significant cash and investments. Intel also returned capital to shareholders through dividend payments of $1.3 billion and share repurchases totaling $1.3 billion during Q2 2017.
06—Continue