01—Abstract
Summary
Summary of the 10-Q filed April 27, 2018. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation reported a strong first quarter in 2018, marking a record in both revenue and exceeding prior expectations.
The company's strategic shift towards a data-centric business model is gaining significant traction, with data-centric revenues growing 25%a year-over-year (excluding Intel Security Group) and now representing 49% of total revenue. This performance was driven by robust growth in the Data Center Group (DCG), Internet of Things Group (IOTG), Non-Volatile Memory Solutions Group (NSG), and Programmable Solutions Group (PSG). Despite broader market trends, the Client Computing Group (CCG) also demonstrated resilience, achieving revenue growth within a declining PC market, primarily supported by strong commercial demand and higher-priced processors.
The company generated substantial cash flow from operations and returned significant capital to shareholders through dividends and stock repurchases. However, Intel noted ongoing costs associated with the 10nm process transition, which impacted gross margins. Looking ahead, Intel anticipates its data-centric businesses will surpass 50%b of total revenue within the year.
02—Key points
Key Highlights
- Q1 2018 revenue reached a record $16.1 billion, a 9% increase year-over-year (13% excluding Intel Security Group).
- Data-centric businesses accelerated, growing 25% year-over-year (excluding ISecG) and now accounting for 49% of total revenue, on track to exceed 50% in 2018.
- Client Computing Group (CCG) revenue grew 3% despite a declining PC market, driven by commercial demand and higher-end processors.
- Data Center Group (DCG) revenue surged 23% year-over-year, fueled by strong adoption of Xeon Scalable processors across cloud, enterprise, and communication service provider segments.
- Generated $6.3 billion in cash flow from operations and returned $3.3 billion to shareholders via dividends and stock repurchases.
- 10nm process transition costs impacted gross margins, with volume production now expected in 2019.
- Intel announced new products including the 8th Gen Intel Core i9 processor for mobile and the Intel Optane SSD 800P.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2018, Intel Corp kept $0.28.
- Revenue$16.07B100.0%
- Cost of revenue−$6.33B39.4%
- Gross profit$9.73B60.6%
- Operating costs−$5.26B32.7%
- Operating income$4.47B27.8%
- Interest, other & tax−$16.0M0.1%
- Net income$4.45B27.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2018filed April 27, 2018Financial Statements
| Revenue | $16.07B |
| Cost of Revenue | $6.33B |
| Gross Profit | $9.73B |
| R&D Expenses | $3.31B |
| SG&A Expenses | $1.90B |
| Operating Expenses | $5.26B |
| Operating Income | $4.47B |
| Interest Expense | $112.00M |
| Net Income | $4.45B |
| EPS (Basic) | $0.95 |
| EPS (Diluted) | $0.93 |
| Shares Outstanding (Basic) | 4.67B |
| Shares Outstanding (Diluted) | 4.79B |
05—Questions
Frequently Asked Questions
What was Intel's overall financial performance in Q1 2018?
Intel reported a record first quarter in 2018 with net revenue of $16.1 billion, up 9% year-over-year. Net income was $4.45 billion, resulting in diluted EPS of $0.93. The company highlighted strong growth in its data-centric businesses and resilient performance in its PC-centric business.
How are Intel's data-centric businesses performing?
Intel's data-centric businesses (including DCG, IOTG, NSG, PSG) showed significant acceleration, growing 25% year-over-year (excluding the divested Intel Security Group). These businesses now represent 49% of total revenue and are projected to cross the 50% mark in 2018, indicating a successful strategic shift.
What is the status of Intel's 10nm process technology?
Intel is currently shipping low-volume 10nm products. However, the company now expects 10nm volume production to be delayed until 2019. Costs associated with the 10nm transition, including engineering samples and initial production, impacted gross margins in Q1 2018.
How is Intel returning capital to shareholders?
In Q1 2018, Intel generated $6.3 billion in cash flow from operations and returned $3.3 billion to shareholders. This included $1.4 billion in dividend payments and $1.9 billion in common stock repurchases.
06—Continue