10-QPeriod: Q1 FY2018

INTEL CORP Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 27, 2018For Securities:INTC

Summary

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% 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% of total revenue within the year.

Financial Highlights

54 data points
Beta

Revenue

$16.07B

60.6% Gross Margin

Net Income

$4.45B

27.7% Net Margin

EPS (Diluted)

$0.93

Total Assets

$128.60B

Cash & Equivalents

$3.55B

Free Cash Flow

$3.37B

Financial Statements
Beta
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

Key Highlights

  • 1Q1 2018 revenue reached a record $16.1 billion, a 9% increase year-over-year (13% excluding Intel Security Group).
  • 2Data-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.
  • 3Client Computing Group (CCG) revenue grew 3% despite a declining PC market, driven by commercial demand and higher-end processors.
  • 4Data 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.
  • 5Generated $6.3 billion in cash flow from operations and returned $3.3 billion to shareholders via dividends and stock repurchases.
  • 610nm process transition costs impacted gross margins, with volume production now expected in 2019.
  • 7Intel announced new products including the 8th Gen Intel Core i9 processor for mobile and the Intel Optane SSD 800P.

Frequently Asked Questions

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.

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.

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.

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.