01—Abstract
Summary
Summary of the 10-Q filed April 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation (INTC) reported $12.7 billiona in net revenue for the first quarter of 2024, a 9% increase year-over-year, driven by a significant 31% surge in Client Computing Group (CCG) revenue.
This growth in CCG was attributed to normalized customer inventory levels in the notebook and desktop segments. While the Data Center and AI (DCAI) segment saw a modest 5% revenue increase, primarily due to higher server Average Selling Prices (ASPs), overall profitability was impacted by a net loss of $381 millionb ($0.09 per diluted share) compared to a loss of $2.76 billion in the prior year. The company is actively executing its IDM 2.0 strategy, highlighted by the launch of Intel Foundry as a distinct business unit and an expanded process roadmap.
Significant investments in R&D and manufacturing continue, supported by proposed substantial funding from the U.S. Department of Commerce under the CHIPS and Science Act. However, the company also incurred restructuring and other charges, including a goodwill impairment loss of $222 millionc related to the Intel Foundry segment, and continues to face challenges in its Network and Edge (NEX) segment due to inventory adjustments by 5G customers. Investors should monitor the execution of the foundry strategy and the impact of ongoing investments on future profitability.
02—Key points
Key Highlights
- Total revenue increased by 9% year-over-year to $12.7 billion, primarily driven by a 31% increase in Client Computing Group (CCG) revenue.
- Gross margin improved significantly to 41.0% from 34.2% in the prior year's quarter, reflecting improved product profitability and lower period charges.
- The company reported a net loss attributable to Intel of $381 million ($0.09 per diluted share), an improvement from a net loss of $2.76 billion ($0.66 per diluted share) in Q1 2023.
- Intel launched Intel Foundry as a dedicated business unit and announced an expanded process roadmap, signaling progress in its foundry strategy.
- The U.S. Department of Commerce proposed up to $8.5 billion in direct funding and $11 billion in loans under the CHIPS and Science Act to support Intel's manufacturing and R&D projects.
- Significant increases in R&D (7%) and Marketing, General, and Administrative (19%) expenses were noted, driven by share-based compensation and strategic investments.
- The company incurred $348 million in restructuring and other charges, including a $222 million goodwill impairment loss related to the Intel Foundry reporting unit.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2024, Intel Corp lost $0.03.
- Revenue$12.72B100.0%
- Cost of revenue−$7.51B59.0%
- Gross profit$5.22B41.0%
- Operating costs−$6.29B49.4%
- Operating income−$1.07B8.4%
- Interest, other & tax$688.0M5.4%
- Net income−$381.0M3.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 26, 2024Financial Statements
| Revenue | $12.72B |
| Cost of Revenue | $7.51B |
| Gross Profit | $5.22B |
| R&D Expenses | $4.38B |
| SG&A Expenses | $1.56B |
| Operating Expenses | $6.29B |
| Operating Income | -$1.07B |
| Interest Expense | $258.00M |
| Net Income | -$381.00M |
| EPS (Basic) | $-0.09 |
| EPS (Diluted) | $-0.09 |
| Shares Outstanding (Basic) | 4.24B |
| Shares Outstanding (Diluted) | 4.24B |
05—Questions
Frequently Asked Questions
What drove the year-over-year revenue growth in Q1 2024?
Intel's revenue increased by 9% to $12.7 billion, primarily driven by a substantial 31% increase in the Client Computing Group (CCG) segment. This growth was largely due to higher notebook and desktop volumes as customer inventory levels normalized after being higher in the first quarter of 2023. The Data Center and AI (DCAI) segment also contributed with a 5% revenue increase, aided by higher server Average Selling Prices (ASPs).
How is Intel's profitability trending, and what are the key factors affecting it?
While Intel narrowed its net loss to $381 million ($0.09 per diluted share) in Q1 2024 from $2.76 billion ($0.66 per diluted share) in Q1 2023, it still reported a loss. Gross margin improved significantly to 41.0% due to higher revenues and lower period charges. However, operating expenses, particularly R&D and Marketing, General, and Administrative (MG&A), increased due to share-based compensation and strategic investments. The company also incurred $348 million in restructuring and other charges, including a $222 million goodwill impairment in the Intel Foundry segment.
What are the key strategic initiatives Intel is pursuing, and how are they reflected in this report?
Intel is advancing its IDM 2.0 strategy, notably by launching Intel Foundry as a separate business unit and announcing an expanded process technology roadmap. The company is also benefiting from government support, with the U.S. Department of Commerce proposing significant funding under the CHIPS and Science Act for its manufacturing and R&D projects. These initiatives indicate a continued focus on technological leadership and foundry services, although they require substantial ongoing investment.
What challenges are Intel facing, as indicated in this filing?
Intel is experiencing softness in its Network and Edge (NEX) segment due to 5G customers reducing inventory. The Altera and Mobileye segments also saw revenue declines as customers tempered purchases. Additionally, the company incurred significant restructuring and other charges, including a goodwill impairment in the Intel Foundry segment, and continues to face intense competition and ongoing investments in its technology roadmap which impact profitability.
06—Continue