Intel Shares Second-Quarter 2018 Financial Results

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Intel today reported second-quarter 2018 financial results. Record second quarter revenue of $17.0 billion was up 15 percent YoY driven by strength across the business and customer demand for Intel platforms. Collectively, data-centric businesses grew 26 percent, approaching 50 percent of total revenue. 



PC-centric revenue was up 6 percent on strength in the commercial and enthusiast segments. Operating margin leverage and lower tax rate drove excellent EPS growth.

"After five decades in tech, Intel is poised to deliver our third record year in a row. We are uniquely positioned to capitalize on the need to process, store and move data, which has never been more pervasive or more valuable," said Bob Swan, Intel CFO and Interim CEO. "Intel is now competing for a $260 billion market opportunity, and our second quarter results show that we're winning. As a result of the continued strength we are seeing across the business, we are raising our full year revenue and earnings outlook."

Highlights

GAAP

Non-GAAP

Q2 2018

Q2 2017

vs. Q2 2017

Q2 2018

Q2 2017

vs. Q2 2017

Revenue ($B)

$17.0

$14.8

up 15%

$17.0^

$14.8^

up 15%

Gross Margin

61.4%

61.6%

down 0.2 pt

63.0%

63.0%

flat

R&D and MG&A ($B)

$5.1

$5.1

flat

$5.1^

$5.1^

flat

Operating Income ($B)

$5.3

$3.8

up 37%

$5.6

$4.2

up 34%

Tax Rate

9.5%

38.6%

down 29.1 pts

11.7%

22.5%

down 10.8 pts

Net Income ($B)

$5.0

$2.8

up 78%

$4.9

$3.5

up 41%

Earnings Per Share

$1.05

$0.58

up 82%

$1.04

$0.72

up 44%

^ No adjustment on a non-GAAP basis

In the second quarter, the company generated approximately $7.4 billion in cash from operations, paid dividends of $1.4 billion and used $3.9 billion to repurchase 76 million shares of stock.
In the second quarter, Intel achieved revenue growth in every business segment. The PC-centric business grew 6 percent driven by strong demand for Intel's performance leading products with particular strength in gaming and commercial. The Client Computing Group (CCG) launched several new 8th Gen Intel Core processors including: the powerful 8th Gen Intel Core i9 processor for high performance laptops, 8th Gen Intel Core vPro processors for business, and the 8th Gen Intel Core i7-8086K limited-edition processor for gaming.


Collectively, Intel's data-centric businesses grew 26 percent year-over-year led by 27 percent growth in the Data Center Group (DCG). DCG saw strong demand from cloud and communications service providers investing to meet the explosive demand for data and to improve the performance of data-intensive workloads like artificial intelligence. DCG customer preference for Intel's highest-performance products continued; Intel Xeon Scalable momentum continued.

The workload optimization trend in the data center is also fueling demand for FPGAs; Intel's Programmable Solutions Group (PSG) revenue grew 18 percent.

Q3 2018

GAAP

Non-GAAP

Range

Revenue

$18.1 billion

$18.1 billion^

+/- $500 million

Operating margin

32.5%

34%

approximately

Tax rate

13%

13%

approximately

Earnings per share

$1.09

$1.15

+/- 5 cents

Full-Year 2018

GAAP

Non-GAAP

Range

Revenue

$69.5 billion

$69.5 billion^

+/- $1.0 billion

Operating margin

30.5%

32%

approximately

Tax rate

12%

12.5%

approximately

Earnings per share

$4.10

$4.15

+/- 5%

Full-year capital spending

$15 billion

$15 billion^

+/- $500 million

Net capital deployed1

$13 billion

$13 billion^

+/- $500 million

Free cash flow

N/A

$15.0 billion

+/- $500 million



Intel's memory (NSG), Internet of Things Group (IOTG) and Mobileye businesses each achieved record quarterly revenue. Mobileye revenue grew 37 percent year-over-year as the adoption of advanced driver-assistance systems (ADAS) increases.

Business Outlook
Intel's guidance for the third-quarter and full-year 2018 includes both GAAP and non-GAAP estimates. Reconciliations between these GAAP and non-GAAP financial measures are included below.

Intel's Business Outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments and other significant transactions that may be completed after July 26, 2018. Actual results may differ materially from Intel's Business Outlook as a result of, among other things, the factors described under "Forward-Looking Statements" below. Our guidance above reflects the divestiture of Wind River, which was completed during the second quarter of 2018.


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