Intel Reports Second Quarter 2018 Financial Results

SANTA CLARA, Calif., July 27, 2018 — Intel Corporation has 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 performance-leading 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.”

^* Data-centric businesses include DCG, IOTG, NSG, PSG and All Other

Q2 2018 Financial 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.

Business Unit Summary

	Key Business Unit Revenue and Trends
		Q2 2018	vs. Q2 2017
PC-centric	CCG	$8.7 billion	up	6%
Data-centric	DCG	$5.5 billion	up	27%
	IOTG	$880 million	up	22%
	NSG	$1.1 billion	up	23%
	PSG	$517 million	up	18%
			up	26%*

* Data-centric businesses include DCG, IOTG, NSG, PSG and All Other

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.

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.

Additional information regarding Intel’s results can be found in the Q2’18 Earnings Presentation available at: www.intc.com/results.cfm.

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.

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

¹ Net capital deployed is full-year capital spending offset by expected prepaid supply agreements within NSG.
^{^} No adjustment on a non-GAAP basis.

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.

Earnings Webcast

Intel will hold a public webcast at 2:00 p.m. PDT today to discuss the results for its second quarter of 2018. The live public webcast can be accessed on Intel’s Investor Relations website at www.intc.com/results.cfm. The Q2’18 Earnings Presentation, webcast replay, and audio download will also be available on the site.

Intel plans to report its earnings for the third quarter of 2018 on October 25, 2018 promptly after close of market, and related materials will be available at www.intc.com/results.cfm. A public webcast of Intel’s earnings conference call will follow at 2:00 p.m. PDT at www.intc.com.

About Intel

Intel (NASDAQ: INTC) expands the boundaries of technology to make the most amazing experiences possible. Information about Intel can be found at newsroom.intel.com and intel.com.

Source: Intel