Intel Reports Second-Quarter Revenue of $14.8 Billion

July 27, 2017

Highlights:

  • Record second-quarter revenue up 14 percent year-over-year (excluding Intel Security Group) with strong performance in client computing (up 12 percent) and data-centric* businesses (up 16 percent).
  • GAAP earnings per share (EPS) was $0.58 and non-GAAP EPS was $0.72, up 22 percent year-over-year driven by strong topline growth and gross margin improvement.
  • Intel raises full-year revenue outlook by $1.3 billion to $61.3 billion; raises full-year GAAP EPS outlook by $0.10 to $2.66 and non-GAAP EPS by $0.15 to $3.00.
  • Launched Intel’s highest performance products ever: the Intel® Core™ X-Series family for advanced gaming, VR and more, as well as Intel® Xeon® Scalable processors, which offer data center customers huge performance gains for artificial intelligence (AI) and other data-intensive workloads.

SANTA CLARA, Calif., July 27, 2017 — Intel Corporation today reported second-quarter revenue of $14.8 billion, up 9 percent year-over-year. After adjusting for the Intel Security Group (ISecG) transaction, second-quarter revenue grew 14 percent from a year ago. Operating income was $3.8 billion, up 190 percent year-over-year, and non-GAAP operating income was $4.2 billion, up 30 percent. EPS was $0.58, up 115 percent year-over-year, and non-GAAP EPS was $0.72, up 22 percent.

The company also generated approximately $4.7 billion in cash from operations, paid dividends of $1.3 billion, and used $1.3 billion to repurchase 36 million shares of stock. Intel is raising its full-year revenue outlook by $1.3 billion to $61.3 billion and raising its EPS outlook to $2.66 (GAAP) and $3.00 (non-GAAP), which is a 15 cent increase over the previous guidance.

“Q2 was an outstanding quarter with revenue and profits growing double digits over last year,” said Brian Krzanich, Intel CEO. “We also launched new Intel Core, Xeon and memory products that reset the bar for performance leadership, and we’re gaining customer momentum in areas like AI and autonomous driving. With industry-leading products and strong first-half results, we’re on a clear path to another record year.”

Key Business Unit Revenue and Trends
Quarterly Year-Over-Year
Q2 2017 vs. Q2 2016
Client Computing Group $8.2 billion up 12%
Data Center Group $4.4 billion up 9%
Internet of Things Group $720 million up 26%
Non-Volatile Memory Solutions Group $874 million up 58%
Programmable Solutions Group $440 million down 5%

*Data-centric businesses include DCG, IOTG, NSG, PSG, and all other

“We feel great about where we are relative to our three year plan and heading into the second half. Intel’s transformation continues in the third quarter when we expect to complete our planned acquisition of Mobileye,” said Bob Swan, Intel CFO. “Based on our strong first-half results and higher expectations for the PC business, we’re raising our full-year revenue and EPS forecast.”

GAAP Financial Comparison
Quarterly Year-Over-Year
Q2 2017 Q2 2016 vs. Q2 2016
Revenue $14.8 billion $13.5 billion up 9%
Gross Margin 61.6% 58.9% up 2.7 points
R&D and MG&A $5.1 billion $5.2 billion flat
Operating Income $3.8 billion $1.3 billion up 190%
Tax Rate 38.6% 20.4% up 18.2 points
Net Income $2.8 billion $1.3 billion up 111%
Earnings Per Share 58 cents 27 cents up 115%
Non-GAAP Financial Comparison
Quarterly Year-Over-Year
Q2 2017 Q2 2016 vs. Q2 2016
Revenue $14.8 billion ^ $13.5 billion ^ up 9%
Gross Margin 63.0% 61.8% up 1.2 points
R&D and MG&A $5.1 billion ^ $5.2 billion ^ flat
Operating Income $4.2 billion $3.2 billion up 30%
Tax Rate 22.5% 20.4% ^ up 2.1 points
Net Income $3.5 billion $2.9 billion up 23%
Earnings Per Share 72 cents 59 cents up 22%

^ No adjustment on a non-GAAP basis.

Business Outlook

Intel’s Business Outlook and other forward-looking statements in this earnings release reflects management’s views as of July 27, 2017. Intel does not undertake, and expressly disclaims any duty, to update any such statement whether as a result of new information, new developments or otherwise, except to the extent that disclosure may be required by law.

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 27, 2017 except for the planned acquisition of Mobileye N.V. (Mobileye), which we expect to close in the third quarter of 2017, pending satisfaction of all closing conditions.

Our guidance for the third-quarter and full-year 2017 include both GAAP and non-GAAP estimates. Reconciliations between these GAAP and non-GAAP financial measures are included below.

Q3 2017 GAAP Non-GAAP Range
Revenue $15.7 billion $15.7 billion ^ +/- $500 million
Gross margin percentage 61% 63% +/- a couple pct. pts.
R&D plus MG&A spending $5.2 billion $5.1 billion approximately
Restructuring and other charges $0 $0 approximately
Amortization of acquisition-related intangibles included in operating expenses $50 million $0 approximately
Impact of equity investments and interest and other, net $300 million $300 million ^ approximately
Depreciation $1.8 billion $1.8 billion ^ approximately
Operating income $4.3 billion $4.8 billion approximately
Tax rate 24% 24% ^ approximately
Earnings per share $0.72 $0.80 +/- 5 cents
Full-Year 2017 GAAP Non-GAAP Range
Revenue $61.3 billion $61.3 billion ^ +/- $500 million
Gross margin percentage 61% 63% +/- a couple pct. pts.
R&D plus MG&A spending $20.8 billion $20.7 billion approximately
Restructuring and other charges $200 million $0 approximately
Amortization of acquisition-related intangibles included in operating expenses $175 million $0 approximately
Impact of equity investments and interest and other, net $1.4 billion $1.0 billion approximately
Depreciation $7.0 billion $7.0 billion ^ +/- $200 million
Operating income $16.4 billion $17.9 billion approximately
Tax rate 27% 23% approximately
Earnings per share $2.66 $3.00 +/- 5%
Full-year capital spending $12.0 billion $12.0 billion ^ +/- $500 million

^ No adjustment on a non-GAAP basis.

For additional information regarding Intel’s results and Business Outlook, please see the CFO Earnings Presentation posted on our Investor Relations website at www.intc.com/results.cfm.

Forward-Looking Statements

The above statements and any others in this release that refer to Business Outlook, future plans and expectations are forward-looking statements that involve a number of risks and uncertainties. Words such as “anticipates,” “expects,” “intends,” “goals,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “will,” “would,” “should,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements that refer to or are based on projections, uncertain events or assumptions also identify forward-looking statements. Such statements are based on management’s expectations as of the date of this earnings release and involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Intel presently considers the following to be important factors that could cause actual results to differ materially from the company’s expectations.

  • Demand for Intel’s products is highly variable and could differ from expectations due to factors including changes in business and economic conditions; consumer confidence or income levels; the introduction, availability and market acceptance of Intel’s products, products used together with Intel products and competitors’ products; competitive and pricing pressures, including actions taken by competitors; supply constraints and other disruptions affecting customers; changes in customer order patterns including order cancellations; and changes in the level of inventory at customers.
  • Intel’s gross margin percentage could vary significantly from expectations based on capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; changes in revenue levels; segment product mix; the timing and execution of the manufacturing ramp and associated costs; excess or obsolete inventory; changes in unit costs; defects or disruptions in the supply of materials or resources; and product manufacturing quality/yields. Variations in gross margin may also be caused by the timing of Intel product introductions and related expenses, including marketing expenses, and Intel’s ability to respond quickly to technological developments and to introduce new products or incorporate new features into existing products, which may result in restructuring and asset impairment charges.
  • Intel’s results could be affected by adverse economic, social, political and physical/infrastructure conditions in countries where Intel, its customers or its suppliers operate, including military conflict and other security risks, natural disasters, infrastructure disruptions, health concerns, fluctuations in currency exchange rates, sanctions and tariffs, and the United Kingdom referendum to withdraw from the European Union. Results may also be affected by the formal or informal imposition by countries of new or revised export and/or import and doing-business regulations, which could be changed without prior notice.
  • Intel operates in highly competitive industries and its operations have high costs that are either fixed or difficult to reduce in the short term.
  • The amount, timing and execution of Intel’s stock repurchase program may fluctuate based on Intel’s priorities for the use of cash for other purposes—such as investing in our business, including operational and capital spending, acquisitions, and returning cash to our stockholders as dividend payments—and because of changes in cash flows or changes in tax laws.
  • Intel’s expected tax rate is based on current tax law and current expected income and may be affected by the jurisdictions in which profits are determined to be earned and taxed; changes in the estimates of credits, benefits and deductions; the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties; and the ability to realize deferred tax assets.
  • Gains or losses from equity securities and interest and other could vary from expectations depending on gains or losses on the sale, exchange, change in the fair value or impairments of debt and equity investments, interest rates, cash balances, and changes in fair value of derivative instruments.
  • Product defects or errata (deviations from published specifications) may adversely impact our expenses, revenues and reputation.
  • Intel’s results could be affected by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust, disclosure and other issues. An unfavorable ruling could include monetary damages or an injunction prohibiting Intel from manufacturing or selling one or more products, precluding particular business practices, impacting Intel’s ability to design its products, or requiring other remedies such as compulsory licensing of intellectual property.
  • Intel’s results may be affected by the timing of closing of acquisitions, divestitures and other significant transactions. In addition, risks associated with our planned acquisition of Mobileye N.V. are described in the “Forward Looking Statements” section of Intel’s press release entitled “Intel to Acquire Mobileye; Combining Technology and Talent to Accelerate the Future of Autonomous Driving” dated March 13, 2017, which risk factors are incorporated by reference herein.

Additional information regarding these and other factors that could affect Intel’s results is included in Intel’s SEC filings, including the company’s most recent reports on Forms 10-K and 10-Q, copies of which may be obtained by visiting our Investor Relations website at www.intc.com or the SEC’s website at www.sec.gov.

Earnings Webcast

Intel will hold a public webcast at 2:00 p.m. PDT today to discuss the results for its second quarter of 2017. The live public webcast can be accessed on Intel’s Investor Relations website at www.intc.com/results.cfm. The CFO 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 2017 on October 26, 2017 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 Corp.

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