Intel Reports Second-Quarter 2024 Financial Results; Announces $10 Billion Cost Reduction Plan to Increase Efficiency and Market Competitiveness
NEWS SUMMARY
-
Second-quarter revenue of
$12.8 billion , down 1% year over year (YoY).
-
Second-quarter GAAP earnings (loss) per share (EPS) attributable to
wasIntel $(0.38) ; non-GAAP EPS attributable toIntel was$0.02 .
-
Forecasting third-quarter 2024 revenue of
$12.5 billion to$13.5 billion ; expecting third-quarter GAAP EPS attributable toIntel of$(0.24) ; non-GAAP EPS attributable toIntel of$(0.03) .
- Implementing comprehensive reduction in spending, including a more than 15% headcount reduction, to resize and refocus.
- Suspending dividend starting in the fourth quarter of 2024. The company reiterates its long-term commitment to a competitive dividend as cash flows improve to sustainably higher levels.
-
Achieved key milestones on
Intel 18A with the 1.0 Process Design Kit (PDK) released and key power-on of first client and server products onIntel 18A,Panther Lake andClearwater Forest .
“Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones. Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies while accelerating our IDM 2.0 transformation,” said
“Second-quarter results were impacted by gross margin headwinds from the accelerated ramp of our AI PC product, higher than typical charges related to non-core businesses and the impact from unused capacity,” said
Cost-Reduction Plan
As
The plan will enable the next phase of the company’s multiyear transformation strategy, and is focused on four key priorities:
-
Reducing Operating Expenses: The company will streamline its operations and meaningfully cut spending and headcount, reducing non-GAAP R&D and marketing, general and administrative (MG&A) to approximately
$20 billion in 2024 and approximately$17.5 billion in 2025, with further reductions expected in 2026.Intel expects to reduce headcount by greater than 15% with the majority completed by the end of 2024.
-
Reducing Capital Expenditures: With the end of its historic five-nodes-in-four-years journey firmly in sight,
Intel is now shifting its focus toward capital efficiency and investment levels aligned to market requirements. This will reduce gross capital expenditures* in 2024 by more than 20% from prior projections, bringing gross capital expenditures in 2024 to between$25 billion and$27 billion .Intel expects net capital spending* in 2024 of between$11 billion and$13 billion . In 2025, the company is targeting gross capital expenditures between$20 billion and$23 billion and net capital spending between$12 billion and$14 billion .
-
Reducing Cost of Sales: The company expects to generate
$1 billion in savings in non-variable cost of sales in 2025. Product mix will continue to be a headwind next year, contributing to modest YoY improvements to 2025's gross margin.
-
Maintaining Core Investments to Execute Strategy: The company continues to advance its long-term innovation and path to leadership across process technology and products, and the increased efficiency from its actions is expected to further support its execution. In addition,
Intel continues to sustain investments to build a resilient and sustainable semiconductor supply chain inthe United States and around the world.
Q2 2024 Financial Highlights
|
GAAP |
Non-GAAP |
||||||||||
|
Q2 2024 |
Q2 2023 |
vs. Q2 2023 |
Q2 2024 |
Q2 2023 |
vs. Q2 2023 |
||||||
Revenue ($B) |
|
|
down 1% |
|
|
|
||||||
Gross Margin |
35.4% |
35.8% |
down 0.4 ppt |
38.7% |
39.8% |
down 1.1 ppts |
||||||
R&D and MG&A ($B) |
|
|
up 2% |
|
|
up 5% |
||||||
Operating Margin |
(15.3)% |
(7.8)% |
down 7.5 ppts |
0.2% |
3.5% |
down 3.3 ppts |
||||||
Tax Rate |
17.5% |
280.5% |
n/m** |
13.0% |
13.0% |
— |
||||||
Net Income (loss) Attributable to |
|
|
n/m** |
|
|
down 85% |
||||||
Earnings (loss) Per Share Attributable to |
|
|
n/m** |
|
|
down 85% |
In the second quarter, the company generated
*Gross capital expenditures refers to GAAP additions to property, plant, and equipment. Net capital spending, a non-GAAP financial measure, is defined as additions to property, plant, and equipment, net of proceeds from capital-related government incentives and partner contributions. See below for more information on and reconciliations of |
|
**Not meaningful |
Business Unit Summary
Business Unit Revenue and Trends |
Q2 2024 |
vs. Q2 2023 |
||
|
|
|
||
|
|
up 9% |
||
Data Center and AI (DCAI) |
|
down 3% |
||
Network and Edge (NEX) |
|
down 1% |
||
Total |
|
up 4% |
||
|
|
up 4% |
||
All other: |
|
|
||
Altera |
|
down 57% |
||
Mobileye |
|
down 3% |
||
Other |
|
up 43% |
||
Total all other revenue |
|
down 32% |
||
Intersegment eliminations |
|
|
||
Total net revenue |
|
down 1% |
-
CCG:
Intel continues to define and drive the AI PC category, shipping more than 15 million AI PCs sinceDecember 2023 , far more than all ofIntel 's competitors combined, and on track to ship more than 40 million AI PCs by year-end.Lunar Lake , the company’s next-generation AI CPU, achieved production release inJuly 2024 , ahead of schedule, with shipments starting in the third quarter.Lunar Lake will power over 80 new Copilot+ PCs across more than 20 OEMs.
-
DCAI: More than 130 million
Intel ® Xeon® processors power data centers around the world today, and at ComputexIntel introduced its next-generationIntel ® Xeon® 6 processor with Efficient-cores (E-cores), code-namedSierra Forest , marking the company’s firstIntel 3 server product architected for high-density, scale-out workloads.Intel expectsIntel ® Xeon® 6 processors with Performance-cores (P-cores), code-named Granite Rapids, to begin shipping in the third quarter of 2024. TheIntel ® Gaudi® 3 AI accelerator is also on track to launch in the third quarter and is expected to deliver roughly two-times the performance per dollar on both inference and training versus the leading competitor.
-
NEX:
Intel announced an array of AI-optimized scale-out Ethernet solutions, including theIntel AI network interface card and foundry chiplets that will launch next year. New infrastructure processing unit (IPU) adaptors for the enterprise are now broadly available and supported by Dell Technologies, Red Hat and others. IPUs will play an increasingly important role in Intel’s accelerator portfolio, which the company expects will help drive AI data center growth and profitability in 2025 and beyond. Additionally,Intel and others announced the creation of the Ultra Accelerator Link, a new industry standard dedicated to advancing high-speed, low-latency communication for scale-up AI systems communication in data centers.
-
Intel is nearing the completion of its promised five-nodes-in-four-years strategy, withIntel 18A on track to be manufacturing-ready by the end of this year and production wafer start volumes in the first half of 2025. InJuly 2024 ,Intel released to foundry customers the 1.0 PDK forIntel 18A. The company’s first twoIntel 18A products,Panther Lake for client — the first microprocessor to use RibbonFet, PowerVia and advanced packaging — andClearwater Forest for servers, are on track to launch in 2025.
-
Ansys, Cadence, Siemens, and Synopsys announced the availability of reference flows for Intel’s embedded multi-die interconnect bridge (EMIB) advanced packaging technology, which simplifies the design process and offers design flexibility. The companies also declared readiness for
Intel 18A designs.
-
During the quarter,
Intel named industry veteranKevin O'Buckley to lead Foundry Services. The company also recently appointedDr. Naga Chandrasekaran to leadIntel Foundry Manufacturing and Supply Chain. Their leadership will support Intel’s continued development of the first systems foundry for the AI era.
Other Highlights
Q3 2024 Dividend
The company announced that its board of directors has declared a quarterly dividend of
As noted earlier,
Business Outlook
Q3 2024 |
|
GAAP |
|
Non-GAAP |
Revenue |
|
|
|
|
Gross Margin |
|
34.5% |
|
38.0% |
Tax Rate |
|
34% |
|
13% |
Earnings (Loss) Per Share Attributable to Intel—Diluted |
|
|
|
|
Reconciliations between GAAP and non-GAAP financial measures are included below. 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. The gross margin and EPS outlook are based on the mid-point of the revenue range.
Earnings Webcast
Forward-Looking Statements
This release contains forward-looking statements that involve a number of risks and uncertainties. Words such as "accelerate", "achieve", "aim", "ambitions", "anticipate", "believe", "committed", "continue", "could", "designed", "estimate", "expect", "forecast", "future", "goals", "grow", "guidance", "intend", "likely", "may", "might", "milestones", "next generation", "objective", "on track", "opportunity", "outlook", "pending", "plan", "position", "possible", "potential", "predict", "progress", "ramp", "roadmap", "seek", "should", "strive", "targets", "to be", "upcoming", "will", "would", and variations of such words and similar expressions are intended to identify such forward-looking statements, which may include statements regarding:
-
our business plans and strategy and anticipated benefits therefrom, including with respect to our IDM 2.0 strategy,
Smart Capital strategy, partnerships with Apollo and Brookfield, internal foundry model, updated reporting structure, and AI strategy;
- projections of our future financial performance, including future revenue, gross margins, capital expenditures, and cash flows;
- projected costs and yield trends;
- future cash requirements, the availability, uses, sufficiency, and cost of capital resources, and sources of funding, including for future capital and R&D investments and for returns to stockholders, such as stock repurchases and dividends, and credit ratings expectations;
- future products, services, and technologies, and the expected goals, timeline, ramps, progress, availability, production, regulation, and benefits of such products, services, and technologies, including future process nodes and packaging technology, product roadmaps, schedules, future product architectures, expectations regarding process performance, per-watt parity, and metrics, and expectations regarding product and process leadership;
- investment plans and impacts of investment plans, including in the US and abroad;
- internal and external manufacturing plans, including future internal manufacturing volumes, manufacturing expansion plans and the financing therefor, and external foundry usage;
- future production capacity and product supply;
- supply expectations, including regarding constraints, limitations, pricing, and industry shortages;
-
plans and goals related to
Intel 's foundry business, including with respect to anticipated customers, future manufacturing capacity and service, technology, and IP offerings;
- expected timing and impact of acquisitions, divestitures, and other significant transactions, including the sale of our NAND memory business;
- expected completion and impacts of restructuring activities and cost-saving or efficiency initiatives;
- future social and environmental performance goals, measures, strategies, and results;
- our anticipated growth, future market share, and trends in our businesses and operations;
- projected growth and trends in markets relevant to our businesses;
- anticipated trends and impacts related to industry component, substrate, and foundry capacity utilization, shortages, and constraints;
- expectations regarding government incentives;
- future technology trends and developments, such as AI;
- future macro environmental and economic conditions;
- geopolitical tensions and conflicts and their potential impact on our business;
- tax- and accounting-related expectations;
- expectations regarding our relationships with certain sanctioned parties; and
- other characterizations of future events or circumstances.
Such statements involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied, including those associated with:
- the high level of competition and rapid technological change in our industry;
- the significant long-term and inherently risky investments we are making in R&D and manufacturing facilities that may not realize a favorable return;
- the complexities and uncertainties in developing and implementing new semiconductor products and manufacturing process technologies;
- our ability to time and scale our capital investments appropriately and successfully secure favorable alternative financing arrangements and government grants;
- implementing new business strategies and investing in new businesses and technologies;
- changes in demand for our products;
-
macroeconomic conditions and geopolitical tensions and conflicts, including geopolitical and trade tensions between the US and
China , the impacts ofRussia's war onUkraine , tensions and conflict affectingIsrael and theMiddle East , and rising tensions between mainlandChina andTaiwan ;
- the evolving market for products with AI capabilities;
- our complex global supply chain, including from disruptions, delays, trade tensions and conflicts, or shortages;
- product defects, errata and other product issues, particularly as we develop next-generation products and implement next-generation manufacturing process technologies;
- potential security vulnerabilities in our products;
- increasing and evolving cybersecurity threats and privacy risks;
- IP risks including related litigation and regulatory proceedings;
- the need to attract, retain, and motivate key talent;
- strategic transactions and investments;
- sales-related risks, including customer concentration and the use of distributors and other third parties;
- our significantly reduced return of capital in recent years;
- our debt obligations and our ability to access sources of capital;
- complex and evolving laws and regulations across many jurisdictions;
- fluctuations in currency exchange rates;
- changes in our effective tax rate;
- catastrophic events;
- environmental, health, safety, and product regulations;
- our initiatives and new legal requirements with respect to corporate responsibility matters; and
-
other risks and uncertainties described in this release, our 2023 Form 10-K, and our other filings with the
SEC .
Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this release and in other documents we file from time to time with the
Unless specifically indicated otherwise, the forward-looking statements in this release do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this filing. In addition, the forward-looking statements in this release are based on management's expectations as of the date of this release, unless an earlier date is specified, including expectations based on third-party information and projections that management believes to be reputable. We do not undertake, and expressly disclaim any duty, to update such statements, whether as a result of new information, new developments, or otherwise, except to the extent that disclosure may be required by law.
About
©
|
||||||||
Consolidated Condensed Statements of Income and Other Information |
||||||||
|
|
|
||||||
|
|
Three Months Ended |
||||||
(In Millions, Except Per Share Amounts; Unaudited) |
|
|
|
|
||||
Net revenue |
|
$ |
12,833 |
|
|
$ |
12,949 |
|
Cost of sales |
|
|
8,286 |
|
|
|
8,311 |
|
Gross margin |
|
|
4,547 |
|
|
|
4,638 |
|
Research and development |
|
|
4,239 |
|
|
|
4,080 |
|
Marketing, general, and administrative |
|
|
1,329 |
|
|
|
1,374 |
|
Restructuring and other charges |
|
|
943 |
|
|
|
200 |
|
Operating expenses |
|
|
6,511 |
|
|
|
5,654 |
|
Operating income (loss) |
|
|
(1,964 |
) |
|
|
(1,016 |
) |
Gains (losses) on equity investments, net |
|
|
(120 |
) |
|
|
(24 |
) |
Interest and other, net |
|
|
80 |
|
|
|
224 |
|
Income (loss) before taxes |
|
|
(2,004 |
) |
|
|
(816 |
) |
Provision for (benefit from) taxes |
|
|
(350 |
) |
|
|
(2,289 |
) |
Net income (loss) |
|
|
(1,654 |
) |
|
|
1,473 |
|
Less: Net income (loss) attributable to non-controlling interests |
|
|
(44 |
) |
|
|
(8 |
) |
Net income (loss) attributable to |
|
$ |
(1,610 |
) |
|
$ |
1,481 |
|
Earnings (loss) per share attributable to Intel—basic |
|
$ |
(0.38 |
) |
|
$ |
0.35 |
|
Earnings (loss) per share attributable to Intel—diluted |
|
$ |
(0.38 |
) |
|
$ |
0.35 |
|
|
|
|
|
|
||||
Weighted average shares of common stock outstanding: |
|
|
|
|
||||
Basic |
|
|
4,267 |
|
|
|
4,182 |
|
Diluted |
|
|
4,267 |
|
|
|
4,196 |
|
|
|
|
|
|
||||
|
|
Three Months Ended |
||||||
(In Millions; Unaudited) |
|
|
|
|
||||
Earnings per share of common stock information: |
|
|
|
|
||||
Weighted average shares of common stock outstanding—basic |
|
|
4,267 |
|
|
|
4,182 |
|
Dilutive effect of employee equity incentive plans |
|
|
— |
|
|
|
14 |
|
Weighted average shares of common stock outstanding—diluted |
|
|
4,267 |
|
|
|
4,196 |
|
Other information: |
|
|
|
|||
(In Thousands; Unaudited) |
|
|
|
|||
Employees |
|
|
|
|||
|
116.5 |
116.4 |
118.1 |
|||
Mobileye and other subsidiaries |
5.3 |
5.2 |
4.7 |
|||
NAND1 |
3.5 |
3.6 |
4.0 |
|||
Total |
125.3 |
125.2 |
126.8 |
1 Employees of the NAND memory business, which we divested to SK hynix on completion of the first closing on |
|
||||||||
Consolidated Condensed Balance Sheets |
||||||||
(In Millions; Unaudited) |
|
|
|
|
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
11,287 |
|
|
$ |
7,079 |
|
Short-term investments |
|
|
17,986 |
|
|
|
17,955 |
|
Accounts receivable, net |
|
|
3,131 |
|
|
|
3,402 |
|
Inventories |
|
|
|
|
||||
Raw materials |
|
|
1,284 |
|
|
|
1,166 |
|
Work in process |
|
|
6,294 |
|
|
|
6,203 |
|
Finished goods |
|
|
3,666 |
|
|
|
3,758 |
|
|
|
|
11,244 |
|
|
|
11,127 |
|
Other current assets |
|
|
7,181 |
|
|
|
3,706 |
|
Total current assets |
|
|
50,829 |
|
|
|
43,269 |
|
|
|
|
|
|
||||
Property, plant, and equipment, net |
|
|
103,398 |
|
|
|
96,647 |
|
Equity investments |
|
|
5,824 |
|
|
|
5,829 |
|
|
|
|
27,442 |
|
|
|
27,591 |
|
Identified intangible assets, net |
|
|
4,383 |
|
|
|
4,589 |
|
Other long-term assets |
|
|
14,329 |
|
|
|
13,647 |
|
Total assets |
|
$ |
206,205 |
|
|
$ |
191,572 |
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Short-term debt |
|
$ |
4,695 |
|
|
$ |
2,288 |
|
Accounts payable |
|
|
9,618 |
|
|
|
8,578 |
|
Accrued compensation and benefits |
|
|
2,651 |
|
|
|
3,655 |
|
Income taxes payable |
|
|
1,856 |
|
|
|
1,107 |
|
Other accrued liabilities |
|
|
13,207 |
|
|
|
12,425 |
|
Total current liabilities |
|
|
32,027 |
|
|
|
28,053 |
|
|
|
|
|
|
||||
Debt |
|
|
48,334 |
|
|
|
46,978 |
|
Other long-term liabilities |
|
|
5,410 |
|
|
|
6,576 |
|
Stockholders’ equity: |
|
|
|
|
||||
Common stock and capital in excess of par value, 4,276 issued and outstanding (4,228 issued and outstanding as of |
|
|
49,763 |
|
|
|
36,649 |
|
Accumulated other comprehensive income (loss) |
|
|
(696 |
) |
|
|
(215 |
) |
Retained earnings |
|
|
66,162 |
|
|
|
69,156 |
|
Total |
|
|
115,229 |
|
|
|
105,590 |
|
Non-controlling interests |
|
|
5,205 |
|
|
|
4,375 |
|
Total stockholders' equity |
|
|
120,434 |
|
|
|
109,965 |
|
Total liabilities and stockholders’ equity |
|
$ |
206,205 |
|
|
$ |
191,572 |
|
|
||||||||
Consolidated Condensed Statements of Cash Flows |
||||||||
|
|
Six Months Ended |
||||||
(In Millions; Unaudited) |
|
|
|
|
||||
|
|
|
|
|
||||
Cash and cash equivalents, beginning of period |
|
$ |
7,079 |
|
|
$ |
11,144 |
|
Cash flows provided by (used for) operating activities: |
|
|
|
|
||||
Net income (loss) |
|
|
(2,091 |
) |
|
|
(1,295 |
) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation |
|
|
4,403 |
|
|
|
3,733 |
|
Share-based compensation |
|
|
1,959 |
|
|
|
1,661 |
|
Restructuring and other charges |
|
|
1,291 |
|
|
|
255 |
|
Amortization of intangibles |
|
|
717 |
|
|
|
909 |
|
(Gains) losses on equity investments, net |
|
|
(84 |
) |
|
|
(146 |
) |
Changes in assets and liabilities: |
|
|
|
|
||||
Accounts receivable |
|
|
272 |
|
|
|
1,137 |
|
Inventories |
|
|
(116 |
) |
|
|
1,240 |
|
Accounts payable |
|
|
184 |
|
|
|
(1,102 |
) |
Accrued compensation and benefits |
|
|
(1,309 |
) |
|
|
(1,340 |
) |
Income taxes |
|
|
(2,174 |
) |
|
|
(2,186 |
) |
Other assets and liabilities |
|
|
(1,983 |
) |
|
|
(1,843 |
) |
Total adjustments |
|
|
3,160 |
|
|
|
2,318 |
|
Net cash provided by (used for) operating activities |
|
|
1,069 |
|
|
|
1,023 |
|
Cash flows provided by (used for) investing activities: |
|
|
|
|
||||
Additions to property, plant, and equipment |
|
|
(11,652 |
) |
|
|
(13,301 |
) |
Proceeds from capital-related government incentives |
|
|
699 |
|
|
|
49 |
|
Purchases of short-term investments |
|
|
(17,634 |
) |
|
|
(25,696 |
) |
Maturities and sales of short-term investments |
|
|
17,214 |
|
|
|
26,957 |
|
Other investing |
|
|
(355 |
) |
|
|
662 |
|
Net cash provided by (used for) investing activities |
|
|
(11,728 |
) |
|
|
(11,329 |
) |
Cash flows provided by (used for) financing activities: |
|
|
|
|
||||
Issuance of commercial paper, net of issuance costs |
|
|
5,804 |
|
|
|
— |
|
Repayment of commercial paper |
|
|
(2,609 |
) |
|
|
(3,944 |
) |
Payments on finance leases |
|
|
— |
|
|
|
(96 |
) |
Partner contributions |
|
|
11,861 |
|
|
|
834 |
|
Proceeds from sales of subsidiary shares |
|
|
— |
|
|
|
1,573 |
|
Issuance of long-term debt, net of issuance costs |
|
|
2,975 |
|
|
|
10,968 |
|
Repayment of debt |
|
|
(2,288 |
) |
|
|
— |
|
Proceeds from sales of common stock through employee equity incentive plans |
|
|
631 |
|
|
|
665 |
|
Payment of dividends to stockholders |
|
|
(1,063 |
) |
|
|
(2,036 |
) |
Other financing |
|
|
(444 |
) |
|
|
(453 |
) |
Net cash provided by (used for) financing activities |
|
|
14,867 |
|
|
|
7,511 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
4,208 |
|
|
|
(2,795 |
) |
Cash and cash equivalents, end of period |
|
$ |
11,287 |
|
|
$ |
8,349 |
|
|
||||||||
Supplemental Operating Segment Results |
||||||||
|
|
Three Months Ended |
||||||
(In Millions) |
|
|
|
|
||||
Operating segment revenue: |
|
|
|
|
||||
|
|
|
|
|
||||
|
|
|
|
|
||||
Desktop |
|
$ |
2,527 |
|
|
$ |
2,370 |
|
Notebook |
|
|
4,480 |
|
|
|
3,896 |
|
Other |
|
|
403 |
|
|
|
514 |
|
|
|
|
7,410 |
|
|
|
6,780 |
|
Data Center and AI |
|
|
3,045 |
|
|
|
3,155 |
|
Network and Edge |
|
|
1,344 |
|
|
|
1,364 |
|
Total |
|
$ |
11,799 |
|
|
$ |
11,299 |
|
|
|
|
|
|
||||
|
|
$ |
4,320 |
|
|
$ |
4,172 |
|
All other |
|
|
|
|
||||
Altera |
|
|
361 |
|
|
|
848 |
|
Mobileye |
|
|
440 |
|
|
|
454 |
|
Other |
|
|
167 |
|
|
|
117 |
|
Total all other revenue |
|
|
968 |
|
|
|
1,419 |
|
Total operating segment revenue |
|
$ |
17,087 |
|
|
$ |
16,890 |
|
Intersegment eliminations |
|
|
(4,254 |
) |
|
|
(3,941 |
) |
Total net revenue |
|
$ |
12,833 |
|
|
$ |
12,949 |
|
|
|
|
|
|
||||
Segment operating income (loss): |
|
|
|
|
||||
|
|
|
|
|
||||
|
|
$ |
2,497 |
|
|
$ |
1,986 |
|
Data Center and AI |
|
|
276 |
|
|
|
469 |
|
Network and Edge |
|
|
139 |
|
|
|
64 |
|
Total |
|
$ |
2,912 |
|
|
$ |
2,519 |
|
|
|
|
|
|
||||
|
|
$ |
(2,830 |
) |
|
$ |
(1,869 |
) |
All Other |
|
|
|
|
||||
Altera |
|
|
(25 |
) |
|
|
346 |
|
Mobileye |
|
|
72 |
|
|
|
129 |
|
Other |
|
|
(82 |
) |
|
|
(120 |
) |
Total all other operating income (loss) |
|
|
(35 |
) |
|
|
355 |
|
Total segment operating income (loss) |
|
$ |
47 |
|
|
$ |
1,005 |
|
Intersegment eliminations |
|
|
(291 |
) |
|
|
(413 |
) |
Corporate unallocated expenses |
|
|
(1,720 |
) |
|
|
(1,608 |
) |
Total operating income (loss) |
|
$ |
(1,964 |
) |
|
$ |
(1,016 |
) |
For information about our operating segments, including the nature of segment revenues and expenses, and a reconciliation of our operating segment revenue and operating income (loss) to our consolidated results, refer to our Form 10-K filed on
Explanation of Non-GAAP Measures
In addition to disclosing financial results in accordance with US GAAP, this document contains references to the non-GAAP financial measures below. We believe these non-GAAP financial measures provide investors with useful supplemental information about our operating performance, enable comparison of financial trends and results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance. Some of these non-GAAP financial measures are used in our performance-based RSUs and our cash bonus plans.
Our non-GAAP financial measures reflect adjustments based on one or more of the following items, as well as the related income tax effects. Income tax effects are calculated using a fixed long-term projected tax rate of 13% across all adjustments. We project this long-term non-GAAP tax rate on at least an annual basis using a five-year non-GAAP financial projection that excludes the income tax effects of each adjustment. The projected non-GAAP tax rate also considers factors such as our tax structure, our tax positions in various jurisdictions, and key legislation in significant jurisdictions where we operate. This long-term non-GAAP tax rate may be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or changes to our strategy or business operations. Management uses this non-GAAP tax rate in managing internal short- and long-term operating plans and in evaluating our performance; we believe this approach facilitates comparison of our operating results and provides useful evaluation of our current operating performance.
Our non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the financial results calculated in accordance with US GAAP and reconciliations from these results should be carefully evaluated.
Non-GAAP adjustment or measure |
Definition |
Usefulness to management and investors |
Acquisition-related adjustments |
Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology, brands, and customer relationships acquired in connection with business combinations. Charges related to the amortization of these intangibles are recorded within both cost of sales and MG&A in our US GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years.
|
We exclude amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. These adjustments facilitate a useful evaluation of our current operating performance and comparison to our past operating performance and provide investors with additional means to evaluate cost and expense trends.
|
Share-based compensation |
Share-based compensation consists of charges related to our employee equity incentive plans. |
We exclude charges related to share-based compensation for purposes of calculating certain non-GAAP measures because we believe these adjustments provide comparability to peer company results and because these charges are not viewed by management as part of our core operating performance. We believe these adjustments provide investors with a useful view, through the eyes of management, of our core business model, how management currently evaluates core operational performance, and additional means to evaluate expense trends, including in comparison to other peer companies.
|
Restructuring and other charges |
Restructuring charges are costs associated with a restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges include periodic goodwill and asset impairments, and costs associated with restructuring activity. Q2 2024 includes a charge arising out of the R2 litigation. |
We exclude restructuring and other charges, including any adjustments to charges recorded in prior periods, for purposes of calculating certain non-GAAP measures because these costs do not reflect our core operating performance. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends.
|
(Gains) losses on equity investments, net |
(Gains) losses on equity investments, net consists of ongoing mark-to-market adjustments on marketable equity securities, observable price adjustments on non-marketable equity securities, related impairment charges, and the sale of equity investments and other.
|
We exclude these non-operating gains and losses for purposes of calculating certain non-GAAP measures because it provides comparability between periods. The exclusion reflects how management evaluates the core operations of the business.
|
(Gains) losses from divestiture |
(Gains) losses are recognized at the close of a divestiture, or over a specified deferral period when deferred consideration is received at the time of closing. Based on our ongoing obligation under the NAND wafer manufacturing and sale agreement entered into in connection with the first closing of the sale of our NAND memory business on
|
We exclude gains or losses resulting from divestitures for purposes of calculating certain non-GAAP measures because they do not reflect our current operating performance. These adjustments facilitate a useful evaluation of our current operating performance and comparisons to past operating results. |
Adjusted free cash flow |
We reference a non-GAAP financial measure of adjusted free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and quality of earnings. Adjusted free cash flow is operating cash flow adjusted for (1) additions to property, plant, and equipment, net of proceeds from capital-related government incentives and partner contributions, and (2) payments on finance leases.
|
This non-GAAP financial measure is helpful in understanding our capital requirements and sources of liquidity by providing an additional means to evaluate the cash flow trends of our business. |
Net capital spending |
We reference a non-GAAP financial measure of net capital spending, which is additions to property, plant, and equipment, net of proceeds from capital-related government incentives and partner contributions. |
We believe this measure provides investors with useful supplemental information about our capital investment activities and capital offsets, and allows for greater transparency with respect to a key metric used by management in operating our business and measuring our performance.
|
Supplemental Reconciliations of GAAP Actuals to Non-GAAP Actuals
Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable US GAAP financial measure. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the reconciliations from US GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable US GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.
|
Three Months Ended |
|||||||
(In Millions, Except Per Share Amounts) |
|
|
||||||
GAAP gross margin |
$ |
4,547 |
|
$ |
4,638 |
|
||
Acquisition-related adjustments |
|
224 |
|
|
306 |
|
||
Share-based compensation |
|
195 |
|
|
210 |
|
||
Non-GAAP gross margin |
$ |
4,966 |
|
$ |
5,154 |
|
||
GAAP gross margin percentage |
|
35.4 |
% |
|
35.8 |
% |
||
Acquisition-related adjustments |
|
1.7 |
% |
|
2.4 |
% |
||
Share-based compensation |
|
1.5 |
% |
|
1.6 |
% |
||
Non-GAAP gross margin percentage |
|
38.7 |
% |
|
39.8 |
% |
||
GAAP R&D and MG&A |
$ |
5,568 |
|
$ |
5,454 |
|
||
Acquisition-related adjustments |
|
(41 |
) |
|
(44 |
) |
||
Share-based compensation |
|
(585 |
) |
|
(712 |
) |
||
Non-GAAP R&D and MG&A |
$ |
4,942 |
|
$ |
4,698 |
|
||
GAAP operating income (loss) |
$ |
(1,964 |
) |
$ |
(1,016 |
) |
||
Acquisition-related adjustments |
|
265 |
|
|
350 |
|
||
Share-based compensation |
|
780 |
|
|
922 |
|
||
Restructuring and other charges |
|
943 |
|
|
200 |
|
||
Non-GAAP operating income |
$ |
24 |
|
$ |
456 |
|
||
GAAP operating margin (loss) |
|
(15.3 |
)% |
|
(7.8 |
)% |
||
Acquisition-related adjustments |
|
2.1 |
% |
|
2.7 |
% |
||
Share-based compensation |
|
6.1 |
% |
|
7.1 |
% |
||
Restructuring and other charges |
|
7.3 |
% |
|
1.5 |
% |
||
Non-GAAP operating margin |
|
0.2 |
% |
|
3.5 |
% |
||
GAAP tax rate |
|
17.5 |
% |
|
280.5 |
% |
||
Income tax effects |
|
(4.5 |
)% |
|
(267.5 |
)% |
||
Non-GAAP tax rate |
|
13.0 |
% |
|
13.0 |
% |
||
GAAP net income (loss) attributable to |
$ |
(1,610 |
) |
$ |
1,481 |
|
||
Acquisition-related adjustments |
|
265 |
|
|
350 |
|
||
Share-based compensation |
|
780 |
|
|
922 |
|
||
Restructuring and other charges |
|
943 |
|
|
200 |
|
||
(Gains) losses on equity investments, net |
|
120 |
|
|
24 |
|
||
(Gains) losses from divestiture |
|
(39 |
) |
|
(39 |
) |
||
Adjustments attributable to non-controlling interest |
|
(18 |
) |
|
(18 |
) |
||
Income tax effects |
|
(358 |
) |
|
(2,373 |
) |
||
Non-GAAP net income attributable to |
$ |
83 |
|
$ |
547 |
|
||
|
|
|
||||||
(In Millions, Except Per Share Amounts) |
|
|
|
|||||
GAAP earnings (loss) per share attributable to Intel—diluted |
$ |
(0.38 |
) |
$ |
0.35 |
|
||
Acquisition-related adjustments |
|
0.06 |
|
|
0.08 |
|
||
Share-based compensation |
|
0.18 |
|
|
0.22 |
|
||
Restructuring and other charges |
|
0.22 |
|
|
0.05 |
|
||
(Gains) losses on equity investments, net |
|
0.03 |
|
|
0.01 |
|
||
(Gains) losses from divestiture |
|
(0.01 |
) |
|
(0.01 |
) |
||
Adjustments attributable to non-controlling interest |
|
— |
|
|
— |
|
||
Income tax effects |
|
(0.08 |
) |
|
(0.57 |
) |
||
Non-GAAP earnings per share attributable to Intel—diluted |
$ |
0.02 |
|
$ |
0.13 |
|
||
|
|
|
||||||
GAAP net cash provided by (used for) operating activities |
$ |
2,292 |
|
$ |
2,808 |
|
||
Net partner contributions and incentives received (cash expended) for property plant and equipment |
|
5,863 |
|
|
(5,454 |
) |
||
Payments on finance leases |
|
— |
|
|
(81 |
) |
||
Adjusted free cash flow |
$ |
8,155 |
|
$ |
(2,727 |
) |
||
GAAP net cash provided by (used for) investing activities |
$ |
(9,165 |
) |
$ |
(2,808 |
) |
||
GAAP net cash provided by (used for) financing activities |
$ |
11,237 |
|
$ |
117 |
|
||
Supplemental Reconciliations of GAAP Outlook to Non-GAAP Outlook
Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable US GAAP financial measure. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the financial outlook prepared in accordance with US GAAP and the reconciliations from this Business Outlook should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable US GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.
|
Q3 2024 Outlook1 |
|||
|
Approximately |
|||
GAAP gross margin percentage |
|
34.5 |
% |
|
Acquisition-related adjustments |
|
1.7 |
% |
|
Share-based compensation |
|
1.8 |
% |
|
Non-GAAP gross margin percentage |
|
38.0 |
% |
|
|
|
|||
GAAP tax rate |
|
34 |
% |
|
Income tax effects |
|
(21 |
)% |
|
Non-GAAP tax rate |
|
13 |
% |
|
|
|
|||
GAAP earnings (loss) per share attributable to Intel—diluted |
$ |
(0.24 |
) |
|
Acquisition-related adjustments |
|
0.06 |
|
|
Share-based compensation |
|
0.23 |
|
|
Restructuring and other charges |
|
0.06 |
|
|
(Gains) losses from divestiture |
|
(0.01 |
) |
|
Adjustments attributable to non-controlling interest |
|
— |
|
|
Income tax effects |
|
(0.13 |
) |
|
Non-GAAP earnings (loss) per share attributable to Intel—diluted |
$ |
(0.03 |
) |
1 Non-GAAP gross margin percentage and non-GAAP EPS outlook based on the mid-point of the revenue range. |
Supplemental Reconciliations of Other GAAP to Non-GAAP Forward-Looking Estimates
Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable US GAAP financial measure. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the reconciliations should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable US GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.
(In Billions) |
|
Full-Year 2024 |
|
Full-Year 2025 |
|
|
Approximately |
|
Approximately |
|
|
|
|
|
GAAP R&D and MG&A |
|
|
|
|
Acquisition-related adjustments |
|
(0.2) |
|
(0.1) |
Share-based compensation |
|
(2.7) |
|
(2.5) |
Non-GAAP R&D and MG&A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP additions to property, plant and equipment (gross capital expenditures) |
|
|
|
|
Proceeds from capital-related government incentives |
|
(1.5 - 3.5) |
|
(4.0 - 6.0) |
Partner contributions |
|
(12.5) |
|
(4.0 - 5.0) |
Non-GAAP net capital spending |
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240801042170/en/
Investor Relations
1-916-356-0320
kylie.altman@intel.com
Media Relations
1-408-893-0601
penelope.bruce@intel.com
Source: