Intel Reports Second Quarter 2020 Financial Results
SANTA CLARA, Calif., July 24, 2020 -- Intel Corporation reported second-quarter 2020 financial results.
“It was an excellent quarter, well above our expectations on the continued strong demand for computing performance to support cloud-delivered services, a work- and learn-at-home environment, and the build-out of 5G networks,” said Bob Swan, Intel CEO. “In our increasingly digital world, Intel technology is essential to nearly every industry on this planet. We have an incredible opportunity to enrich lives and grow this company with a continued focus on innovation and execution."
Q1 2020 Financial Highlights
| GAAP | Non-GAAP | ||||||
| Q2 2020 | Q2 2019 | vs. Q2 2019 | Q2 2020 | Q2 2019 | vs. Q2 2019 | ||
| Revenue ($B) | $19.7 | $16.5 | up 20% | $19.7^ | $16.5^ | up 20% | |
| Gross Margin | 53.3% | 59.8% | down 6.6 ppt | 54.8% | 61.6% | down 6.8 ppt | |
| R&D and MG&A ($B) | $4.8 | $5.1 | down 5% | $4.8 | $5.0 | down 5% | |
| Operating Income ($B) | $5.7 | $4.6 | up 23% | $6.1 | $5.1 | up 18% | |
| Tax Rate | 14.0% | 11.5% | up 2.4 ppt | 13.9% | 11.8% | up 2.1 ppt | |
| Net Income ($B) | $5.1 | $4.2 | up 22% | $5.3 | $4.8 | up 10% | |
| Earnings Per Share | $1.19 | $0.92 | up 29% | $1.23 | $1.06 | up 16% | |
| Key Business Unit Revenue and Trends | ||||
| Q2 2020 | vs. Q2 2019 | |||
| DCG | $7.1 billion | up | 43% | |
| Internet of Things | ||||
| IOTG | $670 million | down | (32)% | |
| Data-centric | Mobileye | $146 million | down | (27)% |
| NSG | $1.7 billion | up | 76% | |
| PSG | $501 million | up | 2% | |
| up | 34%* | |||
| PC-centric | CCG | $9.5 billion | up | 7% |
Intel achieved record second-quarter revenue with 34 percent data-centric revenue growth and 7 percent PC-centric revenue growth YoY. These results were driven by strong sales of cloud, notebook, memory and 5G products in an environment where digital services and computing performance are essential to how we live, work and stay connected.
Second-quarter data-centric results were led by strength in the Data Center Group (DCG) with revenue up 43 percent YoY driven by broad strength including 47 percent YoY growth in cloud service provider revenue. Intel added to its data-centric product offerings in the second quarter with the introduction of new 3rd Gen Intel Xeon Scalable processors and new additions to its hardware and software AI portfolio for data center, network and intelligent-edge environments. Intel's memory business (NSG) set a new revenue record in the quarter, and Intel's portfolio for 5G network infrastructure gained customer momentum, most notably the 10nm-based Intel Atom P5900 for wireless base stations. Mobileye continued to win new ADAS designs in a challenging economic environment for automotive, and Intel acquired Moovit, a mobility-as-a-service (MaaS) solutions company, advancing Mobileye's plan to become a complete mobility provider.
The PC-centric business (CCG) was up 7 percent YoY in the second quarter on notebook strength driven by the continued work- and learn at home dynamics of COVID-19, which also contributed to a volume decline in desktop form factors as demand shifted to notebooks. In the second quarter, Intel expanded its 10th Gen Intel Core processor line-up with the launch of new Core S and H series processors for desktop and mobile gaming as well as the new 10th Gen Intel Core vPro processors, which deliver uncompromised productivity and hardware-based security features for commercial PCs. The second quarter also marked the launch of Intel Core processors with Intel Hybrid Technology, code-named “Lakefield,” which utilize Foveros 3D packaging technology and feature a hybrid CPU architecture for power and performance scalability.
Intel is accelerating its transition to 10nm products this year with increasing volumes and strong demand for an expanding line up. This includes a growing portfolio of 10nm-based Intel Core processors with “Tiger Lake” launching soon, and the first 10nm-based server CPU “Ice Lake,” which remains planned for the end of this year. In the second half of 2021, Intel expects to deliver a new line of client CPU’s (code-named “Alder Lake”), which will include its first 10nm-based desktop CPU, and a new 10nm-based server CPU (code-named “Sapphire Rapids”). The company's 7nm-based CPU product timing is shifting approximately six months relative to prior expectations. The primary driver is the yield of Intel's 7nm process, which based on recent data, is now trending approximately twelve months behind the company's internal target.
The company will provide an update on its product and process technology transitions on today's Q2 earnings webcast. Additional information regarding Intel’s results can be found in the Q2'20 Earnings Presentation available at: www.intc.com/results.cfm.
Intel's guidance for the third quarter and full-year 2020 includes both GAAP and non-GAAP estimates. Reconciliations between these GAAP and non-GAAP financial measures are included below.
| Q3 2020 | GAAP | Non-GAAP | |
| Approximately | Approximately | ||
| Revenue | $18.2 billion | $18.2 billion^ | |
| Operating margin | 28% | 30% | |
| Tax rate | 15.5% | 15.5%^ | |
| Earnings per share | $1.02 | $1.10 | |
| Full-Year 2020 | GAAP | Non-GAAP | |
| Approximately | Approximately | ||
| Revenue | $75 billion | $75 billion^ | |
| Operating margin | 30% | 32% | |
| Tax rate | 14.5% | 14.5%^ | |
| Earnings per share | $4.53 | $4.85 | |
| Cash from Operations | $32.5 billion | N/A | |
| Full-year capital spending | $15.0 billion | $15.0 billion^ | |
| Free cash flow | N/A | $17.5 billion |
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 23, 2020. 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.
About Intel
Intel is an industry leader, creating world-changing technology that enables global progress and enriches lives. Inspired by Moore’s Law, we continuously work to advance the design and manufacturing of semiconductors to help address our customers’ greatest challenges. By embedding intelligence in the cloud, network, edge and every kind of computing device, we unleash the potential of data to transform business and society for the better. To learn more about Intel’s innovations, go to newsroom.intel.com and intel.com.
Source: Intel
