Executive Summary
Intel Corporation reported its Q3 2024 results with a total revenue of $13.28 billion, reflecting a modest increase of 3.51% from the previous quarter, driven by improvements in both the client computing group and foundry services. However, the company faced a significant net income loss of $16.64 billion, ballooned by restructuring charges, inventory impairments, and market transition costs. Despite these challenges, Intel's management emphasized a commitment to operational efficiency and a strategic pivot to maximize its x86 architecture's potential, especially in light of evolving AI demands in the computing landscape. CEO Pat Gelsinger stated that the team is committed to "act with urgency to deliver on our priorities, focusing on a leaner, more profitable Intel."
Key Performance Indicators
QoQ: -56.08% | YoY:-71.66%
QoQ: 787.07% | YoY:-450.37%
QoQ: 933.48% | YoY:-723.42%
QoQ: 921.05% | YoY:-715.87%
Key Insights
**Revenue Performance:** In Q3 2024, Intel's revenue stood at $13.28 billion, marking an 3.51% increase QoQ but a 13.77% decline YoY. This highlights the ongoing challenge of market share competition against rivals like AMD and NVIDIA, particularly in the AI and data center segments.
**Profitability:** Intel suffered a staggering net loss of $16.64 billion, reflecting a net income ratio of -1.25. The operating income was negative at -$9.06 billion, largely due to $15.6 billion in impairmen...
Financial Highlights
Revenue Performance: In Q3 2024, Intel's revenue stood at $13.28 billion, marking an 3.51% increase QoQ but a 13.77% decline YoY. This highlights the ongoing challenge of market share competition against rivals like AMD and NVIDIA, particularly in the AI and data center segments.
Profitability: Intel suffered a staggering net loss of $16.64 billion, reflecting a net income ratio of -1.25. The operating income was negative at -$9.06 billion, largely due to $15.6 billion in impairment charges and significant restructuring expenses linked to workforce reductions.
Costs and Expenditures: The cost of revenue accounted for approximately 85% of sales, with substantial research and development expenses also impacting profitability. Operating expenses were noted at $11.05 billion, emphasizing the need for robust cost optimization strategies.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
13.28B |
-13.77% |
3.51% |
| Gross Profit |
2.00B |
-71.66% |
-56.08% |
| Operating Income |
-9.06B |
-450.37% |
787.07% |
| Net Income |
-16.64B |
-723.42% |
933.48% |
| EPS |
-3.88 |
-715.87% |
921.05% |
Key Financial Ratios
operatingProfitMargin
-68.2%
operatingCashFlowPerShare
$0.95
freeCashFlowPerShare
$-0.56
dividendPayoutRatio
-3.22%
Management Commentary
Management Commentary on Strategic Focus:
- "We need to fight for every inch and execute better than ever before." - Pat Gelsinger, CEO.
- Gelsinger reiterated that the company is on track to reduce its workforce by over 15% and is simplifying its product portfolio to maximize x86 architecture’s value, seeking to unlock efficiencies in operations.
- CFO David Zinsner outlined expectations for a revenue range of $13.3 billion to $14.3 billion in Q4 2024, complementary to a gross margin target of approximately 39.5%.
Emphasis on AI Transition:
- Intel launched its Core Ultra processors catering to AI applications, with management asserting, "This is the most efficient family of x86 processors ever created." Through partnerships with AMD and significant advancements in their technology roadmap, Intel is working to regain its leadership position in an increasingly competitive market.
"We delivered Q3 revenue above the midpoint of our guidance and we made significant progress on our cost reduction plan."
— Pat Gelsinger
"We have a lot more ahead and are acting with urgency to deliver on our priorities."
— Pat Gelsinger
Forward Guidance
Looking ahead, Intel aims to increase its revenue in Q4 2024, projecting flat growth across its key business segments amidst continued client inventory corrections. The company is targeting an operating expense reduction to $17.5 billion, and forecasts for adjusted free cash flow are expected to turn positive in 2025. CEO Gelsinger highlighted Intel’s commitment to managing costs and improving profitability: "We expect adjusted free cash flow to be positive next year and will focus on decreasing leverage and improving liquidity." Investors should monitor the ongoing transformations linked to Intel’s transition to advanced nodes and improvements in the foundry segment.