Intel (INTC) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $12.8B, down 1% year-over-year, with profitability below expectations due to margin pressure from accelerated AI PC ramp, higher costs, and export control restrictions.

• Announced a cost reduction plan targeting over $10 billion in savings for 2025, including a headcount reduction of more than 15% by end of 2025 and a dividend suspension starting Q4 2024 to prioritize liquidity.

• Achieved key milestones on Intel 18A process, with first client and server products powered on and 1.0 PDK released; Lunar Lake production ahead of schedule.

• New operating model separates Intel Products and Intel Foundry, clarifying roles and driving efficiency.

• Second-half trends are more challenging than expected, prompting decisive actions to improve efficiency and profitability.

Financial highlights

• Q2 2024 revenue: $12.8B (down 1% YoY); GAAP gross margin: 35.4%, non-GAAP: 38.7%.

• Q2 2024 GAAP net loss: $(1.6)B; non-GAAP net income: $0.1B; GAAP EPS: $(0.38); non-GAAP EPS: $0.02.

• Q2 2024 operating cash flow: $2.3B; adjusted free cash flow: $8.2B, aided by $11.5B in grants and partner contributions.

• Intel Products revenue was $11.8B, up 4% YoY; operating profit was $2.9B (25% margin).

• Intel Foundry revenue was $4.3B, up 4% YoY; operating loss was $2.8B.

Outlook and guidance

• Q3 2024 revenue guidance: $12.5–$13.5B; midpoint gross margin ~38%, non-GAAP EPS of -$0.03.

• 2024 gross CapEx expected at $25–$27B; net CapEx $11–$13B; 2025 OpEx targeted at $17.5B, net CapEx $12–$14B.

• Positive adjusted free cash flow expected in 2025 as cost reductions take effect; further OpEx and CapEx reductions planned for 2026.

• Q4 expected to see revenue growth at the high end of seasonal range as inventory normalizes.

• Full-year 2024 non-GAAP R&D and MG&A expected at ~$20B, declining to ~$17.5B in 2025.