Unnamed: 0 int64 | symbol string | quarter int64 | year int64 | date string | company_name string | company_id float64 | text string |
|---|---|---|---|---|---|---|---|
3,400 | INTC | 2 | 2,024 | 2024-08-01 17:00:00 | Intel Corporation | 21,127 | David Zinsner: Tailwind as we go into... Now as we -- now the challenge for next year will be, we'll now be ramping Lunar Lake next year. Lunar Lake has the memory in the package, so we're going to have to essentially buy that at a price and turn around and include that in our price at 0% margin. So that puts some negative pressure on the margins. And additionally, it's got more of the content sourced externally, and as you know, we're seeing some inflation. So that one then becomes more of the -- Meteor Lake starts to be helpful, but Lunar Lake starts to become a drag on the Intel Products margins, which is why we're tempered in terms of our outlook for margins next year because we're going to have a lot of improvements on the Intel Foundry side. It's going to be tempered on the product side and it's really going to be because of Lunar Lake.
Patrick Gelsinger: And I was just going to add one thing, as we move the Intel 4, Intel 3 capacity into Ireland, it also gives our TD team more focus on their capital on 18A as well as then 14A and 10A, and we're taking, for instance, the second high NA tool is coming into our Oregon facility. So we're well underway on 14A. So part of this was a capacity and cost decision for the long term. Part of it was an AI PC acceleration, but it was also a TD cadence decision and optimizing the use of our TD resources for the next-generation technologies, which are already well underway and showing good early indicators.
John Pitzer: Srini, do you have a quick follow-on?
Srini Pajjuri: Yes. So, Pat, I think in the past, you talked about the foundry business potentially breaking even sometime 2027, and given all the cuts -- and you seem to at least sound confident that foundry opportunity is not changing, so I'm just curious, do you see a possibility that Foundry business could actually breakeven sooner given all the cuts? |
3,401 | INTC | 2 | 2,024 | 2024-08-01 17:00:00 | Intel Corporation | 21,127 | Patrick Gelsinger: Clearly, that's our objective for Dave and I. You all say that said, we have a lot of wood to chop until we complete that journey. The steps that we've taken today are significant, right, ones for our operational efficiency that we're putting in place. So clearly that's our operating objective that we have. But as we said, 2026 is really this year that many of these wafers come home, many of the new factory investments come online, the new process technologies. So I'd say that 2027 timeframe is still a good one, but you can trust that every aspect of what we're doing is to accelerate the profitability. And the significant announcement today of the cost and financial focus, right, will give us, I'll say, the scrutiny and the lens by which to focus our Intel Foundry, $10 billion next year is a big number and we expect that many of these operational improvements will carry-forward in 2026. Dave said, an acceleration of our adjusted free cash flow turning positive, so everything that we're doing is aligned with our thought, Srini.
John Pitzer: Thank you, Srini. Jonathan, we've got time for one more question.
Operator: Certainly. Then our final question for today comes from the line of Matt Ramsay from TD Cowen. Your question, please.
Matthew Ramsay: Yes, good afternoon. Thank you, guys. I guess my first question is on the client space. I think, Dave, you might have mentioned client flat to down in September. I think your primary x86 competitor is going to be up double-digits or I think they mentioned above seasonal, however, you quantify seasonal now. Maybe you could give us a little color there. There's lots of maybe noise in the system about ARM coming into the client market, I think that impact would be more modest relative to what you described. But if you could kind of give us puts and takes there and how the inventory with OEMs might be affecting what you're guiding for since September. Thanks. |
3,402 | INTC | 2 | 2,024 | 2024-08-01 17:00:00 | Intel Corporation | 21,127 | Patrick Gelsinger: Yes. I'll take that Matt. We feel very good with our client position, the momentum we have in AI PC. Here we have a very healthy ecosystem as well. And I'll say as the large market share position that we have, we're very focused on sell-in and sell-through in the channel. So I believe our overall view of inventory levels, where our market share is, we're actually quite comfortable in the indications that we've given some inventory sell-through in the third quarter above seasonal in Q4. Overall, the TAM expansion is low-single-digit, even though we're seeing a lot of enthusiasm around the AI PC and further TAM expansion as we go into 2025 as expected now broadly. We'd also say that our position in the commercial portion of this market is very strong with our vPro assets and we believe we're coming into a refresh cycle on the corporate. We also saw things like vPro have great success for customers as they were dealing with the CrowdStrike Blue Screen period and customers who are vPro customers were able to recover in a day or so, where customers not on vPro took weeks to recover from that. So a lot of reinforcement of the ecosystem, the leadership that we have on AI PC. And as Dave said, Lunar Lake and Panther Lake only make our market position stronger. So I think we're very comfortable and every indication so far this quarter is very solid for those outcomes.
John Pitzer: Matt, do you have a quick follow-on? |
3,403 | INTC | 2 | 2,024 | 2024-08-01 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Matt, do you have a quick follow-on?
Matthew Ramsay: Yes, I do. Thanks, John. I wanted to ask -- I think in some of the prepared script and maybe early in the Q&A, Pat, you kind of reiterated the $15 billion funnel for the Foundry business, and I know in the medium term, a lot of that is packaging, but I wanted to ask about the customers that you've engaged with on 18A and maybe early on 14A, how have you seen the charts of the programs that they're planning to bring into your foundry progress in the last few quarters. Are people still committed to ramping those things? Are they taking PDKs and maybe doing tape-ins? Are things moving forward? Have you seen any acceleration? Have you seen hesitation or maybe wait-and-see from those customers? I'm just trying to figure out how that stuff is progressing on 18A? Thanks. |
3,404 | INTC | 2 | 2,024 | 2024-08-01 17:00:00 | Intel Corporation | 21,127 | Patrick Gelsinger: Yes. Let me just clarify, the $15 billion is lifetime deal value of committed deals, right? So this isn't a pipeline. This is committed business that we now have in place. So I just want to clarify that, Matt, because I think your question suggests that the pipeline. There's a lot more in the pipeline. This is $15 billion of committed deals. As you say, a lot of the near-term opportunity has been advanced packaging and we're seeing a significant expansion of that capability in terms of volume and technology. On 18A specifically, a lot of customers have been waiting for the PDK, right, and now that we released the PDK last month, the 1.0 PDK, we've seen a flurry of activity with the EDA, the IP vendors, and the end customers. So I'd be optimistic that we have good indicators coming in that area in the future, but this was really the starting point for many of them to go from test chips to start looking at production chips coming based on the PDK that we've just released. So we remain very comfortable with our earlier comments in that area. I'd say, we do believe that we'll have further updates there, but as we've also indicated, customers are reluctant to put their name out there given the supply base and the traditional operation of the Foundry industry. Overall, things are looking on track for what we've said with a meaningful acceleration in packaging over the last quarter, more updates to come. Maybe with that, John, I'll wrap us up. Thank you for joining our call. We appreciate the time as always. And I'd say on a couple of these topics, I hope to see many of you at the Deutsche Bank Technology Conference coming up where we'll have some further updates. I want to reiterate in a quarter like this that we are resolved to finish the audacious turnaround, the building of our process and product key milestones that we've achieved of this phase, but now we have to shift to putting more emphasis on the financial sustainability of our business. We're making difficult decisions as we rightsize. We |
3,405 | INTC | 2 | 2,024 | 2024-08-01 17:00:00 | Intel Corporation | 21,127 | to putting more emphasis on the financial sustainability of our business. We're making difficult decisions as we rightsize. We rebuild a more efficient, leaner, agile Intel for the future and one that we're confident will enable our long-term success. Thanks, and good afternoon, everybody. |
3,406 | INTC | 2 | 2,024 | 2024-08-01 17:00:00 | Intel Corporation | 21,127 | Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. |
3,407 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Operator: Thank you for standing by, and welcome to the Intel Corporation's First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, today's program is being recorded.
And now I'd like to introduce your host for today's program, Mr. John Pitzer, Corporate Vice President of Investor Relations.
John Pitzer: Thank you, Jonathan. By now, you should have received a copy of the Q1 earnings release and earnings presentation, both of which are available on our Investor Relations website, intc.com. For those joining us online today, the earnings presentation is also available in our webcast window.
I'm joined today by our CEO, Pat Gelsinger; and our CFO, David Zinsner. In a moment, we will hear brief comments from both followed by a Q&A session. Before we begin, please note that today's discussion does contain forward-looking statements based on the environment as we currently see it and as such, are subject to various risks and uncertainties. It also contains reference to non-GAAP financial measures that we believe provide useful information to our investors.
Our earnings release, most recent quarterly report on Form 10-Q and other filings with the SEC provide more information on specific risk factors that could cause actual results to differ materially from our expectations. They also provide additional information on our non-GAAP financial measures, including reconciliations where appropriate to corresponding GAAP financial measures.
With that, let me turn things over to Pat.
Patrick Gelsinger: Thanks, John, and welcome, everyone. |
3,408 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | With that, let me turn things over to Pat.
Patrick Gelsinger: Thanks, John, and welcome, everyone.
We've reported solid Q1 results, delivering revenue in line and EPS above our guidance as we continue to focus on operating leverage and expense management. Our results reflect our disciplined approach on reducing costs as well as the steady progress we are making against our long-term priorities. While first half trends are modestly weaker than we originally anticipated, they are consistent with what others have said and also reflect some of our own near-term supply constraints. We continue to see Q1 as the bottom, and we expect sequential revenue growth to strengthen throughout the year and into 2025, underpinned by: one, the beginnings of an enterprise refresh cycle and growing momentum for AI PCs; two, a data center recovery with a return to more normal CPU buying patterns and ramping of our accelerator offerings; and three, cyclical recoveries in NEX, Mobileye and Altera.
We had an extremely productive Q1 and achieved several important milestones along our journey to reposition the company for improved execution, competitiveness and perhaps, most importantly, financial results. We hosted our first-ever Intel foundry Direct Connect, which drew nearly 300 partners, customers and potential customers to hear about the momentum we are building with our foundry offerings. We were pleased to announce Microsoft as our fifth Intel 18A customer. We also updated our lifetime deal value to greater than $15 billion and extended our road map with Intel 14A, the first process node in the industry to use High NA EUV technology. |
3,409 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Shortly following Direct Connect, we were thrilled to join with President Biden and Commerce Secretary Raimondo to announce our position as the National Semiconductor Champion along with the single largest award from the CHIPS and Science Act of more than $45 billion of proposed grants, tax incentives and loans. During the second week of April, we brought together more than 1,000 of our top customers and partners at Intel Vision 2024, where we introduced our next-generation Gaudi 3 accelerator. We were joined by Naver, Dell, Bosch, Supermicro and Roche, among many others who shared how they are benefiting from Intel solutions.
Vision went straight into Open Source Summit, where we led the launch of the open platform for enterprise AI project. This industry initiative aims to accelerate gen AI deployments in what will be the largest market for AI applications, starting with retrieval augmented generation, or REG. Our Xeon plus Gaudi use cases, along with our established enterprise ecosystem, have a big role to play here.
Lastly, we hosted the industry's first Sustainability Summit, underscoring our deep commitment to building a more geographically diverse, resilient, trusted and of course, sustainable supply chain for semiconductors. We are proud of our leadership position in chemical conservation, renewable energy and water reclamation. Our accomplishments year-to-date build on all the work we have done to execute on the strategy I laid out when I rejoined the company 3 years ago. Job #1 was to accelerate our efforts to close the technology gap that was created by over a decade of underinvestment. |
3,410 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | The heart of Phase 1 was 5 nodes in 4 years. The rallying cry was toured. It combined accelerating our node transitions with improving our product execution and cadence to regain customer trust. We have rebuilt our Grovian culture and execution engine and are on track to completing our 5 nodes 4-year goal, which many of our stakeholders thought impossible at inception. In so doing, we are in a unique position with at-scale EUV technology, Western-based capacity and at the very least, a level playing field with the market leader. Intel 20A, which helps pave the way for Intel 18A, begins production ramp in the second half of this year with Arrow Lake. We expect to release the 1.0 PDK for Intel 18A this quarter. Furthermore, our lead products, Clearwater Forest and Panther Lake, are already in fab, and we expect to begin production ramp of the Intel 18A in these products in the first half of '25 for product release in the middle of next year.
Given this progress, now is the time to turn our focus to matching technology leadership with a competitive cost structure. Establishing a founder relationship between our products group and our manufacturing group was a critical step to achieve better structural cost. This quarter, we officially transitioned to our new operating model and introduced Intel products and Intel Foundry. Today, for the first time, we are reporting our results to reflect the new way in which we are running the company. Separating the internal financial reporting between Intel Foundry and Intel products was a critical step needed to provide transparency, accountability and the proper incentives to allow both groups to make better decisions to optimize their own cost structures. |
3,411 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | This change also provided the added benefit of giving more transparency to our outside owners, we knew that the day 1 P&L for Intel foundry was going to spark debate, but we also knew it was important to establish a baseline and provide a target model based on reasonable to conservative revenue and cost assumptions that we have a high degree of confidence we will achieve. I'm going to reiterate that point so it is heard and understood. Our target model is reasonable, conservative and reflects a high degree of confidence in our ability to deliver. And you can rest assured that we will be working hard to beat these targets. If we can move faster and do better, we will, and our new operating model is already catalyzing change in driving efficiencies across the organization.
Let me highlight 3 important aspects of our business and our strategy that is underscored by the new model. First, with Intel products, we have exposed a solid fabless franchise with established, powerful and hard to displace installed base and ecosystem across enterprise, consumer and edge that provide meaningful benefits to our customers and partners. Intel products is a solidly profitable business today despite just recently emerging from a semiconductor downturn and still competing with legacy process technology. That is changing rapidly as we ramp Intel 3 in 2024 and Intel 18A in 2025.
We then claim, we are defining and leading the AI PC category. IDC indicates the overall PC market is now expanding. And as stated earlier, as standards emerge and applications begin to take advantage of new AI embedded capabilities, we see demand signals improving, especially in second half of the year, helped by a likely corporate refresh. |
3,412 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Our Core Ultra ramp, led by Meteor Lake, continues to accelerate beyond our original expectation, with units expected to double sequentially in Q2, limited only by our supply of wafer-level assembly. Improving second half Meteor Lake supply, and the addition of Lunar Lake and Arrow Lake later this year, will allow us to ship in excess of our original 40 million AI PC CPU target in 2024. Next year, with Panther Lake, we will extend our lead with Intel 18A and further product enhancements. Our share position is strong and continues to strengthen as we execute on our product road map. Within DC AI, as committed, we have achieved product release on our first Intel 3 server product, the first-generation E-Core Xeon 6, codename Sierra Forest.
The next-generation P-Core Xeon 6 product, Granite Rapids, will be released in Q3. At Vision, we demonstrated a 70 billion parameter model running natively on Xeon 6 with good performance. We continue to expect share trends to stabilize this year before improving in 2025. While budgets are still being prioritized to generative AI build-out, where we have a strong position in the head node, customer conversations continue to show improving signs for traditional CPU refresh starting in late Q2 and into the second half. Our first Intel 18A product, Clearwater Forest, is slated to launch next year and will allow us to accelerate share gains. Our Gaudi 3 launch gave us a strong offering to improve our position in accelerated computing for the data center and cloud. |
3,413 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | We now expect over $500 million in accelerated revenue in second half of 2024, with increasing momentum into 2025 based on Gaudi 3's vastly superior TCO as well as our own expanding supply. In addition, we are finding good traction with the Intel Developer Cloud with customers onboarding with this platform, including Dell and Zeekr, our largest IDC win to date. We are encouraged by our progress but far from satisfied. Lastly, within NEX, the business has stabilized and beat our Q1 targets with channel inventories approaching normal levels and business acceleration expected through the year as a result. We also recently announced our plans for scale up and scale out Ethernet-based AI networking delivered as a discrete NIC and chiplets for AI foundry customers with numerous key providers in the industry and market standardization through the Ultra Ethernet Consortium.
So that is Intel products, good momentum and a lot for us to build on. Let me turn to Intel Foundry. We are executing on our strategy to drive meaningful improvement in profitability over time. We are obviously not there yet, given the large upfront investment we needed to build out this business. But we always said this was going to be a multiyear plan, and we are right on track with where we expect it to be right now. As we discussed during our webinar at the beginning of the month, the transition from pre-EUV wafers to post-EUV wafers is a powerful tailwind for us. We expect our blended average wafer pricing to grow 3x faster than cost over the decade, driving significant margin expansion. |
3,414 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | In addition, more competitive wafers will allow us to bring home many of the tiles that today are being manufactured at external foundries. Both dynamics are in our control and not dependent on revenue growth and are key elements to drive the business to breakeven, more than doubling our current earnings power at the Intel consolidated level. Of course, more competitive wafers combined with our position as the only company manufacturing with leading-edge wafers outside of Asia, is drawing strong interest from potential external customers. It is important to note that our leadership in advanced packaging creates more value in our wafer technologies and wafer-level assembly, and base die opportunities further fill our factories and extend the useful life of our tools for increased financial returns.
I am pleased to announce that this quarter, we signed another meaningful customer on Intel 18A, bringing our total to 6. A leader in the aerospace and defense industry, this customer chose Intel Foundry based not only on the process technology benefits of Intel 18A, but also because of their desire to have a secure U.S.-only supply base. Just this week, we were very pleased to announce that the DoD awarded Intel Foundry Phase III of the RAMP-C program, which we are confident will lead to additional federal aerospace and defense customers.
More broadly, we are seeing growing interest in Intel 18A and we continue to have a strong pipeline of nearly 50 test chips. The near-term interest in Intel Foundry continues to be strongest with advanced packaging, which now includes engagements with nearly every foundry customer in the industry, including 5 design awards. While we are highly focused on improving the near-term profitability of Intel Foundry, it is also important that we keep sight of the long-term opportunity here. |
3,415 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | The foundry market is expected to grow from $110 billion today to $240 billion by 2030, with almost 90% of the growth coming from EUV nodes and advanced packaging. Given this backdrop, we have clear line of sight to becoming the largest system foundry for the AI era and the second largest overall by 2030, building on our EUV High-NA process technology leadership in advanced packaging, manufacturing capacity, our systems expertise and the surge in AI demand. Put it another way, our $15 billion of external revenue embedded in our Intel Foundry target model would represent less than 15% of the leading edge foundry market. It is not a question of if but when Intel Foundry achieves escape velocity. And every day, we are proving to the market that Intel Foundry is a resilient, sustainable and trusted alternative to serve a semi market on a path to top $1 trillion by the end of the decade. |
3,416 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Let me wrap up by speaking to our All Other category, where our #1 priority is to unlock shareholder value. This quarter, we formally rebranded our Programmable Solutions Group, Altera, an Intel company. We look forward to bringing in a private equity partner this year to help prepare the company for an IPO in the coming years. This puts Altera on a similar path as Mobileye. We are excited about the future of both companies. By providing them with separation and autonomy, we believe we enhance their ability to capitalize on their growth opportunities in their respective market and accelerate their path to create value. Combined with IMS, our mask writing equipment business, we believe these 3 assets represent more than 1/4 of our overall market value today. Along with a solid Intel products franchise and an Intel Foundry business rapidly approaching $100 billion in net tangible assets, we see the opportunity to unlock significant value for our shareholders as we meet our financial commitments, stand up Intel Foundry and drive it to profitability and further leverage our opportunity in AI. So overall, I'll say that there's a lot for us to build on coming out of Q1. We are systematically executing to our strategy, and we are making steady progress. We are maniacally focused on executional excellence and fiscal discipline and we are relentless in our drive to regain process leadership and bring next-generation solutions to solve our customers' hardest problems. |
3,417 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | All of this gives me confidence in where we are headed. Yes, we have a lot of hard work in front of us, but we know what we need to do and the payoff will be significant in the end. Semiconductors are the currency that will drive the global economy for decades to come. We are one of 2, maybe 3 companies in the world that can continue to enable next-generation chip technologies and the only one that has Western capacity and R&D, and we will participate in the entire AI market. Quarter-by-quarter, we are positioning ourselves well to capitalize on the immense opportunities ahead.
With that, let me turn things over to Dave.
David Zinsner: Thank you, Pat, and good afternoon, everyone.
We delivered solid results in the quarter with revenue finishing in line and gross margin and EPS, again beating guidance. Forward-looking demand signals in our core markets improved at a measured pace through the first quarter, and we expect to deliver full year revenue and EPS growth in 2024, with the pace of revenue growth accelerating in the second half. First quarter revenue was $12.7 billion, up 9% year-over-year and just above the midpoint of our guidance, with product segments performing in line with expectations. Intel Products delivered 17% year-over-year growth, offset by inventory headwinds impacting Mobileye, Altera and our 5G customers as well as the sunsetting of several noncore lines of business including the traditional packaging business within Intel Foundry.
These noncore revenue headwinds drove a sequential decline of just over $1 billion, in line with our Q1 guidance. Gross margin was 45.1%, 60 basis points above guidance, and EPS of $0.18 beat guidance by $0.05 on operating spending discipline and strong sell-through of previously reserved inventory. |
3,418 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Q1 operating cash flow was negative $1.2 billion. Net CapEx was $5 billion, resulting in an adjusted free cash flow of negative $6.2 billion and we paid dividends of $0.5 billion in the quarter. We expect Q1 to be the low point for adjusted free cash flow, driven by seasonal factors, including timing of annual bonus payments, along with upsides from larger capital offsets expected in the second half.
As Pat mentioned, this is our first quarter reporting in the new operating segments. The revised structure creates a foundry relationship between manufacturing and our products groups with Intel Products purchasing wafers and services from Intel Foundry at fair market prices. This quarter represents another important step in our transformation, with increased transparency and accountability across all layers of the organization, which is already having a positive impact on decision-making efficiencies and financial discipline.
As I talk about our results, I'll categorize them between Intel Products, Intel Foundry and All Other, with the All Other category, including the results of Mobileye and Altera. Additional detail can be found in our earnings release and SEC filings. Intel Products revenue was $11.9 billion, up 17% year-over-year. The client business grew by more than 30% year-over-year with a strong product portfolio and share position and significantly improved customer inventory levels. The data center and AI business contributed 5% year-over-year growth, driven by higher Xeon ASPs and improved enterprise demand. |
3,419 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | NEX revenue declined 8% year-over-year. As discussed last quarter, we saw significant declines in the 5G market, partially offset by approximately 10% year-over-year growth in our network and edge markets, which we expect to continue to recover through the year. Intel Products' operating profit expanded by more than $2.1 billion year-over-year, driven by higher revenue, better sell-through of reserved inventory and operating spending discipline, resulting in an operating margin of approximately 28% in the quarter.
Intel foundry revenue was $4.4 billion, down 10% year-over-year on lower back-end services and sample revenue, along with lower IMS tool sales. In addition, wafer volume was modestly higher in the quarter, with ASPs modestly down, driven by pricing for mature nodes. Operating profit declined by approximately $100 million year-over-year, with lower revenue being partially offset by improved factory utilization.
Op margin declined significantly quarter-over-quarter, driven by higher start-up costs and the conclusion of the traditional packaging business impacting revenue. The foundry P&L will remain challenged through the year, and we expect operating margins to trough in 2024 as start-up costs associated with 5 nodes in 4 years peak and the P&L absorbs an expected increase of roughly $2 billion in depreciation. Beyond 2024, as volume begins to shift toward leadership manufacturing nodes with a competitive cost structure scale improves, including the return of compute tiles to internal process nodes and our efficiency actions begin to flow through the P&L, we expect to see rapid profitability improvement. |
3,420 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Mobileye revenue of $239 million and an operating loss of $68 million were both down meaningfully year-over-year due to a well-publicized drawdown of iQ customer inventory. Mobileye reiterated full year guidance on their earnings call this morning. With the inventory digestion process on track, financial results are expected to recover quickly. Altera revenue was $342 million, down significantly year-over-year, with results impacted by the industry-wide inventory digestion following supply constraints in 2022 and '23. Altera's $39 million operating loss is a result of lower revenue and spending associated with standing up Altera as a stand-alone company.
We continue to expect Altera to exit 2024 at a $2 billion revenue run rate as inventory positions normalize. I want to acknowledge the hard work and focused execution across the company to transition our systems and processes to our new reporting structure. We're already seeing the results of the increased transparency catalyzing change and driving efficiencies across the company.
Now turning to our Q2 guidance. We expect revenue of $12.5 billion to $13.5 billion in the second quarter, with the midpoint aligned to typical seasonal growth. At the midpoint of $13 billion, we expect gross margin of approximately 43.5%, with a tax rate of 13% and EPS of $0.10, all on a non-GAAP basis. We see the client and data center business roughly flat to Q1 results at the low end of seasonal. Q2 client revenue is constrained by wafer-level assembly supply, which is impacting our ability to meet demand for our Core Ultra-based AI PCs. We do expect sequential growth from Mobileye, NEX and foundry services. |
3,421 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | As we look beyond Q2 guidance, we expect growth across all segments in the second half of the year, led by improved demand for general purpose servers from both cloud and enterprise customers and increased core ultra assembly capacity to support a growing PC TAM, driven by enterprise refresh and the AI PC. We should also see accelerating growth from our network and edge businesses, a return to growth for Altera and a meaningful Gaudi ramp in the second half.
Despite 2024 representing the peak for 5 node and 4-year driven factory start-up costs, we expect roughly 200 basis points of FY '24 gross margin improvement compared to FY '23. Our net capital intensity forecast of mid-30s as a percent of revenue across 2023 and 2024 in aggregate remains unchanged. With significant capital offsets expected to land in the second half of the year, we continue to expect approximately neutral 2024 adjusted free cash flow. While first half demand signals have been a bit weaker, Q1 played out largely in line with our expectations. We achieved several important milestones towards our IDM 2.0 vision, and we're participating in a large and growing TAM with encouraging market signals for the second half of the year and into 2025. By capturing margin at both the foundry level and the fabless product level, we have margin stacking advantage unique in the industry. We are 3 years into our transformation, and 2024 represents the steepest part of the climb, with 5 node and 4-year start-up cost peaking and the majority of our volume on pre-EUV process nodes with uncompetitive economics. However, as we crest the hill and look toward the next few years, we have strong wins at our back and a clear path to achieving the mid- and long-term financial targets we laid out earlier this month.
With that, let me turn the call back over to John.
John Pitzer: Thank you, Dave. We will now transition to the Q&A portion of our call. [Operator Instructions] With that, Jonathan, can we take the first question? |
3,422 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Operator: And our first question comes from the line of Ross Seymore from Deutsche Bank.
Ross Seymore: I guess for my first question, I wanted to dive into the demand side of the equation. What was weaker in the near term than you had expected? And much more importantly, it seems like the back half you're going to have double-digit sequential growth in largely both quarters, so that's significantly above seasonal. I know you went through some of the reasons at a high level, but can you dive a little bit deeper into what gives you that level of confidence in the second half ramp?
Patrick Gelsinger: Yes. Starting out, so Ross, thanks for the question. I'll just say the market was weaker. You've seen that in a number of others that have commented as well. So I'll say somewhat across the board a bit. We've seen that, cloud customers, enterprise, across geos. So I'll just say a bit weaker demand, right, we'll just say at the low end of seasonality Q1 to Q2 that we saw. And as we go into the second half of the year, we're engaging deeply with our customers today, our OEM partners, and we just see strength across the board, right?
Part of that is driven by our unique product position, some of it driven by the market characteristics and client, AI PC and a second half Windows upgrade cycle, we believe, underway and Core Ultra is hot. And as we said, even in Q2, we're racing -- we're meeting all of our commitments, but not all of the upside requests that we're seeing from customers. So we see a very strong AI PC outlook in the data center. As we bring in our new products, we're seeing ASPs increase very healthy on our data center products and with products like CR4 that we just went to production with this week on Intel 3, we're seeing improved product position as well for competitiveness. |
3,423 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | We have the $0.5 billion of Gaudi, right? And most of that is second half loaded. And the All Other businesses coming out of inventory positions in Altera and Mobileye and NEX, all of those improved first half to second half as well. And then incremental, I'll just say, Intel Foundry, every quarter from here until the decade and we're seeing improvement in the Intel Foundry. And one by one, we're seeing all of those business improvements both on revenue and margin improvements over time. So we feel very comfortable that the second half outlook is quite strong for the business, a first half a bit weaker, but we think it's very understandable, very explainable, and a second half outlook that will be very comfortable for every business across Intel growing and a lot of momentum as we go into '25.
John Pitzer: Ross, do you have a quick follow-up?
Ross Seymore: I do. Maybe for Dave, on the gross margin side, nice upside in the first quarter, but the drop in the second quarter is a little bit puzzling with revenues going up. So could you just talk a little bit about that second quarter drop and then the confidence in the rebound in the second half? Is that just revenue driven in the second half? Or what's the key metrics there, please?
David Zinsner: Yes. Good. Thanks, Ross. Maybe start with Q1 because it somewhat explains Q2. We had better sell-through of product. I hadn't even mentioned Meteor Lake strength. That better sell-through was on previously reserved material. And so we just saw some upside in gross margins because of that. We had a little bit more of a flattish plan between Q1 and Q2 in terms of how that would flow through. And so it kind of pulled some of the benefit of gross margin improvement we would have seen in Q2 and kind of pulled it into Q1. So that was part of it. |
3,424 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | The second part is, as we talked about, this year was going to be a heavy year for start-up cost for us. And it really shows up more meaningfully in the second quarter versus the first quarter. And so that puts a little added pressure on gross margins. As you point out, the upside in the revenue, we will have good fall-through in Q3 and Q4, that will help lift the gross margins from where they are today. And then on top of that, we'll see some areas which have high gross margins, helping us like, for example, Mobileye, we get good gross margin for Mobileye and the strength that we'll see through the year there and products like that will also help drive better gross margins in the back half of the year.
As we look into '25, I think we'll have better gross margins than '25 than we had in '24. So this should be an ongoing story for us on the gross margin front. And as you know, we're driving to get to kind of mid-50s gross margins by the midpoint between now and 2030 and ultimately getting to 60%. Of course, revenue will be part of that. But a lot of that is within our control. It's things like 18A wafer pricing growing at 3x the cost of 18A that will help drive margins. The pull-in of tiles, as Pat mentioned, internally is going to drive better gross margins for us over time. All of what we're doing in terms of resegmenting new businesses to drive better decision-making, that better decision-making will translate into significant cost improvements for us, which should also be a meaningful driver for gross margins over time as well. And of course, as Pat mentioned, we're happy to get the CHIPS announcement out. And of course, that, coupled with what we expect from the EU and the investment tax credit will also be major tailwinds on gross margins over a long-term basis.
Operator: And our next question comes from the line of Ben Reitzes from Melius. |
3,425 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Operator: And our next question comes from the line of Ben Reitzes from Melius.
Benjamin Reitzes: Appreciate the chance to ask a question here. Pat, can you talk a little bit more about servers in the data center? There was talk of a bottom there in previous discussions. How do you see that kind of going throughout the year in light of your 2Q guidance? And what's the catalyst for the pickup there?
Patrick Gelsinger: Yes. Thank you, Ben. And obviously, as we look at our position in the data center, I'll just say we're stabilizing. And with that, we're improving our competitiveness. We also see, as I mentioned in the comments, that the ASPs are going up comfortably as well. So socket fairly stable through the year, but the ASP per socket with increased core count improves our position. And then new products like Sierra Forest or Xeon Gen 6 product, definitely gives us power performance capabilities. So overall, we're seeing a very healthy growth rate, mid-20s as we go through the year. We're also seeing increasing interest in the AI capabilities of Xeon. And we're winning head node positions, and we're seeing pretty extraordinary performance at Vision.
We talked about the ability to now run 70 billion parameter models directly on Xeon. And these type of capabilities, say, for a lot of enterprise use cases, Xeon is a very strong product. And as we laid out at Vision, the ability for Xeon plus Gaudi to start positioning this open platform for enterprise AI is a very strong position for us. So overall, we feel like we're on a solid trajectory into a market that even though it's been dominated by the gen AI theme as enterprises, our OEMs and ODMs are communicating, there's growth here in servers. And we now have a much better product position, improving ASPs and a better overall positioning in AI for a lot of these use cases where it's Xeon CPU plus GPU and accelerator.
John Pitzer: Ben, do you have a quick follow-up? |
3,426 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Ben, do you have a quick follow-up?
Benjamin Reitzes: Yes. Thanks. Can we just double-click also on Gaudi, $500 million in the back half of the year? I think you previously talked about a couple of billion in the pipeline. What does that say about your yield to revenue on an annualized basis with AI? And is there an update on the pipeline and your confidence there heading into 2025 on the accelerator front?
Patrick Gelsinger: Yes. Thanks, Ben. And obviously, pipeline converting into revenue, revenue is much more meaningful and as we said, greater than $500 million for the year, and that's obviously quarter-on-quarter accelerating rapidly, which also gives a great indication for the business in '25 as well. At our Vision event, we had over 20 customers publicly describing their embrace of Gaudi 2 and Gaudi 3. And I was super pleased to see the breadth of those customers. It was CSPs like Naver and Ola and IBM Cloud. It was ISVs like Zeekr, right, coming on board, but maybe most importantly, enterprise customers.
And ultimately, gen AI training, okay, creating models, but enterprises are going to use models, and that's where our TCO benefits. The ability for us to action customers' data in their enterprise environment is so powerful and customers like Bosch were coming forward and Roche to be able to demonstrate the true benefits of Gaudi and Xeon plus Gaudi. The road map is in good shape. The Gaudi 3 Falcon Shores in '25. We're also seeing that the industry wants to open alternatives. And we announced our AI networking initiative, Ultra Ethernet Consortium standardizing on scale up and scale out to Ethernet, increasing work for abstract levels of AI development with PyTorch and the embrace of the open platform for enterprise AI that we rolled out. All of those taken together, the industry is looking for open enterprise alternatives for regenerative AI deployment and Intel are quite well positioned, and we're starting to really see that uptake in our Accelerator and Xeon pipeline now. |
3,427 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Operator: And our next question comes from the line of Joe Moore from Morgan Stanley.
Joseph Moore: I wonder if you could talk to the server road map. It sounds like you're confirming the time frame for both Sierra Forest and Granite Rapids. Can you talk about -- is there demand for the Sierra Forest product as well? Do you expect that to be bifurcated where you see demand for both? And then how quickly will you see those products come to volume?
Patrick Gelsinger: Yes. So Sierra Forest, our first Xeon 6 product on Intel 3, and I'm super proud, right? Now we have a leadership process technology back on American soil for the first time in a decade. This is really exciting. And Sierra Forest, high core count, 144, 288 core product, very focused on power, performance, efficiency, and we do see a good pipeline of customers and a good pipeline of, I'll say, socket win backs because the area of power performance has been an area that we've been carrying a deficit, being on an older node. And now that we're on leadership nodes, we definitely see share gains for that.
Of course, Granite Rapids, which will come in Q3, the Xeon 6 P-Core part is much more the bread and butter of the Xeon family. So we do see that being a stronger element to the portfolio this year as we haven't been participating in the power performance sockets as aggressively lately, and Sierra Forest gives us that tool. So it really is a one-two punch, as we've described. With Granite coming in Q3 and a volume ramp on Intel 3 with that, we feel we have a very good product line. |
3,428 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Next year is Clearwater Forest, the second generation of the E-core part, the leadership position on 18A in the server market, a very strong product for us, unquestioned leadership and power performance, so I believe that's a great opportunity for us to gain share again in the data center. So the road map is healthy. The execution is strong, and we're rebuilding customer trust. They're looking at us now and saying, "Oh, Intel is back." And we're quite excited by that. And then beyond that, building the volume, building the confidence and the momentum for traditional use cases as well as the AI use cases, as I just referred on Ben's question as well.
John Pitzer: Joe, do you have a quick follow-up?
Joseph Moore: Yes, I do. Thank you. On the foundry webinar, you had sort of talked about Intel 3 volume being kind of more of an inflection next year. Does that mean it was in server that these Intel 3 products are sort of get to volume crossover kind of some point next year? Or could we see -- obviously, the leadership you just talked about is important. What's kind of keeping you from getting those products ramping in the second half?
Patrick Gelsinger: Yes, Joe, thank you. And servers always just take a while to ramp. Customers bring them in, they qualify them, they test them because they're generally putting these things at scale. So there's just an adoption cycle for server products. And the numbers that I'm holding my team accountable for are some of the most aggressive volume ramps that we've ever achieved on server products. So we're driving them very hard. That said, in terms of the total wafer volume this year, right, it's dominated by Intel 7. And the Intel 4 and 3 wafer volumes become much more prominent next year, and that's what I was communicating on the webinar. |
3,429 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | But as we go through the year, you're going to start to see the wafer ASPs pick up as a result of Intel 4, 3 ramping at much better ASP points, better margins associated with those, and they will become much more prominent in the foundry P&L next year. But these are production ramps that are already underway on Intel 3. The Intel 4 ramp already underway. We began that second half of last year. So these wafer ramps are underway with volume productions, volume products that we're bringing to the marketplace, very confident in our ability. And then, of course, 18A as we deliver the PDK for that in Q2, the 1.0 PDK and we'll begin the volume ramps on Clearwater Forest and Panther Lake in the first half of next year for those products coming out. So we feel very comfortable with that overall picture that we've laid out. So thank you, Joe.
Operator: And our next question comes from the line of Vijay Rakesh from Mizuho Securities.
Vijay Rakesh: Just a quick question on the Grand Rapids, any thoughts on the timing? And do you expect to regain some computing share, server share there with those ramps?
Patrick Gelsinger: Yes. Thanks, Vijay. I'm building a little bit on the last question. Granite Rapids will come in Q3 of this year when we'll have the production release of that product. Same as -- it just takes some time for customers to get comfortable, qualify, and bring those products to marketplace. But Sierra Forest, Granite Rapids, these are much more competitive power performance products on Intel 3. So we see them stabilizing and then giving us opportunity to regain share. And as we go into next year, we expect that we're regaining share as we end this year and go into next year. These are great products and we're going to be ramping them very aggressively with our customers.
John Pitzer: Vijay, do you have a follow-up?
Vijay Rakesh: Yes. Thanks. Just on the GPU side, on the AI side, any parts on Falcon Shores? Any preliminary takes on that? How do you see that building out into '25? |
3,430 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Patrick Gelsinger: Yes. And Gaudi 3 announcement this quarter, extremely well received. And as I mentioned already, 20-plus customers for Gaudi 2, 3, so we're seeing that build. Obviously, Falcon Shores will build on that momentum. We'll be bringing that late next year when Falcon Shores when we combine the great systolic performance of Gaudi 3 with a fully programmable architecture, and all of that comes together with Falcon Shores. And then we have a rich -- a very aggressive cadence of Falcon Shores products following that. We also added the Gaudi 3 PCIe card to it. This use case of Xeon plus an accelerator or Gaudi accelerator is getting very good response from customers as well. So we'll be bringing that out later this year. But the real story is delivering the TCO value, delivering the enterprise use cases. Falcon Shores will just build on the momentum that we're establishing with Gaudi 2 and 3.
We also described customers coming on the Intel Developer Cloud, where we're getting these products very early in their life available for developers and enterprise customers. And customers like Zeekr, now our biggest Intel Developer Cloud win to date, are seeing the benefits. But the bigger story is how do we unleash the data assets of our enterprise customers, and that's things like the open platform for enterprise AI that we launched at Open Summit. So overall, a lot of good things happening to unleash the gen AI cycle for Intel. And of course, right, as we're doing this, AI is a hot market. We're participating across all of our segments, whether that's client, edge, enterprise or our foundry opportunities as well, delivering AI everywhere.
Operator: Our next question comes from the line of Timothy Arcuri from UBS Securities. |
3,431 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Operator: Our next question comes from the line of Timothy Arcuri from UBS Securities.
Timothy Arcuri: Dave, I also wanted to ask about gross margin. You did say it's going to be better next year, but it is really whipping around a lot. And it looks like you sort of have to exit this year at 48 or maybe a little higher, which is already well above the 45.5 that you'll be at this year because you're guiding it up to 100 basis points. So I know you don't want to guide next year, but if you can even qualitatively help us, can you sustain those margins at that level? And I asked because last year, you sort of exited at 49% and then things crashed here during the first half of the year. So can you help us just think about what some of the puts and takes will be next year off of that high base if you're going to exit this year at?
David Zinsner: Yes. Good question. So there will be additional start-up costs next year. We do think it on a percent of revenue basis, it will be lower. So that should help lift the margins. Of course, the expectation would be we see growth in revenue. That also should help. On top of that, we already are seeing good decision-making and changing decision-making around how we operate now under this new different business structure that we have at this point. A lot of that stuff doesn't actually show up in the P&L. We have all these decisions get made this year, but a lot of the decisions made -- sorry, a lot of the benefits to those decisions don't show up until next year and the year after. So we should see some benefit from that as well. |
3,432 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | The other thing that kind of has whipped this -- our margins around a bit over the last few years has been this notion where we reserve material all the way up until the PRQ Pat just mentioned that Sierra Forest just PRQ-ed. So ordinarily, we take a whole bunch of reserves on Sierra Forest and then we would release them as we started shipping beyond the PRQ date. We won't be doing that going forward. So that should help adjust the volatility of the gross margin. So it will be more a function of revenue growth spending profile in the fabs, start-up costs that we have and the mix.
John Pitzer: Tim, do you have a follow-up question?
Timothy Arcuri: I do. I do, yes. So I want to ask about server CPU share. March -- I think the assumption for March was that service share was going to be pretty flat. So the question is, was that the case? And it sounds -- you sound maybe a little bit less optimistic, if I'm sort of reading between the lines, on share into the back half of the year, just given how long it takes these things to sort of impact your share. So your bullish outlook in the second half of the year, it sounds like it's more market-driven versus share driven. Can you just clarify that?
Patrick Gelsinger: Well, overall, I like to say it's hard to predict, right, exactly how these will play out in light of the overall gen AI surge that we've seen. That said, products are good, right? We came into the year improving our market share position in the first quarter of the year. It does take time to ramp these new products. But better products, rebuilding trust with our customers that we're delivering on these and now hitting the, what we would call the early end of the cycles on these new products is giving us a lot of interest with the market and the customer. New use cases also demonstrated a 70 billion parameter model running natively on Granite Rapids at our Vision event, all of these just make us more and more confident in our business execution. |
3,433 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | We're also seeing that we don't need SoC account to increase. The ASPs are going up with the core counts on our new leadership products as well. So all of those in a fairly optimistic view that we're getting from our OEMs and our channel partners for their view of upgrade cycles, building momentum from customers across the industry.
We feel very comfortable that we're stabilizing our position. We have been improving our road map, and we do expect to see share gains as we end the year and go into '25.
Operator: Our next question comes from the line of Srini Pajjuri from Raymond James.
Srinivas Pajjuri: My question is on the client side. I think, Pat, you mentioned something about supply constraints impacting your 2Q outlook. If you could provide some color as to what's causing those supply constraints and when do you expect those to ease as we, I guess, go into the second half. And then in terms of your AI PCs, I think you've been talking about $40 million or so potentially shipping this year. Could you maybe put that into some context as to how it actually helps Intel? Is it just higher ASPs? Is it higher margin? I would think that these products also come with higher costs. I just want to understand how we should think about the benefit to Intel as these AI PCs ramp?
Patrick Gelsinger: Yes. Thank you. And overall, as we've seen, this is a hot product. The AI PC category, and we declared this as we finished last year, and we've just been incrementing up our AI PC or the Core Ultra product volumes throughout. We're meeting our customer commitments that we've had, but they've come back and asked for upside on multiple occasions across different submarkets. And we are racing to catch up to those upside request, and the constraint has been on the back end. Wafer-level assembly, one of the new capabilities that are part of Meteor Lake and our subsequent client products. So with that, we're working to catch up and build more wafer-level assembly capacity to meet those. |
3,434 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | How does it help us? Hey, it's a new category. And that new category of products will generally be at higher ASPs as your question suggests. But we also think it's new use cases, and new use cases over time create a larger TAM. It creates an upgrade cycle that we're seeing. It creates new applications, and we're seeing essentially every ISV AI-ing their app, whether it's the communications capabilities of Zoom and team for translation and contextualization, whether it's new security capabilities with CrowdStrike and others finding new ways to do security on the client or it's way other creators and gamers taking advantage of this.
So we see that every PC is going to become an AI PC over time. And when you have that kind of cycle underway, Srini, everybody starts to say, "Oh, how do I upgrade my platform?" And we even demonstrated how we're using AI PC in the Intel factories now to improve yields and performance inside of our own factories. And as I've described it, it's like a Centrino moment, right, where Centrino ushered in WiFi at scale. We see the AI PC ushering in these new use cases at scale, and that's going to be great for the industry. But as the unquestioned market leader, right, the leader in the category creation, we think we're going to differentially benefit from the emergence of the AI PC.
John Pitzer: Srini, do you have a follow-up?
Srinivas Pajjuri: Yes, John. Thank you. And I guess my other question is on the other bucket. I think, Dave, you kind of talked about Altera potentially exiting the year at a $2 billion run rate from current levels. That's a pretty steep ramp. And also, I think you said next growth will accelerate over the next couple of quarters. So -- and given the telecom weakness out there that we're seeing, I'm just curious as to what's giving you that visibility or confidence. I mean is this driven by some new products? Or is it just the market recovering? Any color would be helpful. |
3,435 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | David Zinsner: Yes. On Altera, and this is not unprecedented when you see a massive work down of inventory, of course, that significantly impacts the revenue. But as that normalizes, then you start shipping to end consumption. So it's actually a pretty easy lift to get to the $2 billion mark once we're through the inventory digestion period. So I think we have high confidence on that.
Patrick Gelsinger: And others have commented on their inventory cycles as well in the FPGA category. We have good products in the second half of the year, with Agilex starting to ramp as well.
David Zinsner: And then on NEX, of course, that business also has gone through its own inventory adjustment. So we have good confidence around that reversing, which will help drive strength. And then some of the products that are more tailored to the AI space, of course, we'll see like, at NEX, for example, we'll see strength through the year. And so that should drive good revenue growth through the year as well.
Patrick Gelsinger: Yes. And also in NEX, the AI networking products are strong, our IPU products, we're seeing strength in that area. So it's inventory as well as products. Even though, as your question suggests, the communication sector and the service providers, that is weaker through the year, but pretty much every aspect of their business in edge AI, as Dave said, is seeing strength as we go into the second half of the year and into '25.
Operator: Our next question comes from the line of Vivek Arya from Bank of America. |
3,436 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Operator: Our next question comes from the line of Vivek Arya from Bank of America.
Vivek Arya: Pat, just a conceptual question. In a gen AI server with accelerators, how important is the role of a specific CPU? Or is it easily interchangeable between yours or AMD's or ARM's? I guess the question is that if most of the workload is being done on the accelerator, does it really matter which CPU I use? And can that move towards gen AI servers, essentially shrink the TAM for x86 server CPUs, because a number of your cloud customers have announced ARM-based server alternatives. So I'm just curious, how do you think about that conversion over to gen AI and what that means for x86 server CPU TAM going forward?
Patrick Gelsinger: Yes. Thanks, Vivek. And we spoke at our Vision event about use cases like RAG, retrievable augmented generation, where the LLMs might run on an accelerator, but all of the real-time data, all of the databases, all of the embedding is running on the CPU. So you're seeing all of these data environments, which are already running on Xeon and x86 being augmented with AI capabilities to feed an LLM. And I believe this whole area of RAG becomes one of the primary use cases for enterprise AI. And if you think about it, an LLM might be trained with 1-, 2-year old data, right? But many of the business processes and environment are real time, right? |
3,437 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | You're not going to be retraining constantly. And that's where this area of the front-end database becomes very prominent. All of those databases run on x86 today. All of them are being enhanced for use cases like RAG. And that's why we see this unlock occurring because the data sits on-prem, the data sits in the x86 database environments that are all being enhanced against these use cases. And as we've shown, we don't need accelerators in some cases. We can run a 70 billion parameter model natively on Xeon with extraordinary TCO value for customers. And furthermore, all of the IT environments that enterprises run today, they have the security, they have the networking, they have the management technologies in place.
They don't need to upgrade or change those from any of those use cases. So we see a lot of opportunity here to build on the enterprise asset that we have with the Xeon franchise, but we're also going to be aggressively augmenting that. And we're commonly the head node, even when it's other accelerators are being used or other GPU is being used. And as we've described, Xeon plus Gaudi, we think is going to be a very powerful opportunity for enterprises.
So in many of those cases, we see this as a market lift, new applications, new use cases, new energy coming to the enterprise AI. Here we are in year 23 of the cloud, and while 60% of the workload has moved to the cloud, over 80% of the data remains on-prem under the control of the enterprise, much of that underutilized in businesses today. That's what gen AI is going to unlock. And a lot of that is going to happen through the x86 CPU and we see a powerful cycle emerging. And I would just point you back to what we described at Vision. This was a great event and many customers are seeing that value today.
John Pitzer: Vivek, do you have a quick follow-up? |
3,438 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Vivek, do you have a quick follow-up?
Vivek Arya: Yes. Thank you. Maybe one for Dave on the potential operating loss, kind of how do we model that for the foundry business. So let's say, if I exclude the $2 billion in depreciation headwind, which I'm assuming is almost all going to your foundry business. What is the right way, Dave, to think about foundry operating income or loss this year? And how much of external foundry revenue are you expecting this year?
David Zinsner: Yes. Good question. The operating losses will pick up. We roughly were at like 2-, 4-ish in the first quarter. It will pick up in the second quarter, given the start-up costs are increasing and I would say, be roughly in that range for the remainder of the year. And then what I said before is we see that improving then going into '25. And Pat's given me the order, he wants to see every quarter some improvement in the operating loss ultimately to get to breakeven midway through the point between now and 2030. And I think that is very achievable. Sorry, Vivek, what was the second question?
John Pitzer: Vivek, are you still on?
Operator: No, we've moved on.
John Pitzer: Why don't we go to the next caller, Jonathan?
Operator: Our next question comes from the line of Matt Ramsay from Cowen.
Matthew Ramsay: Yes. Pat, one question I've been getting from some folks, and I totally understand the lead times of starting some of these programs to put increased tile volume at external foundry, but you guys have made the progress on the 5 nodes in 4 years, as you highlighted multiple times. Is there any flex at all to bring back some of that external volume earlier? And I think it matters to some folks because it's a demonstration of you guys being able to ramp your own product to volume and to yield and to economics on 18A, which might give some indication to some external customers that are looking at your foundry business. So just any flex at all to pull that timeline in of sort of reshoring some of the external tiles? |
3,439 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | Patrick Gelsinger: Yes. Thanks, Matt. And largely, those decisions are made when the product decisions are made. So there's limited flexibility to move them around. And if you pick a process node for a certain tile, generally, that's the process node that it's on. So there's limited flexibility there. And many of those decisions, as we've highlighted before, Matt were literally made years ago, right? And those choices were made.
That said, we see the peak of our external tiles being this year and next year. And then the road map and the movement of those coming back begins to quite accelerate, even starting late next year. So the plan is clearly laid out. As we said, we see a couple of fabs' worth of capacity coming back into the Intel factory network as we move into '26 and beyond. So this becomes a significant driver.
We've also driven significant road map decisions against that improving profile of our products. And I'll say that begins in a very powerful way next year with Panther Lake and Clearwater Forest. Unquestioned, the best products in clients, the best products in server are now being built on Intel 18A. And as the question suggests, we see customers seeing that. Every foundry customer that we speak to, right, understanding where we are in our product and process cycle and the ability for them to essentially benefit from Intel as customer 0 in the foundry network.
So overall, this is feeling very good. We're on track to go accomplish that and the business model that we've laid out and Dave and I presented as we go through the decade shows a very healthy improvement in wafer ASP, wafer volume, foundry and these decisions are made, right? We're on track to both have the wafer foundry capabilities, have the process technology and the products to fill those factories. And that's why Dave and I have such confidence in the business model that we've laid out and the improvements that it will deliver as we go over the next several years together.
John Pitzer: Matt, do you have a quick follow-up? |
3,440 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Matt, do you have a quick follow-up?
Matthew Ramsay: Yes, John. Thank you. I wanted to ask a question about the AI accelerator road map. So you guys have Gaudi 3 that you talked about and Falcon Shores coming next year. And the hardware looks quite good. I wanted to ask a question about the software that goes on top of that for both -- well, really for inference but also for training. How do you feel about the software road map that you guys have in the AI space going forward? And how much compatibility, or uniqueness rather, is there to the software that runs on Gaudi 3 versus what will come on Falcon Shores and the forward road map?
Patrick Gelsinger: Yes. Maybe 3 different points there. The first one is for inferencing, you need a whole lot less software compatibility, right? And as the market is more focused on inferencing going forward, if you can run the models, right, in the context of the databases and the other, so that portends and that's why we're seeing the strength that we're seeing right now, Matt, in these use cases. And clearly, some of the software compatibility issues of a GPU have led to the training environments that have been challenging for us. But now as customers get much more focused on enterprise use cases, inferencing TCO, we're finding a lot of strength in the offerings that we have. And as we've matured a number of customers now, we've worked through many of those use cases and getting quite a lot of acceptance of the software stack that we have with Gaudi 2 and 3.
We will have a very smooth and seamless upgrade from Gaudi 3 into Falcon Shores. But the powerful thing that will come with Falcon Shores is the full programmability that you'll see with the complete instruction set capabilities of Falcon Shores. And at that point, we will have no deficits for any of the use cases and much greater compatibility for the full range of AI capabilities. |
3,441 | INTC | 1 | 2,024 | 2024-04-25 17:00:00 | Intel Corporation | 21,127 | The other thing that I emphasize is Xeon is a powerful capability with incredible programmable capabilities and we're finding these use cases like I described with the open platform for enterprise AI, RAG use cases is clearly beneficial there for us. So overall, we're feeling like the software story is coming together very nicely. And the entire industry is moving to higher level software abstraction such as Python and Triton. So they're moving away from any of these dependencies to an open software or platform. So the industry trends are in the right direction. Our maturity is in the right direction, and our software stack has gotten much more mature, and we'll have a very smooth upgrade to Falcon Shores.
So let me just close our time together and say thank you for the questions. Thanks for joining our call. We appreciate the update to give you on a very solid Q1. And we got a lot done in Q1 that gives us a great foundation for the future. We continue to drive our process and products and AI innovations and delivering on our process technology and leadership road map. If any of you were at COMPUTEX in a few months, I look forward to seeing you there. We have a number of products and offerings that we'll be announcing there as we continue our AI momentum and competitiveness. And as always, we look forward to talking to you next quarter. Thank you very much.
Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. |
3,442 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Operator: Thank you for standing by, and welcome to the Intel Corporation First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, John Pitzer, Corporate Vice President, Investor Relations. Please go ahead, sir. |
3,443 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Thank you, Jonathan, and good afternoon to everyone joining us today. By now, you should have received a copy of the Q1 earnings release and earnings presentation, both of which are available on our Investor Relations website, intc.com. For those joining us online today, the earnings presentation is also available in our webcast window. I'm joined today by our CEO, Lip Bu Tan, and our CFO, David Zinsner. Lip Bu will open with comments on our first quarter results as well as some initial observations, priorities, and actions that he is driving. Dave will then discuss our overall financial results, including second quarter guidance. We will then transition to answer your questions. Before we begin, please note that today's discussion contains forward-looking statements based on the environment as we currently see it and as such, are subject to various risks and uncertainties. It also contains references to non-GAAP financial measures that we believe provide useful information to our investors. Our earnings release and most recent annual report on Form 10-Ks and other filings with the SEC provide more information on specific risk factors that could cause actual results to differ materially from our expectations. They also provide additional information on our non-GAAP financial measures, including reconciliations where appropriate to our corresponding GAAP financial measures. With that, let me turn things over to Lip Bu. |
3,444 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Lip Bu Tan: Thank you, John. And let me add my welcome. I joined Intel Corporation five weeks ago. The reason I'm here is simple. I love our company. I saw the challenges we were facing and I could not sit on the sidelines knowing I had the opportunity to turn things around and put us back on the path to gain market share and drive sustainable growth. Q1 was a step in the right direction. Driven by Dave and Michelle's leadership, we delivered revenue, gross margins, and EPS above our guidance. I want to thank them both as well as our teams for the good execution, especially with the ongoing macroeconomic uncertainty. Our goal now is to build on this progress. But it won't be easy. There are many areas we need to improve, and there's no quick fixes. We must remain laser-focused on execution. One of my biggest learnings so far is that we need to fundamentally transform our culture and the way in which we operate. Organizational complexity and bureaucracies have been suffocating the innovation and agility we need to win. It takes too long for decisions to get made. New ideas and people who generate them have not been given the room or resources to incubate and grow. The unnecessary silos have led to bad execution. I'm here to fix this. I'm taking shift actions to simplify the way we do business and drive transparency and accountability across the company. We will empower smaller teams to move faster and make better decisions, and we will significantly reduce the number of layers that get in their way. As a first step, I have flattened the structure of my leadership team. All critical product, manufacturing, and GNA functions, which were spread over two to three layers, are now directly reporting to me. This will allow me to get closer to our product and engineering groups and work directly with them to close the gaps with competition more quickly. I will apply the same streamlining approach across the company with a focus on empowering our engineering talents to create great products and make it easier for our |
3,445 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | across the company with a focus on empowering our engineering talents to create great products and make it easier for our customers to do business with us. To accelerate this simplification, we are taking more cost out of the business. The lower our calendar 2025 and calendar 2026 OpEx targets. We now expect OpEx of $17 billion this year and $16 billion next year. In addition, as we continue to identify ways to operate our manufacturing network more efficiently, I have directed our teams to find an additional $2 billion of savings in our gross CapEx, taking our target for this year to $18 billion. We will continue to take a closer look at our existing factory footprint to ensure that we are making the most efficient use of our installed capacity before committing to any additional spending. I will continue to make the needed investment to reignite innovation even as we reduce our overall expenses by minimizing projects and programs that have been taking attention away from our core client and server business. They will include revitalizing our engineering core and rebuilding our engineering talent pool with urgency by promoting strong leaders internally, bringing back critical lost talent, and recruiting new people. In addition, we are mandating a four-day-per-week return to office policy effective Q3 2025. I know firsthand the power of teamwork, and this action is necessary to reinstill a more collaborative working environment, improving efficiency, and boosting innovation. By eliminating inefficiencies and transforming how we do business, I strongly believe we can reduce our cost while securing our future. Many of you have asked about my longer-term strategic plan. It is an appropriate question. It's a little bit too soon for me to provide all the details, but let me share with you my priorities. First, the best products always win. And this is very important that we refocus our core franchise to start building best-in-class products again. We have a good foundation. Our ecosystem in client and data center is |
3,446 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | franchise to start building best-in-class products again. We have a good foundation. Our ecosystem in client and data center is valuable and durable, and we still maintain a large market share in both. My focus will be ensuring that our team builds products that are highly competitive and meet the needs of our customers as we enter a new era of computing defined by AI agents and reasoning models. To achieve this, we are taking a holistic approach to redefine our portfolio to optimize our products for new and emerging AI workloads. We are making necessary adjustments to our product roadmap so that we are positioned to make the best-in-class products while staying laser-focused on execution and ensuring on-time delivery. However, I want to emphasize that this is not a quick fix here. These changes will take time. Our goal is to become the platform of choice for our customers. This requires us to radically evolve our design and engineering mindset and anticipate the needs of our customers well in advance. I have received direct feedback from many of our largest customers, who are also close personal friends. I'm taking this feedback to heart and using it to inform and change our approach to product and platform design. Second, we need to refine our AI strategy with a focus on emerging areas of interest. My experience helping successfully fund and incubate many startups in this space provides unique insights that we will leverage in these funds. Our goal will be to take our integrated system and platform view to develop full-stack AI solutions that enable more accuracy, power efficiency, and security for our enterprise customers. Our goal will be to enable the next wave of computing defined by reasoning models, AgenTiC AI, and physical AI. Third, we need to build trust with foundry customers. We have a lot of important building blocks in place, including the RAM of Intel 18A in February to support the launch of our first Pantheon Lake SKU by year-end, with additional SKUs coming in February. However, I know from my |
3,447 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | support the launch of our first Pantheon Lake SKU by year-end, with additional SKUs coming in February. However, I know from my years at Cadence Design that success in the foundry business requires more than process technology manufacturing capabilities alone. It is first and foremost a customer service business built on the foundational principle of trust. And we need to instill a customer service mindset across our foundry business. Success in foundry relies on recognizing that each customer uses different design tools, methodologies, and styles. As a foundry, we need to ensure that our process technologies can be easily used by a variety of customers, each with a unique way of building their products. To do this, we are more rapidly embracing industry-standard EDA tools and best design practices. Here again, there's no quick fix, but we will make the necessary changes to our roadmap to deliver on the commitments we make to our foundry customers. We must learn to delight our customers by building wafers that meet their required power, performance, area, cost, quality, yield, reliability, and on-time schedule. While we are currently focused on delivering Intel 18A, we are also working closely with customers to define the critical KPIs to ensure online delivery of Intel 14A. Lastly, we need to strengthen our balance sheet. Our business is capital-intensive, and we have important investments to make at a time when our financial performance is not where it needs to be. This means we need to be prudent with capital. In addition to new targets of OpEx, CapEx, we will also look to further monetize non-core assets. I'm very pleased to have Silver Lake as an investor in Altera and welcome on board Rakib to help drive the business to its potential. In addition, we have made the decision not to spin off Intel Capital but to work with the team to monetize our existing portfolio while being more selective on new investments that support our strategy. We need to get our balance sheet healthy and start the process of |
3,448 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | more selective on new investments that support our strategy. We need to get our balance sheet healthy and start the process of deleveraging this year. As we are building the new Intel, you can expect us to stay humble, drive the necessary changes, to delight our customers. MicroMoto has always been to under-promise and over-deliver, and I will not be satisfied until we regain the trust of our customers, putting the company on a sustainable path of gaining shares and growing revenue, and delivering consistent returns for our shareholders. With that, I will turn it over to Dave. |
3,449 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | David Zinsner: Thank you, Lip Bu. Our Q1 results mostly reflected our view entering the year that our two biggest markets were poised for growth. On the client side, the end of service for Windows 10, the expected growing adoption of AIPCs, and an aging installed base following the COVID era refresh pointed to a PC TAM growing 3% to 5%. Similarly, on the traditional server side, delayed infrastructure upgrades driven by the rapid adoption of AI servers in 2024 supported double-digit CPU core growth this year on a roughly flat unit. More recently, the economic landscape has become increasingly uncertain, driven by shifting trade policies, persistent inflation, and increased regulatory risk. While we have yet to see a meaningful change in customer buying patterns, we think it prudent to manage the business with a level of conservatism going into the second half of the year. First-quarter revenue was $12.7 billion, coming in at the high end of our guidance range, driven by better-than-expected Xeon sales. Similar to Q4 2024, we believe Q1 revenue benefited from customer purchasing behavior anticipation of potential tariffs, it is difficult to quantify the magnitude. Non-GAAP gross margin was 39.2%, approximately three percentage points above our guidance on much stronger-than-expected demand for Raptor Lake combined with improved cost for Meteor Lake. While we continue to see the mix of AIPCs growing throughout the year, the rate of growth off a lower-than-expected Q1 will be lower. We delivered first-quarter earnings per share of 13¢ versus our guidance of breakeven EPS driven by higher revenue, stronger gross margin, and lower operating expenses. I was particularly pleased to see our spending down $400 million sequentially and $700 million year over year as we continue to focus on optimizing our cost structure. Q1 operating cash flow was $800 million. We had growth CapEx of $6.2 billion with offsets of $1.7 billion in the quarter, resulting in an adjusted free cash flow of negative $3.7 billion. We ended the |
3,450 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | with offsets of $1.7 billion in the quarter, resulting in an adjusted free cash flow of negative $3.7 billion. We ended the quarter with a cash balance of $21 billion and received $1.1 billion from CHIPS grants, and $1.9 billion for the final close of our NAND business sale to SK Inox. Moving to segment results for Q1. As previewed on our Q4 2024 earnings, we updated our segment reporting for Q1 2025. Details can be found in the appendix to our earnings deck and in our Q1 2025 10-Q. The following commentary reflects the updated segmentation and accompanying recasted 2024 financials. Intel products revenue was $11.8 billion, down 10% sequentially but above our expectations. CCG revenue was down 13% quarter over quarter, below typical seasonality and in line with our expectation with higher-than-expected volumes, offset by product mix and competitive pressure. DCAI revenue was down 5% sequentially and above expectations driven by hyperscaler demand for host CPUs for AI servers and storage compute. Operating profit for Intel products was $2.9 billion, 25% of revenue, and down $632 million quarter over quarter on lower revenue, partially offset by reduced operating expenses. Intel Foundry delivered revenue of $4.7 billion, up 8% sequentially on pull-ins of Intel seven wafers and increased advanced packaging services. Intel foundry operating loss in Q1 was $2.3 billion, roughly flat quarter over quarter and in line with expectations. Structural cost improvements were offset by startup costs associated with the ramp of products on Intel 18. Turning to all other, revenue came in at $943 million, and was down 15% sequentially, slightly above expectations. The three primary components of all other are Mobileye, Altera, and IMS. Collectively, the category delivered $103 million of operating profit. As Lip Bu stated, we announced on April 14 our intention to sell 51% of Altera to Silver Lake Partners for an almost $9 billion valuation, Intel receiving net cash proceeds of $4.4 billion. We believe the value of our remaining |
3,451 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | for an almost $9 billion valuation, Intel receiving net cash proceeds of $4.4 billion. We believe the value of our remaining 49% stake in Altera will grow over time through our partnership with Silver Lake, and with the addition of Raghav Hussein as the CEO. We expect this deal to close in the second half of 2025, at which point we expect to deconsolidate Altera from our financial results. Now turning to guidance. Historically, average sequential growth in Q2 has been roughly flat with Q1. However, the very fluid trade policies in the US and beyond as well as regulatory risks have increased the chance of an economic slowdown with the probability of a recession growing. This makes it more difficult to forecast how we will perform for the quarter and for the year even as the underlying fundamentals supporting growth I discussed earlier remain intact. While we have offsets including a global highly diversified manufacturing footprint to help mitigate tariffs, we will certainly see costs increase, and we feel it prudent to anticipate a TAM contraction. The biggest risk we see is the impact of a potential pullback in investment and spending as businesses and consumers react to higher costs and the uncertain economic backdrop. As a result, we're forecasting a wider than normal Q2 revenue range of $11.2 to $12.4 billion, down 2% to 12% sequentially. Within Intel products, we expect DCAI to decline at a faster rate than CCG. We expect Intel foundry revenue down quarter over quarter due to pull-ins to Q1, lower wafer and advanced packaging volume, and capacity constraints in Intel seven, which we expect to persist for the foreseeable future. For all other, expect revenue for the sum of those parts to be roughly flat sequentially. At the midpoint of $11.8 billion, we expect a gross margin of approximately 36.5% on lower revenue and mix to our outsourced and lower margin client products with a tax rate of 12% and breakeven EPS all on a non-GAAP basis. As you think about the full year, we recommend you start by using the |
3,452 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | rate of 12% and breakeven EPS all on a non-GAAP basis. As you think about the full year, we recommend you start by using the last ten-year seasonality to model sequential changes in revenue. But be mindful of the significant uncertainty in the market today, especially due to the potential for meaningful tariffs and tight supply on our older nodes. We expect non-controlled income or NCI to net to zero in Q2, and for the full year to be approximately $500 million on a GAAP basis. NCI is still expected to grow in fiscal year 2026, to an updated range of $1.3 to $15 billion on a GAAP basis and meaningfully increase further in future years. As Lip Bu discussed earlier, we're simplifying our organizational structure and the way we work across Intel so that we innovate faster and adapt more quickly where needed to better serve our customers. As a result, we now expect 2025 OpEx of $17 billion, $500 million lower than prior expectations with a 2026 OpEx target of $16 billion. We are likely to have restructuring charges associated with these actions, some of which may be included in our non-GAAP results. Since we have not yet estimated these charges, they are not included in our guidance. These spending reductions will be driven by numerous broad-based transformation activities. Key 2025 focus areas will be refocusing our portfolio, eliminating organizational complexity, transforming our engineering functions, and continuing to drive to leading SG and A efficiency. As Lip Bu stated, we anticipate our 2025 gross capital investment will now be approximately $18 billion, which is below our previous guide of $20 billion, reflecting further operational efficiencies, and better utilization of our construction in progress. While gross CapEx is down, we maintain our range for 2025 net CapEx to be approximately $8 to $11 billion due to uncertainty regarding the timing of the US government fulfilling their obligations in our CHIPS agreement. Beginning the process of delevering our balance sheet in 2025 remains a top priority for |
3,453 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | obligations in our CHIPS agreement. Beginning the process of delevering our balance sheet in 2025 remains a top priority for us, as evidenced by our lower OpEx and CapEx targets and the value unlock across our non-core assets. I'll wrap up by saying that Q1 was a solid quarter to start even as the rest of the year is more uncertain. We will closely manage what's in our control and react quickly as the environment evolves. I'm encouraged by Lip Bu's leadership and on enhancing our competitive position, improving our balance sheet, setting us on a path to deliver consistent returns to our shareholders. With that, let me turn the call back over to John to begin the Q&A. |
3,454 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Thank you, Dave. We will now transition to the Q&A portion of our call. Michelle Johnston Holthaus, CEO of Intel products, will be joining Lip Bu and Dave during the Q&A session. As a reminder, we would ask that each of you ask one question and a brief question where applicable. With that, Jonathan, can we take the first question, please?
Operator: Certainly. And our first question comes from the line of Ross Seymore from Deutsche Bank. Your question, please.
Ross Seymore: Hi, guys. Thanks for letting me ask the question. Lip Bu, welcome to Intel. Lip Bu, the first question is for you. You talked a lot about increasing the flexibility and speed at Intel and, you know, unfortunately, having to shrink the headcount to do so. How do we balance fixing the roadmap with also filling the foundry and making sure you have the unit volumes there? It seems like the flexibility and speed goals would be more quickly adopted and capitalized by going to foundry. But you have the need to fill your own Intel. So balancing the internal product roadmap versus the Foundry side of things is basically the question. |
3,455 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Lip Bu Tan: Yeah. Ross, thank you so much for the questions. So a couple of things. One is clearly the approach is basically to flatten the organization, to the number of layers, and so that we can really focus on the right products and then deliver the customer the solution. And then in some of the product and the roadmap, I think it clearly we like to focus on what is the killing product that we want to have. And a laser focus on making sure that we deliver on time on the performance and then the, you know, the power so that make sure that we meet the customer requirement. And then in terms of the foundry, clearly, you know, AT and A is very important for us. For Pentelic. And, you know, secondly, I think we clearly one by one, improving the yield, the reliability, and so that our internal customer can use that. I think from the product side, they have to do the best they can now depend on whether it's inside or outside. And then drive the performance of the products.
John Pitzer: Ross, do you have a follow-up question?
Ross Seymore: Yeah. I did have one for Dave. Dave, the gross margin side of things, you talked a little bit about the slope for the rest of the year. But especially given the strategic changes that Lip Bu is putting into place, the cost-cutting and the OpEx side of things, and the lower CapEx that you talked about. Can you just talk about some of the puts and takes on gross margin if you think about 2025 as a whole and maybe even 2026? What are some of the goals that you have? |
3,456 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | David Zinsner: Yeah. Sure, Ross. And I'll qualify this by saying, you know, it's a relatively dynamic industry out there right now given the tariffs and the implications on what that might look like from our TAM and from the macro. So I'm saying this with, you know, some murkiness as it relates to the full-year picture. I would just say that when we look out through the year, we do expect to see our mix on the client side move more to, you know, the Lunar Lake and so forth. And as you know, Lunar Lake's margins are more under pressure given the memories and package, and so that makes, you know, the accounting look make it look a little funky. So that will be a headwind to our margins on a go-forward basis. And in addition, when we look at 18A, we're going to be ramping that through the year. There's startup costs associated with that bringing that up in Arizona. So that's always gonna put some pressure on gross margins through the year as well. I think as you get into '26, things start to go the other direction, you know, Panther Lake will be ramping more in volume next year. It's a better margin product than Lunar Lake just on the, you know, on an apples-to-apples basis, but on top of that, you know, as you know, we have 18A, on Panther Lake, so it brings the wafers back into the fabs, and we get the margin stacking benefit of that on a kind of consolidated basis. So we, you know, we'd expect next year to look better. Of course, all of that is, you know, subject ultimately a lot of what is reflected in the margins is how we do on the top line side, and so, you know, we gotta sort through, you know, how tariffs impact us. You know, I think from a tariff perspective, you know, this year could be choppy depending on what ultimately is settled across the US and abroad. But we do have a global supply chain. So we do have the ability to flex to mitigate a lot of the headwinds we face. It's just we can't, you know, obviously turn this stuff on a dime. It's gonna take us time to, you know, optimize the network to what |
3,457 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | we can't, you know, obviously turn this stuff on a dime. It's gonna take us time to, you know, optimize the network to what the rules are, you know, in terms of tariffs. |
3,458 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Thank you. Thanks, Ross. Can we have the next question, please?
Operator: Certainly. And our next question comes from the line of Timothy Arcuri from UBS. Your question, please.
Timothy Arcuri: Thanks a lot. Dave, can you help us just also on gross margin? Can you help us with sort of what a clean number is for March? You guided 36%, but that was supposed to have some COGS headwinds from the way you accounted for the grants, but it came in at 39. So sort of what's the clean number for March? And then also, you said that the Q1 number would be the trough. So you know, I know you're guiding Q2 to thirty-six five, but it, like, is could it go lower than what you're guiding?
David Zinsner: Yeah. Yeah. I mean, obviously, we thought Q1 would be a trough, and it turned out to be better. So that, you know, that put some pressure on 2Q now on a relative basis. And like I said, you know, this the tariff dynamics do kind of change the outlook through the year so that's that's an additional pressure point for gross margins through the year. In terms of the margins for Q1, you know, cleaning that out, clearly, the biggest benefit to the gross margins was the beat on the top line. We, you know, kind of handedly beat the top line. That helped out a lot. In addition, we did better or we had more of our volume come from Raptor Lake versus Lunar Lake. And so that was mix beneficial to gross margins. And, you know, and then we did, I think, a little bit better job in terms of just managing spending. And so forth that that helped out. But the two bigger components were the higher revenue in Raptor Lake. I think if you strip those two things out, we were we would've been much closer to the guide.
John Pitzer: Tim, do you have a follow-up? |
3,459 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Tim, do you have a follow-up?
Timothy Arcuri: I do. Yeah. So, Lip Bu, I know the prior policy had been to not announce new, you know, third-party foundry customers. How do you think about that? And how can you update us on sort of what you're tracking? Is there anything to help believe that maybe you can add a tier-one customer and maybe this year, you know, if not sooner, I know that they want, you know, want some power improvements on AT and A. But can you kinda talk about that? Thank you.
Lip Bu Tan: Sure. Thanks, Tim. I think the priority one for us is for Intel Foundry is ramping our internal customer. Like the Pentelic I mentioned earlier. And then the next step is basically building the trust with our foundry customer and, you know, the PDK, the schedule, you know, to really make sure that we're really robust on that. And then in terms of the process technology, the priority is really focused on yield reliability, and also I think it's very important to understand this is a customer service mindset so that, you know, customers have different design tools, methodology styles, want to make sure that we really do the pattern matching so that we really optimize for their solution they want to drive. So I think it's kind of one, two steps, and then we'd really continue to drive the efficiency and then so that we can really scale the business.
John Pitzer: Thank you, Tim. Jonathan, can we have the next question, please?
Operator: Certainly. And our next question comes from the line of Joseph Moore from Morgan Stanley. Your question, please.
Joseph Moore: Great. Thank you. So a number of elements in your letter and in your comments about kind of improving product execution. Guess five weeks into it, can you give us your assessment of Panther Lake and Clearwater Forest in the 1880? Alright. Portfolio and give us a sense of, you know, are those leadership products? Do you still have work to do to get to the leadership position that you wanna have? |
3,460 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Lip Bu Tan: Yeah. Let me start. I think Michelle will chip in. First of all, I think clearly our laser focus on execution. And in terms of delivering on time, a performance that we can meet the customer and industry trends. And the workload. So that is the number one priority for us. In terms of Panther Lake, you know, clearly on the 18A is very important. We have the first SKU by the end of this year, then we have additional SKU the next year. So I think so far we are very focused on that. Michelle?
Michelle Johnston Holthaus: Yeah. Maybe just to add, Joe, I think I talked about this a little bit in our Q4 earnings. Panther Lake really matches what you see in both Meteor Lake and Lunar the way that we're gonna ramp, bringing our first most performant product out first with customers and then the additional SKUs in Q1, which really allows us to line up with the commercial marketplace. That product looks quite good competitively, and we get a lot of customer interest, so I think we continue to track well there. You also asked about Clearwater Forest, and I talked a bit about that and the prioritization between Panther Lake and Clearwater Forest in Q4 as well. And so for Clearwater Forest, it has some very unique packaging that comes to market with it, and therefore, we decided to prioritize getting Panther Lake out first. And then the first half of 2026, you'll see Clearwater Forest. I would just remind you that Clearwater Forest is an ECORE based product, so it's a derivative. Right, of Granite Rapids. And so it'll be, you know, a more of a purpose-built product than your kind of leading performance part. In the marketplace, but both are on track for delivery.
John Pitzer: Joe, do you have a follow-up question?
Joseph Moore: I do. Thank you for that. The comment that you guys made about seven nanometer being constrained for the foreseeable future. Can you elaborate on why that is and what impact that might have? |
3,461 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | David Zinsner: Yeah. Oh, pretty simply, you know, we're doing better on Raptor Lake and Raptor Lake's an Intel seven part. And so, you know, we obviously plan out our network to be, you know, just to the edge in terms of, you know, capacity and, you know, when things shift meaningfully like they did, you know, we're gonna be hand them out. That said, you know, that's usually a good thing for the factory. When they're constrained, they, you know, leverage, the network to try to, you know, produce more wafers, and every wafer becomes less expensive as a result. So, you know, we do we obviously do like that. Ultimately, though, we do wanna see these AIPC products gain more traction in the market, and we're optimistic that happens in the year.
Michelle Johnston Holthaus: Yeah. Maybe just to add on both seven and ten nanometer. Obviously, with the macroeconomic concerns that we see and just with the overall economy, we are particularly seeing consumer a stronger n minus one and n minus two demand in the market as those system price points tend to stay rather fixed. And so we've been doing our best to respond to that shift while at the same time in the commercial segment, we are seeing that Windows 10 refresh and a strong demand for AIPC. Think there's both good and bad news in that in that as you see n minus one, n minus two, as Dave talked about, you see a lot of that gross margin flow to the bottom line. It is also, you know, as the AIPC ramp slows, that's also good for gross margins. But I do want you to walk away with the fact that we continue to invest in the AIPC. We do view this as the long-term growth segment. We have our AI symposium with all the software vendors this week, and we see a ton of excitement from our customers around Lunar Lake, and so we'll be balancing our portfolio and our mix across our foundries.
John Pitzer: Thanks, Joe. Jonathan, can we have the next question, please?
Operator: Certainly. And our next question comes from the line of C.J. Muse from Cantor Fitzgerald. Your question, please. |
3,462 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Operator: Certainly. And our next question comes from the line of C.J. Muse from Cantor Fitzgerald. Your question, please.
C.J. Muse: Yes, good afternoon. Thank you for taking the question. I guess first question for Lip Bu. You touched on your AI strategy. Focusing on new and emerging workloads like reasoning models, the gen pick AI, and physical AI. Is the plan here to reinvent x86 to succeed in the AI world or perhaps a broader portfolio, including ARM? And then should we be interpreting your focus more on edge AI?
Lip Bu Tan: Thank you. Yeah. Good question, CJ. I think first of all, as I articulate and not on the AI strategy, it's very important to understanding the workload. And then, you know, make sure that we can really deliver. And then clearly, we're going to look for partnership with the industry leader to build a purpose-built silicon and the software to optimize for that platform. So we like to be the compute platform for doing that. And clearly, I think one of the big areas would be the kind of edge and inference area. And that will be important to have the architecture that is low power and drive efficiency. And so those kinds of things that we are exploring some of this new architecture and some of this disruptive platform that we try to build. So stay tuned. Over time, we're going to start to articulate the strategy for that.
John Pitzer: CJ, do you have a follow-up question?
C.J. Muse: I do, John. Thanks. Dave, to follow-up on the OpEx guide for 'twenty-five and 'twenty-six, do those numbers fully contemplate the headcount reductions that you are planning? Or, you know, over time, could we see additional savings? |
3,463 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | David Zinsner: I would say, you know, Lip Bu has driven us to think about the company in a leaner, more efficient, faster-to-execution kind of way. And that's been kind of the underpinning of what we are doing from an OpEx perspective. So it's all of that, you know, elimination of the bureaucracy, taking out the layers and support, that drive us to a number that's kind of in this $17 billion range for 25 and $16 billion range for 26. We are still in the process of, you know, working through the details of how we lay into that number. But I feel confident based on his direction, we will land in that ZIP code for those numbers. We have not yet identified what that means from a headcount perspective. You know, there's obviously other categories of spend in operating expenses in addition to labor, and, you know, those will also be looked at and we'll scrutinize and make sure that they're spent in a highly efficient manner, and we'll have more details around how we will land the $16 billion number for '26 when we end the second quarter and do the earnings in July, I think we'll have a good sense of, you know, what that means. Whether it can be reduced further, I think we'll have to see. I think the $16 billion number, we feel very confident we can land. We'll update you in July as to, you know, for sure where that number is with a little bit more precision. You know, I think if you asked Lip Bu today, he'd probably say there are areas where he would like to invest as well. So to the extent we're freeing up investment, it may go to some other areas that he wants to invest in. So, you know, I think $16 billion would probably be the good working assumption. But we'll update you in July, like I said.
John Pitzer: Thanks, CJ. Jonathan, can we have the next question, please?
Operator: Certainly. Our next question comes from the line of Vijay Rakesh from Mizuho. Your question, please. |
3,464 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Operator: Certainly. Our next question comes from the line of Vijay Rakesh from Mizuho. Your question, please.
Vijay Rakesh: Yeah. Hi. I was just wondering, as you look at the data center site, how you see that playing out through the year? I saw you may you kinda kinda June and you saw DJ apologize. Can you restate that? You broke up a little bit at the beginning of the question. Just wondering how the data center side would play out to the end of the year. As you look at the second half, especially.
Michelle Johnston Holthaus: Yeah. Thank you for the question. As we look at, you know, Q1, we saw higher-than-expected growth, really driven by a few hyperscalers. We are optimistic about the rest of the year. If you look at, you know, the product roadmap we have with Granite Rapids coming out and Xeon six, some of the traditional consolidation that that drives as well as, you know, being the CPO choice as the AI head node. And we are starting to see some improvement in telco as well. However, as Dave and everyone's talked about, you know, we still do see a large macro concern, and so we need to continue to understand what that means. Much like we talked about before in client, we are seeing strong demand on older gen parts in data center as well, and we're working through that from a supply perspective. As stated in last quarter's earnings, I talked about our main goal being to stabilize market segment share, create margin, and, you know, up ASPs, and so those are things that we're going to be laser-focused on for the remainder of the year. We do have a good product portfolio. We do see, you know, strength both in hyperscalers and enterprise, but the rest of the world is where we really see a market segment share challenge, and so that's where we'll be focused.
John Pitzer: Vijay, do you have a follow-up question? |
3,465 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Vijay, do you have a follow-up question?
Vijay Rakesh: Yes. Thanks, John. And, Lip Bu, congratulations on the new assignment. Just looking at CapEx, maybe this is for Dave. Any thoughts on how you would look at CapEx through that time frame, 25-26? Are you looking at rationalizing that given the footprint, fab footprint that you have?
David Zinsner: Yeah. Yeah. Oh, go ahead. Sorry. Go ahead, please. Okay. In '25, you know, we think we can operate to an $18 billion number as we talked about. I would just tell you we have $50 billion or so of assets under construction, you know, that are a lot of which are equipment that's still in bubble wrap. So we're in some ways, you know, taking a more aggressive approach to driving better return on what we've spent already. And that's allowing us to spend less in capital. I think that story probably plays out next year as well, although I think it's too early to talk about guidance for CapEx for next year. You know, we're gonna leverage our assets under construction next year as well. You know, longer term, you know, this is a high-intensity model, obviously. You know, we've talked about roughly having 25% capital intensity as we look at this in a full IDM model. And I think that's probably a good working assumption on a long-term basis.
John Pitzer: Thank you, Vijay. Jonathan, can we have the next question, please?
Operator: Certainly. And our next question comes from the line of Stacy Rasgon from Bernstein Research. Your question, please.
Stacy Rasgon: Hi, guys. Thanks for taking my questions. Wanted to go back to that seven nanometer constraint capacity constraint. Think you're seeing a lot of demand for Raptor Lake. I guess I'm just surprised given how good Meteor Lake and Lunar Lake are supposed to be. Like, why are you seeing so much more demand for the older generation parts versus new ones? Or is it, I mean, are you pushing the older gen stuff like you because the margins are better? Like, what's going on there? |
3,466 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Michelle Johnston Holthaus: Yeah. Thanks for the question, Stacy. We're not pushing the old parts based on what we're really seeing is much greater demand from our customers for N-one and N-two products, so that they can continue to deliver system price points that consumers are really demanding. As we've all talked about, the macroeconomic concerns and tariffs have everybody kind of hedging their bets in what they need to have from an inventory perspective. And Raptor Lake is a great part. Meteor Lake and Lunar Lake are great as well, but come with a much higher cost structure, not only for us, but at the system, ASP price points for our OEMs as well. And so as you think about an OEM perspective, they've also, you know, ridden those cost curves down from a Raptor Lake perspective, and it allows them to offer that product at a better price point. So I really just think it's, you know, macroeconomics, the overall economy, and how they're hedging their bets.
John Pitzer: Stacy, do you have a follow-up?
Stacy Rasgon: I do. To follow-up on that then, so what does that imply for the Panther Lake launch, which I guess is gonna happen, you said, by year-end. So I guess we'll get at least one SKU by December. Most of it comes this year. But if that's happening, like, in the midst of a macro event, tariffs, like, who knows? Like, how do I think about, like, the launch of those new products given, like, demand seems to be pivoting back to the older products and the environment hasn't even gotten bad yet. |
3,467 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Michelle Johnston Holthaus: I think it's a very fair question. The Panther Lake launch matches exactly what we did on both Meteor Lake and Lunar Lake in regards to timing, so it's very aligned with how customers like to take products to market. Panther Lake is a great product both from a performance and price perspective for our customers, so I think you'll see a strong uptake of that product, right? We still see very strong commercial demand for AIPC. As they are deploying their fleets, as they're doing their upgrades, they want to future-proof their products and have that AI capability. So I don't think you're going to see that change in commercial. And if you look at our traditional ramp for these types of products, we tend to go faster in Commercial first and then consumers come on board. And so we'll have to balance where is the economy at the end of the year, but I feel very bullish about the Panther Lake product. And our customer feedback.
John Pitzer: Thanks, Stacy. Jonathan, can we have the next question, please?
Operator: Certainly. And our next question comes from the line of Srini Pajjuri from Raymond James.
Srini Pajjuri: Thank you. Michelle, I wanna go back to the comments you made about the server market, in particular about the Q2 guidance. I'm just curious as to why Q2 is tracking a little bit weaker. And then as we look out to the next few quarters, I know you talked about Granite ramping. Also potentially TAM growing from a, you know, per core basis in double digits. But at the same time, you know, we do have incremental competition from ARM, especially in head nodes where I think you guys have done well. So I'm just wondering how to think about, you know, maybe talk about why the guidance is a little softer for Q2 and then how to think about your market share for the next few quarters? Thank you. |
3,468 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Michelle Johnston Holthaus: Yes, thank you for the question. As I look at Q1, I mean, we had a few hyperscalers that were particularly strong in Q1. And so, you know, you could call that, you know, hedging your bets or doing pull-ins or just balancing out their portfolio. But we don't expect to continue to see that into Q2. And so when we look at the overall macro demand, concern around tariffs and restrictions, as well as the stronger demand for older generation parts. There's more demand there than we currently can supply, and so you have to balance that as well. And then as I've continued to say, we're gonna do everything we can to stabilize market segment share. But that also creates a lot of margin and ASP pressure that we need to balance throughout the year. And so Granite Rapids is a great product. We are seeing excitement from our customers around that. Particularly in the consolidation, particularly with Edge AI, a lot of excitement from customers about finding ways to be able to offer service revenue there. But at the same time, as you said, there is good competition. And so we're just being, you know, I think very prudent in what the year looks like. We understand there is competition, but we've got a good product portfolio, but as Lip Bu said, we want a very strong Seydou ratio. So we're going to commit to a number that we can beat.
John Pitzer: Srini, do you have a quick follow-up?
Srini Pajjuri: Yeah. And then on Panther Lake, I know Lip Bu said, you know, it's a priority to ramp AT and A with Panther Lake. I know in the past, your target was to, I guess, bring in 70% of the die in-house, to 18A. Just wondering if that's still the target. And then, as we look forward to NovoLake, has the decision about, you know, internal versus external been made yet? If so, you know, maybe you can give us some color on that as to what percent or, you know, how you think about internal versus external mix for NOLA. Thank you. |
3,469 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Michelle Johnston Holthaus: Yeah, both are great questions. When we look at 18A, our goal of bringing everything in-house, getting to a 70%, approximately 70% mix, remains steadfast, and there's no change to that POR, and Pantherlight helps us get on that journey. You know, talked about this in Q3. I talked about it in Q4. One of the great strengths we have is the fact that we do have optionality when it comes to where we build our products. We build products with TSMC, Samsung, and Intel. And so when you look at Nova Lake, really, what we've done is we've optimized at the SKU level the process node that we're going to use. And so when you look at Nova Lake, you'll see product both at TSMC, and you'll see product internal to Intel. But when you look at the aggregate of Nova Lake, we will build more wafers on Intel process than we are on Panther Lake. So that commitment to continue to drive wafer growth with our internal foundry partners remains steadfast, and there's no change to strategy there.
David Zinsner: I just add one other thing that just I come over the top of the organization on. Is we are going to continue to balance internal and external manufacturing of wafers. We do that because that's part of our capital strategy to maintain a reasonable capital intensity relative to the business. So just as much as, you know, we're pushing on filling the fab and making sure we're utilizing all of our assets and leveraging the investments we've made on the process side, we also wanna make sure that we're not over-investing in capital and are left, ultimately with a bad answer from a return on asset perspective. So that's part of our smart capital strategy is always to keep a certain percentage of our wafer capacity outside.
John Pitzer: Thank you, Srini. Jonathan, can we have the next question, please?
Operator: Certainly. And our next question comes from the line of Thomas O'Malley from Barclays. Your question, please. |
3,470 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Operator: Certainly. And our next question comes from the line of Thomas O'Malley from Barclays. Your question, please.
Thomas O'Malley: Hey guys, thanks for taking my question. This one is for Dave. Little more shorter term. Just if you look at the first twenty-something days of the quarter here, I was surprised that you saw a little bit of weakness in the client. Obviously, data center down a little bit more. But could you maybe just give us an update on if you're seeing any pull-ins, any changes in dynamics from a geography perspective? Any customer behaviors that are looking any different for the first couple of days of this quarter? Just as it helps as a framework for the entire market and then also for you guys as well.
David Zinsner: Yeah. I would just say that, you know, for the first whatever number of days that is off, I didn't count it. So I'm assuming it is twenty days. We are off to a relatively strong start. But what we are anticipating and what's built into our guidance is that, you know, the macro is going to start to catch up to the implications of the tariffs. And so June is likely to be softer than our strong start to the quarter. But so far, we're off to a strong start. Of course, I can't completely rule out that it might continue through the whole quarter, in which case we're, you probably looking at the higher end of the guidance. But for now, we've built in the expectation that, you know, tariffs will start to weigh on the macro.
John Pitzer: Tom, do you have a follow-up? |
3,471 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Tom, do you have a follow-up?
Thomas O'Malley: Yeah. I do. Michelle, in December when we chatted when you when you first took over the job, you spoke about products being first. And, specifically, we talked about the data center side of things. And, I think earlier to CJ's questions, you addressed the edge. But if you look at the products that you've had with Gowdy, Falcon Shores inside the data center specifically, could you talk about what the strategy will be going forward? Are you planning on launching a new product think at the time you said, we need to learn with what we've already had, so we're not starting from scratch. But any update to that strategy, particularly inside the data center?
Michelle Johnston Holthaus: Yeah. I'm glad that you asked. Actually, you know, in the first five weeks, that Lip Bu has been here, he and Sachin have spent a significant amount of time relooking at our whole AI strategy, our portfolio of assets, how we need to come to market to be able to compete in that marketplace. You've heard Lip Bu really talk about the fact that we want a workload-first approach. And so in Q4, I talked about the fact that we weren't gonna build Falcon Shores. Right? And that we were gonna stay with the POR of Jaguar Shores. So we still have a Jaguar product on our roadmap. And Sachin and Lip Bu over the coming months or so. We'll start to talk externally about what our AI roadmap looks like, what we'll do in between then. And then as we really dive in with our customers on that workload roadmap, what needs to change. But I think you'll see us be quite aggressive. We know that that is a segment of the data center market that we're not competing in today. And we need a robust portfolio as all the customers are looking for alternatives.
John Pitzer: Thanks, Tom. Jonathan, can we have the next question, please?
Operator: Certainly. And our next question comes from the line of Vivek Arya from Bank of America Securities. Your question, please. |
3,472 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Vivek Arya: Thanks for taking my questions. Lip Bu, for the first one. You there are no quick fixes. So how much time realistically should investors be prepared for in terms of Intel's turnaround? Is it one year, two years? Three years? And related to that, what are the right metrics to measure that progress? Is it share gains? Is it gross margins? Is it free cash flow? So, basically, what metric are you optimizing for, and what is the timeline in order to achieve that?
Lip Bu Tan: Okay. Thanks. Good question. So I think, you know, clearly, there's no quick fix. And as you described. And as we're working through the roadmap and weekly update with the team, and then defining what is the new workload look like in terms of the, you know, the CPU, GPU, and AI and then driving the some short term and some longer-term products. And then shorter term, we may embrace some of the disruptive technology that's out there and we can partner with them to bring the market faster and then meet the customer requirement. So I think stay tuned. I mean, those are the things that we're working on. In terms of the matrix, clearly, want to have the best products. And that is really, you know, especially at addressing the edge because of your power efficient. And also able to drive the performance that we like. And time to market is critical on schedule. And so those are the things that we look at in terms of matrix to really deliver what the industry wants and customers want and that's something that we're working on.
John Pitzer: Vivek, do you have a quick follow-up? |
3,473 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | John Pitzer: Vivek, do you have a quick follow-up?
Vivek Arya: Yes. Thanks, John. So on the IDM structure, Lip Bu, you know, given your experience in the industry, you know, what we have seen from the outside is that the most successful businesses in semis are either fabless or dedicated foundry. And a few years ago, when Intel started to give out financials for the manufacturing business, the hope was that that would turn it around. But what we have seen is just consistently negative gross margin. So do you think that just AT and A progress is sufficient, just kind of low single-digit top-line growth is sufficient to make this business viable? So at what point, you know, do you need to rethink whether this IDM structure, regardless of the way, financials are broken out, does it make sense?
Lip Bu Tan: Right. I think it's a good question. So I think clearly, we want to have that kind of a balanced approach. One is our, you know, the foundry got to be able to deliver the product that internal customers need. And also can serve our Intel customers well. So that we make them the simplicity also online schedule to deliver. And then meanwhile, you know, in that respect, we clearly view TSMC as our partner and they have been very good partners to have. And Morris and Cece are very long-time friends of mine. And we also, we now met recently, try to find areas we can collaborate and so that we can create a win-win situation. And then meanwhile, we continue to drive the efficiency, the yield, that AT and A and also look at with the customer what can we do on the 14A and then so that we can really wisely effectively using some of the foundry capacity footprint that we have.
John Pitzer: Vivek, thank you. Jonathan, we've got time for one last question, please.
Operator: Certainly. And our final question for today comes from the line of Aaron Rakers from Wells Fargo. Your question, please. |
3,474 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Aaron Rakers: Yes. Thanks, John, for fitting me in. I guess maybe the first question would be is just as I think about the guidance that you gave and, you know, more importantly, the operating expense structure that you talked about 25-26. Just to be very clear, that that's exclusive of the pending divestiture of 51% stake in Altera. I guess that's just a point of clarification.
David Zinsner: Yeah. Let me decide what exclusive means. But, essentially, the $17 billion in '25 and the $16 billion in '26 actually assume Altera's OpEx is in that number. Now, you know, obviously, as soon as we deconsolidate it, it won't be. So, you know, the target of the 60 will come down. You know, dollar for dollar for what Altera is spending in terms of OpEx. But given that it hasn't closed, we don't know the timing of when it closes. It was a little difficult to provide anything. With that built into the forecast, so we just included it.
John Pitzer: Aaron, do you have a follow-up?
Aaron Rakers: Fair enough. I do. And it's maybe more strategic back to kind of the core data center AI strategy. And I know it's early days, but Lip Bu, I'm curious of how you think about, you know, RackScale, you know, networking and the pieces that Intel has internally to really compete in the cloud infrastructure AI build-out. Is it UCIE? Is there other pieces of the building blocks that you think strategically is needed to really drive if it's with Jaguar Shores or, you know, how that strategy plays out around the networking scale upside?
Lip Bu Tan: Yeah. It's a good question. So let me start first and then Michelle will add on to it. So clearly, the RackScale approach of the system, I think is very important. That we need to have a full scale in those hardware and software to do it. And then clearly leverage on our XPU in our CPU and GPU approach and then to drive that. And I think, you know, there will be something that we kinda work on and then come up with a killing product that we can really launch the product. |
3,475 | INTC | 1 | 2,025 | 2025-04-24 17:00:00 | Intel Corporation | 21,127 | Michelle Johnston Holthaus: Yeah. Maybe I would just add that, you know, we are seeing great success with the IPU products that we've built. We will see at least double-digit or, excuse me, doubling of that revenue from 24 to 25. We also see optics as a critical element of that rack scale architecture as well. And I think I would just remind everybody that Intel is the only foundry out there that has an optics-based foundry option for our customers, and so we're very optimistic that those two things add to the overall opportunity to build out that RackScale architecture. Also just our OpenX 86. What we are seeing is that customers do love the x86 ecosystem, the software around it, and if they can build out an AI infrastructure with x86, they're very interested in doing that. We already have one large custom design win, and I would expect more.
Lip Bu Tan: With that, thank you for joining us today. We have a clear opportunity to strengthen our business in both products and foundry. We have clear priorities to better serve our customers and create value for our shareholders. I look forward to the work ahead as we build the new Intel. Thank you.
Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. |
3,476 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | Operator: Good morning and welcome to Johnson & Johnson's Fourth Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer session of the conference. This call is being recorded. If anyone has any objections, you may disconnect at this time. [Operator Instructions] I would now like to turn the conference call over to Johnson & Johnson. You may begin. |
3,477 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | Jessica Moore: Hello, everyone. This is Jessica Moore, Vice President of Investor Relations for Johnson & Johnson. Welcome to our company's review of business results for the fourth quarter and full year 2024 and our financial outlook for 2025. A few logistics before we get into the details. As a reminder, you can find additional materials, including today's presentation and associated schedules on the Investor Relations section of the Johnson & Johnson website at investor.jnj.com. Please note that this presentation contains forward-looking statements regarding, among other things, the company's future operating and financial performance, market position and business strategy. You are cautioned not to rely on these forward-looking statements, which are based on the current expectations of future events using the information available as of the date of this recording and are subject to certain risk and uncertainties that may cause the company's actual results to differ materially from those projected. A description of these risks, uncertainties and other factors can be found in our SEC filings, including our 2023 Form 10-K, which is available at investor.jnj.com and on the SEC's website. Additionally, several of the products and compounds discussed today are being developed in collaboration with strategic partners or licensed from other companies. This slide acknowledges those relationships. Moving to today's agenda. Joaquin Duato, our Chairman and CEO, will open with a few comments on our performance and key catalysts for the company. I will then review the fourth quarter sales and P&L results as well as full year 2024 results for the enterprise. Joe Walk, our CFO, will then close by sharing an overview of our cash position, capital allocation priorities and guidance for 2025. Jennifer Taubert, John Reed and Tim Schmid, our Innovative Medicine and MedTech leaders, will be joining us for Q&A. To ensure we provide enough time to address your questions, we anticipate the webcast will last a little over 60 minutes. |
3,478 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | Q&A. To ensure we provide enough time to address your questions, we anticipate the webcast will last a little over 60 minutes. With that, I will now turn the call over to Joaquin. |
3,479 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | Joaquin Duato: Thank you, Jess, and good morning, everyone. 2024 was a year of progress and transformation for Johnson & Johnson. Today, we operate in a broad set of high unmet need, high growth and high innovation segments, including oncology, immunology and neuroscience in Innovative Medicine and cardiovascular, vision and robotics in MedTech. In 2024, we continue to make disciplined decisions to exit lower priority businesses while investing industry leading amount in our pipeline, approximately $50 billion in R&D and M&A in the last year, inclusive of the recently announced acquisition agreement with Intra-Cellular Therapies, which I will speak about shortly. And while we have been through a period of transformation, the fundamentals of our company remain the same. Indeed, our enduring success is rooted in two things. First, we are a purpose-driven company guided by Our Credo. And second, we are broadly diversified, meaning that we can truly lead where medicine is going. No other company has the span of expertise and capabilities that Johnson & Johnson has. No other company can impact the entire patient journey as we do. We are not just a Pharma company or a MedTech company. We are a health care company. And our strategies are disease centric focused on end-to-end solutions. Just think about multiple myeloma and the impact of DARZALEX, CARVYKTI, TECVAYLI and TALVEY. Think about heart recovery and the impact of Abiomed's Impella heart pumps and the promise of V-Waves minimally invasive interatrial shunt. Think about mental health and the impact of our INVEGA portfolio, SPRAVATO and the potential of the Intra-Cellular Therapies acquisition we announced last week. And think about inflammatory bowel disease and the impact of STELARA and TREMFYA and the potential of our targeted oral peptide that blocks IL-23 Icotrokinra and JNJ-4804, our Co-antibody Therapeutic targeting IL-23 and TNF. As the only major health care company focused both on Pharmaceuticals and Medical Technology, we are unique in the industry with |
3,480 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | the only major health care company focused both on Pharmaceuticals and Medical Technology, we are unique in the industry with the financial muscle, global reach and this is expertise to deliver the sustained high pace of growth and innovation that is the hallmark of Johnson & Johnson. The strategic decisions we made in 2024 position Johnson & Johnson for sustained growth through the second half of the decade and beyond and strengthen our confidence in our 2025 guidance. Now to the numbers for 2024. Over the full year, we delivered robust operational sales growth of 7% excluding the COVID-19 vaccine. With SPRAVATO surpassing $1 billion in annual sales, we now have 26 platforms that generate at least $1 billion in annual revenue. In Innovative Medicine, we reported a third consecutive quarter of sales exceeding $14 billion with 10 key brands growing double-digit. Across the full year, we achieved strong growth in oncology, neuroscience and pulmonary hypertension with immunology performing well despite the entry of biosimilars for STELARA in the EU. Equally impressive is our pace of innovation, which in 2024 resulted in 27 approvals in major markets, including FDA approvals of TREMFYA for the treatment of ulcerative colitis and RYBREVANT and LAZCLUZE for first line treatment for patients with EGFR-mutated advanced non-small cell lung cancer. In 2024, we reported 18 positive readouts for registrational studies, initiated 16 Phase III studies and submitted 49 filings across major markets. And as you have seen over the last three weeks, we are off to a fast start in 2025. RYBREVANT and LAZCLUZE showed significant in overall survival in first line treatment of advanced or metastatic non-small cell lung cancer. We received FDA approval of SPRAVATO as the first and only monotherapy for adults with treatment resistant depression. We received priority review for Nipocalimab for the treatment of generalized myasthenia gravis in addition to the FDA breakthrough therapy and Fast Track designations for other indications |
3,481 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | of generalized myasthenia gravis in addition to the FDA breakthrough therapy and Fast Track designations for other indications received last year. And last week, we announced a new drug application with the FDA for TAR-200, our intravesical drug releasing system for the treatment of non-muscle invasive bladder cancer and area of significant unmet need impacting as many as 1 million patients per year. Turning to MedTech. For the full year, we reported a second year of over $30 billion in sales with growth across most part of the business, including particularly strong momentum in cardiovascular ambition. Our pace of MedTech innovation also continues to accelerate with 15 major products launched in 2024. Major highlights of the year include the approval of our VARIPULSE Pulsed Field Ablation platform in several major markets and FDA clearance of our VELYS robotic assisted solution for the use in Unicompartmental Knee Arthroplasty procedures as well as an expanded FDA indication for Impella heart pumps to treat pediatric patients and FDA clearance of Shockwave's Javelin Peripheral IVL Catheter for the treatment of tight, difficult to close peripheral lesions. We also achieved the full market release of 10 major products including the Shockwave E8 Peripheral IVL Catheter in the US. Version 8 of the CARTO 3 Electroanatomical Mapping System and our TECNIS Odyssey Intraocular Lens. And we progressed 18 clinical trial programs including the IDE approval of our OTTAVA robotic surgical system, which allows clinical trials to begin at US sites. And last year, we fortified our future by making significant value creating investments in M&A. These investments enable us to further shift our portfolio to address our mandates in high growth and high innovation markets. This included the acquisitions of Shockwave and V-Wave in MedTech and Ambrx Proteologix and the NM26 biospecific antibody in Innovative Medicine. And building on our nearly 70 year legacy neuroscience, we announced last week plans to acquire Intra-Cellular |
3,482 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | Medicine. And building on our nearly 70 year legacy neuroscience, we announced last week plans to acquire Intra-Cellular Therapies, a biopharmaceutical company focused on the development and commercialization of therapeutics for Central Nervous System Disorders. This unique opportunity to add Intra-Cellular Therapies reflects our commitment to transforming care and advancing research in mental health. It also further solidifies sales growth above analyst expectations now and through the remainder of the decade. Together, these transactions represent industry leading levels of investment for the company, providing strategic near and long-term growth catalyst for Johnson & Johnson. Turning to 2025. And as previously guided back at the end of 2023, we expect to deliver operational sales growth of 3%, overcoming headwinds associated with US biosimilar entries for STELARA and the impact of the Part D redesign and continued macroeconomic pressures in China. Perhaps even more impressive, we are planning for adjusted operational earnings per share growth of nearly 9%. I cannot think of any other company that would be able to deliver growth through the first year of losing exclusivity of a multibillion dollar product. We are able to achieve these results because of the diversification of our business, the strength of our commercial assets as well as the breadth of our pipeline with additional launches in 2025 including TREMFYA in IBD, RYBREVANT and LAZCLUZE in lung cancer and VARIPULSE and the Dual Energy THERMOCOOL SMARTTOUCH SF Catheter in electrophysiology. In closing, I want to thank everyone at Johnson & Johnson for all that they do to help patients. We are starting the year from a position of strength and we have confidence in our sales growth and EPS guidance for 2025. And with that, I'll turn the call over to Jess. |
3,483 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | Jessica Moore: Thank you, Joaquin. Moving to our financial results. Unless otherwise stated, the results and guidance highlighted today reflect the continuing operations of Johnson & Johnson. Furthermore, the percentages quoted represent operational results and therefore excludes the impact of currency translation. Starting with Q4 2024 sales results. Worldwide sales were $22.5 billion for the quarter. Sales increased 6.7% with growth of 10% in the US and 2.5% outside of the US. Worldwide growth was negatively impacted by 290 basis points due to STELARA and positively impacted by 100 basis points due to acquisitions and divestitures. It's important to note growth in Europe was negatively impacted by 720 basis points due to the loss of exclusivity of STELARA and the COVID-19 vaccine. Turning now to earnings. For the quarter, net earnings were $3.4 billion and diluted earnings per share was $1.41 versus diluted earnings per share of $1.70 a year ago. Excluding after tax intangible asset amortization expense and special items for both periods, adjusted net earnings for the quarter were $4.9 billion and adjusted diluted earnings per share was $2.04, representing decreases of 11.1% and 10.9%, respectively, compared to the fourth quarter of 2023. Earnings per share in the quarter was negatively impacted by $0.22 of acquired IPR&D expense related to the V-Wave acquisition. For the full year 2024, sales were $88.8 billion. Sales grew 5.9% with growth of 8.3% in the US and 2.9% outside of the US. STELARA and the COVID-19 vaccine negatively impacted worldwide growth by 260 basis points. Acquisition and divestitures positively impacted worldwide growth by 50 basis points. Growth in Europe was negatively impacted by 670 basis points due to the COVID-19 vaccine and the loss of exclusivity of STELARA. Net earnings for the full year 2024 were $14.1 billion and diluted earnings per share was $5.79 versus diluted earnings per share of $5.20 a year ago. Full year 2024 adjusted net earnings were $24.2 billion and adjusted diluted |
3,484 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | diluted earnings per share of $5.20 a year ago. Full year 2024 adjusted net earnings were $24.2 billion and adjusted diluted earnings per share was $9.98, representing a decrease of 4.6% and an increase of 0.6% respectively versus full year 2023. Earnings per share in the year was negatively impacted by $0.67 due to acquired IPR&D charges on various transactions throughout the year. I will now comment on business sales performance in the quarter. Beginning with Innovative Medicine. Worldwide sales of $14.3 billion increased 6.5% excluding the COVID-19 vaccine with growth of 11.1% in the US and a decline of 0.3% outside of the US. STELARA negatively impacted worldwide growth by 490 basis points. Innovative Medicine growth was driven by our key brands and continued uptake from recently launched products with 10 assets delivering double-digit growth. Results across the portfolio continue to be positively impacted by price adjustments associated with Argentina hyperinflation consistent with market practice. Starting with oncology. We continue to drive strong sales growth across our multiple myeloma portfolio. DARZALEX growth was 23.5%, primarily driven by share gains of over three points across all lines of therapy and six points in the frontline setting as well as market growth. This marks Johnson & Johnson's first brand to achieve over $3 billion in sales in a quarter. CARVYKTI achieved sales of $334 million with growth of over 100% driven by share gains and capacity expansion. This reflects sequential growth of 17.3% aligned with our expectations of accelerating growth in the back half of the year. TECVAYLI sales were $146 million in the quarter with growth of 18%, reflecting a strong launch in the relapsed refractory setting. Demand remains strong despite continued adoption of longer duration dosing intervals. Finally, within our multiple myeloma portfolio, TALVEY continued its launch trajectory with another quarter of strong growth. As a reminder, we anticipate disclosing TALVEY sales in the first quarter of |
3,485 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | trajectory with another quarter of strong growth. As a reminder, we anticipate disclosing TALVEY sales in the first quarter of 2025, which are currently reported in the category Other Oncology. ERLEADA continues to deliver strong growth of 22.7%, primarily driven by share gains and market growth, reaching $3 billion in annual sales for the first time. RYBREVANT, our bispecific antibody for non-small cell lung cancer, contributed to growth in the category Other Oncology as we continue to expand approved indications. We also anticipate disclosing RYBREVANT sales in the first quarter of 2025. Within immunology, we saw sales growth in TREMFYA of 5.6%, driven by strong market growth and share gains in PsO and PsA, partially offset by unfavorable patient mix and inventory dynamics. We are excited about the recent UC launch and expect to see strong uptake of the IBD indications in 2025. STELARA declined 13.6% driven by the impact of current and anticipated biosimilar competition. As a reminder, biosimilar competition has entered the US in January 2025. REMICADE and SIMPONI worldwide sales were positively impacted by return of distribution rights in Europe. In Neuroscience, SPRAVATO growth of 45.3% continues to be driven by increased physician and patient demand. As Joaquin mentioned, SPRAVATO has exceeded $1 billion in annual sales for the first time. Other Neuroscience decline was driven by the loss of a SPINRAZA tender in Europe. In Pulmonary Hypertension, OPSUMIT grew 2.5%, driven by market growth and share gains, partially offset by inventory dynamics in the US and austerity measures in Europe. Starting in 2025, we will begin to report OPSYNVI, which is currently reported in the category Other Pulmonary Hypertension in OPSUMIT. UPTRAVI grew 12. 1%, driven by market growth, patient mix and share gains. Finally, XARELTO sales growth was driven by favorable patient mix. I'll now turn your attention to MedTech. Worldwide sales of $8.2 billion increased 7.6% both in the US and outside of the US. Acquisitions and |
3,486 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | attention to MedTech. Worldwide sales of $8.2 billion increased 7.6% both in the US and outside of the US. Acquisitions and divestitures had a net positive impact of 300 basis points on worldwide growth, 430 basis points in the US and 150 basis points outside of the US. Overall, MedTech growth was driven by commercial execution and strength of new product introductions, partially offset by increased competitive PFA pressures in US electrophysiology and continued headwinds in Asia Pacific, primarily in China. In Cardiovascular, electrophysiology delivered growth of 7.3%. Performance was driven by global procedure growth, new product uptake and commercial execution, partially offset by competitive PFA ablation catheter uptake in the US and VBP in China. Despite the IV saline shortage in the US, Abiomed delivered growth of 13.2% driven by strong growth in all regions and continued adoption of Impella 5.5 and Impella RP technology. Cardiovascular results also included $258 million associated with the acquisition of Shockwave. Contact Lenses and Other grew 7.4%, driven by trade inventory dynamics, continued strategic price actions, strong performance in ACUVUE OASYS 1-Day family of products as well as lapping prior year impacts from Russia sanctions. Surgical Vision growth of 13.6% was driven by TECNIS PureSee & TECNIS Eyhance. Commercial execution partially offset by competitive pressures in the US. Orthopedics grew 2.5% inclusive of hips growth of 5.6%, primarily driven by the success of recent product launches and commercial execution, partially offset by revenue disruption from the previously announced orthopedics transformation, impacts of China VBP and competitive pressures. Lastly, Surgery grew 0.4% with the Acclarent divestiture negatively impacting results by approximately 130 basis points. Performance was driven primarily by commercial execution, strength of new products across wound closure and biosurgery and continued price adjustments primarily associated with hyperinflation consistent with market |
3,487 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | wound closure and biosurgery and continued price adjustments primarily associated with hyperinflation consistent with market practice. Growth was partially offset by competitive pressures in Energy and Endocutters as well as VBP and the anticorruption campaign in China. Now turning to our consolidated statement of earnings for the fourth quarter of 2024. I'd like to highlight a few noteworthy items that have changed compared to the same quarter of last year. We continue to invest strategically in research and development at competitive levels to fortify our future, investing $5.3 billion or nearly 24% of sales, which includes $540 million of acquired IPR&D expense associated with the V-Wave acquisition. Selling, marketing and administrative expense as a percent of sales deleveraged 150 basis points driven by increased commercial investment in the Innovative Medicine business. Interest income and expense was a net income of $144 million as compared to $212 million of income last year driven by lower interest rates earned on a lower average cash balance and higher interest rates on a higher average debt balance. Other income and expense was a net income of $161 million compared to $421 million of income in the prior year. This was primarily driven by lower gains on securities, a lower benefit related to employee benefit programs due to the discount rate, partially offset by lower litigation expense in 2024. Regarding taxes in the quarter, our effective tax rate was 11.7% versus 14.4% in the same period last year. This decrease was primarily driven by post-acquisition integration efforts that allowed the company to deduct certain acquisition costs for tax purposes as well as the resolution of prior tax matters both in jurisdictions outside of the US. Excluding special items, the effective tax rate was 8.8% versus 10.8% in the same period last year. I encourage you to review our upcoming 2024 10-K filing for additional details on specific tax related matters. Lastly, I'll direct your attention to the box section of |
3,488 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | 10-K filing for additional details on specific tax related matters. Lastly, I'll direct your attention to the box section of the slide, where we have also provided our income before tax, net earnings and earnings per share adjusted to exclude the impact of intangible, amortization expense and special items. Now let's look at adjusted income before tax by segment for the quarter. Innovative Medicine margin declined from 37.4% to 32.5% primarily driven by strategic commercial investment and R&D pipeline advancement. MedTech margin declined from 15.5% to 10. 8% primarily driven by acquired IPR&D expense related to the V-Wave acquisition. Please note that the MedTech margin was negatively impacted in both years due to expenses associated with the strategic acquisition of Laminar. When adjusting for these one-time items, MedTech margin was relatively flat. As a result, adjusted income before tax for the enterprise as a percentage of sales decreased from 29.2% to 24.1% with the V-Wave acquired IPR&D expense impacting results by 240 basis points. When looking at the full year, Innovative Medicine, MedTech and the Enterprise adjusted income before tax remained relatively flat year-over-year when adjusting for the one-time items highlighted on the slide, mainly acquired IPR&D expenses on various transactions across both years. This concludes the sales and earnings portion of the call. I am now pleased to turn it over to Joe. |
3,489 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | Joseph Wolk: Thank you, Jessica, and thanks everyone for joining us today. As you've heard already, we delivered solid overall fourth quarter and full year results in 2024, above the operational guidance we set at the beginning of the year when excluding acquisition costs we incurred to fortify our business for the future. We are particularly pleased with advancements made throughout the year, strengthening our pipeline, achieving key milestones across core therapeutic areas and platforms. We continue to prioritize investment and innovation, forge strategic partnerships that further enhance our differentiated business and focus on improving margins positioning the company for near and long-term growth. Additionally, we've made progress toward resolving the talc litigation. As many of you are aware, our prepackaged bankruptcy plan received overwhelming support from current claimants and the futures claims representative and that support has only increased in recent months. The next milestone is the scheduled confirmation hearing commencing on February 18th in the Southern District of Texas Bankruptcy Court. Now let's get into the numbers, starting with cash and capital allocation. We ended 2024 with approximately $25 billion of cash and marketable securities and approximately $37 billion of debt for a net debt position of approximately $12 billion. Our focus on cash flow resulted in the company delivering approximately $20 billion of free cash flow during 2024, $1.6 billion more than in 2023, despite having higher litigation settlement payments during 2024, higher TCJA toll tax and eight months of contribution from Consumer Health in 2023. Our ability to strategically invest and deploy capital that unlocks value has made Johnson & Johnson successful in the past and will be as important for our success moving forward. We evaluate strong credit rating, which underscores the strength of Johnson & Johnson's financial discipline and enables us to execute against our capital allocation priorities. In Research and |
3,490 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | Johnson & Johnson's financial discipline and enables us to execute against our capital allocation priorities. In Research and Development, we invested more than $17 billion or 19.4% of sales. We remain one of the top investors in R&D across all industries. 2024 marked the 62nd consecutive year of dividend increases. We know this use of capital is a priority for our investors and we plan to continue to increase our dividend annually. We also deployed, announced or committed to over $32 billion in strategic value-creating inorganic growth opportunities in the last 12 months. This amount includes larger transactions such as Shockwave, Proteologix, the NM26 bispecific antibody, V-Wave, the planned acquisition of Intra-Cellular Therapies as well as more than 40 smaller early-stage collaborations and partnerships to complement our businesses that are much more common for us than larger transactions. As we look ahead to 2025, we will maintain a heightened focus on cash flow generation to build on our strong financial foundation and judiciously deploy capital on behalf of shareholders to create value. Let's now discuss our full year guidance for 2025. It is important to note that guidance at this time excludes the impact from the planned acquisition of Intra-Cellular Therapies, but I will provide some comments on that transaction in a few moments. We anticipate operational sales in the range of 2.5% to 3.5% with a midpoint of $91.3 billion or 3.0% in line with the expectations outlined at our late 2023 enterprise business review as Joaquin noted. Acquisitions and divestitures are expected to favorably impact operational growth by approximately 50 basis points resulting in an adjusted operational sales growth midpoint of 2.5%. Sales growth across our innovative medicine businesses will be driven by our proven assets such as DARZALEX, ERLEADA and SPRAVATO. Our recently launched products, CARVYKTI, TECVAYLI and TALVEY and our new launches of TREMFYA in IBD and RYBREVANT plus LAZCLUZE in lung cancer. The strength of our |
3,491 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | TECVAYLI and TALVEY and our new launches of TREMFYA in IBD and RYBREVANT plus LAZCLUZE in lung cancer. The strength of our portfolio enables Innovative Medicine to grow despite the expanded STELARA biosimilar competition and approximately $2 billion negative impact from Part D redesign. MedTech sales growth will be driven by our recent acquisitions, Shockwave and Abiomed as well as continued uptake of our recently launched products such as VARIPULSE, TECNIS Odyssey, ACUVUE OASYS MAX, the VELYS portfolio of enabling technology and our barbed suture and hemostat portfolio. We continue to expect China to remain a headwind through 2025. Regarding VARIPULSE in the US, we are working diligently to complete our investigation and we'll provide an update when we have additional information to share. As a reminder, there is no impact to commercial activity to VARIPULSE outside of the United States. As you know, we don't speculate on future currency movements. For today's call, we are utilizing yesterday's euro spot rate relative to the US dollar of 1.04 significantly below last quarter's euro spot rate of $1.10. This results in an estimated unfavorable foreign currency impact on sales of $1.7 billion or 2.0%, as such, we estimate reported 2025 sales of $89.6 billion or 1% growth at the midpoint. Turning to other items on the P&L. Despite STELARA biosimilar competition and the impact of Part D redesign, we expect our 2025 adjusted pre-tax operating margins to increase by approximately 300 basis points of which approximately half is driven by operating spend management and the remainder from reduced acquired IPR&D expense. This is about 50 basis points better than we discussed on the Q3 earnings call in October. We anticipate net other income to be $900 million to $1.1 billion for 2025. The reduction versus last year is primarily driven by a lower benefit related to employee benefit programs based on discount rate assumptions, the nonrecurring monetization of royalty rights in 2024 and no longer receiving a Kenvue dividend. |
3,492 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | discount rate assumptions, the nonrecurring monetization of royalty rights in 2024 and no longer receiving a Kenvue dividend. Due to higher debt incurred associated with 2024 acquisitions and the reduction in interest rates earned on cash, we expect net interest income between zero and $100 million. Finally, we are projecting an effective tax rate for 2025 in the range of 16.5% to 17.0% based on current tax laws and our anticipated geographic income mix across our businesses. Given all these factors, we expect adjusted operational earnings per share to grow 8.7% at the midpoint for a range of $10.75 to $10.95. While not predicting the impact of currency movements, utilizing the recent exchange rate previously referenced, our reported adjusted earnings per share for the year now estimates a full year negative impact of $0.25. As such, we expect reported adjusted earnings per share of $10.60 at the midpoint. When adjusting for this impact, it becomes clear that our operational EPS performance is considerably stronger than consensus assumed as only about half the analysts incorporated the impact of foreign currency into their models. A few initial considerations outlined on this chart regarding the planned acquisition of Intra-Cellular Therapies, a transaction we plan to finance mainly with debt. We are not planning for material near-term cost synergies. Rather, we expect to accelerate penetration of CAPLYTA in existing markets, explore additional geographies to commercialize the portfolio and potentially accelerate research and development to expand into new indications and disease areas where high unmet need exists. Given this and assuming a close subject to regulatory review early in the second quarter, we anticipate an acceleration of our sales growth of approximately 80 basis points. Inclusive of the impact of financing cost, the transaction is expected to have a dilutive impact on adjusted EPS of approximately $0.30 to $0.35 in 2025. Again, these are very preliminary thoughts, which will be influenced by when |
3,493 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | EPS of approximately $0.30 to $0.35 in 2025. Again, these are very preliminary thoughts, which will be influenced by when the transaction closes and borrowing rates. We will be sure to provide an update to our full year guidance shortly after the acquisition is complete. I'll now provide some qualitative considerations on the phasing of notable events for your modeling. We expect both Innovative Medicine and MedTech operational sales growth to be higher in the second half of the year versus the first half. Regarding Innovative Medicine, we anticipate STELARA biosimilar competition to accelerate throughout the year as the number of biosimilar entrants increase. HUMIRA's erosion curve, once faced with material biosimilar competition continues to be the best proxy for STELARA erosion with the additive impact of Part D redesign. The impact of Part D redesign as a percent of sales will be consistently applied throughout the year. We expect a more pronounced benefit from our newly launched products as we progress throughout 2025 to counter these headwinds. In MedTech, for the first half of the year and more prominently in Q1, we faced tougher year-over-year comparisons, excluding the positive impact associated with the Shockwave acquisition. We anticipate acceleration of our newly launched products to build throughout the year. As we've said before, we continue to expect normalized procedure volume and seasonality. Regarding the P&L, it is important to consider one-time items that impacted our EPS results in 2024. Specifically, the benefit of Kenvue dividend in the first two quarters of 2024 is not repeating. Higher interest income prior to the Shockwave acquisition closure in May, the monetization of royalty rights recorded in Q3 and IPR&D expense associated with the NM26 bispecific antibody in Q3 and V-Wave acquisition in Q4. Given these factors and aligned with sales, we expect higher earnings per share growth in the second half of the year versus the first half. Moving to the discussion beyond financial |
3,494 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | earnings per share growth in the second half of the year versus the first half. Moving to the discussion beyond financial commitments. We are excited for the pipeline progress planned for 2025. In Innovative Medicine, this includes expected approvals for TREMFYA subcutaneous for Crohn's disease, nipocalimab for generalized myasthenia gravis and subcutaneous RYBREVANT for non-small cell lung cancer. We expect to file for regulatory approval of TAR-200 in non-muscle invasive bladder cancer, and Icotrokinra in psoriasis and planned data readouts for RYBREVANT lung cancer overall survival as well as data in head and neck and colorectal cancer and Icotrokinra in ulcerative colitis as well as head-to-head data versus TYK2 in psoriasis. In MedTech, building upon the 15 major product launches in 2024, we anticipate a submission to the FDA for Impella ECP regulatory approval, continued progress on our OTTAVA robotic surgical system and advancements across our cardiovascular portfolio, including electrophysiology, heart recovery and circulatory restoration. So to summarize, we are well positioned to tackle the challenges in 2025, continue to advance our pipeline, deliver on our financial commitments and create long-term sustainable value for shareholders. Our success is the result of the hard work and dedication of our colleagues who share a sincere passion to successfully serve patients around the world. We are extremely grateful for their efforts. With that, we are happy to take your questions. So I will now turn it to Kevin to provide instructions for those seeking to participate in the Q&A. |
3,495 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from Terence Flynn from Morgan Stanley. Your line is now live.
Terence Flynn: Great. Thanks so much for taking the questions. Appreciate it. Obviously, myeloma franchise is a very important growth driver as we think about history, but also 2025. So just wondering if you can kind of frame for us how you're thinking about that, both from the bispecifics as well as CAR-T and maybe a broadening into the community setting and the pace of growth here as we think about the ramp in '25? Thank you. |
3,496 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | Jennifer Taubert: Great. Well, good morning, Terence, and hello, everybody. I'd like to start by thanking all of our Innovative Medicine colleagues around the world for a very strong quarter. This was our third quarter with sales over $14 billion with 10 key brands achieving double-digit growth and Terence I will come back to that. That includes brands like DARZALEX, CARVYKTI, TALVEY and TECVAYLI as well as ones such as ERLEADA, SPRAVATO and UPTRAVI. We're making really nice progress on our launches, including TREMFYA in ulcerative colitis and RYBREVANT plus LAZCLUZE in non-small cell lung cancer. And just an important note, we hit our $57 billion target this year, a year early. For those that were here back at our enterprise review, we had made that commitment to hit the $57 billion by 2025 and we cleared that goal this year in 2024. So multiple myeloma is really an extraordinary franchise for us. And maybe I will start with DARZALEX because our quarter was over $3 billion. It was $3.1 billion and 22% growth and we continue to really build out share across the frontline settings in both transplant eligible and ineligible patients and in triplet and quad regimens. And so we're performing very well for DARZALEX and anticipate that to continue. And in fact, with DARZALEX, it's our first brand to hit $3 billion in quarterly sales. So important to note that milestone too. CARVYKTI had a really, really robust quarter as well as year nearing $1 billion for the year, $963 million as we continue to see very strong demand in that second-line plus setting as well as very strong capacity expansion in the US, in Europe and also with a contract manufacturer. And so we've talked before about that being more of a stair step rather than a direct linear line and it is performing very, very well and we're seeing nice continued expansion in the first quarter of this year that will also continue throughout the year. For TEC and TAL both products did well. We report sales, we break out sales on TEC. We don't yet on TAL. Both of |
3,497 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | the year. For TEC and TAL both products did well. We report sales, we break out sales on TEC. We don't yet on TAL. Both of these agents are best-in-class bispecifics. They're performing very well from a competitive share standpoint. We've got them nicely being utilized in the academic setting and we're working that out into more of the community setting, which will be important for their continued growth and uptake. So in total, multiple myeloma really is a stronghold for us and we're not stopping there. Because of the strength that we have, the assets that we have, we're also working on multiple additional types of combinations. John, maybe you want to address what we're doing with the bispecifics specifically. |
3,498 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | John Reed: Yes. Thank you, Jennifer. Maybe before I jump in, I'll follow your lead and just offer my appreciation and thanks to our colleagues in Innovation Medicine R&D. We had a heck of a year for the pipeline, 27 approvals, 49 submissions, 15 out of 17 positive Phase IIIs, more than 90% success rate. 9 out of 12 POCs came in positive, exceeding the industry benchmarks by approximately double, 10 first-in-humans, 10 new NMEs added to the pipeline from internal research at a price point well below the industry median and quite an impressive year on the BD front with five bolt-on acquisitions and six new molecules added to the pipeline. So my congratulations to the team. Now on the point around our broad portfolio of myeloma medicines, this is where we are now bringing them together to reinvent the next frontline therapies. And if you were at the ASH Congress, the American Society of Hematology, you saw some of the early tantalizing data where in early lines of therapy front, first, second line of myeloma, we're bringing DARA together with either TEC or TAL and we've been getting 100% minimal residual disease negativity, MRD negativity, showing the impressive potential of these new combinations. Mind you, last year, the FDA declared MD or minimal residual disease negativity or MRD as a surrogate endpoint within myeloma that could form the basis for accelerated approvals. So we're really excited about bringing these into earlier lines. And then I would also remind you with CARVYKTI, we are now doing studies in frontline transplant eligible and ineligible and asking whether we can replace autologous stem cell transplant with our CAR-T therapy as a new opportunity there to break through with unprecedented outcomes for patients. CARVYKTI, of course, already is the go-to regimen in the second line setting, the only CAR-T for myeloma approved in that setting. And last year, we reported overall survival data for CARVYKTI in a randomized setting with an impressive hazard ratio of 0.55. So really feel great about |
3,499 | JNJ | 4 | 2,024 | 2025-01-22 08:00:00 | Johnson & Johnson | 139,677 | overall survival data for CARVYKTI in a randomized setting with an impressive hazard ratio of 0.55. So really feel great about bringing CARVYKTI into earlier lines of therapy as well. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.