Intel Corporation Q1 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q1 revenue reached $11.7B, about $700M above midpoint guidance. This is still down compared to prior-year periods but ahead of expectations.
  • Gross margin was 38.4%, down year-over-year and slightly below guidance, mainly due to higher inventory reserves and 300 bps factory underload charges.
  • EPS was -$0.04, outperforming guidance by $0.11; reflects strong expense discipline.
  • Operating cash flow was -$1.8B, with net CapEx at $7B, leading to adjusted free cash flow of -$8.8B.
  • Intel remains cautious on macroeconomic conditions but expects gradual improvements in the second half of 2023.

Business Environment and Market Conditions

  • PC market: inventory correction progressing as planned. Intel undersold consumption by ~20% in Q1 and expects normalization exiting Q2. Full-year PC TAM expectation remains 270M units (sell-through), compared to 240M–250M units sell-in expected by analysts.
  • Server and networking markets: still declining; continued softness expected in the first half. Some early strength seen in AI-related demand and China market “green shoots.”
  • Industrial, automotive and infrastructure markets remain relatively stronger.
  • Intel expects revenue to increase sequentially through 2023, with a modest recovery in the second half.

Business Unit Performance

Client Computing Group (CCG)

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Operator: Thank you for standing by, and welcome to Intel Corporation's First Quarter 2023 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. [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. Please go ahead, sir. 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 references to non-GAAP financial measures that we believe provide useful information to our investors. Our earnings release, most recent Annual Report in Form 10-K, and other filings with the SEC, provide more information on the specific risk factors that could cause actual results to differ materially from our expectations. They also provide additio

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