Intel Corporation Q3 FY2022 Earnings Call

· Earnings call transcript and AI-powered summary

Overall Performance and Market Context

  • Q3 revenue was $15.3 billion, flat sequentially and slightly below guidance. This compares to $19.2 billion in Q3 2021 (a decline of roughly 20%).
  • Gross margin was 46%, down from 56% in Q3 2021 but up 1 percentage point sequentially.
  • EPS was $0.59, significantly lower than $1.71 in Q3 2021, but above the company’s own Q3 2022 guidance due to lower taxes.
  • Intel warns macroeconomic conditions remain challenging into 2023, with persistent demand weakness across PCs, enterprise, and cloud.
  • Adjusted free cash flow was negative $6.3 billion, compared to negative $6.4 billion in the prior quarter, pressured by net CapEx of $7.3 billion.

Business Unit Performance

Client Computing Group (CCG)
  • Revenue: $8.1 billion, down 17% year-over-year but up 6% sequentially.
  • Operating profit: $1.7 billion, down 54% year-over-year.
  • Intel confirms continued PC TAM decline and weaker consumer/education segments, but reports sequential share gains driven by Alder Lake and Raptor Lake.
Data Center and AI (DCAI)
  • Revenue: $4.2 billion, down 27% year-over-year due to lower TAM and competitive pressure.
  • Operating profit: $17 million, down sharply from prior periods.
  • Sapphire Rapids has PRQ’d; Intel expects fastest-ever ramp to one million units once full production volume begins.

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Operator: Thank you for standing by, and welcome to Intel's Third Quarter 2022 Earnings Conference 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, John Pitzer, Corporate Vice President of Investor Relations. Please go ahead, sir. John Pitzer: Thank you, operator. By now, you should have received a copy of the Q3 earnings release and earnings presentation, both of which are available on our investor 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 contains forward-looking statements based on the environment as we currently see it. As such, it does involve risks and uncertainties. Our press release provides more information on the specific risk factors that could cause actual results to differ materially. We have also provided both GAAP and non-GAAP financial measures this quarter, and we will be speaking to the non-GAAP financial measures when describing our consolidated results. The earnings release and earnings presentation include full GAAP and non-GAAP reconciliations. With that, let me turn things over to Pat. Patrick Gelsinger: Thank you, John, and good afternoon, everyone. Despite growing economic headwinds,

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