Thanks, Mark. This summer we celebrated our 50th anniversary, and this quarter was the best quarter in our 50-year history. Record quarterly revenue of $19.2 billion was up 19%. Our operating margins expanded 5 points, and earnings per share of $1.40 was up 39%. Our results were driven by incredibly strong demand and customer preference for the performance of our leadership products across the business. Our Data Center, Client Computing, Internet of Things, Memory, and Mobileye businesses all achieved record revenue. We expect 2018 to be the best year ever and our third record year in a row. Before we get deeper into the financials, I'll take a few minutes to talk about our strategy, our products, and our people, first our strategy.
We are growing share in a larger TAM, driving operating leverage while increasing our R&D investments, and delivering attractive capital returns. Our thesis is that the massive growth of data worldwide will increase demand for the analysis, storage, and sharing of data. We are one of the few companies that touches every part of the data revolution, and we've invested both organically and acquisitively to capitalize on these trends to accelerate the growth of the company, while at the same time delivering significant operating leverage and exiting non-core businesses. Our disciplined focus is delivering outstanding results. Demand and growth this year continued to exceed our expectations. Collectively, our data-centric businesses are up 22% year to date, led by growth in the cloud and communication service provider segments. In both our data-centric and PC businesses, our CPU leadership puts us in a great position to capitalize on this massive data opportunity by delivering more value to a broader set of customers.
We've expanded beyond CPUs with memory, modems, FPGAs, and silicon for emerging high-growth workloads like ADAS, artificial intelligence, and 5G communications. We acquired Mobileye, which has integrated Intel architecture to produce the industry's leading ADAS and autonomous driving platforms. Mobileye also just announced the ability to fully retrofit existing vehicles to deliver full autonomy, moving Mobileye further up the value chain. The acquisitions of Altera and Movidius are enabling us to partner with customers to expand the markets that they serve. They are developing new AI capabilities by combining our Core products with our FPGAs and VPUs. This is most evident in computer vision applications, which cut across all of our IoT verticals. As a result, our opportunity has never been bigger.
We are competing and winning share in a $300 billion TAM, transforming from a PC-centric company to a data-centric company in the process. We now expect full-year revenue to grow more than $8.4 billion over 2017. And in the first nine months of the year, we have returned $12.6 billion to shareholders in the form of buybacks and dividends, or 112% of free cash flow. We've also achieved outstanding growth in our PC-centric business. After seven years of decline, we expect modest growth in the PC TAM this year, and we continue to gain share in modems. We focused our investments in the PC sector on the areas where we see growth and where our performance leadership and differentiation matters most, the commercial, gaming, and 2-in-1 segments.
Second, our products, our strategy is delivering results because we have products that are solving our customers' problems. We're making the products we have even better and expanding our portfolio to deliver more value to customers. One of the most important things we do is collaborate with our customers and ecosystem partners to deliver exciting new computing experiences. We do that broadly with our OEMs. An example in our PC business was the launch of the stunning new HP Spectre Folio, a 2-in-1 we worked closely with HP to develop. We leveraged our expertise in thermal tuning and motherboard miniaturization while achieving up to 19 hours battery life through power tuning and the use of Intel's low-power display technology. This sort of innovation isn't possible without Intel's exceptionally broad range of IP and the scale and expertise to partner deeply with our customers on design. We also launched the new 9th gen Intel Core desktop processors, including the world's best gaming processor. In our data-centric businesses, we announced 95 new performance world records for Xeon Scalable and continue to see strong adoption while we work with customers to get ready for the transition to Cascade Lake. Cascade Lake introduces hardware-based side channel mitigation, Intel DL Boost with 11x inference speed-up, and a revolutionary new technology, Optane DC Persistent Memory. And we're deepening our engagement with customers on custom SKUs. In fact, we'll have 60% more custom SKUs in the Cascade Lake family than the prior generation. We shipped our first revenue units of Optane DC Persistent Memory to Google, Microsoft, and Alibaba, and we're already receiving great feedback. Microsoft reported a new performance record of 13.7 million IOPS using Xeon Scalable and Optane, a level they said they've never seen with any other platform approach.
Customers also continue to choose Intel as a partner as they use artificial intelligence to transform their businesses. Taboola chose Intel Xeon over GPUs for a massive inference speedup and scale-out across seven data centers, delivering 360 billion content recommendations monthly. Rolls-Royce will design autonomous ships running inference on Xeon and are evaluating more of our portfolio in a multiyear engagement. Mobileye customer momentum continued, with eight new design wins at major U.S. and global automakers, bringing our 2018 design win total to 20. Mobileye also shipped 3.3 million EyeQ SOCs in the third quarter, bringing the lifetime total to more than 33 million units. While our current product lineup is compelling, our roadmap is even more exciting. We continue to make good progress on 10-nanometer. Yields are improving, and we're on track for 10-nanometer-based systems on shelves during the holiday 2019 selling season. The breadth of IP we've assembled combined with Intel's design, software, packaging, and manufacturing capability, gives us an unmatched ability to invent the industry's future. Third and most importantly, our people, Intel has amazing talent, including world-class scientists and engineers, and we are making excellent progress toward our commitment to a fully representative workforce. Intel employees are at their best when they're working together to address challenges. And faced with explosive and unexpected demand this year, they've exhibited incredible problem-solving skills to deliver this quarter's results. The PC TAM has returned to growth, and our Data Center business is growing at more than twice the rate we expected in January. Our full-year revenue outlook is now more than $6 billion higher than our January forecast, and we have supply to support this revised guidance thanks to outstanding responsiveness from our factory teams. We are focused on doing everything possible not to constrain our customers' growth. We've increased our CapEx by $1.5 billion since January to a record $15.5 billion. We've repositioned some 10-nanometer capacity to 14-nanometer, and we're making progress with our 10-nanometer process technology. Supply is tightest at the entry level of the PC market and in our IOTG business. Within our CPU product lines, we're prioritizing the production of our Xeon and Core processors so that we and our customers can serve the high-performance segments of the market. Our biggest challenge in Q4 will be meeting any additional PC and IOTG demand beyond our guidance, and we do expect fourth quarter upside from here will be limited. Summing it up, our strategy, leadership products, and amazing people combined to produce the best quarter in the company's history. We're well on track to another record year. With that, let's turn to the details.
Third quarter revenue of $19.2 billion was up 19% year over year. Our data-centric businesses were collectively up 22% and our PC-centric business was up 16%. Outstanding business performance, continued operating leverage, and a lower tax rate resulted in non-GAAP net income of $6.5 billion, up 34% year over year. EPS of $1.40 was up 39% year over year.
Year to date, we have generated $11.2 billion of free cash flow and returned $12.6 billion to shareholders, including $4.2 billion in dividends and $8.5 billion in buybacks, repurchasing 167 million shares. We continue to see strong momentum in our business and are raising our full-year revenue guide by $1.7 billion to $71.2 billion. We are also raising our EPS guide by $0.38 versus July to $4.53 and our free cash flow guide by $500 million to $15.5 billion. Our revenue guidance for 2018 is up greater than $6 billion versus our January expectations, as we focus on a strong finish to a record year.
Our leadership products continue to win share in our expanded TAM, as both our data-centric and PC-centric businesses grew at double-digit rates this quarter. Our data-centric businesses were up 22%, as customers choose our performance products to move, store, and process more data faster from the cloud to the edge. And our PC-centric business was up 16%, as we saw continued strength in the commercial and gaming PC segments and grew modem share. Operating income increased by more than $2 billion, with margin up 5.1 points year over year in the third quarter, marking our highest operating margin percentage since 2011. EPS climbed to $1.40, up 39% year on year. Our EPS improvement was driven by growing demand for high-performance products in the Data Center and Client businesses, leading to higher volumes and ASPs, continued growth in our adjacent businesses, a lower tax rate, and lower share count as a result of buybacks. Our focus on operational efficiency continues to produce strong results.
We now expect full-year spending as a percentage of revenue to be approximately 29%, down about 7 points since 2015, while R&D is up $1.4 billion over the same period. We continue to improve our leverage while increasing investment in our key priorities, such as product leadership, artificial intelligence, and autonomous driving. Disciplined spending with a focus on prioritizing the most important investment opportunities is a key lever in magnifying our revenue opportunities, and it's apparent in our results. Over the last three years, we've grown annual revenue by nearly $16 billion while adding less than $600 million in spending, resulting in a more than 25% increase in revenue per employee. Now some Q3 performance highlights by segment, the Data Center Group delivered its first $6 billion revenue quarter, as it shipped more than 8 million CPUs into an annual server, storage, and network and CPU TAM that is greater than 30 million units.
Revenue of $6.1 billion was up 26% year over year, and operating income of $3.1 billion was up 37% year over year. Q3 operating margin was 50%, and we continued to see strong acceleration in both the cloud and comm service providers segments, which make up more than two-thirds of DCG revenue. Platform unit volume was up 15% and ASPs were up 10%. Non-CPU adjacencies grew 14% over last year. The cloud business grew 50% year over year, with strong growth trends across our diversified customer base. Our comm service provider segment grew 30% year over year, as customers continued to transform their networks with Intel architecture as they prepare for 5G. And our enterprise segment was up 1% year over year, as the strong IT spending environment continued, with CIOs prioritizing investment in private and hybrid cloud implementations. Our other data-centric businesses, IOTG, NSG, and PSG, achieved solid growth in the third quarter, and together were up 13% year over year or 17% excluding Wind River. Our Internet of Things business achieved record revenue of $919 million on broad business strength, up 8% or 19% excluding Wind River. Operating profit was $321 million, up 120% year over year, on growing demand and revenue scale. Mobileye had record revenue of $191 million, up approximately 50% over last year, as ADAS adoption continues to accelerate. Our Memory business delivered record revenue of $1.1 billion, up 21% year over year, as we continued to redefine the storage paradigm with industry-leading, low-cost, high-density NAND SSDs and the revolutionary performance of Optane drives. We have now reached a crossover point, with 50% of our data center and client SSDs shifted to cost-effective 64-layer 3D NAND, leading to rapidly improving cost per gigabyte. At the same time, as a result of pursuing 3D XPoint development independently and a tougher NAND pricing environment, we now expect NSG to be approximately breakeven for the full year.
Micron recently announced their intent to call the IMFT factory. Our agreements with Micron ensure a reliable and cost-effective supply of 3D XPoint through at least 2020. And we have developed internal manufacturing options which can be executed well within that timeframe.
PSG's revenue came in at $496 million, up 6% on strength in data center and comm segments. PSG's data center segment was up 45% over last year. In the advanced products category, our 28-nanometer, 20-nanometer, and 14-nanometer solutions grew 55%.
Operating profit was $106 million, down 6% year over year. Finally, the Client Computing Group delivered exceptional results with its first $10 billion quarter, up 16% year over year. Commercial and gaming demand continued to be very strong. The notebook segment grew 13% year over year. The desktop segment grew 9% year over year. And client adjacencies grew 66% year over year, led by the 131% growth in our modem business. Operating profit grew $932 million year over year, while operating margin up 3.7 points.
Leadership product performance and segmentation contributed to strong mix and higher ASPs. The investments we have made in the business organically and through acquisition are delivering excellent cash flow generation. Year to date, we have generated $22.5 billion in cash from operations. We have invested $11.3 billion in capital expenditures and delivered $11.2 billion in free cash flow, up 57% over the first three quarters of last year. During this period, we returned 112% of our free cash flow to our shareholders. Buybacks totaled $8.5 billion and dividends totaled $4.2 billion. In addition, settlements of our convertible debt reduced fully diluted shares by 22 million. Now turning to our full-year outlook, we started the year in January expecting to generate $65 billion in revenue, 30% operating margin, and $3.55 in EPS.
Nine months later, the growth that we and the industry have seen has been remarkable. We couldn't be more pleased that in an increasingly competitive market, our customers are choosing Intel. Our leadership products are winning across our data-centric businesses, and we're seeing strong demand upside in the client business that not long ago many thought was in perpetual decline. We are now forecasting revenue of approximately $71.2 billion, up $1.7 billion versus our expectations in July. This represents a $6.2 billion increase versus the expectations we set just nine months ago.
We now expect data-centric growth to be approximately 20% year over year and PC-centric growth to be around 9% year over year. Our outlook for operating margin is approximately 34.5%, up 2.5 points from July, as we now expect to deliver 29% spending to revenue, not only hitting our original goal two years early but beating it. We expect a full-year tax rate of around 12%, down slightly from our prior estimate. Overall, we expect strong top line growth and improving operating leverage will drive EPS to $4.53, up $0.38 from our estimate in July.
As a result of increased demand, we are raising our forecast for gross CapEx to $15.5 billion, or approximately $14 billion net of memory prepayments. We are now expecting free cash flow of $15.5 billion, up $500 million from July. For Q4, we are forecasting revenue of approximately $19 billion, up 11% year over year. We expect operating margin of approximately 34.5% and gross margin of approximately 62%. We also expect EPS at $1.22, up 38% excluding equity adjustments from business growth, spending leverage, and a lower tax rate. We expect DCG to set another revenue record of approximately $6.3 billion in the fourth quarter. Due to supply constraints, we anticipate IOTG revenue will be down approximately 15% sequentially. As we look forward to 2019, we expect to deliver another record year for the company. We'll have more to say about 2019 in January, but we're expecting that our operating margin percentage will be approximately flat next year.
We expect gross margins to remain in the upper half of our historical 55% to 65% range. While we expect 2019 gross margin percentage to be down slightly from Q4 2018 levels as we continue to gain share in our adjacent businesses and we ramp our 10-nanometer process, that will be offset by increasing OpEx leverage as we continue to make thoughtful trade-offs and invest in R&D that will accelerate our growth and profitability. And we expect the full-year tax rate to be up a couple points following several beneficial discrete events in 2018. Five years ago, we set out to transform Intel from a PC-centric company to a data-centric company. Today, our strategy, our products, and our people are delivering on that ambition, with strong growth, record results, and the largest TAM opportunity in the company's history, and we're just getting started. With that, let me turn it back over to Mark, and we'll get to your questions. Thank you.