IBM RELEASES SECOND-QUARTER RESULTS
PRNewswire 24-Jul-2024 4:08 PM
Accelerated revenue growth led by Software; Raises full-year free cash flow expectation
ARMONK, N.Y., July 24, 2024 /PRNewswire/ -- IBM (NYSE:IBM) today announced second-quarter 2024 earnings results.
"We had a strong second quarter, exceeding our expectations, driven by growth in both revenue and free cash flow. We continue to see that clients turn to IBM for our technology and our expertise in enterprise AI, and our book of business for generative AI has grown to more than two billion dollars since the launch of watsonx one year ago," said Arvind Krishna, IBM chairman and chief executive officer. "Given our first-half results, we are raising our full-year view of free cash flow, which we now expect to be more than $12 billion."
Second-Quarter Highlights
- Revenue
- Revenue of $15.8 billion, up 2 percent, up 4 percent at constant currency
- Software revenue up 7 percent, up 8 percent at constant currency
- Consulting revenue down 1 percent, up 2 percent at constant currency
- Infrastructure revenue up 1 percent, up 3 percent at constant currency - Profit Margin
- Gross Profit Margin: GAAP: 56.8 percent, up 180 basis points; Operating (Non-GAAP): 57.8 percent, up 190 basis points
- Pre-Tax Income Margin: GAAP: 14.1 percent, up 110 basis points; Operating (Non-GAAP): 17.7 percent, up 220 basis points - Cash Flow
- Year to date, net cash from operating activities of $6.2 billion, down $0.2 billion; free cash flow of $4.5 billion, up $1.1 billion
- Over the last twelve months, net cash from operating activities of $13.8 billion; free cash flow of $12.3 billion
SECOND QUARTER 2024 INCOME STATEMENT SUMMARY
|
| Revenue
|
| Gross
Profit
|
|
| Gross
Profit
Margin
|
|
| Pre-tax
Income
|
| Pre-tax
Income
Margin
|
| Net
Income
|
| Diluted
Earnings
Per Share
|
GAAP from
Continuing
Operations
| $ 15.8 B
|
|
| $ 8.9 B
|
|
| 56.8
| %
|
| $ 2.2 B
|
|
| 14.1
| %
|
| $ 1.8 B
|
|
| $ 1.96
|
|
Year/Year
| 2
| %(1)
|
| 5
| %
|
| 1.8
| Pts
|
| 11
| %
|
| 1.1
| Pts
|
| 16
| %
|
| 14
| %
|
Operating
(Non-GAAP)
|
|
|
| $ 9.1 B
|
|
| 57.8
| %
|
| $ 2.8 B
|
|
| 17.7
| %
|
| $ 2.3 B
|
|
| $ 2.43
|
|
Year/Year
|
|
|
| 5
| %
|
| 1.9
| Pts
|
| 17
| %
|
| 2.2
| Pts
|
| 14
| %
|
| 11
| %
|
(1) 4% at constant currency.
|
"In the quarter, we accelerated our revenue growth as we continue to execute well on our strategy. Our business fundamentals, operating leverage, product mix and productivity initiatives all contributed to significant margin expansion and increased profit and free cash flow," said James Kavanaugh, IBM senior vice president and chief financial officer. "Our strong cash generation enables us to continue investing in innovation and expertise across the portfolio, while returning value to shareholders through dividends."
Segment Results for Second Quarter
- Software — revenues of $6.7 billion, up 7.1 percent, up 8.4 percent at constant currency:
- Hybrid Platform & Solutions up 5 percent, up 6 percent at constant currency:
-- Red Hat up 7 percent, up 8 percent at constant currency
-- Automation up 15 percent, up 16 percent at constant currency
-- Data & AI down 3 percent, down 2 percent at constant currency
-- Security up 2 percent, up 3 percent at constant currency
- Transaction Processing up 11 percent, up 13 percent at constant currency
- Consulting — revenues of $5.2 billion, down 0.9 percent, up 1.8 percent at constant currency:
- Business Transformation up 3 percent, up 6 percent at constant currency
- Technology Consulting down 3 percent, up 1 percent at constant currency
- Application Operations down 4 percent, down 2 percent at constant currency
- Infrastructure — revenues of $3.6 billion, up 0.7 percent, up 2.7 percent at constant currency:
- Hybrid Infrastructure up 4 percent, up 6 percent at constant currency
-- IBM Z up 6 percent, up 8 percent at constant currency
-- Distributed Infrastructure up 3 percent, up 5 percent at constant currency
- Infrastructure Support down 5 percent, down 3 percent at constant currency
- Financing — revenues of $0.2 billion, down 8.3 percent, down 6.6 percent at constant currency
Cash Flow and Balance Sheet
In the second quarter, the company generated net cash from operating activities of $2.1 billion, down $0.6 billion year to year. IBM's free cash flow was $2.6 billion, up $0.5 billion year to year. The company returned $1.5 billion to shareholders in dividends in the second quarter.
For the first six months of the year, the company generated net cash from operating activities of $6.2 billion, down $0.2 billion year to year. IBM's free cash flow was $4.5 billion, up $1.1 billion year to year. Over the last twelve months, the company generated net cash from operating activities of $13.8 billion and free cash flow of $12.3 billion.
IBM ended the second quarter with $16.0 billion of cash, restricted cash and marketable securities, up $2.5 billion from year-end 2023. Debt, including IBM Financing debt of $11.1 billion, totaled $56.5 billion, flat year to date.
Full-Year 2024 Expectations
- Revenue: The company continues to expect constant currency revenue growth consistent with its mid-single digit model. At current foreign exchange rates, currency is expected to be about a one to two-point headwind to revenue growth
- Free cash flow: The company now expects more than $12 billion in free cash flow
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company's innovation initiatives; damage to the company's reputation; risks from investing in growth opportunities; failure of the company's intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company's ability to successfully manage acquisitions, alliances and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company's failure to meet growth and productivity objectives; ineffective internal controls; the company's use of accounting estimates; impairment of the company's goodwill or amortizable intangible assets; the company's ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity and data privacy considerations; adverse effects related to climate change and environmental matters; tax matters; legal proceedings and investigatory risks; the company's pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; potential failure of the separation of Kyndryl Holdings, Inc. to qualify for tax-free treatment; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company's Form 10-Qs, Form 10-K and in the company's other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference.
Statements in this communication regarding the strategic acquisition that are forward-looking may include projections as to closing date for the transaction, the extent of, and the time necessary to obtain, the regulatory approvals required for the transaction, the anticipated benefits of the transaction, the impact of the transaction on IBM's business, the synergies from the transaction, and the combined company's future operating results.
Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information, which management believes provides useful information to investors:
IBM results —
- adjusting for currency (i.e., at constant currency);
- presenting operating (non-GAAP) earnings per share amounts and related income statement items;
- free cash flow;
- net cash from operating activities excluding IBM Financing receivables;
- adjusted EBITDA.
The rationale for management's use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.
For generative AI, book of business includes Software transactional revenue, SaaS Annual Contract Value and Consulting signings.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. ET, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-2q24. Presentation charts will be available shortly before the Webcast.
Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).
Contact: IBM
Sarah Meron, 347-891-1770
sarah.meron@ibm.com
Tim Davidson, 914-844-7847
tfdavids@us.ibm.com
INTERNATIONAL BUSINESS MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Unaudited; Dollars in millions except per share amounts)
|
|
| Three Months Ended
June 30,
|
|
| Six Months Ended
June 30,
|
|
| 2024
|
|
| 2023 (1)
|
|
| 2024
|
|
| 2023 (1)
|
|
REVENUE BY SEGMENT
|
|
|
|
|
|
|
|
|
|
|
|
Software
| $ 6,739
|
|
| $ 6,294
|
|
| $ 12,637
|
|
| $ 11,885
|
|
Consulting
| 5,179
|
|
| 5,226
|
|
| 10,365
|
|
| 10,423
|
|
Infrastructure
| 3,645
|
|
| 3,618
|
|
| 6,721
|
|
| 6,716
|
|
Financing
| 169
|
|
| 185
|
|
| 362
|
|
| 380
|
|
Other
| 38
|
|
| 152
|
|
| 146
|
|
| 321
|
|
TOTAL REVENUE
| 15,770
|
|
| 15,475
|
|
| 30,231
|
|
| 29,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
| 8,950
|
|
| 8,501
|
|
| 16,692
|
|
| 16,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
Software
| 83.6
| %
|
| 82.1
| %
|
| 83.0
| %
|
| 82.3
| %
|
Consulting
| 26.3
| %
|
| 25.9
| %
|
| 25.8
| %
|
| 25.7
| %
|
Infrastructure
| 56.5
| %
|
| 56.0
| %
|
| 55.4
| %
|
| 54.1
| %
|
Financing
| 48.9
| %
|
| 49.2
| %
|
| 48.7
| %
|
| 46.5
| %
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT MARGIN
| 56.8
| %
|
| 54.9
| %
|
| 55.2
| %
|
| 53.9
| %
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER INCOME
|
|
|
|
|
|
|
|
|
|
|
|
S,G&A
| 4,938
|
|
| 4,900
|
|
| 9,912
|
|
| 9,754
|
|
R,D&E
| 1,840
|
|
| 1,687
|
|
| 3,637
|
|
| 3,342
|
|
Intellectual property and custom development income
| (241)
|
|
| (248)
|
|
| (458)
|
|
| (428)
|
|
Other (income) and expense
| (233)
|
|
| (261)
|
|
| (550)
|
|
| (506)
|
|
Interest expense
| 427
|
|
| 423
|
|
| 859
|
|
| 790
|
|
TOTAL EXPENSE AND OTHER INCOME
| 6,730
|
|
| 6,501
|
|
| 13,399
|
|
| 12,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
| 2,219
|
|
| 2,000
|
|
| 3,293
|
|
| 3,058
|
|
Pre-tax margin
| 14.1
| %
|
| 12.9
| %
|
| 10.9
| %
|
| 10.3
| %
|
Provision for/(Benefit from) income taxes
| 389
|
|
| 419
|
|
| (112)
|
|
| 543
|
|
Effective tax rate
| 17.5
| %
|
| 21.0
| %
|
| (3.4)
| %
|
| 17.8
| %
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
| $ 1,830
|
|
| $ 1,581
|
|
| $ 3,405
|
|
| $ 2,515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) from discontinued operations, net of taxes
| 4
|
|
| 2
|
|
| 34
|
|
| (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
| $ 1,834
|
|
| $ 1,583
|
|
| $ 3,439
|
|
| $ 2,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS/(LOSS) PER SHARE OF COMMON STOCK
|
|
|
|
|
|
|
|
|
|
|
|
Assuming Dilution
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations
| $ 1.96
|
|
| $ 1.72
|
|
| $ 3.65
|
|
| $ 2.74
|
|
Discontinued Operations
| $ 0.00
|
|
| $ 0.00
|
|
| $ 0.04
|
|
| $ 0.00
|
|
TOTAL
| $ 1.96
|
|
| $ 1.72
|
|
| $ 3.68
|
|
| $ 2.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations
| $ 1.99
|
|
| $ 1.74
|
|
| $ 3.71
|
|
| $ 2.77
|
|
Discontinued Operations
| $ 0.00
|
|
| $ 0.00
|
|
| $ 0.04
|
|
| $ 0.00
|
|
TOTAL
| $ 1.99
|
|
| $ 1.74
|
|
| $ 3.74
|
|
| $ 2.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (M's)
|
|
|
|
|
|
|
|
|
|
|
|
Assuming Dilution
| 934.4
|
|
| 919.5
|
|
| 933.9
|
|
| 918.6
|
|
Basic
| 920.3
|
|
| 909.9
|
|
| 918.7
|
|
| 908.7
|
|
____________________
|
|
(1) Recast to reflect January 2024 segment changes.
|
|
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
|
|
(Dollars in Millions)
|
| At
June 30,
2024
|
| At
December 31,
2023
|
ASSETS:
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash and cash equivalents
|
| $ 12,210
|
| $ 13,068
|
Restricted cash
|
| 2,268
|
| 21
|
Marketable securities
|
| 1,481
|
| 373
|
Notes and accounts receivable - trade, net
|
| 5,769
|
| 7,214
|
Short-term financing receivables, net
|
| 5,799
|
| 6,793
|
Other accounts receivable, net
|
| 757
|
| 640
|
Inventories
|
| 1,234
|
| 1,161
|
Deferred costs
|
| 997
|
| 998
|
Prepaid expenses and other current assets
|
| 2,784
|
| 2,639
|
Total Current Assets
|
| 33,299
|
| 32,908
|
|
|
|
|
|
Property, plant and equipment, net
|
| 5,600
|
| 5,501
|
Operating right-of-use assets, net
|
| 3,130
|
| 3,220
|
Long-term financing receivables, net
|
| 5,483
|
| 5,766
|
Prepaid pension assets
|
| 7,630
|
| 7,506
|
Deferred costs
|
| 820
|
| 842
|
Deferred taxes
|
| 6,378
|
| 6,656
|
Goodwill
|
| 59,416
|
| 60,178
|
Intangibles, net
|
| 10,251
|
| 11,036
|
Investments and sundry assets
|
| 1,840
|
| 1,626
|
Total Assets
|
| $ 133,848
|
| $ 135,241
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Taxes
|
| $ 1,691
|
| $ 2,270
|
Short-term debt
|
| 3,602
|
| 6,426
|
Accounts payable
|
| 3,631
|
| 4,132
|
Deferred income
|
| 13,643
|
| 13,451
|
Operating lease liabilities
|
| 762
|
| 820
|
Other liabilities
|
| 6,319
|
| 7,022
|
Total Current Liabilities
|
| 29,648
|
| 34,122
|
|
|
|
|
|
Long-term debt
|
| 52,929
|
| 50,121
|
Retirement related obligations
|
| 10,200
|
| 10,808
|
Deferred income
|
| 3,489
|
| 3,533
|
Operating lease liabilities
|
| 2,546
|
| 2,568
|
Other liabilities
|
| 10,932
|
| 11,475
|
Total Liabilities
|
| 109,745
|
| 112,628
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
IBM Stockholders' Equity:
|
|
|
|
|
Common stock
|
| 60,501
|
| 59,643
|
Retained earnings
|
| 151,659
|
| 151,276
|
Treasury stock — at cost
|
| (169,815)
|
| (169,624)
|
Accumulated other comprehensive income/(loss)
|
| (18,319)
|
| (18,761)
|
Total IBM Stockholders' Equity
|
| 24,026
|
| 22,533
|
|
|
|
|
|
Noncontrolling interests
|
| 77
|
| 80
|
Total Equity
|
| 24,103
|
| 22,613
|
|
|
|
|
|
Total Liabilities and Equity
|
| $ 133,848
|
| $ 135,241
|
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW ANALYSIS
(Unaudited)
|
|
|
| Three Months Ended
June 30,
|
| Six Months Ended
June 30,
|
| Trailing Twelve
Months Ended
June 30,
|
(Dollars in Millions)
|
| 2024
|
| 2023
|
| 2024
|
| 2023
|
| 2024
|
Net Cash from Operations per GAAP
|
| $ 2,066
|
| $ 2,638
|
| $ 6,234
|
| $ 6,412
|
| $ 13,752
|
|
|
|
|
|
|
|
|
|
|
|
Less: change in IBM Financing receivables
|
| (946)
|
| 50
|
| 951
|
| 2,028
|
| 156
|
Capital Expenditures, net
|
| (399)
|
| (487)
|
| (761)
|
| (944)
|
| (1,305)
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
| 2,612
|
| 2,101
|
| 4,522
|
| 3,441
|
| 12,292
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
| (153)
|
| (334)
|
| (235)
|
| (356)
|
| (4,961)
|
Divestitures
|
| —
|
| 6
|
| 703
|
| 6
|
| 693
|
Dividends
|
| (1,537)
|
| (1,510)
|
| (3,058)
|
| (3,007)
|
| (6,092)
|
Non-Financing Debt
|
| (4,168)
|
| (1,178)
|
| 1,076
|
| 8,514
|
| (1,892)
|
Other (includes IBM Financing net receivables and debt)
|
| (73)
|
| (347)
|
| (510)
|
| (1,109)
|
| (410)
|
|
|
|
|
|
|
|
|
|
|
|
Change in Cash, Cash Equivalents, Restricted Cash
and Short-term Marketable Securities
|
| $ (3,318)
|
| $ (1,263)
|
| $ 2,497
|
| $ 7,489
|
| $ (370)
|
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW
(Unaudited)
|
|
|
| Three Months Ended
June 30,
|
| Six Months Ended
June 30,
|
(Dollars in Millions)
|
| 2024
|
| 2023
|
| 2024
|
| 2023
|
Net Income from Operations
|
| $ 1,834
|
| $ 1,583
|
| $ 3,439
|
| $ 2,511
|
Depreciation/Amortization of Intangibles (1)
|
| 1,155
|
| 1,076
|
| 2,287
|
| 2,150
|
Stock-based Compensation
|
| 316
|
| 288
|
| 636
|
| 556
|
Operating assets and liabilities/Other, net (2)
|
| (293)
|
| (359)
|
| (1,079)
|
| (832)
|
IBM Financing A/R
|
| (946)
|
| 50
|
| 951
|
| 2,028
|
Net Cash Provided by Operating Activities
|
| $ 2,066
|
| $ 2,638
|
| $ 6,234
|
| $ 6,412
|
|
|
|
|
|
|
|
|
|
Capital Expenditures, net of payments & proceeds
|
| (399)
|
| (487)
|
| (761)
|
| (944)
|
Divestitures, net of cash transferred
|
| -
|
| 6
|
| 703
|
| 6
|
Acquisitions, net of cash acquired
|
| (153)
|
| (334)
|
| (235)
|
| (356)
|
Marketable Securities / Other Investments, net
|
| 2,791
|
| 822
|
| (1,679)
|
| (6,659)
|
Net Cash Provided by/(Used in) Investing Activities
|
| $ 2,239
|
| $ 7
|
| $ (1,971)
|
| $ (7,953)
|
|
|
|
|
|
|
|
|
|
Debt, net of payments & proceeds
|
| (2,900)
|
| (1,135)
|
| 481
|
| 6,169
|
Dividends
|
| (1,537)
|
| (1,510)
|
| (3,058)
|
| (3,007)
|
Financing - Other
|
| (78)
|
| (86)
|
| (61)
|
| (185)
|
Net Cash Provided by/(Used in) Financing Activities
|
| $ (4,515)
|
| $ (2,731)
|
| $ (2,638)
|
| $ 2,978
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate changes on Cash
|
| (76)
|
| (25)
|
| (236)
|
| (1)
|
Net Change in Cash, Cash Equivalents and Restricted Cash
|
| $ (287)
|
| $ (110)
|
| $ 1,389
|
| $ 1,436
|
____________________
|
(1) Includes operating lease right-of-use assets amortization.
|
(2) Includes the reduction of tax reserves.
|
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
|
|
|
| Three Months Ended
June 30,
|
| Six Months Ended
June 30,
|
(Dollars in Billions)
|
| 2024
|
| 2023
|
| Yr/Yr
|
| 2024
|
| 2023
|
| Yr/Yr
|
Net Income as reported (GAAP)
|
| $ 1.8
|
| $ 1.6
|
| $ 0.3
|
| $ 3.4
|
| $ 2.5
|
| $ 0.9
|
Less: Income/(loss) from discontinued operations, net of tax
|
| 0.0
|
| 0.0
|
| 0.0
|
| 0.0
|
| 0.0
|
| 0.0
|
Income from continuing operations
|
| 1.8
|
| 1.6
|
| 0.2
|
| 3.4
|
| 2.5
|
| 0.9
|
Provision for/(Benefit from) income taxes from continuing ops.
|
| 0.4
|
| 0.4
|
| 0.0
|
| (0.1)
|
| 0.5
|
| (0.7)
|
Pre-tax income from continuing operations (GAAP)
|
| 2.2
|
| 2.0
|
| 0.2
|
| 3.3
|
| 3.1
|
| 0.2
|
Non-operating adjustments (before tax)
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related charges (1)
|
| 0.5
|
| 0.4
|
| 0.1
|
| 1.0
|
| 0.8
|
| 0.2
|
Non-operating retirement-related costs/(income)
|
| 0.1
|
| 0.0
|
| 0.1
|
| 0.2
|
| 0.0
|
| 0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (non-GAAP) pre-tax income from continuing ops.
|
| 2.8
|
| 2.4
|
| 0.4
|
| 4.4
|
| 3.8
|
| 0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
| 0.2
|
| 0.2
|
| 0.0
|
| 0.4
|
| 0.4
|
| 0.0
|
Depreciation/Amortization of non-acquired intangible assets
|
| 0.7
|
| 0.7
|
| 0.0
|
| 1.4
|
| 1.4
|
| 0.0
|
Stock-based compensation
|
| 0.3
|
| 0.3
|
| 0.0
|
| 0.6
|
| 0.6
|
| 0.1
|
Workforce rebalancing charges
|
| 0.0
|
| 0.1
|
| (0.1)
|
| 0.4
|
| 0.4
|
| 0.0
|
Corporate (gains) and charges (2)
|
| 0.0
|
| 0.0
|
| 0.0
|
| (0.2)
|
| 0.0
|
| (0.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
| $ 4.0
|
| $ 3.7
|
| $ 0.4
|
| $ 7.1
|
| $ 6.5
|
| $ 0.5
|
____________________
|
(1) Primarily consists of amortization of acquired intangible assets.
|
(2) Corporate (gains) and charges primarily consists of unique corporate actions such as gains on divestitures.
|
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
|
|
|
| Three Months Ended June 30, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
| Software
|
|
| Consulting
|
|
| Infrastructure
|
|
| Financing
|
|
Revenue
|
| $ 6,739
|
|
| $ 5,179
|
|
| $ 3,645
|
|
| $ 169
|
|
Segment Profit
|
| $ 2,113
|
|
| $ 463
|
|
| $ 654
|
|
| $ 77
|
|
Segment Profit Margin
|
| 31.3
| %
|
| 8.9
| %
|
| 17.9
| %
|
| 45.3
| %
|
Change YTY Revenue
|
| 7.1
| %
|
| (0.9)
| %
|
| 0.7
| %
|
| (8.3)
| %
|
Change YTY Revenue - Constant Currency
|
| 8.4
| %
|
| 1.8
| %
|
| 2.7
| %
|
| (6.6)
| %
|
|
|
|
|
|
| Three Months Ended June 30, 2023 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
| Software
|
|
| Consulting
|
|
| Infrastructure
|
|
| Financing
|
|
Revenue
|
| $ 6,294
|
|
| $ 5,226
|
|
| $ 3,618
|
|
| $ 185
|
|
Segment Profit
|
| $ 1,749
|
|
| $ 483
|
|
| $ 732
|
|
| $ 64
|
|
Segment Profit Margin
|
| 27.8
| %
|
| 9.2
| %
|
| 20.2
| %
|
| 34.8
| %
|
____________________
|
(1) Recast to reflect January 2024 segment changes.
|
|
|
| Six Months Ended June 30, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
| Software
|
|
| Consulting
|
|
| Infrastructure
|
|
| Financing
|
|
Revenue
|
| $ 12,637
|
|
| $ 10,365
|
|
| $ 6,721
|
|
| $ 362
|
|
Segment Profit
|
| $ 3,612
|
|
| $ 888
|
|
| $ 965
|
|
| $ 168
|
|
Segment Profit Margin
|
| 28.6
| %
|
| 8.6
| %
|
| 14.4
| %
|
| 46.5
| %
|
Change YTY Revenue
|
| 6.3
| %
|
| (0.6)
| %
|
| 0.1
| %
|
| (4.9)
| %
|
Change YTY Revenue - Constant Currency
|
| 7.2
| %
|
| 1.8
| %
|
| 1.5
| %
|
| (4.0)
| %
|
|
|
|
|
|
| Six Months Ended June 30, 2023 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
| Software
|
|
| Consulting
|
|
| Infrastructure
|
|
| Financing
|
|
Revenue
|
| $ 11,885
|
|
| $ 10,423
|
|
| $ 6,716
|
|
| $ 380
|
|
Segment Profit
|
| $ 3,128
|
|
| $ 910
|
|
| $ 1,039
|
|
| $ 164
|
|
Segment Profit Margin
|
| 26.3
| %
|
| 8.7
| %
|
| 15.5
| %
|
| 43.2
| %
|
__________
|
(1) Recast to reflect January 2004 segment changes.
|
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars in millions except per share amounts)
|
|
| Three Months Ended June 30, 2024
|
|
| Continuing Operations
|
|
| GAAP
|
|
| Acquisition-
Related
Adjustments (1)
|
|
| Retirement-
Related
Adjustments (2)
|
|
| Tax
Reform
Impacts
|
|
| Operating
(Non-GAAP)
|
|
Gross Profit
| $ 8,950
|
|
| $ 170
|
|
| $ —
|
|
| $ —
|
|
| $ 9,120
|
|
Gross Profit Margin
| 56.8
| %
|
| 1.1
| pts
|
| —
| pts
|
| —
| pts
|
| 57.8
| %
|
S,G&A
| $ 4,938
|
|
| $ (286)
|
|
| $ —
|
|
| $ —
|
|
| $ 4,651
|
|
Other (Income) & Expense
| (233)
|
|
| (18)
|
|
| (98)
|
|
| —
|
|
| (349)
|
|
Total Expense & Other (Income)
| 6,730
|
|
| (304)
|
|
| (98)
|
|
| —
|
|
| 6,328
|
|
Pre-tax Income from Continuing Operations
| 2,219
|
|
| 474
|
|
| 98
|
|
| —
|
|
| 2,792
|
|
Pre-tax Income Margin from Continuing
Operations
| 14.1
| %
|
| 3.0
| pts
|
| 0.6
| pts
|
| —
| pts
|
| 17.7
| %
|
Provision for/(Benefit from) Income Taxes (3)
| $ 389
|
|
| $ 113
|
|
| $ 26
|
|
| $ (12)
|
|
| $ 516
|
|
Effective Tax Rate
| 17.5
| %
|
| 1.1
| pts
|
| 0.3
| pts
|
| (0.4)
| pts
|
| 18.5
| %
|
Income from Continuing Operations
| $ 1,830
|
|
| $ 362
|
|
| $ 72
|
|
| $ 12
|
|
| $ 2,275
|
|
Income Margin from Continuing Operations
| 11.6
| %
|
| 2.3
| pts
|
| 0.5
| pts
|
| 0.1
| pts
|
| 14.4
| %
|
Diluted Earnings Per Share: Continuing
Operations
| $ 1.96
|
|
| $ 0.39
|
|
| $ 0.08
|
|
| $ 0.01
|
|
| $ 2.43
|
|
|
|
|
| Three Months Ended June 30, 2023
|
|
| Continuing Operations
|
|
| GAAP
|
|
| Acquisition-
Related
Adjustments (1)
|
|
| Retirement-
Related
Adjustments (2)
|
|
| Tax
Reform
Impacts
|
|
| Operating
(Non-GAAP)
|
|
Gross Profit
| $ 8,501
|
|
| $ 150
|
|
| $ —
|
|
| $ —
|
|
| $ 8,650
|
|
Gross Profit Margin
| 54.9
| %
|
| 1.0
| pts
|
| —
| pts
|
| —
| pts
|
| 55.9
| %
|
S,G&A
| $ 4,900
|
|
| $ (245)
|
|
| $ —
|
|
| $ —
|
|
| $ 4,655
|
|
Other (Income) & Expense
| (261)
|
|
| 0
|
|
| (1)
|
|
| —
|
|
| (262)
|
|
Total Expense & Other (Income)
| 6,501
|
|
| (246)
|
|
| (1)
|
|
| —
|
|
| 6,254
|
|
Pre-tax Income from Continuing Operations
| 2,000
|
|
| 395
|
|
| 1
|
|
| —
|
|
| 2,396
|
|
Pre-tax Income Margin from Continuing
Operations
| 12.9
| %
|
| 2.6
| pts
|
| 0.0
| pts
|
| —
| pts
|
| 15.5
| %
|
Provision for/(Benefit from) Income Taxes (3)
| $ 419
|
|
| $ 87
|
|
| $ (3)
|
|
| $ (110)
|
|
| $ 393
|
|
Effective Tax Rate
| 21.0
| %
|
| 0.2
| pts
|
| (0.2)
| pts
|
| (4.6)
| pts
|
| 16.4
| %
|
Income from Continuing Operations
| $ 1,581
|
|
| $ 308
|
|
| $ 5
|
|
| $ 110
|
|
| $ 2,003
|
|
Income Margin from Continuing Operations
| 10.2
| %
|
| 2.0
| pts
|
| 0.0
| pts
|
| 0.7
| pts
|
| 12.9
| %
|
Diluted Earnings Per Share: Continuing
Operations
| $ 1.72
|
|
| $ 0.34
|
|
| $ 0.00
|
|
| $ 0.12
|
|
| $ 2.18
|
|
____________________
|
(1) Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax
charges related to acquisition integration and pre-closing charges, such as financing costs. 2024 also includes a loss of $18 million on foreign
exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG.
|
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan
curtailments/settlements and pension insolvency costs and other costs.
|
(3) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the
As Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.
|
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars in millions except per share amounts)
|
|
| Six Months Ended June 30, 2024
|
|
| Continuing Operations
|
|
| GAAP
|
|
| Acquisition-
Related
Adjustments (1)
|
|
| Retirement-
Related
Adjustments (2)
|
|
| Tax
Reform
Impacts (3)
|
|
| Operating
(Non-GAAP)
|
|
Gross Profit
| $ 16,692
|
|
| $ 341
|
|
| $ —
|
|
| $ —
|
|
| $ 17,033
|
|
Gross Profit Margin
| 55.2
| %
|
| 1.1
| pts
|
| —
| pts
|
| —
| pts
|
| 56.3
| %
|
S,G&A
| $ 9,912
|
|
| $ (554)
|
|
| $ —
|
|
| $ —
|
|
| $ 9,358
|
|
Other (Income) & Expense
| (550)
|
|
| (68)
|
|
| (194)
|
|
| —
|
|
| (812)
|
|
Total Expense & Other (Income)
| 13,399
|
|
| (622)
|
|
| (194)
|
|
| —
|
|
| 12,584
|
|
Pre-tax Income from Continuing Operations
| 3,293
|
|
| 963
|
|
| 194
|
|
| —
|
|
| 4,449
|
|
Pre-tax Income Margin from Continuing
Operations
| 10.9
| %
|
| 3.2
| pts
|
| 0.6
| pts
|
| —
| pts
|
| 14.7
| %
|
Provision for/(Benefit from) Income Taxes (4)
| $ (112)
|
|
| $ 255
|
|
| $ 31
|
|
| $ 436
|
|
| $ 610
|
|
Effective Tax Rate
| (3.4)
| %
|
| 6.5
| pts
|
| 0.9
| pts
|
| 9.8
| pts
|
| 13.7
| %
|
Income from Continuing Operations
| $ 3,405
|
|
| $ 707
|
|
| $ 163
|
|
| $ (436)
|
|
| $ 3,839
|
|
Income Margin from Continuing Operations
| 11.3
| %
|
| 2.3
| pts
|
| 0.5
| pts
|
| (1.4)
| pts
|
| 12.7
| %
|
Diluted Earnings Per Share: Continuing
Operations
| $ 3.65
|
|
| $ 0.76
|
|
| $ 0.17
|
|
| $ (0.47)
|
|
| $ 4.11
|
|
|
|
|
| Six Months Ended June 30, 2023
|
|
| Continuing Operations
|
|
| GAAP
|
|
| Acquisition-
Related
Adjustments (1)
|
|
| Retirement-
Related
Adjustments (2)
|
|
| Tax
Reform
Impacts
|
|
| Operating
(Non-GAAP)
|
|
Gross Profit
| $ 16,010
|
|
| $ 298
|
|
| $ —
|
|
| $ —
|
|
| $ 16,308
|
|
Gross Profit Margin
| 53.9
| %
|
| 1.0
| pts
|
| —
| pts
|
| —
| pts
|
| 54.9
| %
|
S,G&A
| $ 9,754
|
|
| $ (491)
|
|
| $ —
|
|
| $ —
|
|
| $ 9,263
|
|
Other (Income) & Expense
| (506)
|
|
| (2)
|
|
| 4
|
|
| —
|
|
| (504)
|
|
Total Expense & Other (Income)
| 12,952
|
|
| (493)
|
|
| 4
|
|
| —
|
|
| 12,463
|
|
Pre-tax Income from Continuing Operations
| 3,058
|
|
| 791
|
|
| (4)
|
|
| —
|
|
| 3,845
|
|
Pre-tax Income Margin from Continuing
Operations
| 10.3
| %
|
| 2.7
| pts
|
| 0.0
| pts
|
| —
| pts
|
| 12.9
| %
|
Provision for/(Benefit from) Income Taxes (4)
| $ 543
|
|
| $ 178
|
|
| $ (14)
|
|
| $ (115)
|
|
| $ 593
|
|
Effective Tax Rate
| 17.8
| %
|
| 1.0
| pts
|
| (0.3)
| pts
|
| (3.0)
| pts
|
| 15.4
| %
|
Income from Continuing Operations
| $ 2,515
|
|
| $ 613
|
|
| $ 10
|
|
| $ 115
|
|
| $ 3,252
|
|
Income Margin from Continuing Operations
| 8.5
| %
|
| 2.1
| pts
|
| 0.0
| pts
|
| 0.4
| pts
|
| 10.9
| %
|
Diluted Earnings Per Share: Continuing
Operations
| $ 2.74
|
|
| $ 0.67
|
|
| $ 0.01
|
|
| $ 0.13
|
|
| $ 3.54
|
|
____________________
|
(1) Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax
charges related to acquisition integration and pre-closing charges, such as financing costs. 2024 also includes a loss of $68 million on foreign
exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG.
|
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan
curtailments/settlements and pension insolvency costs and other costs.
|
(3) 2024 includes a net benefit from discrete tax events.
|
(4) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the
As Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.
|
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP OPERATING CASH FLOW TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
|
|
|
| Three Months Ended
June 30,
|
| Six Months Ended
June 30,
|
(Dollars in Billions)
|
| 2024
|
| 2023
|
| 2024
|
| 2023
|
Net Cash Provided by Operating Activities
|
| $ 2.1
|
| $ 2.6
|
| $ 6.2
|
| $ 6.4
|
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
Net interest expense
|
| 0.2
|
| 0.2
|
| 0.4
|
| 0.4
|
Provision for/(Benefit from) income taxes from continuing operations
|
| 0.4
|
| 0.4
|
| (0.1)
|
| 0.5
|
|
|
|
|
|
|
|
|
|
Less change in:
|
|
|
|
|
|
|
|
|
Financing receivables
|
| (0.9)
|
| 0.1
|
| 1.0
|
| 2.0
|
Other assets and liabilities/Other, net (1)
|
| (0.4)
|
| (0.5)
|
| (1.5)
|
| (1.2)
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
| $ 4.0
|
| $ 3.7
|
| $ 7.1
|
| $ 6.5
|
____________________
|
(1) Other assets and liabilities/Other, net mainly consists of Operating assets and liabilities/Other, net in the Cash flow chart, workforce
rebalancing charges, non-operating impacts and corporate (gains) and charges.
|
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SOURCE IBM
