Accelerated Software revenue
growth; Strong gross margin expansion and cash
generation
Announces strategic acquisition of HashiCorp,
Inc.
ARMONK,
N.Y., April 24, 2024 /PRNewswire/ -- IBM (NYSE:
IBM) today announced first-quarter 2024 earnings results.
"We began the year with solid revenue and free cash flow growth,
reflecting the strength of our hybrid cloud and AI strategy. We
continue to capitalize on the excitement and demand for enterprise
AI from our clients. Our book of business for watsonx and
generative AI again showed strong momentum, growing quarter over
quarter, and has now eclipsed one billion
dollars since we launched watsonx in mid-2023. As a result,
for the full year, we continue to expect revenue performance in
line with our mid-single digit model and about $12 billion in free cash flow," said Arvind
Krishna, IBM chairman and chief executive officer. "To strengthen
our position in today's hybrid cloud and AI-driven technology
landscape, we also announced our intent to acquire HashiCorp. IBM's
and HashiCorp's combined portfolios will help clients manage
growing application and infrastructure complexity and create a
comprehensive hybrid cloud platform designed for the AI
era."
Strategic Acquisition
IBM today announced its intent
to acquire HashiCorp, Inc. for $35
per share in cash, representing an enterprise value of $6.4 billion. The acquisition will create a
comprehensive end-to-end hybrid cloud platform for the AI era. The
transaction is expected to close by the end of 2024, subject to
approval by HashiCorp shareholders, regulatory approvals and other
customary closing conditions.
First-Quarter Highlights
- Revenue
- Revenue of $14.5 billion, up 1
percent, up 3 percent at constant currency
- Software revenue up 5 percent, up 6 percent at constant
currency
- Consulting revenue flat, up 2 percent at constant
currency
- Infrastructure revenue down 1 percent, flat at constant
currency
- Profit Margin
- Gross Profit Margin: GAAP: 53.5 percent, up 80 basis points;
Operating (Non-GAAP): 54.7 percent, up 100 basis points
- Pre-Tax Income Margin: GAAP: 7.4 percent, flat; Operating
(Non-GAAP): 11.5 percent, up 130 basis points
- Cash Flow
- Net cash from operating activities of $4.2 billion, up $0.4
billion; free cash flow of $1.9
billion, up $0.6 billion
- Over the last twelve months, net cash from operating
activities of $14.3 billion; free
cash flow of $11.8 billion
|
FIRST
QUARTER 2024 INCOME STATEMENT SUMMARY
|
|
Revenue
|
|
Gross
Profit
|
|
|
Gross
Profit
Margin
|
|
|
Pre-tax
Income
|
|
Pre-tax
Income
Margin
|
|
Net
Income (1)
|
|
Diluted
Earnings
Per
Share
|
|
GAAP from
Continuing
Operations
|
$ 14.5
B
|
|
|
$ 7.7
B
|
|
|
53.5
|
%
|
|
$ 1.1
B
|
|
|
7.4
|
%
|
|
$ 1.6 B
|
|
|
$ 1.69
|
|
|
Year/Year
|
1
|
%(2)
|
|
3
|
%
|
|
0.8
|
Pts
|
|
1
|
%
|
|
0.0
|
Pts
|
|
69
|
%
|
|
66
|
%
|
|
Operating
(Non-GAAP)
|
|
|
|
$ 7.9
B
|
|
|
54.7
|
%
|
|
$ 1.7
B
|
|
|
11.5
|
%
|
|
$ 1.6 B
|
|
|
$ 1.68
|
|
|
Year/Year
|
|
|
|
3
|
%
|
|
1.0
|
Pts
|
|
14
|
%
|
|
1.3
|
Pts
|
|
25
|
%
|
|
24
|
%
|
|
(1) 2024 includes a net
benefit from discrete tax events.
|
|
(2) 3% at constant
currency.
|
"In the quarter we continued to focus on the fundamentals of our
business, growing revenue, expanding operating margins, improving
profit performance and increasing productivity and operating
leverage," said James Kavanaugh, IBM
senior vice president and chief financial officer. "These
fundamentals, combined with our strong cash generation, position us
to invest both organically and through strategic acquisitions like
today's announcement with HashiCorp. At the same time, we continue
to return value to shareholders through our dividend."
Segment Results for First Quarter
- Software — revenues of $5.9
billion, up 5.5 percent, up 5.9 percent at constant
currency:
- Hybrid Platform & Solutions up 6 percent, up 7 percent
at constant currency:
-- Red Hat up 9 percent
-- Automation up 13 percent
-- Data & AI up 1 percent
-- Security down 3 percent
- Transaction Processing up 3 percent, up 4 percent at
constant currency
- Consulting — revenues of $5.2
billion, down 0.2 percent, up 1.7 percent at constant
currency:
- Business Transformation up 1 percent, up 3 percent at
constant currency
- Technology Consulting up 1 percent, up 3 percent at constant
currency
- Application Operations down 3 percent, down 1 percent at
constant currency
- Infrastructure — revenues of $3.1
billion, down 0.7 percent, up 0.2 percent at constant
currency:
- Hybrid Infrastructure up 5 percent, up 6 percent at constant
currency
-- IBM Z up 4 percent, up 5 percent at constant
currency
-- Distributed Infrastructure up 6 percent, up 7
percent at constant currency
- Infrastructure Support down 8 percent, down 7 percent at
constant currency
- Financing — revenues of $0.2
billion, down 1.6 percent, down 1.5 percent at constant
currency
Cash Flow and Balance Sheet
In the first quarter, the
company generated net cash from operating activities of
$4.2 billion, up $0.4 billion year to year. Net cash from
operating activities excluding IBM Financing receivables was
$2.3 billion. IBM's free cash flow
was $1.9 billion, up $0.6 billion year to year. Over the last twelve
months, the company generated net cash from operating activities of
$14.3 billion and free cash flow of
$11.8 billion. The company returned
$1.5 billion to shareholders in
dividends in the first quarter.
IBM ended the first quarter with $19.3
billion of cash and marketable securities, up $5.8 billion from year-end 2023. Debt, including
IBM Financing debt of $9.9 billion,
totaled $59.5 billion, up
$3.0 billion since the end of
2023.
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-and-a-half to two-point headwind to revenue growth
- Free cash flow: The company continues to expect about
$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 watsonx and 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-1q24. 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
March 31,
|
|
|
2024
|
|
|
2023 (1)
|
|
|
REVENUE BY
SEGMENT
|
|
|
|
|
|
|
Software
|
$
5,899
|
|
|
$
5,591
|
|
|
Consulting
|
5,186
|
|
|
5,197
|
|
|
Infrastructure
|
3,076
|
|
|
3,098
|
|
|
Financing
|
193
|
|
|
196
|
|
|
Other
|
108
|
|
|
169
|
|
|
TOTAL
REVENUE
|
14,462
|
|
|
14,252
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
7,742
|
|
|
7,509
|
|
|
|
|
|
|
|
|
GROSS PROFIT
MARGIN
|
|
|
|
|
|
|
Software
|
82.4
|
%
|
|
82.6
|
%
|
|
Consulting
|
25.3
|
%
|
|
25.5
|
%
|
|
Infrastructure
|
54.2
|
%
|
|
51.8
|
%
|
|
Financing
|
48.5
|
%
|
|
43.9
|
%
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT
MARGIN
|
53.5
|
%
|
|
52.7
|
%
|
|
|
|
|
|
|
|
EXPENSE AND OTHER
INCOME
|
|
|
|
|
|
|
S,G&A
|
4,974
|
|
|
4,853
|
|
|
R,D&E
|
1,796
|
|
|
1,655
|
|
|
Intellectual property
and custom development income
|
(216)
|
|
|
(180)
|
|
|
Other (income) and
expense
|
(317)
|
|
|
(245)
|
|
|
Interest
expense
|
432
|
|
|
367
|
|
|
TOTAL EXPENSE AND
OTHER INCOME
|
6,669
|
|
|
6,451
|
|
|
|
|
|
|
|
|
INCOME FROM
CONTINUING OPERATIONS
BEFORE INCOME
TAXES
|
1,074
|
|
|
1,058
|
|
|
Pre-tax
margin
|
7.4
|
%
|
|
7.4
|
%
|
|
Provision for/(Benefit
from) income taxes (2)
|
(502)
|
|
|
124
|
|
|
Effective tax rate
(2)
|
(46.7)
|
%
|
|
11.7
|
%
|
|
|
|
|
|
|
|
INCOME FROM
CONTINUING OPERATIONS
|
$
1,575
|
|
|
$
934
|
|
|
|
|
|
|
|
|
DISCONTINUED
OPERATIONS
|
|
|
|
|
|
|
Income/(loss) from
discontinued operations, net of taxes
|
30
|
|
|
(7)
|
|
|
|
|
|
|
|
|
NET
INCOME
|
$
1,605
|
|
|
$
927
|
|
|
|
|
|
|
|
|
EARNINGS/(LOSS) PER
SHARE OF COMMON STOCK
|
|
|
|
|
|
|
Assuming
Dilution
|
|
|
|
|
|
|
Continuing
Operations
|
$
1.69
|
|
|
$
1.02
|
|
|
Discontinued
Operations
|
$
0.03
|
|
|
$
(0.01)
|
|
|
TOTAL
|
$
1.72
|
|
|
$
1.01
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
Continuing
Operations
|
$
1.72
|
|
|
$
1.03
|
|
|
Discontinued
Operations
|
$
0.03
|
|
|
$
(0.01)
|
|
|
TOTAL
|
$
1.75
|
|
|
$
1.02
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING (M's)
|
|
|
|
|
|
|
Assuming
Dilution
|
933.4
|
|
|
917.8
|
|
|
Basic
|
917.2
|
|
|
907.5
|
|
|
____________________
|
|
(1) Recast to
reflect segment changes.
|
|
(2) 2024 includes
a net benefit from discrete tax events.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEET
(Unaudited)
|
|
|
(Dollars in
Millions)
|
|
At
March 31,
2024
|
|
At
December 31,
2023
|
|
ASSETS:
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
14,603
|
|
$
13,068
|
|
Restricted
cash
|
|
162
|
|
21
|
|
Marketable
securities
|
|
4,512
|
|
373
|
|
Notes and accounts
receivable - trade, net
|
|
6,041
|
|
7,214
|
|
Short-term financing
receivables, net
|
|
5,521
|
|
6,793
|
|
Other accounts
receivable, net
|
|
760
|
|
640
|
|
Inventories
|
|
1,212
|
|
1,161
|
|
Deferred
costs
|
|
1,047
|
|
998
|
|
Prepaid expenses and
other current assets
|
|
2,804
|
|
2,639
|
|
Total Current
Assets
|
|
36,663
|
|
32,908
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
5,594
|
|
5,501
|
|
Operating right-of-use
assets, net
|
|
3,204
|
|
3,220
|
|
Long-term financing
receivables, net
|
|
4,927
|
|
5,766
|
|
Prepaid pension
assets
|
|
7,545
|
|
7,506
|
|
Deferred
costs
|
|
810
|
|
842
|
|
Deferred
taxes
|
|
6,465
|
|
6,656
|
|
Goodwill
|
|
59,534
|
|
60,178
|
|
Intangibles,
net
|
|
10,750
|
|
11,036
|
|
Investments and sundry
assets
|
|
1,678
|
|
1,626
|
|
Total
Assets
|
|
$
137,169
|
|
$
135,241
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Taxes
|
|
$
1,710
|
|
$
2,270
|
|
Short-term
debt
|
|
5,471
|
|
6,426
|
|
Accounts
payable
|
|
3,588
|
|
4,132
|
|
Deferred
income
|
|
14,051
|
|
13,451
|
|
Operating lease
liabilities
|
|
784
|
|
820
|
|
Other
liabilities
|
|
6,794
|
|
7,022
|
|
Total Current
Liabilities
|
|
32,397
|
|
34,122
|
|
|
|
|
|
|
Long-term
debt
|
|
54,033
|
|
50,121
|
|
Retirement related
obligations
|
|
10,421
|
|
10,808
|
|
Deferred
income
|
|
3,488
|
|
3,533
|
|
Operating lease
liabilities
|
|
2,583
|
|
2,568
|
|
Other
liabilities
|
|
10,914
|
|
11,475
|
|
Total
Liabilities
|
|
113,836
|
|
112,628
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
|
IBM Stockholders'
Equity:
|
|
|
|
|
|
Common stock
|
|
60,145
|
|
59,643
|
|
Retained
earnings
|
|
151,362
|
|
151,276
|
|
Treasury stock — at
cost
|
|
(169,759)
|
|
(169,624)
|
|
Accumulated other
comprehensive income/(loss)
|
|
(18,488)
|
|
(18,761)
|
|
Total IBM
Stockholders' Equity
|
|
23,261
|
|
22,533
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
72
|
|
80
|
|
Total
Equity
|
|
23,333
|
|
22,613
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
$
137,169
|
|
$
135,241
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH FLOW
ANALYSIS
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
Trailing
Twelve
Months
Ended
March
31,
|
|
(Dollars in
Millions)
|
|
2024
|
|
2023
|
|
2024
|
|
Net Cash from
Operations per GAAP
|
|
$
4,168
|
|
$
3,774
|
|
$
14,325
|
|
|
|
|
|
|
|
|
Less: change in IBM
Financing receivables
|
|
1,897
|
|
1,977
|
|
1,152
|
|
Capital Expenditures,
net
|
|
(361)
|
|
(457)
|
|
(1,393)
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
|
1,910
|
|
1,340
|
|
11,780
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
(82)
|
|
(22)
|
|
(5,142)
|
|
Divestitures
|
|
703
|
|
—
|
|
699
|
|
Dividends
|
|
(1,522)
|
|
(1,497)
|
|
(6,065)
|
|
Non-Financing
Debt
|
|
5,244
|
|
9,692
|
|
1,098
|
|
Other (includes IBM
Financing net receivables and debt)
|
|
(437)
|
|
(762)
|
|
(684)
|
|
|
|
|
|
|
|
|
Change in Cash, Cash
Equivalents, Restricted Cash and Short-term
Marketable
Securities
|
|
$
5,815
|
|
$
8,752
|
|
$
1,686
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH
FLOW
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
(Dollars in
Millions)
|
|
2024
|
|
2023
|
|
|
Net Income from
Operations
|
|
$
1,605
|
|
$
927
|
|
|
Depreciation/Amortization of Intangibles
(1)
|
|
1,132
|
|
1,074
|
|
|
Stock-based
Compensation
|
|
320
|
|
268
|
|
|
Operating assets and
liabilities/Other, net (2)
|
|
(785)
|
|
(473)
|
|
|
IBM Financing
A/R
|
|
1,897
|
|
1,977
|
|
|
Net Cash Provided by
Operating Activities
|
|
$
4,168
|
|
$
3,774
|
|
|
|
|
|
|
|
|
Capital Expenditures,
net of payments & proceeds
|
|
(361)
|
|
(457)
|
|
|
Divestitures, net of
cash transferred
|
|
703
|
|
-
|
|
|
Acquisitions, net of
cash acquired
|
|
(82)
|
|
(22)
|
|
|
Marketable Securities
/ Other Investments, net
|
|
(4,469)
|
|
(7,481)
|
|
|
Net Cash Provided
by/(Used in) Investing Activities
|
|
$
(4,210)
|
|
$
(7,960)
|
|
|
|
|
|
|
|
|
Debt, net of payments
& proceeds
|
|
3,382
|
|
7,304
|
|
|
Dividends
|
|
(1,522)
|
|
(1,497)
|
|
|
Financing -
Other
|
|
17
|
|
(99)
|
|
|
Net Cash Provided
by/(Used in) Financing Activities
|
|
$
1,877
|
|
$
5,708
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate
changes on Cash
|
|
(159)
|
|
24
|
|
|
Net Change in Cash,
Cash Equivalents and Restricted Cash
|
|
$
1,676
|
|
$
1,547
|
|
|
____________________
|
|
(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
March
31,
|
|
|
(Dollars in
Billions)
|
|
2024
|
|
2023
|
|
Yr/Yr
|
|
|
Net Income as
reported (GAAP)
|
|
$
1.6
|
|
$
0.9
|
|
$
0.7
|
|
|
Less: Income/(loss)
from discontinued operations, net of tax
|
|
0.0
|
|
0.0
|
|
0.0
|
|
|
Income from continuing
operations
|
|
1.6
|
|
0.9
|
|
0.6
|
|
|
Provision for/(Benefit
from) income taxes from continuing ops.
|
|
(0.5)
|
|
0.1
|
|
(0.6)
|
|
|
Pre-tax income from
continuing operations (GAAP)
|
|
1.1
|
|
1.1
|
|
0.0
|
|
|
Non-operating
adjustments (before tax)
|
|
|
|
|
|
|
|
|
Acquisition-related
charges (1)
|
|
0.5
|
|
0.4
|
|
0.1
|
|
|
Non-operating
retirement-related costs/(income)
|
|
0.1
|
|
0.0
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
Operating (non-GAAP)
pre-tax income from continuing ops.
|
|
1.7
|
|
1.4
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
Net interest
expense
|
|
0.2
|
|
0.2
|
|
0.0
|
|
|
Depreciation/Amortization of non-acquired intangible
assets
|
|
0.7
|
|
0.7
|
|
0.0
|
|
|
Stock-based
compensation
|
|
0.3
|
|
0.3
|
|
0.1
|
|
|
Workforce rebalancing
charges
|
|
0.4
|
|
0.3
|
|
0.1
|
|
|
Corporate (gains) and
charges (2)
|
|
(0.2)
|
|
0.0
|
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
3.0
|
|
$
2.8
|
|
$
0.2
|
|
|
____________________
|
|
(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
March 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
|
Revenue
|
|
$
5,899
|
|
|
$
5,186
|
|
|
$
3,076
|
|
|
$
193
|
|
|
Segment
Profit
|
|
$
1,500
|
|
|
$
424
|
|
|
$
311
|
|
|
$
92
|
|
|
Segment Profit
Margin
|
|
25.4
|
%
|
|
8.2
|
%
|
|
10.1
|
%
|
|
47.7
|
%
|
|
Change YTY
Revenue
|
|
5.5
|
%
|
|
(0.2)
|
%
|
|
(0.7)
|
%
|
|
(1.6)
|
%
|
|
Change YTY Revenue -
Constant Currency
|
|
5.9
|
%
|
|
1.7
|
%
|
|
0.2
|
%
|
|
(1.5)
|
%
|
|
|
|
Three Months Ended
March 31, 2023 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
|
Revenue
|
|
$
5,591
|
|
|
$
5,197
|
|
|
$
3,098
|
|
|
$
196
|
|
|
Segment
Profit
|
|
$
1,379
|
|
|
$
427
|
|
|
$
307
|
|
|
$
100
|
|
|
Segment Profit
Margin
|
|
24.7
|
%
|
|
8.2
|
%
|
|
9.9
|
%
|
|
51.2
|
%
|
|
____________________
|
|
(1) Recast to reflect
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
March 31, 2024
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts (3)
|
|
|
Operating
(Non-
GAAP)
|
|
|
Gross Profit
|
$
7,742
|
|
|
$
170
|
|
|
$
—
|
|
|
$
—
|
|
|
$
7,913
|
|
|
Gross Profit
Margin
|
53.5
|
%
|
|
1.2
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
54.7
|
%
|
|
S,G&A
|
$
4,974
|
|
|
$
(268)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
4,706
|
|
|
Other (Income) &
Expense
|
(317)
|
|
|
(50)
|
|
|
(96)
|
|
|
—
|
|
|
(463)
|
|
|
Total Expense &
Other (Income)
|
6,669
|
|
|
(318)
|
|
|
(96)
|
|
|
—
|
|
|
6,255
|
|
|
Pre-tax Income from
Continuing Operations
|
1,074
|
|
|
488
|
|
|
96
|
|
|
—
|
|
|
1,658
|
|
|
Pre-tax Income Margin
from Continuing
Operations
|
7.4
|
%
|
|
3.4
|
pts.
|
|
0.7
|
pts.
|
|
—
|
pts.
|
|
11.5
|
%
|
|
Provision for/(Benefit
from) Income Taxes (4)
|
$
(502)
|
|
|
$
142
|
|
|
$
5
|
|
|
$
448
|
|
|
$
94
|
|
|
Effective Tax
Rate
|
(46.7)
|
%
|
|
22.3
|
pts.
|
|
3.0
|
pts.
|
|
27.0
|
pts.
|
|
5.6
|
%
|
|
Income from Continuing
Operations
|
$
1,575
|
|
|
$
346
|
|
|
$
91
|
|
|
$
(448)
|
|
|
$
1,564
|
|
|
Income Margin from
Continuing Operations
|
10.9
|
%
|
|
2.4
|
pts.
|
|
0.6
|
pts.
|
|
(3.1)
|
pts.
|
|
10.8
|
%
|
|
Diluted Earnings Per
Share: Continuing
Operations
|
$
1.69
|
|
|
$
0.37
|
|
|
$
0.10
|
|
|
$
(0.48)
|
|
|
$
1.68
|
|
|
|
Three Months Ended
March 31, 2023
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Operating
(Non-
GAAP)
|
|
|
Gross Profit
|
$
7,509
|
|
|
$
148
|
|
|
$
—
|
|
|
$
—
|
|
|
$
7,658
|
|
|
Gross Profit
Margin
|
52.7
|
%
|
|
1.0
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
53.7
|
%
|
|
S,G&A
|
$
4,853
|
|
|
$
(246)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
4,607
|
|
|
Other (Income) &
Expense
|
(245)
|
|
|
(2)
|
|
|
5
|
|
|
—
|
|
|
(242)
|
|
|
Total Expense &
Other (Income)
|
6,451
|
|
|
(247)
|
|
|
5
|
|
|
—
|
|
|
6,209
|
|
|
Pre-tax Income from
Continuing Operations
|
1,058
|
|
|
396
|
|
|
(5)
|
|
|
—
|
|
|
1,449
|
|
|
Pre-tax Income Margin
from Continuing
Operations
|
7.4
|
%
|
|
2.8
|
pts.
|
|
0.0
|
pts.
|
|
—
|
pts.
|
|
10.2
|
%
|
|
Provision for/(Benefit
from) Income Taxes (4)
|
$
124
|
|
|
$
91
|
|
|
$
(10)
|
|
|
$
(5)
|
|
|
$
200
|
|
|
Effective Tax
Rate
|
11.7
|
%
|
|
3.1
|
pts.
|
|
(0.7)
|
pts.
|
|
(0.3)
|
pts.
|
|
13.8
|
%
|
|
Income from Continuing
Operations
|
$
934
|
|
|
$
305
|
|
|
$
5
|
|
|
$
5
|
|
|
$
1,249
|
|
|
Income Margin from
Continuing Operations
|
6.6
|
%
|
|
2.1
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
8.8
|
%
|
|
Diluted Earnings Per
Share: Continuing
Operations
|
$
1.02
|
|
|
$
0.33
|
|
|
$
0.01
|
|
|
$
0.01
|
|
|
$
1.36
|
|
|
____________________
|
|
(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 $50
million on foreign
exchange call option contracts related to the company's
planned 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
March 31,
|
|
|
(Dollars in
Billions)
|
|
2024
|
|
2023
|
|
|
Net Cash Provided by
Operating Activities
|
|
$
4.2
|
|
$
3.8
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
Net interest
expense
|
|
0.2
|
|
0.2
|
|
|
Provision for/(Benefit
from) income taxes from continuing operations
|
|
(0.5)
|
|
0.1
|
|
|
|
|
|
|
|
|
Less change
in:
|
|
|
|
|
|
|
Financing
receivables
|
|
1.9
|
|
2.0
|
|
|
Other assets and
liabilities/Other, net (1)
|
|
(1.0)
|
|
(0.7)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
3.0
|
|
$
2.8
|
|
|
____________________
|
|
(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