IBM
RELEASES FIRST-QUARTER RESULTS
Accelerated
Software revenue
growth; Strong gross margin
expansion and cash generation
Announces
strategic acquisition of HashiCorp, Inc.
ARMONK, N.Y., April 25, 2024
-- IBM (NYSE:
IBM) today
announced first-quarter 2024 earnings results.
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"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.
|