Revenue Growth in All Key Segments Led by Global Hybrid Cloud
Adoption; Solid Cash Generation
ARMONK,
N.Y., Oct. 19, 2022 /PRNewswire/ -- IBM (NYSE:
IBM) today announced third-quarter 2022 earnings results.
"IBM delivered strong revenue growth in the quarter, reflecting
our continued focus on the execution of our strategy. Globally,
clients view technology as an opportunity to enhance their
business, which is evident in the results across our portfolio,"
said Arvind Krishna, IBM chairman
and chief executive officer. "With our year-to-date performance, we
now expect full-year revenue growth above our mid-single digit
model."
Third-Quarter Highlights
- Revenue
- Revenue of $14.1 billion, up 6
percent, up 15 percent at constant currency (about 5 points from
sales to Kyndryl)
- Software revenue up 7 percent, up 14 percent at constant currency
(about 8 points from sales to Kyndryl)
- Consulting revenue up 5 percent, up 16 percent at constant
currency
- Infrastructure revenue up 15 percent, up 23 percent at constant
currency (about 9 points from sales to Kyndryl)
- Hybrid cloud revenue, over the last 12 months, of $22.2 billion, up 15 percent, up 20 percent at
constant currency
- Cash Flow
- On a consolidated basis, year to date, net cash from operating
activities of $6.5 billion; free cash
flow of $4.1 billion
|
|
THIRD QUARTER 2022 INCOME STATEMENT
SUMMARY
|
|
|
GAAP results include impact of one-time, non-cash
pension settlement charge*
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
Gross
|
|
|
Pre-tax
|
|
Income/(Loss)
|
|
|
Net
|
|
|
Earnings/(Loss)
|
|
|
|
|
Revenue
|
|
|
Profit
|
|
|
Income/(Loss)
|
|
Margin
|
|
|
Income/(Loss)
|
|
|
Per Share
|
|
|
GAAP from
Continuing
Operations
|
|
$
|
14.1B
|
|
$
|
7.4B
|
|
$
|
(4.5B)
|
*
|
(31.9)
|
%*
|
$
|
(3.2B)
|
*
|
$
|
(3.55)
|
*
|
|
Year/Year
|
|
|
6
|
%**
|
|
5
|
%
|
|
NM
|
*
|
(38.0)
|
Pts*
|
|
NM
|
*
|
|
NM
|
*
|
|
Operating
(Non-GAAP)
|
|
|
|
|
$
|
7.6B
|
|
$
|
2.0B
|
|
13.9
|
%
|
$
|
1.7B
|
|
$
|
1.81
|
|
|
Year/Year
|
|
|
|
|
|
4
|
%
|
|
23
|
%
|
1.8
|
Pts
|
|
(1)
|
%
|
|
(2)
|
%
|
|
* GAAP results
include the impact of a one-time, non-cash pension settlement
charge of $5.9 billion ($4.4 billion net of tax) related to the
transfer of a portion of the company's U.S. defined benefit pension
obligations and related plan assets to third party insurers,
announced on September 13, 2022.
|
|
** 15% at constant
currency
|
"Both our revenue growth and operating profit profile for the
first three quarters of the year align to the investment thesis we
outlined last fall," said James
Kavanaugh, IBM senior vice president and chief financial
officer. "Our portfolio mix, business fundamentals, strong
recurring revenue stream and solid cash generation allow us to
invest for continued growth and return value to shareholders
through dividends."
Segment Results for Third Quarter
- Software (includes Hybrid Platform & Solutions,
Transaction Processing)— revenues of $5.8 billion, up 7.5 percent, up 14.2 percent at
constant currency (about 8 points from sales to Kyndryl):
- Hybrid Platform & Solutions up 2 percent, up 8 percent at
constant currency (about 1.5 points from sales to Kyndryl):
-- Red Hat up 12 percent, up 18 percent at constant
currency
-- Automation down 2 percent, up 3 percent at constant
currency
-- Data & AI down 1 percent, up 4 percent at
constant currency
-- Security down 1 percent, up 6 percent at constant
currency
- Transaction Processing up 23 percent, up 33 percent at constant
currency (about 26 points from sales to Kyndryl)
- Consulting (includes Business Transformation, Technology
Consulting and Application Operations)— revenues of
$4.7 billion, up 5.4 percent, up 15.6
percent at constant currency:
- Business Transformation up 5 percent, up 14 percent at constant
currency
- Technology Consulting up 6 percent, up 17 percent at constant
currency
- Application Operations up 6 percent, up 17 percent at constant
currency
- Infrastructure (includes Hybrid Infrastructure,
Infrastructure Support)— revenues of $3.4 billion, up 14.8 percent, up 23.1 percent at
constant currency (about 9 points from sales to Kyndryl):
- Hybrid Infrastructure up 33 percent, up 41 percent at constant
currency (about 11 points from sales to Kyndryl):
-- IBM z Systems up 88 percent, up 98 percent at
constant currency
-- Distributed Infrastructure up 13 percent, up 21
percent at constant currency
- Infrastructure Support down 3 percent, up 5 percent at constant
currency (about 7 points from sales to Kyndryl)
- Financing (includes client and commercial financing)—
revenues of $0.2 billion, down 5.7
percent, down 0.6 percent at constant currency
Cash Flow and Balance Sheet
On a consolidated basis,
in the third quarter, the company generated net cash from operating
activities of $1.9 billion or
$1.2 billion excluding IBM Financing
receivables. IBM's free cash flow was $0.8
billion. The company returned $1.5
billion to shareholders in dividends in the third
quarter.
On a consolidated basis, for the first nine months of the year,
the company generated net cash from operating activities of
$6.5 billion or $5.4 billion excluding IBM Financing receivables.
IBM's free cash flow was $4.1
billion, which includes cash impacts from the company's
structural actions initiated at the end of 2020.
IBM ended the third quarter with $9.7
billion of cash on hand (which includes marketable
securities), up $2.2 billion from
year-end 2021. Debt, including IBM Financing debt of $11.2 billion, totaled $50.9 billion, down $0.8
billion since the end of 2021.
Full-Year 2022 Expectations
- Revenue Growth: The company now expects constant currency
revenue growth above its mid-single digit model. The company
continues to expect an additional contribution of approximately 3.5
points from sales to Kyndryl, concentrated in the first three
quarters. At mid-October 2022 foreign
exchange rates, currency is expected to be about a seven-point
headwind.
- Free Cash Flow: The company continues to expect about
$10 billion in consolidated 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. 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
On
November 3, 2021, IBM completed the
separation of Kyndryl. Unless otherwise specified, results are
presented on a continuing operations basis. All references to
revenue impacts from sales to Kyndryl are incremental sales
post-separation.
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;
- consolidated free cash flow;
- consolidated cash from operating activities excluding IBM
Financing receivables.
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.
Conference Call and Webcast
IBM's regular quarterly
earnings conference call is scheduled to begin at
5:00 p.m. EDT, today. The Webcast may be accessed via a
link at
https://www.ibm.com/investor/events/earnings-3q22. 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
|
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
2022*
|
|
2021**
|
|
|
|
2022*
|
|
2021**
|
|
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
$
|
5,811
|
|
$
|
5,406
|
|
|
|
$
|
17,749
|
|
$
|
16,339
|
|
|
|
Consulting
|
|
|
4,700
|
|
|
4,457
|
|
|
|
|
14,337
|
|
|
13,098
|
|
|
|
Infrastructure
|
|
|
3,352
|
|
|
2,921
|
|
|
|
|
10,805
|
|
|
9,774
|
|
|
|
Financing
|
|
|
174
|
|
|
184
|
|
|
|
|
474
|
|
|
601
|
|
|
|
Other
|
|
|
70
|
|
|
282
|
|
|
|
|
475
|
|
|
844
|
|
|
|
TOTAL REVENUE
|
|
|
14,107
|
|
|
13,251
|
|
|
|
|
43,840
|
|
|
40,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
7,430
|
|
|
7,106
|
|
|
|
|
23,055
|
|
|
21,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
79.0
|
%
|
|
78.6
|
%
|
|
|
|
79.0
|
%
|
|
78.7
|
%
|
|
|
Consulting
|
|
|
26.0
|
%
|
|
29.5
|
%
|
|
|
|
24.8
|
%
|
|
28.3
|
%
|
|
|
Infrastructure
|
|
|
50.8
|
%
|
|
52.8
|
%
|
|
|
|
51.9
|
%
|
|
55.6
|
%
|
|
|
Financing
|
|
|
32.8
|
%
|
|
28.7
|
%
|
|
|
|
35.1
|
%
|
|
31.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT MARGIN
|
|
|
52.7
|
%
|
|
53.6
|
%
|
|
|
|
52.6
|
%
|
|
54.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S,G&A
|
|
|
4,391
|
|
|
4,306
|
|
|
|
|
13,843
|
|
|
13,842
|
|
|
|
R,D&E
|
|
|
1,611
|
|
|
1,606
|
|
|
|
|
4,963
|
|
|
4,863
|
|
|
|
Intellectual property
and custom development income
|
|
|
(121)
|
|
|
(153)
|
|
|
|
|
(418)
|
|
|
(431)
|
|
|
|
Other (income) and
expense
|
|
|
5,755
|
|
|
244
|
|
|
|
|
5,921
|
|
|
891
|
|
|
|
Interest
expense
|
|
|
295
|
|
|
290
|
|
|
|
|
903
|
|
|
852
|
|
|
|
TOTAL EXPENSE AND OTHER INCOME
|
|
|
11,931
|
|
|
6,293
|
|
|
|
|
25,212
|
|
|
20,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS) FROM CONTINUING
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEFORE INCOME TAXES
|
|
|
(4,501)
|
|
|
813
|
|
|
|
|
(2,156)
|
|
|
1,968
|
|
|
|
Pre-tax
margin
|
|
|
(31.9)
|
%
|
|
6.1
|
%
|
|
|
|
(4.9)
|
%
|
|
4.8
|
%
|
|
|
Provision for/(Benefit
from) income taxes
|
|
|
(1,287)
|
|
|
(224)
|
|
|
|
|
(1,070)
|
|
|
(282)
|
|
|
|
Effective tax
rate
|
|
|
28.6
|
%
|
|
(27.6)
|
%
|
|
|
|
49.6
|
%
|
|
(14.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS) FROM CONTINUING
OPERATIONS
|
|
$
|
(3,214)
|
|
$
|
1,037
|
|
|
|
$
|
(1,087)
|
|
$
|
2,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
discontinued operations, net of taxes
|
|
|
18
|
|
|
93
|
|
|
|
|
16
|
|
|
1,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME/(LOSS)
|
|
$
|
(3,196)
|
|
$
|
1,130
|
|
|
|
$
|
(1,071)
|
|
$
|
3,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS/(LOSS) PER SHARE OF COMMON
STOCK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
$
|
(3.55)
|
|
$
|
1.14
|
|
|
|
$
|
(1.21)
|
|
$
|
2.49
|
|
|
|
Discontinued
Operations
|
|
$
|
0.02
|
|
$
|
0.10
|
|
|
|
$
|
0.02
|
|
$
|
1.28
|
|
|
|
TOTAL
|
|
$
|
(3.54)
|
|
$
|
1.25
|
|
|
|
$
|
(1.19)
|
|
$
|
3.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
$
|
(3.55)
|
|
$
|
1.16
|
|
|
|
$
|
(1.21)
|
|
$
|
2.51
|
|
|
|
Discontinued
Operations
|
|
$
|
0.02
|
|
$
|
0.10
|
|
|
|
$
|
0.02
|
|
$
|
1.30
|
|
|
|
TOTAL
|
|
$
|
(3.54)
|
|
$
|
1.26
|
|
|
|
$
|
(1.19)
|
|
$
|
3.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(M's)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
|
|
904.1
|
|
|
906.0
|
|
|
|
|
901.6
|
|
|
904.0
|
|
|
|
Basic
|
|
|
904.1
|
|
|
897.1
|
|
|
|
|
901.6
|
|
|
895.3
|
|
|
|
_________________________
|
|
* Includes
a one-time, non-cash pension settlement charge of $5.9 billion
($4.4 billion net of tax).
|
|
** Recast to conform
with 2022 presentation.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEET
(Unaudited)
|
|
|
|
At
|
|
At
|
|
|
September 30,
|
|
December 31,
|
|
(Dollars in Millions)
|
|
2022
|
|
2021
|
|
ASSETS:
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
7,816
|
|
$
|
6,650
|
|
Restricted
cash
|
|
|
159
|
|
|
307
|
|
Marketable
securities
|
|
|
1,753
|
|
|
600
|
|
Notes and accounts
receivable - trade, net
|
|
|
5,526
|
|
|
6,754
|
|
Short-term financing
receivables, net
|
|
|
6,676
|
|
|
8,014
|
|
Other accounts
receivable, net
|
|
|
902
|
|
|
1,002
|
|
Inventories
|
|
|
1,794
|
|
|
1,649
|
|
Deferred
costs
|
|
|
921
|
|
|
1,097
|
|
Prepaid expenses and
other current assets
|
|
|
3,452
|
|
|
3,466
|
|
Total Current Assets
|
|
|
28,999
|
|
|
29,539
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
5,150
|
|
|
5,694
|
|
Operating right-of-use
assets, net
|
|
|
2,740
|
|
|
3,222
|
|
Long-term financing
receivables, net
|
|
|
4,781
|
|
|
5,425
|
|
Prepaid pension
assets
|
|
|
9,695
|
|
|
9,850
|
|
Deferred
costs
|
|
|
818
|
|
|
924
|
|
Deferred
taxes
|
|
|
6,868
|
|
|
7,370
|
|
Goodwill
|
|
|
54,218
|
|
|
55,643
|
|
Intangibles,
net
|
|
|
10,967
|
|
|
12,511
|
|
Investments and sundry
assets
|
|
|
1,614
|
|
|
1,823
|
|
Total Assets
|
|
$
|
125,850
|
|
$
|
132,001
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
Taxes
|
|
$
|
1,667
|
|
$
|
2,289
|
|
Short-term
debt
|
|
|
5,937
|
|
|
6,787
|
|
Accounts
payable
|
|
|
3,806
|
|
|
3,955
|
|
Deferred
income
|
|
|
11,139
|
|
|
12,518
|
|
Operating lease
liabilities
|
|
|
844
|
|
|
974
|
|
Other
liabilities
|
|
|
7,072
|
|
|
7,097
|
|
Total Current Liabilities
|
|
|
30,466
|
|
|
33,619
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
44,942
|
|
|
44,917
|
|
Retirement related
obligations
|
|
|
11,760
|
|
|
14,435
|
|
Deferred
income
|
|
|
3,018
|
|
|
3,577
|
|
Operating lease
liabilities
|
|
|
2,103
|
|
|
2,462
|
|
Other
liabilities
|
|
|
13,413
|
|
|
13,996
|
|
Total Liabilities
|
|
|
105,703
|
|
|
113,005
|
|
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
|
|
|
IBM Stockholders' Equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
58,117
|
|
|
57,319
|
|
Retained
earnings
|
|
|
148,611
|
|
|
154,209
|
|
Treasury stock —
at cost
|
|
|
(169,514)
|
|
|
(169,392)
|
|
Accumulated other
comprehensive income/(loss)
|
|
|
(17,138)
|
|
|
(23,234)
|
|
Total IBM Stockholders' Equity
|
|
|
20,076
|
|
|
18,901
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
71
|
|
|
95
|
|
Total Equity
|
|
|
20,147
|
|
|
18,996
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
$
|
125,850
|
|
$
|
132,001
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH FLOW
ANALYSIS
(Unaudited)
|
|
|
|
|
|
|
|
Trailing Twelve
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
(Dollars in Millions)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
|
Consolidated Net Cash from Operations per
GAAP
|
|
$
|
1,901
|
|
$
|
2,713
|
|
$
|
6,470
|
|
$
|
10,252
|
|
$
|
9,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: change in IBM
Financing receivables
|
|
|
704
|
|
|
1,472
|
|
|
1,071
|
|
|
5,235
|
|
|
(257)
|
|
Capital Expenditures,
net
|
|
|
(445)
|
|
|
(638)
|
|
|
(1,317)
|
|
|
(1,855)
|
|
|
(1,843)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Free Cash Flow
|
|
|
752
|
|
|
603
|
|
|
4,082
|
|
|
3,162
|
|
|
7,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
(62)
|
|
|
(152)
|
|
|
(1,020)
|
|
|
(3,018)
|
|
|
(1,295)
|
|
Divestitures
|
|
|
3
|
|
|
51
|
|
|
1,271
|
|
|
26
|
|
|
1,359
|
|
Dividends
|
|
|
(1,491)
|
|
|
(1,471)
|
|
|
(4,454)
|
|
|
(4,395)
|
|
|
(5,927)
|
|
Non-Financing
Debt
|
|
|
2,946
|
|
|
1,187
|
|
|
4,686
|
|
|
(1,143)
|
|
|
4,638
|
|
Other (includes IBM
Financing net receivables and debt)
|
|
|
(198)
|
|
|
22
|
|
|
(2,395)
|
|
|
(500)
|
|
|
(4,881)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Cash, Cash Equivalents, Restricted Cash and
Short-term
Marketable Securities*
|
|
$
|
1,950
|
|
$
|
241
|
|
$
|
2,171
|
|
$
|
(5,868)
|
|
$
|
1,322
|
|
_________________________
|
|
* Cash flows are
presented on a consolidated basis.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH
FLOW
(Unaudited)
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
(Dollars in Millions)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net Income/(Loss) from
Operations
|
|
$
|
(3,196)
|
|
$
|
1,130
|
|
$
|
(1,071)
|
|
$
|
3,410
|
|
Pension Settlement
Charge
|
|
|
5,894
|
|
|
-
|
|
|
5,894
|
|
|
-
|
|
Depreciation/Amortization of Intangibles
|
|
|
1,163
|
|
|
1,684
|
|
|
3,665
|
|
|
5,036
|
|
Stock-based
Compensation
|
|
|
251
|
|
|
262
|
|
|
739
|
|
|
719
|
|
Working Capital /
Other
|
|
|
(2,914)
|
|
|
(1,834)
|
|
|
(3,827)
|
|
|
(4,147)
|
|
IBM Financing
A/R
|
|
|
704
|
|
|
1,472
|
|
|
1,071
|
|
|
5,235
|
|
Net Cash Provided by Operating
Activities
|
|
$
|
1,901
|
|
$
|
2,713
|
|
$
|
6,470
|
|
$
|
10,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures,
net of payments & proceeds
|
|
|
(445)
|
|
|
(638)
|
|
|
(1,317)
|
|
|
(1,855)
|
|
Divestitures, net of
cash transferred
|
|
|
3
|
|
|
51
|
|
|
1,271
|
|
|
26
|
|
Acquisitions, net of
cash acquired
|
|
|
(62)
|
|
|
(152)
|
|
|
(1,020)
|
|
|
(3,018)
|
|
Marketable Securities
/ Other Investments, net
|
|
|
(1,193)
|
|
|
109
|
|
|
(1,818)
|
|
|
(453)
|
|
Net Cash Provided by/(Used in) Investing
Activities
|
|
$
|
(1,697)
|
|
$
|
(629)
|
|
$
|
(2,883)
|
|
$
|
(5,300)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net of
payments & proceeds
|
|
|
2,138
|
|
|
(287)
|
|
|
2,572
|
|
|
(6,086)
|
|
Dividends
|
|
|
(1,491)
|
|
|
(1,471)
|
|
|
(4,454)
|
|
|
(4,395)
|
|
Financing -
Other
|
|
|
67
|
|
|
9
|
|
|
(223)
|
|
|
(181)
|
|
Net Cash Provided by/(Used in) Financing
Activities
|
|
$
|
714
|
|
$
|
(1,748)
|
|
$
|
(2,106)
|
|
$
|
(10,662)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate
changes on Cash
|
|
|
(197)
|
|
|
(94)
|
|
|
(463)
|
|
|
(159)
|
|
Net Change in Cash, Cash Equivalents and Restricted
Cash*
|
|
$
|
721
|
|
$
|
241
|
|
$
|
1,018
|
|
$
|
(5,868)
|
|
_________________________
|
|
* Cash flows are
presented on a consolidated basis.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
SEGMENT
DATA
(Unaudited)
|
|
|
|
Three Months Ended
September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
|
Software
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
|
Revenue
|
|
$
|
5,811
|
|
$
|
4,700
|
|
$
|
3,352
|
|
$
|
174
|
|
|
Pre-tax Income/(Loss) from Continuing
Operations
|
|
$
|
1,306
|
|
$
|
462
|
|
$
|
280
|
|
$
|
79
|
|
|
Pre-tax Margin
|
|
|
22.5
|
%
|
|
9.8
|
%
|
|
8.3
|
%
|
|
45.4
|
%
|
|
Change YTY Revenue
|
|
|
7.5
|
%
|
|
5.4
|
%
|
|
14.8
|
%
|
|
(5.7)
|
%
|
|
Change YTY Revenue -
constant currency
|
|
|
14.2
|
%
|
|
15.6
|
%
|
|
23.1
|
%
|
|
(0.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2021*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
|
Software
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
|
Revenue
|
|
$
|
5,406
|
|
$
|
4,457
|
|
$
|
2,921
|
|
$
|
184
|
|
|
Pre-tax Income/(Loss) from Continuing
Operations
|
|
$
|
990
|
|
$
|
466
|
|
$
|
209
|
|
$
|
132
|
|
|
Pre-tax Margin
|
|
|
18.3
|
%
|
|
10.5
|
%
|
|
7.1
|
%
|
|
71.7
|
%
|
|
_________________________
|
|
* Recast to conform
with 2022 presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
|
Software
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
|
Revenue
|
|
$
|
17,749
|
|
$
|
14,337
|
|
$
|
10,805
|
|
$
|
474
|
|
|
Pre-tax Income/(Loss) from Continuing
Operations
|
|
$
|
3,816
|
|
$
|
1,154
|
|
$
|
1,236
|
|
$
|
265
|
|
|
Pre-tax Margin
|
|
|
21.5
|
%
|
|
8.0
|
%
|
|
11.4
|
%
|
|
55.9
|
%
|
|
Change YTY Revenue
|
|
|
8.6
|
%
|
|
9.5
|
%
|
|
10.6
|
%
|
|
(21.2)
|
%
|
|
Change YTY Revenue -
constant currency
|
|
|
13.7
|
%
|
|
16.9
|
%
|
|
16.3
|
%
|
|
(17.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2021*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
|
Software
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
|
Revenue
|
|
$
|
16,339
|
|
$
|
13,098
|
|
$
|
9,774
|
|
$
|
601
|
|
|
Pre-tax Income/(Loss) from Continuing
Operations
|
|
$
|
2,707
|
|
$
|
1,013
|
|
$
|
989
|
|
$
|
362
|
|
|
Pre-tax Margin
|
|
|
16.6
|
%
|
|
7.7
|
%
|
|
10.1
|
%
|
|
60.1
|
%
|
|
_________________________
|
|
* Recast to conform
with 2022 presentation.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
U.S. GAAP TO
OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars
in millions except per share amounts)
|
|
|
|
Three Months Ended
September 30, 2022
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments (1)
|
|
Adjustments* (2)
|
|
Impacts
|
|
Impacts (3)
|
|
(Non-GAAP)
|
|
|
Gross Profit
|
|
$
|
7,430
|
|
$
|
165
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
7,595
|
|
|
Gross Profit
Margin
|
|
|
52.7
|
%
|
|
1.2
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
53.8
|
%
|
|
S,G&A
|
|
$
|
4,391
|
|
$
|
(253)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0)
|
|
$
|
4,138
|
|
|
Other
(Income) & Expense
|
|
|
5,755
|
|
|
(1)
|
|
|
(6,062)
|
|
|
—
|
|
|
14
|
|
|
(293)
|
|
|
Total
Expense & Other (Income)
|
|
|
11,931
|
|
|
(253)
|
|
|
(6,062)
|
|
|
—
|
|
|
14
|
|
|
5,630
|
|
|
Pre-tax Income/(Loss)
from Continuing
Operations
|
|
|
(4,501)
|
|
|
418
|
|
|
6,062
|
|
|
—
|
|
|
(14)
|
|
|
1,965
|
|
|
Pre-tax Income/(Loss)
Margin from
Continuing Operations
|
|
|
(31.9)
|
%
|
|
3.0
|
pts.
|
|
43.0
|
pts.
|
|
—
|
pts.
|
|
(0.1)
|
pts.
|
|
13.9
|
%
|
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
(1,287)
|
|
$
|
103
|
|
$
|
1,495
|
|
$
|
—
|
|
$
|
—
|
|
$
|
312
|
|
|
Effective Tax
Rate
|
|
|
28.6
|
%
|
|
(0.8)
|
pts.
|
|
(12.1)
|
pts.
|
|
—
|
pts.
|
|
0.2
|
pts.
|
|
15.9
|
%
|
|
Income/(Loss) from
Continuing
Operations
|
|
$
|
(3,214)
|
|
$
|
315
|
|
$
|
4,566
|
|
$
|
—
|
|
$
|
(14)
|
|
$
|
1,653
|
|
|
Income/(Loss) Margin
from Continuing
Operations
|
|
|
(22.8)
|
%
|
|
2.2
|
pts.
|
|
32.4
|
pts.
|
|
—
|
pts.
|
|
(0.1)
|
pts.
|
|
11.7
|
%
|
|
Diluted Earnings/(Loss)
Per Share:
Continuing Operations **
|
|
$
|
(3.55)
|
|
$
|
0.35
|
|
$
|
5.05
|
|
$
|
—
|
|
$
|
(0.02)
|
|
$
|
1.81
|
|
|
_________________________
|
|
* Includes
a one-time, non-cash, pre-tax pension settlement charge of $5.9
billion ($4.4 billion net of tax).
|
|
** Operating (non-GAAP)
earnings per share was calculated using 912.8 million shares, which
includes 8.8 million dilutive potential shares under our
stock-based compensation plans and
contingently issuable shares. Due to the GAAP net
loss for the three months ended September 30, 2022, these dilutive
potential shares were excluded from the GAAP loss per share
calculation as the effect would have been antidilutive. The
difference in share count resulted in an additional ($0.02)
reconciling item.
|
|
|
|
|
|
|
Three Months Ended
September 30, 2021
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments (1)
|
|
Adjustments (2)
|
|
Impacts
|
|
Impacts (3)
|
|
(Non-GAAP)
|
|
|
Gross Profit
|
|
$
|
7,106
|
|
$
|
183
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
7,290
|
|
|
Gross Profit
Margin
|
|
|
53.6
|
%
|
|
1.4
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
55.0
|
%
|
|
S,G&A
|
|
$
|
4,306
|
|
$
|
(288)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
4,018
|
|
|
Other
(Income) & Expense
|
|
|
244
|
|
|
(1)
|
|
|
(318)
|
|
|
—
|
|
|
—
|
|
|
(74)
|
|
|
Total
Expense & Other (Income)
|
|
|
6,293
|
|
|
(289)
|
|
|
(318)
|
|
|
—
|
|
|
—
|
|
|
5,687
|
|
|
Pre-tax Income/(Loss)
from Continuing
Operations
|
|
|
813
|
|
|
472
|
|
|
318
|
|
|
—
|
|
|
—
|
|
|
1,603
|
|
|
Pre-tax Income/(Loss)
Margin from
Continuing Operations
|
|
|
6.1
|
%
|
|
3.6
|
pts.
|
|
2.4
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
12.1
|
%
|
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
(224)
|
|
$
|
102
|
|
$
|
55
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(67)
|
|
|
Effective Tax
Rate
|
|
|
(27.6)
|
%
|
|
14.5
|
pts.
|
|
8.9
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
(4.2)
|
%
|
|
Income/(Loss) from
Continuing
Operations
|
|
$
|
1,037
|
|
$
|
370
|
|
$
|
262
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,670
|
|
|
Income/(Loss) Margin
from Continuing
Operations
|
|
|
7.8
|
%
|
|
2.8
|
pts.
|
|
2.0
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
12.6
|
%
|
|
Diluted Earnings/(Loss)
Per Share:
Continuing Operations
|
|
$
|
1.14
|
|
$
|
0.41
|
|
$
|
0.29
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1.84
|
|
|
_________________________
|
|
(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.
|
|
(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)
|
Primarily relates to
the realized gain/(loss) and unrealized fair value changes in
Kyndryl common stock and the related cash-settled swap.
|
|
(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
U.S. GAAP TO
OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars
in millions except per share amounts)
|
|
|
|
Nine Months Ended
September 30, 2022
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments (1)
|
|
Adjustments* (2)
|
|
Impacts
|
|
Impacts (3)
|
|
(Non-GAAP)
|
|
|
Gross Profit
|
|
$
|
23,055
|
|
$
|
526
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
23,582
|
|
|
Gross Profit
Margin
|
|
|
52.6
|
%
|
|
1.2
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
53.8
|
%
|
|
S,G&A
|
|
$
|
13,843
|
|
$
|
(818)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0)
|
|
$
|
13,025
|
|
|
Other
(Income) & Expense
|
|
|
5,921
|
|
|
(2)
|
|
|
(6,455)
|
|
|
—
|
|
|
(353)
|
|
|
(889)
|
|
|
Total
Expense & Other (Income)
|
|
|
25,212
|
|
|
(820)
|
|
|
(6,455)
|
|
|
—
|
|
|
(353)
|
|
|
17,584
|
|
|
Pre-tax Income/(Loss)
from Continuing
Operations
|
|
|
(2,156)
|
|
|
1,346
|
|
|
6,455
|
|
|
—
|
|
|
353
|
|
|
5,998
|
|
|
Pre-tax Income/(Loss)
Margin from
Continuing Operations
|
|
|
(4.9)
|
%
|
|
3.1
|
pts.
|
|
14.7
|
pts.
|
|
—
|
pts.
|
|
0.8
|
pts.
|
|
13.7
|
%
|
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
(1,070)
|
|
$
|
327
|
|
$
|
1,599
|
|
$
|
112
|
|
$
|
—
|
|
$
|
969
|
|
|
Effective Tax
Rate
|
|
|
49.6
|
%
|
|
(5.7)
|
pts.
|
|
(26.7)
|
pts.
|
|
1.9
|
pts.
|
|
(2.9)
|
pts.
|
|
16.1
|
%
|
|
Income/(Loss) from
Continuing
Operations
|
|
$
|
(1,087)
|
|
$
|
1,019
|
|
$
|
4,856
|
|
$
|
(112)
|
|
$
|
353
|
|
$
|
5,029
|
|
|
Income/(Loss) Margin
from Continuing
Operations
|
|
|
(2.5)
|
%
|
|
2.3
|
pts.
|
|
11.1
|
pts.
|
|
(0.3)
|
pts.
|
|
0.8
|
pts.
|
|
11.5
|
%
|
|
Diluted Earnings/(Loss)
Per Share:
Continuing Operations **
|
|
$
|
(1.21)
|
|
$
|
1.13
|
|
$
|
5.39
|
|
$
|
(0.12)
|
|
$
|
0.39
|
|
$
|
5.52
|
|
|
_________________________
|
|
* Includes a
one-time, non-cash, pre-tax pension settlement charge of $5.9
billion ($4.4 billion net of tax).
|
|
** Operating (non-GAAP)
earnings per share was calculated using 911.1 million shares, which
includes 9.4 million dilutive potential shares under our
stock-based compensation plans and
contingently issuable shares. Due to the GAAP net loss for the
nine months ended September 30, 2022, these dilutive potential
shares were excluded from the GAAP loss per share calculation as
the effect would have been antidilutive. The difference in share count resulted in an
additional ($0.06) reconciling item.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2021
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments (1)
|
|
Adjustments (2)
|
|
Impacts
|
|
Impacts (3)
|
|
(Non-GAAP)
|
|
|
Gross Profit
|
|
$
|
21,985
|
|
$
|
537
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
22,522
|
|
|
Gross Profit
Margin
|
|
|
54.1
|
%
|
|
1.3
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
55.4
|
%
|
|
S,G&A
|
|
$
|
13,842
|
|
$
|
(870)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
12,972
|
|
|
Other
(Income) & Expense
|
|
|
891
|
|
|
(2)
|
|
|
(967)
|
|
|
—
|
|
|
—
|
|
|
(77)
|
|
|
Total
Expense & Other (Income)
|
|
|
20,017
|
|
|
(872)
|
|
|
(967)
|
|
|
—
|
|
|
—
|
|
|
18,179
|
|
|
Pre-tax Income/(Loss)
from Continuing
Operations
|
|
|
1,968
|
|
|
1,409
|
|
|
967
|
|
|
—
|
|
|
—
|
|
|
4,343
|
|
|
Pre-tax Income/(Loss)
Margin from
Continuing Operations
|
|
|
4.8
|
%
|
|
3.5
|
pts.
|
|
2.4
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
10.7
|
%
|
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
(282)
|
|
$
|
340
|
|
$
|
141
|
|
$
|
6
|
|
$
|
—
|
|
$
|
204
|
|
|
Effective Tax
Rate
|
|
|
(14.4)
|
%
|
|
12.5
|
pts.
|
|
6.5
|
pts.
|
|
0.1
|
pts.
|
|
—
|
pts.
|
|
4.7
|
%
|
|
Income/(Loss) from
Continuing
Operations
|
|
$
|
2,250
|
|
$
|
1,069
|
|
$
|
825
|
|
$
|
(6)
|
|
$
|
—
|
|
$
|
4,139
|
|
|
Income/(Loss) Margin
from Continuing
Operations
|
|
|
5.5
|
%
|
|
2.6
|
pts.
|
|
2.0
|
pts.
|
|
(0.0)
|
pts.
|
|
—
|
pts.
|
|
10.2
|
%
|
|
Diluted Earnings/(Loss)
Per Share:
Continuing Operations
|
|
$
|
2.49
|
|
$
|
1.18
|
|
$
|
0.91
|
|
$
|
(0.01)
|
|
$
|
—
|
|
$
|
4.58
|
|
|
_________________________
|
|
(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.
|
|
(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)
|
Primarily relates to
the realized gain/(loss) and unrealized fair value changes in
Kyndryl common stock and the related cash-settled swap.
|
|
(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.
|
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SOURCE IBM