IBM RELEASES
SECOND QUARTER RESULTS
Growth Across Key Segments Led by
Hybrid Cloud Adoption; Solid Cash and Profit Generation
ARMONK, N.Y., July 19, 2022 /PRNewswire/ -- IBM
(NYSE: IBM) today announced second-quarter 2022 earnings
results.
"In the quarter we delivered good revenue performance with
balanced growth across our geographies, driven by client demand for
our hybrid cloud and AI offerings. The IBM team executed our
strategy well," said Arvind Krishna,
IBM chairman and chief executive officer. "With our first half
results, we continue to expect full-year revenue growth at the high
end of our mid-single digit model."
Second-Quarter Highlights
- Revenue
- Revenue of $15.5 billion, up 9
percent, up 16 percent at constant currency (about 5 points from
sales to Kyndryl)
- Software revenue up 6 percent, up 12 percent at constant currency
(about 7 points from sales to Kyndryl)
- Consulting revenue up 10 percent, up 18 percent at constant
currency
- Infrastructure revenue up 19 percent, up 25 percent at constant
currency (about 7 points from sales to Kyndryl)
- Hybrid cloud revenue, over the last 12 months, of $21.7 billion, up 16 percent, up 19 percent at
constant currency
- Cash Flow
- On a consolidated basis, year to date, net cash from operating
activities of $4.6 billion; free cash
flow of $3.3 billion
SECOND QUARTER 2022 INCOME STATEMENT
SUMMARY |
|
|
|
|
|
|
|
|
|
|
|
Pre-tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
Pre-tax |
|
Income |
|
|
Net |
|
|
Diluted |
|
|
|
|
Revenue |
|
|
Profit |
|
|
Income |
|
Margin |
|
|
Income |
|
|
EPS |
|
GAAP from
Continuing
Operations |
|
$ |
15.5B |
|
$ |
8.3B |
|
$ |
1.7B |
|
11.1 |
% |
$ |
1.5B |
|
$ |
1.61 |
|
Year/Year |
|
|
9 |
%* |
|
6 |
% |
|
89 |
% |
4.7 |
Pts |
|
81 |
% |
|
79 |
% |
Operating
(Non-GAAP) |
|
|
|
|
$ |
8.5B |
|
$ |
2.5B |
|
16.2 |
% |
$ |
2.1B |
|
$ |
2.31 |
|
Year/Year |
|
|
|
|
|
5 |
% |
|
48 |
% |
4.2 |
Pts |
|
45 |
% |
|
43 |
% |
*16% at constant currency |
"We are a faster-growing, focused, disciplined company with
sound business fundamentals," said James
Kavanaugh, IBM senior vice president and chief financial
officer. "Our recurring revenue stream and solid cash generation
position us well to continue to invest in R&D, acquire new
companies, and strengthen our talent in every part of the business,
while also returning value to shareholders through our
dividend."
Segment Results for Second Quarter
- Software (includes Hybrid Platform & Solutions,
Transaction Processing)— revenues of $6.2 billion, up 6.4 percent, up 11.6 percent at
constant currency (about 7 points from sales to Kyndryl):
- Hybrid Platform & Solutions up 4 percent, up 9 percent at
constant currency (about 1.5 points from sales to Kyndryl):
-- Red Hat up 12 percent, up 17 percent at constant
currency
-- Automation up 4 percent, up 8 percent at constant
currency
-- Data & AI flat, up 4 percent at constant
currency
-- Security flat, up 5 percent at constant
currency
- Transaction Processing up 12 percent, up 19 percent at constant
currency (about 22 points from sales to Kyndryl)
- Software segment hybrid cloud revenue up 14 percent, up 18
percent at constant currency
- Consulting (includes Business Transformation, Technology
Consulting and Application Operations)— revenues of
$4.8 billion, up 9.8 percent, up 17.8
percent at constant currency:
- Business Transformation up 9 percent, up 16 percent at constant
currency
- Technology Consulting up 14 percent, up 23 percent at constant
currency
- Application Operations up 9 percent, up 17 percent at constant
currency
- Consulting segment hybrid cloud revenue up 20 percent, up 29
percent at constant currency
- Infrastructure (includes Hybrid Infrastructure,
Infrastructure Support)— revenues of $4.2 billion, up 19.0 percent, up 25.4 percent at
constant currency (about 7 points from sales to Kyndryl):
- Hybrid Infrastructure up 34 percent, up 41 percent at constant
currency (about 7 points from sales to Kyndryl)
-- IBM z Systems up 69 percent, up 77 percent at
constant currency
-- Distributed Infrastructure up 11 percent, up 17
percent at constant currency
- Infrastructure Support down 2 percent, up 5 percent at constant
currency (about 8 points from sales to Kyndryl)
- Infrastructure segment hybrid cloud revenue up 24 percent, up 30
percent at constant currency
- Financing (includes client and commercial
financing)— revenues of $0.1
billion, down 29.9 percent, down 26.6 percent at constant
currency
Cash Flow and Balance Sheet
On a consolidated basis, in the second quarter, the company
generated net cash from operating activities of $1.3 billion or $2.6
billion excluding IBM Financing receivables. IBM's free cash
flow was $2.1 billion. The company
returned $1.5 billion to shareholders
in dividends in the second quarter.
On a consolidated basis, for the first six months of the year,
the company generated net cash from operating activities of
$4.6 billion or $4.2 billion excluding IBM Financing receivables.
IBM's free cash flow was $3.3
billion, which includes cash impacts from the company's
structural actions initiated at the end of 2020.
IBM ended the second quarter with $7.8
billion of cash on hand (which includes marketable
securities), up $0.2 billion from
year-end 2021. Debt, including IBM Financing debt of $12.3 billion, totaled $50.3 billion, down $1.4
billion since the end of 2021.
Full-Year 2022 Expectations
- Revenue growth: The company continues to expect constant
currency revenue growth at the high end of its mid-single digit
model. The company also expects an additional 3.5 point
contribution from incremental sales to Kyndryl. At mid-July 2022 foreign exchange rates, currency is
expected to be about a six-point headwind.
- Free Cash Flow: The company now expects 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-2q22. 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 |
|
|
|
Six Months Ended |
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
2022 |
|
2021* |
|
|
|
2022 |
|
2021* |
|
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software |
|
$ |
6,166 |
|
$ |
5,795 |
|
|
|
$ |
11,938 |
|
$ |
10,933 |
|
|
Consulting |
|
|
4,809 |
|
|
4,378 |
|
|
|
|
9,637 |
|
|
8,641 |
|
|
Infrastructure |
|
|
4,235 |
|
|
3,560 |
|
|
|
|
7,453 |
|
|
6,853 |
|
|
Financing |
|
|
146 |
|
|
209 |
|
|
|
|
300 |
|
|
417 |
|
|
Other |
|
|
180 |
|
|
277 |
|
|
|
|
404 |
|
|
561 |
|
|
TOTAL REVENUE |
|
|
15,535 |
|
|
14,218 |
|
|
|
|
29,732 |
|
|
27,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
8,290 |
|
|
7,852 |
|
|
|
|
15,625 |
|
|
14,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT MARGIN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software |
|
|
79.2 |
% |
|
79.7 |
% |
|
|
|
79.0 |
% |
|
78.8 |
% |
|
Consulting |
|
|
24.2 |
% |
|
27.6 |
% |
|
|
|
24.3 |
% |
|
27.7 |
% |
|
Infrastructure |
|
|
53.8 |
% |
|
57.1 |
% |
|
|
|
52.4 |
% |
|
56.7 |
% |
|
Financing |
|
|
35.3 |
% |
|
29.9 |
% |
|
|
|
36.5 |
% |
|
32.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT MARGIN |
|
|
53.4 |
% |
|
55.2 |
% |
|
|
|
52.6 |
% |
|
54.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S,G&A |
|
|
4,855 |
|
|
4,849 |
|
|
|
|
9,452 |
|
|
9,536 |
|
|
R,D&E |
|
|
1,673 |
|
|
1,641 |
|
|
|
|
3,352 |
|
|
3,257 |
|
|
Intellectual property and custom development
income |
|
|
(176) |
|
|
(133) |
|
|
|
|
(297) |
|
|
(278) |
|
|
Other (income) and expense |
|
|
(81) |
|
|
302 |
|
|
|
|
166 |
|
|
647 |
|
|
Interest expense |
|
|
297 |
|
|
281 |
|
|
|
|
607 |
|
|
561 |
|
|
TOTAL EXPENSE AND OTHER INCOME |
|
|
6,568 |
|
|
6,940 |
|
|
|
|
13,280 |
|
|
13,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS) FROM CONTINUING OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEFORE INCOME TAXES |
|
|
1,722 |
|
|
912 |
|
|
|
|
2,345 |
|
|
1,155 |
|
|
Pre-tax margin |
|
|
11.1 |
% |
|
6.4 |
% |
|
|
|
7.9 |
% |
|
4.2 |
% |
|
Provision for/(Benefit from) income taxes |
|
|
257 |
|
|
101 |
|
|
|
|
218 |
|
|
(58) |
|
|
Effective tax rate |
|
|
14.9 |
% |
|
11.1 |
% |
|
|
|
9.3 |
% |
|
(5.0) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS |
|
$ |
1,465 |
|
$ |
810 |
|
|
|
$ |
2,127 |
|
$ |
1,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss) from discontinued operations, net of
taxes |
|
|
(73) |
|
|
515 |
|
|
|
|
(2) |
|
|
1,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
1,392 |
|
$ |
1,325 |
|
|
|
$ |
2,125 |
|
$ |
2,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS/(LOSS) PER SHARE OF COMMON STOCK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming Dilution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations |
|
$ |
1.61 |
|
$ |
0.90 |
|
|
|
$ |
2.34 |
|
$ |
1.34 |
|
|
Discontinued Operations |
|
$ |
(0.08) |
|
$ |
0.57 |
|
|
|
$ |
0.00 |
|
$ |
1.18 |
|
|
TOTAL |
|
$ |
1.53 |
|
$ |
1.47 |
|
|
|
$ |
2.34 |
|
$ |
2.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations |
|
$ |
1.62 |
|
$ |
0.91 |
|
|
|
$ |
2.36 |
|
$ |
1.36 |
|
|
Discontinued Operations |
|
$ |
(0.08) |
|
$ |
0.57 |
|
|
|
$ |
0.00 |
|
$ |
1.19 |
|
|
TOTAL |
|
$ |
1.54 |
|
$ |
1.48 |
|
|
|
$ |
2.36 |
|
$ |
2.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (M's) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming Dilution |
|
|
910.7 |
|
|
904.2 |
|
|
|
|
910.0 |
|
|
903.0 |
|
|
Basic |
|
|
901.5 |
|
|
895.0 |
|
|
|
|
900.4 |
|
|
894.3 |
|
|
____________________ |
* Recast to conform with 2022 presentation. |
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited) |
|
|
|
At |
|
At |
|
|
June 30, |
|
December 31, |
(Dollars in Millions) |
|
2022 |
|
2021 |
ASSETS: |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,034 |
|
$ |
6,650 |
Restricted cash |
|
|
220 |
|
|
307 |
Marketable securities |
|
|
524 |
|
|
600 |
Notes and accounts receivable - trade,
net |
|
|
5,867 |
|
|
6,754 |
Short-term financing receivables, net |
|
|
7,233 |
|
|
8,014 |
Other accounts receivable, net |
|
|
909 |
|
|
1,002 |
Inventories |
|
|
1,684 |
|
|
1,649 |
Deferred costs |
|
|
1,010 |
|
|
1,097 |
Prepaid expenses and other current assets |
|
|
3,414 |
|
|
3,466 |
Total Current Assets |
|
|
27,896 |
|
|
29,539 |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
5,275 |
|
|
5,694 |
Operating right-of-use assets, net |
|
|
2,848 |
|
|
3,222 |
Long-term financing receivables, net |
|
|
5,316 |
|
|
5,425 |
Prepaid pension assets |
|
|
9,930 |
|
|
9,850 |
Deferred costs |
|
|
865 |
|
|
924 |
Deferred taxes |
|
|
7,073 |
|
|
7,370 |
Goodwill |
|
|
55,039 |
|
|
55,643 |
Intangibles, net |
|
|
11,571 |
|
|
12,511 |
Investments and sundry assets |
|
|
1,689 |
|
|
1,823 |
Total Assets |
|
$ |
127,503 |
|
$ |
132,001 |
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Taxes |
|
$ |
1,742 |
|
$ |
2,289 |
Short-term debt |
|
|
5,981 |
|
|
6,787 |
Accounts payable |
|
|
3,707 |
|
|
3,955 |
Deferred income |
|
|
12,522 |
|
|
12,518 |
Operating lease liabilities |
|
|
884 |
|
|
974 |
Other liabilities |
|
|
7,008 |
|
|
7,097 |
Total Current Liabilities |
|
|
31,844 |
|
|
33,619 |
|
|
|
|
|
|
|
Long-term debt |
|
|
44,328 |
|
|
44,917 |
Retirement related obligations |
|
|
13,118 |
|
|
14,435 |
Deferred income |
|
|
3,069 |
|
|
3,577 |
Operating lease liabilities |
|
|
2,182 |
|
|
2,462 |
Other liabilities |
|
|
13,486 |
|
|
13,996 |
Total Liabilities |
|
|
108,026 |
|
|
113,005 |
|
|
|
|
|
|
|
EQUITY: |
|
|
|
|
|
|
IBM Stockholders' Equity: |
|
|
|
|
|
|
Common stock |
|
|
57,802 |
|
|
57,319 |
Retained earnings |
|
|
153,298 |
|
|
154,209 |
Treasury stock — at cost |
|
|
(169,522) |
|
|
(169,392) |
Accumulated other comprehensive income/(loss) |
|
|
(22,169) |
|
|
(23,234) |
Total IBM Stockholders' Equity |
|
|
19,409 |
|
|
18,901 |
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
67 |
|
|
95 |
Total Equity |
|
|
19,476 |
|
|
18,996 |
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
127,503 |
|
$ |
132,001 |
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW ANALYSIS
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve |
|
|
Three Months Ended |
|
Six Months Ended |
|
Months Ended |
|
|
June 30, |
|
June 30, |
|
June 30, |
(Dollars in Millions) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
2022 |
Consolidated Net Cash from Operations per
GAAP |
|
$ |
1,321 |
|
$ |
2,625 |
|
$ |
4,569 |
|
$ |
7,539 |
|
$ |
9,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: change in IBM Financing receivables |
|
|
(1,264) |
|
|
900 |
|
|
367 |
|
|
3,763 |
|
|
511 |
Capital Expenditures, net |
|
|
(494) |
|
|
(688) |
|
|
(871) |
|
|
(1,217) |
|
|
(2,035) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Free Cash Flow |
|
|
2,091 |
|
|
1,037 |
|
|
3,331 |
|
|
2,559 |
|
|
7,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions |
|
|
(260) |
|
|
(1,747) |
|
|
(958) |
|
|
(2,866) |
|
|
(1,385) |
Divestitures |
|
|
1,207 |
|
|
(10) |
|
|
1,268 |
|
|
(25) |
|
|
1,408 |
Dividends |
|
|
(1,488) |
|
|
(1,467) |
|
|
(2,963) |
|
|
(2,924) |
|
|
(5,907) |
Non-Financing Debt |
|
|
(2,934) |
|
|
(586) |
|
|
1,740 |
|
|
(2,331) |
|
|
2,880 |
Other (includes IBM Financing net receivables and
debt) |
|
|
(1,607) |
|
|
(335) |
|
|
(2,197) |
|
|
(522) |
|
|
(4,661) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Cash, Cash Equivalents, Restricted Cash
and Short-term
Marketable Securities* |
|
$ |
(2,991) |
|
$ |
(3,108) |
|
$ |
221 |
|
$ |
(6,110) |
|
$ |
(387) |
____________________ |
* Cash flows are presented on a consolidated
basis. |
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW
(Unaudited) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
(Dollars in Millions) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net Income from Operations |
|
$ |
1,392 |
|
$ |
1,325 |
|
$ |
2,125 |
|
$ |
2,280 |
Depreciation/Amortization of Intangibles |
|
|
1,245 |
|
|
1,680 |
|
|
2,501 |
|
|
3,352 |
Stock-based Compensation |
|
|
254 |
|
|
243 |
|
|
488 |
|
|
457 |
Working Capital / Other |
|
|
(307) |
|
|
(1,524) |
|
|
(912) |
|
|
(2,313) |
IBM Financing A/R |
|
|
(1,264) |
|
|
900 |
|
|
367 |
|
|
3,763 |
Net Cash Provided by Operating Activities |
|
$ |
1,321 |
|
$ |
2,625 |
|
$ |
4,569 |
|
$ |
7,539 |
Capital Expenditures, net of payments &
proceeds |
|
|
(494) |
|
|
(688) |
|
|
(871) |
|
|
(1,217) |
Divestitures, net of cash transferred |
|
|
1,207 |
|
|
(10) |
|
|
1,268 |
|
|
(25) |
Acquisitions, net of cash acquired |
|
|
(260) |
|
|
(1,747) |
|
|
(958) |
|
|
(2,866) |
Marketable Securities / Other Investments, net |
|
|
(281) |
|
|
(227) |
|
|
(625) |
|
|
(562) |
Net Cash Provided by/(Used in) Investing
Activities |
|
$ |
172 |
|
$ |
(2,671) |
|
$ |
(1,186) |
|
$ |
(4,671) |
Debt, net of payments & proceeds |
|
|
(2,514) |
|
|
(1,500) |
|
|
434 |
|
|
(5,799) |
Dividends |
|
|
(1,488) |
|
|
(1,467) |
|
|
(2,963) |
|
|
(2,924) |
Financing - Other |
|
|
(195) |
|
|
(163) |
|
|
(290) |
|
|
(190) |
Net Cash Provided by/(Used in) Financing
Activities |
|
$ |
(4,197) |
|
$ |
(3,131) |
|
$ |
(2,819) |
|
$ |
(8,914) |
Effect of Exchange Rate changes on Cash |
|
|
(262) |
|
|
69 |
|
|
(267) |
|
|
(65) |
Net Change in Cash, Cash Equivalents and Restricted
Cash* |
|
$ |
(2,965) |
|
$ |
(3,108) |
|
$ |
297 |
|
$ |
(6,110) |
____________________ |
* Cash flows are presented on a consolidated
basis. |
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited) |
|
|
|
|
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
Consulting |
|
Infrastructure |
|
Financing |
|
Revenue |
|
$ |
6,166 |
|
$ |
4,809 |
|
$ |
4,235 |
|
$ |
146 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
$ |
1,375 |
|
$ |
343 |
|
$ |
757 |
|
$ |
102 |
|
Pre-tax Margin |
|
|
22.3 |
% |
|
7.1 |
% |
|
17.9 |
% |
|
69.7 |
% |
Change YTY Revenue |
|
|
6.4 |
% |
|
9.8 |
% |
|
19.0 |
% |
|
(29.9) |
% |
Change YTY Revenue -
constant currency |
|
|
11.6 |
% |
|
17.8 |
% |
|
25.4 |
% |
|
(26.6) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021* |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
Consulting |
|
Infrastructure |
|
Financing |
|
Revenue |
|
$ |
5,795 |
|
$ |
4,378 |
|
$ |
3,560 |
|
$ |
209 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
$ |
1,059 |
|
$ |
270 |
|
$ |
489 |
|
$ |
131 |
|
Pre-tax Margin |
|
|
18.3 |
% |
|
6.2 |
% |
|
13.7 |
% |
|
63.0 |
% |
____________________ |
* Recast to conform with 2022 presentation. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
Consulting |
|
Infrastructure |
|
Financing |
|
Revenue |
|
$ |
11,938 |
|
$ |
9,637 |
|
$ |
7,453 |
|
$ |
300 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
$ |
2,509 |
|
$ |
691 |
|
$ |
956 |
|
$ |
186 |
|
Pre-tax Margin |
|
|
21.0 |
% |
|
7.2 |
% |
|
12.8 |
% |
|
62.0 |
% |
Change YTY Revenue |
|
|
9.2 |
% |
|
11.5 |
% |
|
8.8 |
% |
|
(28.0) |
% |
Change YTY Revenue -
constant currency |
|
|
13.4 |
% |
|
17.6 |
% |
|
13.4 |
% |
|
(25.5) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021* |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
Consulting |
|
Infrastructure |
|
Financing |
|
Revenue |
|
$ |
10,933 |
|
$ |
8,641 |
|
$ |
6,853 |
|
$ |
417 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
$ |
1,717 |
|
$ |
547 |
|
$ |
780 |
|
$ |
229 |
|
Pre-tax Margin |
|
|
15.7 |
% |
|
6.3 |
% |
|
11.4 |
% |
|
55.0 |
% |
____________________ |
* 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 June 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 |
|
$ |
8,290 |
|
$ |
180 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
8,470 |
|
Gross Profit Margin |
|
|
53.4 |
% |
|
1.2 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
— |
pts. |
|
54.5 |
% |
S,G&A |
|
$ |
4,855 |
|
$ |
(279) |
|
$ |
— |
|
$ |
— |
|
$ |
(0) |
|
$ |
4,576 |
|
Other (Income) & Expense |
|
|
(81) |
|
|
(1) |
|
|
(192) |
|
|
— |
|
|
(145) |
|
|
(418) |
|
Total Expense & Other (Income) |
|
|
6,568 |
|
|
(280) |
|
|
(192) |
|
|
— |
|
|
(145) |
|
|
5,952 |
|
Pre-tax Income from Continuing
Operations |
|
|
1,722 |
|
|
460 |
|
|
192 |
|
|
— |
|
|
145 |
|
|
2,518 |
|
Pre-tax Income Margin from
Continuing Operations |
|
|
11.1 |
% |
|
3.0 |
pts. |
|
1.2 |
pts. |
|
— |
pts. |
|
0.9 |
pts. |
|
16.2 |
% |
Provision for/(Benefit from) Income
Taxes (4) |
|
$ |
257 |
|
$ |
115 |
|
$ |
46 |
|
$ |
(4) |
|
$ |
— |
|
$ |
413 |
|
Effective Tax Rate |
|
|
14.9 |
% |
|
1.8 |
pts. |
|
0.7 |
pts. |
|
(0.2) |
pts. |
|
(0.9) |
pts. |
|
16.4 |
% |
Income from Continuing Operations |
|
$ |
1,465 |
|
$ |
345 |
|
$ |
146 |
|
$ |
4 |
|
$ |
145 |
|
$ |
2,105 |
|
Income Margin from Continuing
Operations |
|
|
9.4 |
% |
|
2.2 |
pts. |
|
0.9 |
pts. |
|
0.0 |
pts. |
|
0.9 |
pts. |
|
13.5 |
% |
Diluted Earnings/(Loss) Per Share:
Continuing Operations |
|
$ |
1.61 |
|
$ |
0.38 |
|
$ |
0.16 |
|
$ |
0.00 |
|
$ |
0.16 |
|
$ |
2.31 |
|
|
|
|
Three Months Ended June 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 |
|
$ |
7,852 |
|
$ |
179 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
8,031 |
|
Gross Profit Margin |
|
|
55.2 |
% |
|
1.3 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
— |
pts. |
|
56.5 |
% |
S,G&A |
|
$ |
4,849 |
|
$ |
(294) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
4,555 |
|
Other (Income) & Expense |
|
|
302 |
|
|
(1) |
|
|
(317) |
|
|
— |
|
|
— |
|
|
(16) |
|
Total Expense & Other (Income) |
|
|
6,940 |
|
|
(294) |
|
|
(317) |
|
|
— |
|
|
— |
|
|
6,329 |
|
Pre-tax Income/(Loss) from Continuing
Operations |
|
|
912 |
|
|
474 |
|
|
317 |
|
|
— |
|
|
— |
|
|
1,702 |
|
Pre-tax Income Margin from
Continuing Operations |
|
|
6.4 |
% |
|
3.3 |
pts. |
|
2.2 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
12.0 |
% |
Provision for/(Benefit from) Income
Taxes (4) |
|
$ |
101 |
|
$ |
105 |
|
$ |
53 |
|
$ |
(14) |
|
$ |
— |
|
$ |
246 |
|
Effective Tax Rate |
|
|
11.1 |
% |
|
3.1 |
pts. |
|
1.0 |
pts. |
|
(0.8) |
pts. |
|
— |
pts. |
|
14.5 |
% |
Income from Continuing Operations |
|
$ |
810 |
|
$ |
368 |
|
$ |
264 |
|
$ |
14 |
|
$ |
— |
|
$ |
1,456 |
|
Income Margin from Continuing
Operations |
|
|
5.7 |
% |
|
2.6 |
pts. |
|
1.9 |
pts. |
|
0.1 |
pts. |
|
— |
pts. |
|
10.2 |
% |
Diluted Earnings/(Loss) Per Share:
Continuing Operations |
|
$ |
0.90 |
|
$ |
0.41 |
|
$ |
0.29 |
|
$ |
0.01 |
|
$ |
— |
|
$ |
1.61 |
|
____________________ |
(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 fair value changes
in the retained 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) |
|
|
|
Six Months Ended June 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 |
|
$ |
15,625 |
|
$ |
361 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
15,986 |
|
Gross Profit Margin |
|
|
52.6 |
% |
|
1.2 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
— |
pts. |
|
53.8 |
% |
S,G&A |
|
$ |
9,452 |
|
$ |
(565) |
|
$ |
— |
|
$ |
— |
|
$ |
(0) |
|
$ |
8,887 |
|
Other (Income) & Expense |
|
|
166 |
|
|
(1) |
|
|
(394) |
|
|
— |
|
|
(367) |
|
|
(596) |
|
Total Expense & Other (Income) |
|
|
13,280 |
|
|
(566) |
|
|
(394) |
|
|
— |
|
|
(367) |
|
|
11,953 |
|
Pre-tax Income from Continuing
Operations |
|
|
2,345 |
|
|
928 |
|
|
394 |
|
|
— |
|
|
367 |
|
|
4,033 |
|
Pre-tax Income Margin from
Continuing Operations |
|
|
7.9 |
% |
|
3.1 |
pts. |
|
1.3 |
pts. |
|
— |
pts. |
|
1.2 |
pts. |
|
13.6 |
% |
Provision for/(Benefit from) Income
Taxes (4) |
|
$ |
218 |
|
$ |
224 |
|
$ |
104 |
|
$ |
112 |
|
$ |
— |
|
$ |
657 |
|
Effective Tax Rate |
|
|
9.3 |
% |
|
3.4 |
pts. |
|
1.7 |
pts. |
|
2.8 |
pts. |
|
(0.8) |
pts. |
|
16.3 |
% |
Income from Continuing Operations |
|
$ |
2,127 |
|
$ |
704 |
|
$ |
290 |
|
$ |
(112) |
|
$ |
367 |
|
$ |
3,376 |
|
Income Margin from Continuing
Operations |
|
|
7.2 |
% |
|
2.4 |
pts. |
|
1.0 |
pts. |
|
(0.4) |
pts. |
|
1.2 |
pts. |
|
11.4 |
% |
Diluted Earnings/(Loss) Per Share:
Continuing Operations |
|
$ |
2.34 |
|
$ |
0.77 |
|
$ |
0.32 |
|
$ |
(0.12) |
|
$ |
0.40 |
|
$ |
3.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 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 |
|
$ |
14,879 |
|
$ |
353 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
15,232 |
|
Gross Profit Margin |
|
|
54.3 |
% |
|
1.3 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
— |
pts. |
|
55.6 |
% |
S,G&A |
|
$ |
9,536 |
|
$ |
(582) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
8,954 |
|
Other (Income) & Expense |
|
|
647 |
|
|
(1) |
|
|
(649) |
|
|
— |
|
|
— |
|
|
(3) |
|
Total Expense & Other (Income) |
|
|
13,724 |
|
|
(583) |
|
|
(649) |
|
|
— |
|
|
— |
|
|
12,491 |
|
Pre-tax Income from Continuing
Operations |
|
|
1,155 |
|
|
936 |
|
|
649 |
|
|
— |
|
|
— |
|
|
2,741 |
|
Pre-tax Income Margin from
Continuing Operations |
|
|
4.2 |
% |
|
3.4 |
pts. |
|
2.4 |
pts. |
|
— |
pts. |
|
— |
pts. |
|
10.0 |
% |
Provision for/(Benefit from) Income
Taxes (4) |
|
$ |
(58) |
|
$ |
238 |
|
$ |
86 |
|
$ |
6 |
|
$ |
— |
|
$ |
272 |
|
Effective Tax Rate |
|
|
(5.0) |
% |
|
10.4 |
pts. |
|
4.3 |
pts. |
|
0.2 |
pts. |
|
— |
pts. |
|
9.9 |
% |
Income from Continuing Operations |
|
$ |
1,213 |
|
$ |
699 |
|
$ |
563 |
|
$ |
(6) |
|
$ |
— |
|
$ |
2,469 |
|
Income Margin from Continuing
Operations |
|
|
4.4 |
% |
|
2.5 |
pts. |
|
2.1 |
pts. |
|
(0.0) |
pts. |
|
— |
pts. |
|
9.0 |
% |
Diluted Earnings/(Loss) Per Share:
Continuing Operations |
|
$ |
1.34 |
|
$ |
0.77 |
|
$ |
0.62 |
|
$ |
(0.01) |
|
$ |
— |
|
$ |
2.73 |
|
____________________ |
(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 fair value changes
in the retained 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. |