Accelerated Software revenue growth, expanded gross profit
margin, and strong free cash flow
ARMONK,
N.Y., Oct. 23, 2024 /PRNewswire/ -- IBM (NYSE:
IBM) today announced third-quarter 2024 earnings results.
"Our third-quarter performance was led by double-digit
growth in Software, including a re-acceleration in Red Hat. We
continue to see great momentum in AI as our models are trusted,
fit-for-purpose, and lower cost, with performance leadership. Our
generative AI book of business now stands at more than $3 billion, up more than $1 billion quarter to quarter," said Arvind Krishna, IBM chairman, president and
chief executive officer. "Heading into the final quarter of 2024,
we expect fourth-quarter constant currency revenue growth to be
consistent with the third quarter, with continued strength in
Software. We are confident in our ability to deliver more than
$12 billion in free cash flow for the
year, driven by continued expansion of our operating
margins."
Third-Quarter Highlights
- Revenue
- Revenue of $15.0 billion, up 1
percent, up 2 percent at constant currency
- Software revenue up 10 percent
- Consulting revenue flat
- Infrastructure revenue down 7 percent
- Profit
- Gross Profit Margin: GAAP: 56.3 percent, up 190 basis
points; Operating (Non-GAAP):
57.5 percent, up 210 basis points
- Cash Flow
- Year to date, net cash from operating activities of
$9.1 billion; free cash flow of
$6.6 billion
|
THIRD-QUARTER
2024 INCOME STATEMENT SUMMARY
|
|
|
GAAP results include
impact of one-time, non-cash pension settlement charge (1)
|
|
|
Revenue
|
|
Gross
Profit
|
|
|
Gross
Profit
Margin
|
|
|
Pre-tax
Income/
(Loss) (1)
|
|
Pre-tax
Income
Margin (1)
|
|
Net
Income/
(Loss) (1)
|
|
Diluted
Earnings/
(Loss)
Per
Share (1)
|
|
GAAP
from
Continuing
Operations
|
$ 15.0
B
|
|
|
$ 8.4
B
|
|
|
56.3
|
%
|
|
$ (0.8)
B
|
|
|
(5.4)
|
%
|
|
$ (0.3)
B
|
|
|
$
(0.34)
|
|
|
Year/Year
|
1
|
%(2)
|
|
5
|
%
|
|
1.9
|
Pts
|
|
NM
|
|
|
-18.1
|
Pts
|
|
NM
|
|
|
NM
|
|
|
Operating
(Non-GAAP)
|
|
|
|
$ 8.6
B
|
|
|
57.5
|
%
|
|
$
2.5 B
|
|
|
16.6
|
%
|
|
$ 2.2 B
|
|
|
$ 2.30
|
|
|
Year/Year
|
|
|
|
5
|
%
|
|
2.1
|
Pts
|
|
8
|
%
|
|
1.0
|
Pts
|
|
6
|
%
|
|
5
|
%
|
|
(1) 2024 GAAP
results include the impact of a one-time, non-cash, pension
settlement charge of $2.7 billion ($2.0 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 a
third-party insurer,
announced in September 2024.
|
|
(2) 2% at
constant currency.
|
"Our investments are paying off in Software as we've
repositioned our portfolio in recent years. In the third quarter,
Software delivered broad-based growth and now represents nearly 45
percent of our total revenue. Our ongoing focus on product mix,
coupled with our productivity initiatives enables us to continue to
drive operating leverage in our underlying profit performance,"
said James Kavanaugh, IBM senior
vice president and chief financial officer. "With our strong cash
generation, we are well-positioned to continue investing for growth
while returning value to shareholders through dividends."
Segment Results for Third Quarter
- Software — revenues of $6.5
billion, up 9.7 percent, up 9.6 percent at constant
currency:
- Hybrid Platform & Solutions up 10 percent
-- Red Hat up 14 percent
-- Automation up 13 percent
-- Data & AI up 5 percent
-- Security down 1 percent
- Transaction Processing up 9 percent
- Consulting — revenues of $5.2
billion, down 0.5 percent, down 0.2 percent at constant
currency:
- Business Transformation up 2 percent
- Technology Consulting down 4 percent
- Application Operations down 1 percent
- Infrastructure — revenues of $3.0
billion, down 7.0 percent, down 6.7 percent at constant
currency:
- Hybrid Infrastructure down 9 percent
-- IBM Z down 19 percent
-- Distributed Infrastructure down 3
percent
- Infrastructure Support down 4 percent, down 3 percent at
constant currency
- Financing — revenues of $0.2
billion, down 2.5 percent, down 1.3 percent at constant
currency
Cash Flow and Balance Sheet
In the third quarter, the company generated net cash from
operating activities of $2.9 billion,
down $0.2 billion year to year. IBM's
free cash flow was $2.1 billion, up
$0.4 billion year to year. The
company returned $1.5 billion to
shareholders in dividends in the third quarter.
For the first nine months of the year, the company generated net
cash from operating activities of $9.1
billion, down $0.4 billion
year to year. IBM's free cash flow was $6.6
billion, up $1.5 billion year
to year.
IBM ended the third quarter with $13.7
billion of cash, restricted cash and marketable securities,
up $0.3 billion from year-end 2023.
Debt, including IBM Financing debt of $10.4
billion, totaled $56.6
billion, flat year to date.
Expectations
- Revenue: The company expects fourth-quarter constant currency
revenue growth consistent with the third quarter. At current
foreign exchange rates, currency is expected to be about a
half-point headwind to revenue growth in the quarter
- Free cash flow: The company continues to expect more than
$12 billion in free cash flow for the
full year
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
For generative AI, book of business includes Software
transactional revenue, SaaS Annual Contract Value and Consulting
signings. The generative AI book of business is further defined
within Exhibit 99.2 in the Form 8-K that includes 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;
- 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.
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-3q24. 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
September 30,
|
|
|
Nine Months
Ended
September 30,
|
|
|
2024
|
|
|
2023 (1)
|
|
|
2024
|
|
|
2023 (1)
|
|
|
REVENUE BY
SEGMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
$
6,524
|
|
|
$
5,947
|
|
|
$
19,162
|
|
|
$
17,832
|
|
|
Consulting
|
5,152
|
|
|
5,178
|
|
|
15,517
|
|
|
15,601
|
|
|
Infrastructure
|
3,042
|
|
|
3,272
|
|
|
9,764
|
|
|
9,988
|
|
|
Financing
|
181
|
|
|
186
|
|
|
543
|
|
|
566
|
|
|
Other
|
68
|
|
|
170
|
|
|
214
|
|
|
491
|
|
|
TOTAL
REVENUE
|
14,968
|
|
|
14,752
|
|
|
45,199
|
|
|
44,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
8,420
|
|
|
8,023
|
|
|
25,112
|
|
|
24,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
83.2
|
%
|
|
82.3
|
%
|
|
83.1
|
%
|
|
82.3
|
%
|
|
Consulting
|
28.4
|
%
|
|
27.6
|
%
|
|
26.7
|
%
|
|
26.3
|
%
|
|
Infrastructure
|
55.0
|
%
|
|
53.7
|
%
|
|
55.3
|
%
|
|
54.0
|
%
|
|
Financing
|
47.2
|
%
|
|
49.7
|
%
|
|
48.2
|
%
|
|
47.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT
MARGIN
|
56.3
|
%
|
|
54.4
|
%
|
|
55.6
|
%
|
|
54.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
S,G&A
|
4,911
|
|
|
4,458
|
|
|
14,823
|
|
|
14,212
|
|
|
R,D&E
|
1,876
|
|
|
1,685
|
|
|
5,512
|
|
|
5,027
|
|
|
Intellectual property
and custom development income
|
(238)
|
|
|
(190)
|
|
|
(696)
|
|
|
(618)
|
|
|
Other (income) and
expense
|
2,244
|
|
|
(215)
|
|
|
1,694
|
|
|
(721)
|
|
|
Interest
expense
|
429
|
|
|
412
|
|
|
1,288
|
|
|
1,202
|
|
|
TOTAL EXPENSE AND
OTHER INCOME
|
9,222
|
|
|
6,150
|
|
|
22,621
|
|
|
19,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS)
FROM CONTINUING OPERATIONS
BEFORE INCOME
TAXES
|
(802)
|
|
|
1,873
|
|
|
2,491
|
|
|
4,931
|
|
|
Pre-tax
margin
|
(5.4)
|
%
|
|
12.7
|
%
|
|
5.5
|
%
|
|
11.1
|
%
|
|
Provision for/(Benefit
from) income taxes
|
(485)
|
|
|
159
|
|
|
(597)
|
|
|
702
|
|
|
Effective tax
rate
|
60.4
|
%
|
|
8.5
|
%
|
|
(24.0)
|
%
|
|
14.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS) FROM
CONTINUING OPERATIONS
|
$
(317)
|
|
|
$
1,714
|
|
|
$
3,088
|
|
|
$
4,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/ (loss) from
discontinued operations, net of taxes
|
(13)
|
|
|
(10)
|
|
|
21
|
|
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME/(LOSS)
(2)
|
$
(330)
|
|
|
$
1,704
|
|
|
$
3,109
|
|
|
$
4,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS/(LOSS) PER
SHARE OF COMMON STOCK (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
$
(0.34)
|
|
|
$
1.86
|
|
|
$
3.30
|
|
|
$
4.59
|
|
|
Discontinued
Operations
|
$
(0.01)
|
|
|
$
(0.01)
|
|
|
$
0.02
|
|
|
$
(0.02)
|
|
|
TOTAL
|
$
(0.36)
|
|
|
$
1.84
|
|
|
$
3.32
|
|
|
$
4.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
$
(0.34)
|
|
|
$
1.88
|
|
|
$
3.36
|
|
|
$
4.65
|
|
|
Discontinued
Operations
|
$
(0.01)
|
|
|
$
(0.01)
|
|
|
$
0.02
|
|
|
$
(0.02)
|
|
|
TOTAL
|
$
(0.36)
|
|
|
$
1.87
|
|
|
$
3.38
|
|
|
$
4.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE
NUMBER OF COMMON SHARES
OUTSTANDING
(M's)
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
923.6
|
|
|
923.7
|
|
|
935.4
|
|
|
920.3
|
|
|
Basic
|
923.6
|
|
|
912.8
|
|
|
920.3
|
|
|
910.1
|
|
|
____________________
|
|
(1) Recast to
reflect January 2024 segment changes.
|
|
(2) 2024 includes
the impact of a one-time, non-cash, pension settlement charge of
$2.7 billion ($2.0 billion net of tax).
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEET
(Unaudited)
|
|
|
(Dollars in
Millions)
|
|
At
September
30,
2024
|
|
At
December 31,
2023
|
|
ASSETS:
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
13,197
|
|
$
13,068
|
|
Restricted
cash
|
|
17
|
|
21
|
|
Marketable
securities
|
|
505
|
|
373
|
|
Notes and accounts
receivable - trade, net
|
|
5,390
|
|
7,214
|
|
Short-term financing
receivables, net
|
|
5,765
|
|
6,793
|
|
Other accounts
receivable, net
|
|
928
|
|
640
|
|
Inventories
|
|
1,367
|
|
1,161
|
|
Deferred
costs
|
|
966
|
|
998
|
|
Prepaid expenses and
other current assets
|
|
2,408
|
|
2,639
|
|
Total Current
Assets
|
|
30,543
|
|
32,908
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
5,614
|
|
5,501
|
|
Operating right-of-use
assets, net
|
|
3,355
|
|
3,220
|
|
Long-term financing
receivables, net
|
|
4,931
|
|
5,766
|
|
Prepaid pension
assets
|
|
7,975
|
|
7,506
|
|
Deferred
costs
|
|
788
|
|
842
|
|
Deferred
taxes
|
|
6,943
|
|
6,656
|
|
Goodwill
|
|
61,092
|
|
60,178
|
|
Intangibles,
net
|
|
11,090
|
|
11,036
|
|
Investments and sundry
assets
|
|
2,009
|
|
1,626
|
|
Total
Assets
|
|
$
134,339
|
|
$
135,241
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Taxes
|
|
$
1,584
|
|
$
2,270
|
|
Short-term
debt
|
|
3,599
|
|
6,426
|
|
Accounts
payable
|
|
3,274
|
|
4,132
|
|
Deferred
income
|
|
12,882
|
|
13,451
|
|
Operating lease
liabilities
|
|
790
|
|
820
|
|
Other
liabilities
|
|
6,725
|
|
7,022
|
|
Total Current
Liabilities
|
|
28,853
|
|
34,122
|
|
|
|
|
|
|
Long-term
debt
|
|
52,980
|
|
50,121
|
|
Retirement-related
obligations
|
|
10,366
|
|
10,808
|
|
Deferred
income
|
|
3,666
|
|
3,533
|
|
Operating lease
liabilities
|
|
2,757
|
|
2,568
|
|
Other
liabilities
|
|
11,186
|
|
11,475
|
|
Total
Liabilities
|
|
109,809
|
|
112,628
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
|
IBM Stockholders'
Equity:
|
|
|
|
|
|
Common stock
|
|
61,013
|
|
59,643
|
|
Retained
earnings
|
|
149,789
|
|
151,276
|
|
Treasury stock - at
cost
|
|
(169,935)
|
|
(169,624)
|
|
Accumulated other
comprehensive income/(loss)
|
|
(16,418)
|
|
(18,761)
|
|
Total IBM
Stockholders' Equity
|
|
24,448
|
|
22,533
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
82
|
|
80
|
|
Total
Equity
|
|
24,530
|
|
22,613
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
$
134,339
|
|
$
135,241
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH FLOW
ANALYSIS
(Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
(Dollars in
Millions)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net Cash from
Operations per GAAP
|
|
$
2,881
|
|
$
3,055
|
|
$
9,115
|
|
$
9,468
|
|
|
|
|
|
|
|
|
|
|
Less: change in IBM
Financing receivables
|
|
873
|
|
1,092
|
|
1,824
|
|
3,119
|
|
Capital Expenditures,
net
|
|
55
|
|
(282)
|
|
(705)
|
|
(1,226)
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
|
2,064
|
|
1,682
|
|
6,586
|
|
5,123
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
(2,513)
|
|
(4,589)
|
|
(2,748)
|
|
(4,945)
|
|
Divestitures
|
|
2
|
|
(10)
|
|
705
|
|
(4)
|
|
Dividends
|
|
(1,542)
|
|
(1,515)
|
|
(4,601)
|
|
(4,522)
|
|
Non-Financing
Debt
|
|
(383)
|
|
(942)
|
|
693
|
|
7,572
|
|
Other (includes IBM
Financing net receivables and debt)
|
|
131
|
|
41
|
|
(379)
|
|
(1,068)
|
|
|
|
|
|
|
|
|
|
|
Change in Cash, Cash
Equivalents, Restricted Cash and Short-term
Marketable
Securities
|
|
$
(2,241)
|
|
$
(5,333)
|
|
$
257
|
|
$
2,156
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH
FLOW
(Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
(Dollars in
Millions)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net Income/(loss)
from Operations
|
|
$
(330)
|
|
$
1,704
|
|
$
3,109
|
|
$
4,214
|
|
Pension Settlement
Charge
|
|
2,725
|
|
-
|
|
2,725
|
|
-
|
|
Depreciation/Amortization of Intangibles
(1)
|
|
1,268
|
|
1,093
|
|
3,555
|
|
3,243
|
|
Stock-based
Compensation
|
|
330
|
|
286
|
|
966
|
|
843
|
|
Operating assets and
liabilities/Other, net (2)
|
|
(1,984)
|
|
(1,119)
|
|
(3,063)
|
|
(1,952)
|
|
IBM Financing
A/R
|
|
873
|
|
1,092
|
|
1,824
|
|
3,119
|
|
Net Cash Provided by
Operating Activities
|
|
$
2,881
|
|
$
3,055
|
|
$
9,115
|
|
$
9,468
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures,
net of payments & proceeds (3)
|
|
55
|
|
(282)
|
|
(705)
|
|
(1,226)
|
|
Divestitures, net of
cash transferred
|
|
2
|
|
(10)
|
|
705
|
|
(4)
|
|
Acquisitions, net of
cash acquired
|
|
(2,513)
|
|
(4,589)
|
|
(2,748)
|
|
(4,945)
|
|
Marketable Securities
/ Other Investments, net
|
|
869
|
|
2,927
|
|
(810)
|
|
(3,732)
|
|
Net Cash Provided
by/(Used in) Investing Activities
|
|
$
(1,587)
|
|
$
(1,953)
|
|
$
(3,558)
|
|
$
(9,906)
|
|
|
|
|
|
|
|
|
|
|
Debt, net of payments
& proceeds
|
|
(1,259)
|
|
(1,550)
|
|
(777)
|
|
4,619
|
|
Dividends
|
|
(1,542)
|
|
(1,515)
|
|
(4,601)
|
|
(4,522)
|
|
Financing -
Other
|
|
35
|
|
(67)
|
|
(26)
|
|
(252)
|
|
Net Cash Provided
by/(Used in) Financing Activities
|
|
$
(2,766)
|
|
$
(3,132)
|
|
$
(5,403)
|
|
$
(154)
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate
changes on Cash
|
|
207
|
|
(119)
|
|
(29)
|
|
(120)
|
|
Net Change in Cash,
Cash Equivalents and Restricted Cash
|
|
$
(1,264)
|
|
$
(2,149)
|
|
$
125
|
|
$
(713)
|
|
____________________
|
|
(1) Includes
operating lease right-of-use assets amortization.
|
|
(2) Includes a
$0.7 billion tax effect associated with the one-time, non-cash
pension settlement charge in the third-quarter
2024.
|
|
(3) 2024 includes
proceeds of $0.4 billion from the sale of
certain QRadar SaaS assets.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
GAAP NET INCOME TO
ADJUSTED EBITDA RECONCILIATION
(Unaudited)
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
(Dollars in
Billions)
|
|
2024
|
|
2023
|
|
Yr/Yr
|
|
2024
|
|
2023
|
|
Yr/Yr
|
|
Net Income/(Loss) as
reported (GAAP) (1)
|
|
$
(0.3)
|
|
$
1.7
|
|
$
(2.0)
|
|
$
3.1
|
|
$
4.2
|
|
$
(1.1)
|
|
Less: Income/(loss)
from discontinued operations, net of tax
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.0
|
|
Income/(Loss) from
continuing operations
|
|
(0.3)
|
|
1.7
|
|
(2.0)
|
|
3.1
|
|
4.2
|
|
(1.1)
|
|
Provision for/(Benefit
from) income taxes from continuing ops.
|
|
(0.5)
|
|
0.2
|
|
(0.6)
|
|
(0.6)
|
|
0.7
|
|
(1.3)
|
|
Pre-tax
income/(loss) from continuing operations (GAAP)
|
|
(0.8)
|
|
1.9
|
|
(2.7)
|
|
2.5
|
|
4.9
|
|
(2.4)
|
|
Non-operating
adjustments (before tax)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
charges (2)
|
|
0.5
|
|
0.4
|
|
0.1
|
|
1.5
|
|
1.2
|
|
0.2
|
|
Non-operating
retirement-related costs/(income) (1)
|
|
2.8
|
|
0.0
|
|
2.8
|
|
3.0
|
|
0.0
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (non-GAAP)
pre-tax income/(loss) from continuing ops.
|
|
2.5
|
|
2.3
|
|
0.2
|
|
6.9
|
|
6.1
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
expense
|
|
0.3
|
|
0.3
|
|
0.0
|
|
0.7
|
|
0.7
|
|
0.0
|
|
Depreciation/Amortization of non-acquired intangible
assets
|
|
0.7
|
|
0.7
|
|
0.0
|
|
2.1
|
|
2.0
|
|
0.1
|
|
Stock-based
compensation
|
|
0.3
|
|
0.3
|
|
0.0
|
|
1.0
|
|
0.8
|
|
0.1
|
|
Workforce rebalancing
charges
|
|
0.3
|
|
0.0
|
|
0.3
|
|
0.7
|
|
0.4
|
|
0.3
|
|
Corporate (gains) and
charges (3)
|
|
(0.4)
|
|
0.0
|
|
(0.3)
|
|
(0.6)
|
|
0.0
|
|
(0.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
3.8
|
|
$
3.5
|
|
$
0.2
|
|
$
10.8
|
|
$
10.1
|
|
$
0.8
|
|
____________________
|
|
(1) 2024 includes
the impact of a one-time, non-cash pension settlement charge of
$2.7 billion ($2.0 billion net of tax).
|
|
(2) Primarily consists
of amortization of acquired intangible assets.
|
|
(3) Corporate (gains) and charges primarily consists
of unique corporate actions such as gains on divestitures and asset
sales (e.g., certain QRadar SaaS assets).
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
SEGMENT
DATA
(Unaudited)
|
|
|
|
Three Months Ended
September 30, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
|
Revenue
|
|
$
6,524
|
|
|
$
5,152
|
|
|
$
3,042
|
|
|
$
181
|
|
|
Segment
Profit
|
|
$
1,969
|
|
|
$
559
|
|
|
$
422
|
|
|
$
86
|
|
|
Segment Profit
Margin
|
|
30.2
|
%
|
|
10.9
|
%
|
|
13.9
|
%
|
|
47.5
|
%
|
|
Change YTY
Revenue
|
|
9.7
|
%
|
|
(0.5)
|
%
|
|
(7.0)
|
%
|
|
(2.5)
|
%
|
|
Change YTY Revenue -
Constant Currency
|
|
9.6
|
%
|
|
(0.2)
|
%
|
|
(6.7)
|
%
|
|
(1.3)
|
%
|
|
|
Three Months Ended
September 30, 2023 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
|
Revenue
|
|
$
5,947
|
|
|
$
5,178
|
|
|
$
3,272
|
|
|
$
186
|
|
|
Segment
Profit
|
|
$
1,722
|
|
|
$
566
|
|
|
$
490
|
|
|
$
91
|
|
|
Segment Profit
Margin
|
|
29.0
|
%
|
|
10.9
|
%
|
|
15.0
|
%
|
|
49.2
|
%
|
|
__________________
|
|
(1) Recast to reflect
January 2024 segment changes.
|
|
|
Nine Months Ended
September 30, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
|
Revenue
|
|
$
19,162
|
|
|
$
15,517
|
|
|
$
9,764
|
|
|
$
543
|
|
|
Segment
Profit
|
|
$
5,582
|
|
|
$
1,447
|
|
|
$
1,387
|
|
|
$
254
|
|
|
Segment Profit
Margin
|
|
29.1
|
%
|
|
9.3
|
%
|
|
14.2
|
%
|
|
46.9
|
%
|
|
Change YTY
Revenue
|
|
7.5
|
%
|
|
(0.5)
|
%
|
|
(2.3)
|
%
|
|
(4.1)
|
%
|
|
Change YTY Revenue -
Constant Currency
|
|
8.0
|
%
|
|
1.1
|
%
|
|
(1.2)
|
%
|
|
(3.1)
|
%
|
|
|
Nine Months Ended
September 30, 2023 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
|
Revenue
|
|
$
17,832
|
|
|
$
15,601
|
|
|
$
9,988
|
|
|
$
566
|
|
|
Segment
Profit
|
|
$
4,850
|
|
|
$
1,476
|
|
|
$
1,529
|
|
|
$
256
|
|
|
Segment Profit
Margin
|
|
27.2
|
%
|
|
9.5
|
%
|
|
15.3
|
%
|
|
45.2
|
%
|
|
____________________
|
|
(1) Recast to
reflect January 2024 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
September 30, 2024
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Operating
(Non-GAAP)
|
|
|
Gross Profit
|
$
8,420
|
|
|
$
192
|
|
|
$
—
|
|
|
$
—
|
|
|
$
8,612
|
|
|
Gross Profit
Margin
|
56.3
|
%
|
|
1.3
|
pts
|
|
—
|
pts
|
|
—
|
pts
|
|
57.5
|
%
|
|
S,G&A
|
$
4,911
|
|
|
$
(300)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
4,611
|
|
|
Other (Income) &
Expense
|
2,244
|
|
|
—
|
|
|
(2,797)
|
|
|
—
|
|
|
(553)
|
|
|
Total Expense &
Other (Income)
|
9,222
|
|
|
(300)
|
|
|
(2,797)
|
|
|
—
|
|
|
6,125
|
|
|
Pre-tax Income/(Loss)
from Continuing Operations
|
(802)
|
|
|
492
|
|
|
2,797
|
|
|
—
|
|
|
2,487
|
|
|
Pre-tax Income Margin
from Continuing Operations
|
(5.4)
|
%
|
|
3.3
|
pts
|
|
18.7
|
pts
|
|
—
|
pts
|
|
16.6
|
%
|
|
Provision for/(Benefit
from) Income Taxes (3)
|
$
(485)
|
|
|
$
119
|
|
|
$
700
|
|
|
$
(2)
|
|
|
$
332
|
|
|
Effective Tax
Rate
|
60.4
|
%
|
|
(7.2)
|
pts
|
|
(39.8)
|
pts
|
|
(0.1)
|
pts
|
|
13.4
|
%
|
|
Income/(Loss) from
Continuing Operations
|
$
(317)
|
|
|
$
373
|
|
|
$
2,097
|
|
|
$
2
|
|
|
$
2,155
|
|
|
Income Margin from
Continuing Operations
|
(2.1)
|
%
|
|
2.5
|
pts
|
|
14.0
|
pts
|
|
0.0
|
pts
|
|
14.4
|
%
|
|
Diluted Earnings/(Loss)
Per Share: Continuing
Operations (4)
|
$
(0.34)
|
|
|
$
0.40
|
|
|
$
2.27
|
|
|
$
0.00
|
|
|
$
2.30
|
|
|
|
|
|
Three Months Ended
September 30, 2023
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Operating
(Non-GAAP)
|
|
|
Gross Profit
|
$
8,023
|
|
|
$
162
|
|
|
$
—
|
|
|
$
—
|
|
|
$
8,185
|
|
|
Gross Profit
Margin
|
54.4
|
%
|
|
1.1
|
pts
|
|
—
|
pts
|
|
—
|
pts
|
|
55.5
|
%
|
|
S,G&A
|
$
4,458
|
|
|
$
(277)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
4,181
|
|
|
Other (Income) &
Expense
|
(215)
|
|
|
0
|
|
|
12
|
|
|
—
|
|
|
(203)
|
|
|
Total Expense &
Other (Income)
|
6,150
|
|
|
(277)
|
|
|
12
|
|
|
—
|
|
|
5,885
|
|
|
Pre-tax Income/(Loss)
from Continuing Operations
|
1,873
|
|
|
438
|
|
|
(12)
|
|
|
—
|
|
|
2,299
|
|
|
Pre-tax Income Margin
from Continuing Operations
|
12.7
|
%
|
|
3.0
|
pts
|
|
(0.1)
|
pts
|
|
—
|
pts
|
|
15.6
|
%
|
|
Provision for/(Benefit
from) Income Taxes (3)
|
$
159
|
|
|
$
99
|
|
|
$
(14)
|
|
|
$
24
|
|
|
$
268
|
|
|
Effective Tax
Rate
|
8.5
|
%
|
|
2.7
|
pts
|
|
(0.5)
|
pts
|
|
1.0
|
pts
|
|
11.7
|
%
|
|
Income/(Loss) from
Continuing Operations
|
$
1,714
|
|
|
$
340
|
|
|
$
1
|
|
|
$
(24)
|
|
|
$
2,031
|
|
|
Income Margin from
Continuing Operations
|
11.6
|
%
|
|
2.3
|
pts
|
|
0.0
|
pts
|
|
(0.2)
|
pts
|
|
13.8
|
%
|
|
Diluted Earnings/(Loss)
Per Share: Continuing
Operations
|
$
1.86
|
|
|
$
0.37
|
|
|
$
0.00
|
|
|
$
(0.03)
|
|
|
$
2.20
|
|
|
____________________
|
|
(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. 2024 also includes the impact of
a one-time, non-cash, pre-tax pension settlement charge of
$2.7 billion ($2.0 billion net of tax).
|
|
(3) Tax
impact on operating (non-GAAP) pre-tax income from continuing
operations is calculated under the same accounting principles
applied to the As Reported pre-tax income under ASC 740, which
employs an annual effective tax rate method to the
results.
|
|
(4)
Operating (non-GAAP) earnings per share was calculated using
938.4 million shares, which includes 14.9 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, 2024, 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 $(0.04) reconciling
item.
|
|
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, 2024
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts (3)
|
|
|
Operating
(Non-GAAP)
|
|
|
Gross Profit
|
$
25,112
|
|
|
$
533
|
|
|
$
—
|
|
|
$
—
|
|
|
$
25,645
|
|
|
Gross Profit
Margin
|
55.6
|
%
|
|
1.2
|
pts
|
|
—
|
pts
|
|
—
|
pts
|
|
56.7
|
%
|
|
S,G&A
|
$
14,823
|
|
|
$
(854)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
13,969
|
|
|
Other (Income) &
Expense
|
1,694
|
|
|
(68)
|
|
|
(2,991)
|
|
|
—
|
|
|
(1,364)
|
|
|
Total Expense &
Other (Income)
|
22,621
|
|
|
(922)
|
|
|
(2,991)
|
|
|
—
|
|
|
18,709
|
|
|
Pre-tax Income/(Loss)
from Continuing Operations
|
2,491
|
|
|
1,454
|
|
|
2,991
|
|
|
—
|
|
|
6,936
|
|
|
Pre-tax Income Margin
from Continuing Operations
|
5.5
|
%
|
|
3.2
|
pts
|
|
6.6
|
pts
|
|
—
|
pts
|
|
15.3
|
%
|
|
Provision for/(Benefit
from) Income Taxes (4)
|
$
(597)
|
|
|
$
374
|
|
|
$
731
|
|
|
$
434
|
|
|
$
942
|
|
|
Effective Tax
Rate
|
(24.0)
|
%
|
|
10.4
|
pts
|
|
20.9
|
pts
|
|
6.3
|
pts
|
|
13.6
|
%
|
|
Income/(Loss) from
Continuing Operations
|
$
3,088
|
|
|
$
1,081
|
|
|
$
2,259
|
|
|
$
(434)
|
|
|
$
5,994
|
|
|
Income Margin from
Continuing Operations
|
6.8
|
%
|
|
2.4
|
pts
|
|
5.0
|
pts
|
|
(1.0)
|
pts
|
|
13.3
|
%
|
|
Diluted Earnings/(Loss)
Per Share: Continuing
Operations
|
$
3.30
|
|
|
$
1.16
|
|
|
$
2.42
|
|
|
$
(0.46)
|
|
|
$
6.41
|
|
|
|
|
|
Nine Months Ended
September 30, 2023
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Operating
(Non-GAAP)
|
|
|
Gross Profit
|
$
24,033
|
|
|
$
460
|
|
|
$
—
|
|
|
$
—
|
|
|
$
24,492
|
|
|
Gross Profit
Margin
|
54.0
|
%
|
|
1.0
|
pts
|
|
—
|
pts
|
|
—
|
pts
|
|
55.1
|
%
|
|
S,G&A
|
$
14,212
|
|
|
$
(768)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
13,444
|
|
|
Other (Income) &
Expense
|
(721)
|
|
|
(2)
|
|
|
16
|
|
|
—
|
|
|
(707)
|
|
|
Total Expense &
Other (Income)
|
19,102
|
|
|
(770)
|
|
|
16
|
|
|
—
|
|
|
18,348
|
|
|
Pre-tax Income from
Continuing Operations
|
4,931
|
|
|
1,229
|
|
|
(16)
|
|
|
—
|
|
|
6,144
|
|
|
Pre-tax Income Margin
from Continuing
Operations
|
11.1
|
%
|
|
2.8
|
pts
|
|
0.0
|
pts
|
|
—
|
pts
|
|
13.8
|
%
|
|
Provision for/(Benefit
from) Income Taxes (4)
|
$
702
|
|
|
$
277
|
|
|
$
(27)
|
|
|
$
(91)
|
|
|
$
861
|
|
|
Effective Tax
Rate
|
14.2
|
%
|
|
1.7
|
pts
|
|
(0.4)
|
pts
|
|
(1.5)
|
pts
|
|
14.0
|
%
|
|
Income from Continuing
Operations
|
$
4,229
|
|
|
$
953
|
|
|
$
11
|
|
|
$
91
|
|
|
$
5,283
|
|
|
Income Margin from
Continuing Operations
|
9.5
|
%
|
|
2.1
|
pts
|
|
0.0
|
pts
|
|
0.2
|
pts
|
|
11.9
|
%
|
|
Diluted Earnings Per
Share: Continuing
Operations
|
$
4.59
|
|
|
$
1.04
|
|
|
$
0.01
|
|
|
$
0.10
|
|
|
$
5.74
|
|
|
____________________
|
|
(1)
Includes amortization of purchased intangible assets, in process
R&D, transaction costs, applicable restructuring and related
expenses, tax charges related to acquisition integration and
pre-closing charges, such as financing costs. 2024 also includes a
loss of $68 million on foreign exchange derivative contracts
entered into by the company prior to the acquisition
of StreamSets and webMethods from Software
AG.
|
|
(2)
Includes amortization of prior service costs, interest cost,
expected return on plan assets, amortized actuarial gains/losses,
the impacts of any plan curtailments/settlements and pension
insolvency costs and other costs. 2024 also includes the impact of
a one-time, non-cash, pre-tax pension settlement charge of
$2.7 billion ($2.0 billion net of tax).
|
|
(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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
(Dollars in
Billions)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net Cash Provided by
Operating Activities
|
|
$
2.9
|
|
$
3.1
|
|
$
9.1
|
|
$
9.5
|
|
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Net interest
expense
|
|
0.3
|
|
0.3
|
|
0.7
|
|
0.7
|
|
Provision for/(Benefit
from) income taxes from continuing operations
|
|
(0.5)
|
|
0.2
|
|
(0.6)
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
Less change
in:
|
|
|
|
|
|
|
|
|
|
Financing
receivables
|
|
0.9
|
|
1.1
|
|
1.8
|
|
3.1
|
|
Other assets and
liabilities/other, net (1)
|
|
(2.0)
|
|
(1.2)
|
|
(3.5)
|
|
(2.3)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
3.8
|
|
$
3.5
|
|
$
10.8
|
|
$
10.1
|
|
____________________
|
|
(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