TIDMIBM
IBM RELEASES FIRST QUARTER RESULTS
Double-Digit Software and Consulting Growth Led by Hybrid Cloud Adoption;
Strong Profit Generation
ARMONK, N.Y., April 19, 2022 -- IBM (NYSE: IBM) today announced first-quarter
2022 earnings results.
"Demand for hybrid cloud and AI drove growth in both Software and Consulting in
the first quarter. Today we're a more focused business and our results reflect
the execution of our strategy," said Arvind Krishna, IBM chairman and chief
executive officer. "We are off to a solid start for the year, and we now see
revenue growth for 2022 at the high end of our model."
First-Quarter Highlights
* Revenue
- Revenue of $14.2 billion, up 8 percent, up 11 percent at constant
currency (over 5 points from incremental sales to Kyndryl)
- Software revenue up 12 percent, up 15 percent at constant currency (over
8 points from incremental sales to Kyndryl)
- Consulting revenue up 13 percent, up 17 percent at constant currency
- Infrastructure revenue down 2 percent, flat at constant currency (over 8
points from incremental sales to Kyndryl)
- Hybrid cloud revenue:
-- First Quarter: $5.0 billion, up 14 percent, up 17 percent at constant
currency
-- Last 12 months: $20.8 billion, up 17 percent
* Free Cash Flow
- On a consolidated basis, net cash from operating activities of $3.2
billion; free cash flow of $1.2 billion
FIRST QUARTER 2022 INCOME STATEMENT SUMMARY
Pre-tax
Gross Pre-tax Income Net Diluted
Revenue Profit Income Margin Income EPS
GAAP from $ 14.2B $ 7.3B $ 0.6B 4.4 % $ 0.7B $ 0.73
Continuing
Operations
Year/ 8 % 4 % 156 % 2.5 Pts 64 % 62 %
Year *
Operating $ 7.5B $ 1.5B 10.7 % $ 1.3B $ 1.40
(Non-GAAP)
Year/ 4 % 46 % 2.8 Pts 25 % 25 %
Year
* 11% at constant currency
"In the first quarter we continued to strengthen the fundamentals of our
business, consistent with our medium-term model," said James Kavanaugh, IBM
senior vice president and chief financial officer. "We are a faster growing,
more profitable company with a higher-value business mix, a significant
recurring revenue base and strong cash generation."
Segment Results for First Quarter
* Software (includes Hybrid Platform & Solutions, Transaction Processing)-
revenues of $5.8 billion, up 12.3 percent, up 15.4 percent at constant
currency (over 8 points from incremental sales to Kyndryl):
- Hybrid Platform & Solutions up 7 percent, up 10 percent at constant
currency (about 1.5 points from incremental sales to Kyndryl):
-- Red Hat up 18 percent, up 21 percent at constant currency
-- Automation up 3 percent, up 5 percent at constant currency
-- Data & AI up 2 percent, up 4 percent at constant currency
-- Security up 5 percent, up 8 percent at constant currency
- Transaction Processing up 26 percent, up 31 percent at constant currency
(about 28 points from incremental sales to Kyndryl)
- Software segment hybrid cloud revenue up 22 percent, up 25 percent at
constant currency
* Consulting (includes Business Transformation, Technology Consulting and
Application Operations)- revenues of $4.8 billion, up 13.3 percent, up
17.4 percent at constant currency:
- Business Transformation up 15 percent, up 19 percent at constant currency
- Technology Consulting up 14 percent, up 19 percent at constant currency
- Application Operations up 10 percent, up 14 percent at constant currency
- Consulting segment hybrid cloud revenue up 24 percent, up 29 percent at
constant currency
* Infrastructure (includes Hybrid Infrastructure, Infrastructure Support)
- revenues of $3.2 billion, down 2.3 percent, up 0.3 percent at constant
currency (over 8 points from incremental sales to Kyndryl):
- Hybrid Infrastructure down 5 percent, down 2 percent at constant
currency (over 8 points from incremental sales to Kyndryl)
-- IBM z Systems down 19 percent, down 18 percent at constant currency
-- Distributed Infrastructure up 5 percent, up 8 percent at constant
currency
- Infrastructure Support flat, up 4 percent at constant currency (over 8
points from incremental sales to Kyndryl)
- Infrastructure segment hybrid cloud revenue down 20 percent, down 18
percent at constant currency
* Financing (includes client and commercial financing)- revenues of $0.2
billion, down 26.2 percent, down 24.5 percent at constant currency
Cash Flow and Balance Sheet
On a consolidated basis, in the first quarter, the company generated net cash
from operating activities of $3.2 billion or $1.6 billion excluding IBM
Financing receivables. IBM's free cash flow was $1.2 billion, which includes
cash impacts from the company's structural actions initiated at the end of
2020.
IBM ended the first quarter with $10.8 billion of cash on hand (which includes
marketable securities), up $3.2 billion from year-end 2021. Debt, including IBM
Financing debt of $12.2 billion, totaled $54.2 billion, up $2.5 billion since
the end of 2021. The company returned $1.5 billion to shareholders in dividends
in the first quarter.
Full-Year 2022 Expectations
* Revenue growth: The company now expects constant currency revenue growth at
the high end of the mid-single digit range. The company also expects an
additional 3.5 point contribution from incremental sales to Kyndryl. At
mid-April 2022 foreign exchange rates, currency is expected to be a three
to four point headwind.
* Free Cash Flow: The company continues to expect $10 billion to $10.5
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.
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-1q22. Presentation charts will be
available shortly before the Webcast.
Financial Results Below (certain amounts may not add due to use of rounded
numbers; percentages presented are calculated from the underlying whole-dollar
amounts).
Contact: IBM
Sarah Meron, 347 891 1770
sarah.meron@ibm.com
Tim Davidson, 914 844 7847
tfdavids@us.ibm.com
INTERNATIONAL BUSINESS MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Unaudited; Dollars in millions except per share amounts)
Three Months Ended
March 31,
2022 2021*
REVENUE
Software $ 5,772 $ 5,138
Consulting 4,829 4,262
Infrastructure 3,219 3,293
Financing 154 208
Other 224 284
TOTAL REVENUE 14,197 13,187
GROSS PROFIT 7,335 7,027
GROSS PROFIT MARGIN
Software 78.8 % 77.8 %
Consulting 24.3 % 27.8 %
Infrastructure 50.5 % 56.3 %
Financing 37.7 % 35.5 %
TOTAL GROSS PROFIT MARGIN 51.7 % 53.3 %
EXPENSE AND OTHER INCOME
S,G&A 4,597 4,688
R,D&E 1,679 1,616
Intellectual property and custom development income (121) (146)
Other (income) and expense 246 346
Interest expense 311 280
TOTAL EXPENSE AND OTHER INCOME 6,712 6,784
INCOME/(LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 623 244
Pre-tax margin 4.4 % 1.8 %
Provision for/(Benefit from) income taxes (39) (160)
Effective tax rate (6.3) % (65.5) %
INCOME FROM CONTINUING OPERATIONS $ 662 $ 403
DISCONTINUED OPERATIONS
Income/(Loss) from discontinued operations, net of 71 552
taxes
NET INCOME $ 733 $ 955
EARNINGS/(LOSS) PER SHARE OF COMMON STOCK
Assuming Dilution
Continuing Operations $ 0.73 $ 0.45
Discontinued Operations $ 0.08 $ 0.61
TOTAL $ 0.81 $ 1.06
Basic
Continuing Operations $ 0.74 $ 0.45
Discontinued Operations $ 0.08 $ 0.62
TOTAL $ 0.82 $ 1.07
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(M's)
Assuming Dilution 909.2 901.7
Basic 899.3 893.6
____________________
* Recast to conform with 2022 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
At At
March 31, December 31,
(Dollars in Millions) 2022 2021
ASSETS:
Current Assets:
Cash and cash equivalents $ 9,934 $ 6,650
Restricted cash 286 307
Marketable securities 550 600
Notes and accounts receivable - trade, net 5,963 6,754
Short-term financing receivables, net 7,169 8,014
Other accounts receivable, net 1,003 1,002
Inventories 1,776 1,649
Deferred costs 1,103 1,097
Prepaid expenses and other current assets 3,548 3,466
Total Current Assets 31,330 29,539
Property, plant and equipment, net 5,559 5,694
Operating right-of-use assets, net 3,108 3,222
Long-term financing receivables, net 4,610 5,425
Prepaid pension assets 9,995 9,850
Deferred costs 916 924
Deferred taxes 7,567 7,370
Goodwill 56,106 55,643
Intangibles, net 12,312 12,511
Investments and sundry assets 1,771 1,823
Total Assets $ 133,275 $ 132,001
LIABILITIES:
Current Liabilities:
Taxes $ 1,798 $ 2,289
Short-term debt 7,690 6,787
Accounts payable 3,453 3,955
Deferred income 13,526 12,518
Operating lease liabilities 954 974
Other liabilities 6,635 7,097
Total Current Liabilities 34,056 33,619
Long-term debt 46,545 44,917
Retirement related obligations 13,937 14,435
Deferred income 3,423 3,577
Operating lease liabilities 2,358 2,462
Other liabilities 13,844 13,996
Total Liabilities 114,162 113,005
EQUITY:
IBM Stockholders' Equity:
Common stock 57,603 57,319
Retained earnings 153,401 154,209
Treasury stock - at cost (169,422) (169,392)
Accumulated other comprehensive income/(loss) (22,532) (23,234)
Total IBM Stockholders' Equity 19,050 18,901
Noncontrolling interests 62 95
Total Equity 19,112 18,996
Total Liabilities and Equity $ 133,275 $ 132,001
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW ANALYSIS
(Unaudited)
Three Months Ended
March 31,
(Dollars in Millions) 2022 2021
Consolidated Net Cash from Operations per GAAP $ 3,248 $ 4,914
Less: change in IBM Financing receivables 1,631 2,863
Capital Expenditures, net (378) (529)
Consolidated Free Cash Flow 1,240 1,522
Acquisitions (698) (1,120)
Divestitures 61 (15)
Dividends (1,475) (1,457)
Non-Financing Debt 4,675 (1,725)
Other (includes IBM Financing net receivables and debt) (590) (207)
Change in Cash, Cash Equivalents, Restricted Cash and $ 3,213 $ (3,002)
Short-term Marketable Securities*
____________________
* Cash flows are presented on a consolidated basis.
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW
(Unaudited)
Three Months Ended
March 31,
(Dollars in Millions) 2022 2021
Net Income from Operations $ 733 $ 955
Depreciation/Amortization of Intangibles 1,257 1,672
Stock-based Compensation 234 213
Working Capital / Other (606) (789)
IBM Financing A/R 1,631 2,863
Net Cash Provided by Operating Activities $ 3,248 $ 4,914
Capital Expenditures, net of payments & proceeds (378) (529)
Divestitures, net of cash transferred 61 (15)
Acquisitions, net of cash acquired (698) (1,120)
Marketable Securities / Other Investments, net (344) (335)
Net Cash Provided by/(Used in) Investing Activities $ (1,358) $ (2,000)
Debt, net of payments & proceeds 2,948 (4,299)
Dividends (1,475) (1,457)
Financing - Other (95) (26)
Net Cash Provided by/(Used in) Financing Activities $ 1,377 $ (5,783)
Effect of Exchange Rate changes on Cash (5) (134)
Net Change in Cash, Cash Equivalents and Restricted Cash $ 3,263 $ (3,002)
*
____________________
* Cash flows are presented on a consolidated basis.
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
Three Months Ended March 31, 2022
(Dollars in Millions) Software Consulting Infrastructure Financing
Revenue $ 5,772 $ 4,829 $ 3,219 $ 154
Pre-tax Income/(Loss) from 1,134 348 199 84
Continuing Operations
Pre-tax Margin 19.7 % 7.2 % 6.2 % 54.6 %
Change YTY Revenue 12.3 % 13.3 % (2.3) % (26.2) %
Change YTY Revenue - 15.4 % 17.4 % 0.3 % (24.5) %
constant currency
Three Months Ended March 31, 2021*
(Dollars in Millions) Software Consulting Infrastructure Financing
Revenue $ 5,138 $ 4,262 $ 3,293 $ 208
Pre-tax Income/(Loss) from 658 277 292 98
Continuing Operations
Pre-tax Margin 12.8 % 6.5 % 8.9 % 47.0 %
____________________
* 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 March 31, 2022
Continuing Operations
Acquisition- Retirement- Tax Kyndryl-
Related Related Reform Related Operating
GAAP Adjustments Adjustments Impacts Impacts (Non-GAAP)
(1) (2) (3)
Gross $ 7,335 $ 181 $ - $ - $ - $ 7,516
Profit
Gross 51.7 % 1.3 pts. - pts. - pts. - pts. 52.9 %
Profit
Margin
S,G&A $ 4,597 $ (286) $ - $ - $ (0) $ 4,311
Other 246 (1) (202) - (222) (179)
(Income) &
Expense
Total 6,712 (287) (202) - (222) 6,001
Expense &
Other
(Income)
Pre-tax 623 468 202 - 222 1,515
Income
from
Continuing
Operations
Pre-tax 4.4 % 3.3 pts. 1.4 pts. - pts. 1.6 pts. 10.7 %
Income
Margin
from
Continuing
Operations
Provision $ (39) $ 109 $ 58 $ 116 $ - $ 244
for/
(Benefit
from)
Income
Taxes (4)
Effective (6.3) % 9.1 pts. 4.6 pts. 7.7 pts. 0.9 pts. 16.1 %
Tax Rate
Income $ 662 $ 359 $ 144 $ (116) $ 222 $ 1,271
from
Continuing
Operations
Income 4.7 % 2.5 pts. 1.0 pts. (0.8) pts. 1.6 pts. 9.0 %
Margin
from
Continuing
Operations
Diluted $ 0.73 $ 0.39 $ 0.16 $ (0.13) $ 0.24 $ 1.40
Earnings/
(Loss) Per
Share:
Continuing
Operations
Three Months Ended March 31, 2021
Continuing Operations
Acquisition- Retirement- Tax Kyndryl-
Related Related Reform Related Operating
GAAP Adjustments Adjustments Impacts Impacts (Non-GAAP)
(1) (2) (3)
Gross $ 7,027 $ 174 $ - $ - $ - $ 7,201
Profit
Gross 53.3 % 1.3 pts. - pts. - pts. - pts. 54.6 %
Profit
Margin
S,G&A $ 4,688 $ (288) $ - $ - $ - $ 4,399
Other 346 (1) (332) - - 13
(Income) &
Expense
Total 6,784 (289) (332) - - 6,162
Expense &
Other
(Income)
Pre-tax 244 463 332 - - 1,039
Income/
(Loss)
from
Continuing
Operations
Pre-tax 1.8 % 3.5 pts. 2.5 pts. - pts. - pts. 7.9 %
Income
Margin
from
Continuing
Operations
Provision $ (160) $ 132 $ 33 $ 19 $ - $ 25
for/
(Benefit
from)
Income
Taxes (4)
Effective (65.5) % 41.9 pts. 24.2 pts. 1.8 pts. - pts. 2.4 %
Tax Rate
Income $ 403 $ 330 $ 299 $ (19) $ - $ 1,013
from
Continuing
Operations
Income 3.1 % 2.5 pts. 2.3 pts. (0.1) pts. - pts. 7.7 %
Margin
from
Continuing
Operations
Diluted $ 0.45 $ 0.37 $ 0.33 $ (0.02) $ - $ 1.12
Earnings/
(Loss) Per
Share:
Continuing
Operations
____________________
(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 fair value changes in shares of Kyndryl common stock that
were retained by IBM.
(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.
END
(END) Dow Jones Newswires
April 20, 2022 02:00 ET (06:00 GMT)
International Business M... (LSE:IBM)
Historical Stock Chart
From Sep 2024 to Oct 2024
International Business M... (LSE:IBM)
Historical Stock Chart
From Oct 2023 to Oct 2024
