IBM RELEASES FOURTH QUARTER RESULTS

Rhea-AI Summary

IBM reported fourth-quarter 2021 earnings, revealing a 6.5% increase in revenue to $16.7 billion, driven by hybrid cloud adoption. Software revenue grew by 8% while consulting revenue rose 13%. Hybrid cloud revenue reached $6.2 billion, up 16%. The company achieved a 183% increase in pre-tax income, totaling $2.9 billion. IBM's free cash flow for the year was $6.5 billion, down from previous figures, primarily due to structural action charges. The company is optimistic for 2022, aiming for mid-single digit revenue growth and strong cash flow.

Positive

• Revenue increased by 6.5% to $16.7 billion, driven by hybrid cloud services.
• Software revenue rose by 8%, while consulting revenue grew by 13%.
• Hybrid cloud revenue for Q4 reached $6.2 billion, up 16%.

Negative

• Infrastructure revenue remained flat, indicating stagnation.
• Financing revenues decreased significantly by 29.4%.
• Free cash flow was down to $6.5 billion, influenced by structural charges.

ARMONK, N.Y., Jan. 24, 2022 /PRNewswire/ -- IBM (NYSE: IBM) today announced fourth-quarter 2021 earnings results.

"We increased revenue in the fourth quarter with hybrid cloud adoption driving growth in software and consulting," said Arvind Krishna, IBM chairman and chief executive officer. "Our fourth-quarter results give us confidence in our ability to deliver our objectives of sustained mid-single digit revenue growth and strong free cash flow in 2022."

On November 3, 2021, IBM completed the separation of Kyndryl. Unless otherwise specified, fourth-quarter and full-year results are presented on a continuing operations basis.

Fourth-Quarter Highlights

• Revenue
  - Revenue of $16.7 billion, up 6.5 percent, up 8.6 percent at constant currency (including about 3.5 points from incremental external sales to Kyndryl)
  - Software revenue up 8 percent, up 10 percent at constant currency (including about 5 points from incremental external sales to Kyndryl)
  - Consulting revenue up 13 percent, up 16 percent at constant currency
  - Infrastructure revenue flat, up 2 percent at constant currency (including about 5 points from incremental external sales to Kyndryl)
  - Hybrid cloud revenue:
        -- Fourth Quarter: $6.2 billion, up 16 percent, up 18 percent at constant currency
        -- Full Year: $20.2 billion, up 20 percent, up 19 percent at constant currency
• Pre-tax Income:
  - GAAP: $2.9 billion, up 183 percent, including 167 points from the impact of fourth-quarter 2020 charge for structural actions
  - Operating (Non-GAAP): $3.5 billion, up 102 percent, including 92 points from the impact of fourth-quarter 2020 charge for structural actions

		FOURTH QUARTER 2021 INCOME STATEMENT SUMMARY
											Pre-tax
						Gross			Pre-tax		Income			Net			Diluted
			Revenue			Profit			Income**		Margin**			Income**			EPS**
GAAP from Continuing Operations		$	16.7B		$	9.5B		$	2.9B		17.2	%	$	2.5B		$	2.72
Year/Year			6.5	%*		2.8	%		183	%	10.7	Pts		107	%		106	%
Operating (Non-GAAP)		$			$	9.7B		$	3.5B		21.2	%	$	3.0B		$	3.35
Year/Year						2.8	%		102	%	10.0	Pts		80	%		78	%
* 8.6% at constant currency
** Year-to-year results include impact of $1.5 billion pre-tax charge for structural actions in fourth quarter of 2020

"In 2021, we continued to invest for the future by increasing R&D spending, expanding our ecosystem and acquiring 15 companies to strengthen our hybrid cloud and AI capabilities," said James Kavanaugh, IBM senior vice president and chief financial officer. "With the separation of Kyndryl we now have taken the next step in the evolution of our strategy, creating value through focus and strengthening our financial profile."

Segment Results for Fourth Quarter

• Software (includes Hybrid Platform & Solutions, Transaction Processing)— revenues of $7.3 billion, up 8.2 percent, up 10.1 percent at constant currency (including about 5 points from incremental external sales to Kyndryl):
  - Hybrid Platform & Solutions up 7 percent, up 9 percent at constant currency (including about 1 point from incremental external sales to Kyndryl):
        -- Red Hat up 19 percent, up 21 percent at constant currency
        -- Automation up 13 percent, up 15 percent at constant currency
        -- Data & AI up 1 percent, up 3 percent at constant currency
        -- Security down 2 percent, down 1 percent at constant currency
  - Transaction Processing up 11 percent, up 14 percent at constant currency (including about 16 points from incremental external sales to Kyndryl)
  - Software segment hybrid cloud revenue up 22 percent, up 24 percent at constant currency
  
  
• Consulting (includes Business Transformation, Technology Consulting and Application Operations)— revenues of $4.7 billion, up 13.1 percent, up 15.7 percent at constant currency:
  - Business Transformation up 18 percent, up 20 percent at constant currency
  - Technology Consulting up 14 percent, up 19 percent at constant currency
  - Application Operations up 6 percent, up 8 percent at constant currency
  - Consulting segment hybrid cloud revenue up 31 percent, up 34 percent at constant currency
  
  
• Infrastructure (includes Hybrid Infrastructure, Infrastructure Support)— revenues of $4.4 billion, down 0.2 percent, up 1.7 percent at constant currency (including about 5 points from incremental external sales to Kyndryl):
  - Hybrid Infrastructure flat, up 2 percent at constant currency (including about 4 points from incremental external sales to Kyndryl)
        -- IBM Z down 6 percent, down 4 percent at constant currency
        -- Distributed Infrastructure up 5 percent, up 7 percent at constant currency
  - Infrastructure Support down 1 percent, up 1 percent at constant currency (including about 6 points from incremental external sales to Kyndryl)
  - Infrastructure segment hybrid cloud revenue down 12 percent, down 11 percent at constant currency
  
  
• Financing (includes client and commercial financing)— revenues of $0.2 billion, down 29.4 percent, down 28.8 percent at constant currency

Cash Flow and Balance Sheet
On a consolidated basis, full-year cash from operating activities was $12.8 billion and free cash flow was $6.5 billion. These consolidated results include ten months of Kyndryl results, and reflect cash paid in 2021 for separation charges and fourth-quarter 2020 structural actions.

IBM's post-separation baseline free cash flow for the year was $7.9 billion excluding Kyndryl charges and pre-separation activity. This view is aligned to the company's go-forward business. Payments for IBM-related structural actions and deferred cash taxes paid in 2021 contributed to the year-to-year decline in the post-separation baseline free cash flow.

IBM ended the year with $7.6 billion of cash on hand (which includes marketable securities), down $6.7 billion from year-end 2020, reflecting acquisitions of $3.3 billion and debt reduction payments consistent with the company's previously-stated intention to deleverage. Debt, including Financing debt of $13.9 billion, totaled $51.7 billion, down $9.6 billion since the end of 2020, and down more than $21 billion since closing the Red Hat acquisition. The company returned $5.9 billion to shareholders in dividends.

Full-Year 2022 Expectations
The company will discuss 2022 expectations during today's quarterly earnings conference call.

Continuing Operations
With the separation completed on November 3, 2021, Kyndryl's operational activity has been reclassified to IBM's discontinued operations results in accordance with U.S. Generally Accepted Accounting Principles (GAAP). As discussed in previous communications, discontinued operations does not include historical intercompany transactions between IBM and Kyndryl (e.g., purchases of IBM hardware and software) which were previously eliminated in consolidation. It also does not include the spending for shared services (e.g., finance, marketing, human resources, global sales coverage) that has already been transferred to Kyndryl. IBM results on a continuing operations basis after separation reflect the new commercial relationship with Kyndryl and do not include shared services costs, which have been transferred to Kyndryl.

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 from 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; 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
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;
• post-separation baseline free cash flow.

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. EST, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-4q21. 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								Year Ended
		December 31,								December 31,
		2021			2020					2021			2020
REVENUE
Software		$	7,273		$	6,719				$	24,141		$	22,927
Consulting			4,746			4,196					17,844			16,257
Infrastructure			4,414			4,425					14,188			14,533
Financing			172			244					774			975
Other			89			98					404			488
TOTAL REVENUE			16,695			15,682					57,350			55,179
GROSS PROFIT			9,500			9,238					31,486			30,865
GROSS PROFIT MARGIN
Software			80.9	%		80.5	%				78.8	%		78.3	%
Consulting			27.0	%		29.7	%				28.0	%		29.3	%
Infrastructure			54.8	%		60.1	%				55.3	%		57.5	%
Financing			32.5	%		36.0	%				31.7	%		41.6	%
TOTAL GROSS PROFIT MARGIN			56.9	%		58.9	%				54.9	%		55.9	%
EXPENSE AND OTHER INCOME
S,G&A			4,903			6,256					18,745			20,561
R,D&E			1,625			1,592					6,488			6,262
Intellectual property and custom development income			(181)			(171)					(612)			(620)
Other (income) and expense			(18)			230					873			802
Interest expense			303			317					1,155			1,288
TOTAL EXPENSE AND OTHER INCOME			6,632			8,224					26,649			28,293
INCOME/(LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES			2,869			1,014					4,837			2,572
Pre-tax margin			17.2	%		6.5	%				8.4	%		4.7	%
Provision for/(Benefit from) income taxes			407			(175)					124			(1,360)
Effective tax rate			14.2	%		(17.3)	%				2.6	%		(52.9)	%
INCOME FROM CONTINUING OPERATIONS		$	2,462		$	1,190				$	4,712		$	3,932
DISCONTINUED OPERATIONS
Income/(Loss) from discontinued operations, net of taxes			(129)			166					1,030			1,658
NET INCOME		$	2,332		$	1,356				$	5,743		$	5,590
EARNINGS/(LOSS) PER SHARE OF COMMON STOCK
Assuming Dilution
Continuing Operations		$	2.72		$	1.32				$	5.21		$	4.38
Discontinued Operations		$	(0.14)		$	0.19				$	1.14		$	1.85
TOTAL		$	2.57		$	1.51				$	6.35		$	6.23
Basic
Continuing Operations		$	2.74		$	1.33				$	5.26		$	4.42
Discontinued Operations		$	(0.14)		$	0.19				$	1.15		$	1.86
TOTAL		$	2.60		$	1.52				$	6.41		$	6.28
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M's)
Assuming Dilution			906.6			899.0					904.6			896.6
Basic			898.2			892.6					896.0			890.3

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
		At			At
		December 31,			December 31,
(Dollars in Millions)		2021			2020
ASSETS:
Current Assets:
Cash and cash equivalents		$	6,650		$	13,188
Restricted cash			307			463
Marketable securities			600			600
Notes and accounts receivable - trade, net			6,754			5,790
Short-term financing receivables, net			8,014			10,892
Other accounts receivable, net			1,002			695
Inventories			1,649			1,812
Deferred costs			1,097			1,018
Prepaid expenses and other current assets			3,466			2,089
Current assets of discontinued operations			—			2,618
Total Current Assets			29,539			39,165
Property, plant and equipment, net			5,694			6,205
Operating right-of-use assets, net			3,222			3,566
Long-term financing receivables, net			5,425			7,086
Prepaid pension assets			9,850			7,557
Deferred costs			924			1,150
Deferred taxes			7,370			8,404
Goodwill			55,643			53,765
Intangibles, net			12,511			13,739
Investments and sundry assets			1,823			2,187
Non-current assets of discontinued operations			—			13,147
Total Assets		$	132,001		$	155,971
LIABILITIES:
Current Liabilities:
Taxes		$	2,289		$	3,198
Short-term debt			6,787			7,116
Accounts payable			3,955			4,033
Deferred income			12,518			11,980
Operating lease liabilities			974			1,035
Other liabilities			7,097			8,688
Current liabilities of discontinued operations			—			3,820
Total Current Liabilities			33,619			39,869
Long-term debt			44,917			54,217
Retirement related obligations			14,435			17,184
Deferred income			3,577			3,758
Operating lease liabilities			2,462			2,720
Other liabilities			13,996			14,180
Non-current liabilities of discontinued operations			—			3,317
Total Liabilities			113,005			135,244
EQUITY:
IBM Stockholders' Equity:
Common stock			57,319			56,556
Retained earnings			154,209			162,717
Treasury stock — at cost			(169,392)			(169,339)
Accumulated other comprehensive income/(loss)			(23,234)			(29,337)
Total IBM Stockholders' Equity			18,901			20,597
Noncontrolling interests			95			129
Total Equity			18,996			20,727
Total Liabilities and Equity		$	132,001		$	155,971

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW ANALYSIS (Unaudited)
		Three Months Ended						Year Ended
		December 31,						December 31,
(Dollars in Millions)		2021			2020			2021			2020
Consolidated Net Cash from Operations per GAAP		$	2,543		$	5,859		$	12,796		$	18,197
Less: change in IBM Financing receivables			(1,328)			(974)			3,907			4,349
Capital Expenditures, net			(526)			(780)			(2,381)			(3,042)
Consolidated Free Cash Flow			3,345			6,054			6,508			10,805
Acquisitions			(275)			(299)			(3,293)			(336)
Divestitures			88			(7)			114			503
Dividends			(1,474)			(1,455)			(5,869)			(5,797)
Non-IBM Financing debt			(20)			(4,814)			(1,191)			221
Other (includes IBM Financing net receivables and debt)*			(2,514)			(958)			(2,987)			(130)
Change in Cash, Cash Equivalents, Restricted Cash and Short-term Marketable Securities**		$	(850)		$	(1,478)		$	(6,718)		$	5,265
____________________
* The three months and year ended December 31, 2021 include distribution from Kyndryl of $0.9 billion.
** Cash flows above are presented on an IBM consolidated basis and therefore include an immaterial amount of cash and cash equivalents presented in current assets of discontinued operations in the IBM Condensed Consolidated Balance Sheet at December 31, 2020.

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW (Unaudited)
		Three Months Ended						Year Ended
		December 31,						December 31,
(Dollars in Millions)		2021			2020			2021			2020
Net Income from Operations		$	2,332		$	1,356		$	5,743		$	5,590
Depreciation/Amortization of Intangibles			1,380			1,699			6,416			6,695
Stock-based Compensation			264			279			982			937
Working Capital / Other			(105)			3,499			(4,253)			625
IBM Financing A/R			(1,328)			(974)			3,907			4,349
Net Cash Provided by Operating Activities		$	2,543		$	5,859		$	12,796		$	18,197
Capital Expenditures, net of payments & proceeds			(526)			(780)			(2,381)			(3,042)
Divestitures, net of cash transferred			88			(7)			114			503
Acquisitions, net of cash acquired			(275)			(299)			(3,293)			(336)
Marketable Securities / Other Investments, net			38			528			(414)			(153)
Net Cash Provided by/(Used in) Investing Activities		$	(675)		$	(558)		$	(5,975)		$	(3,028)
Debt, net of payments & proceeds			(2,030)			(4,781)			(8,116)			(3,714)
Dividends			(1,474)			(1,455)			(5,869)			(5,797)
Financing - Other*			811			(57)			630			(210)
Net Cash Provided by/(Used in) Financing Activities		$	(2,692)		$	(6,293)		$	(13,354)		$	(9,721)
Effect of Exchange Rate changes on Cash			(26)			113			(185)			(87)
Net Change in Cash, Cash Equivalents and Restricted Cash**		$	(850)		$	(878)		$	(6,718)		$	5,361
____________________
* Represents Common Stock Transactions and other financing activities. The three months and year ended December 31, 2021 include distribution from Kyndryl of $0.9 billion.
** Cash flows above are presented on an IBM consolidated basis and therefore include an immaterial amount of cash and cash equivalents presented in current assets of discontinued operations in the IBM Condensed Consolidated Balance Sheet at December 31, 2020.

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION SEGMENT DATA (Unaudited)
		Three Months Ended December 31, 2021
(Dollars in Millions)		Software			Consulting			Infrastructure			Financing
Revenue		$	7,273		$	4,746		$	4,414		$	172
Pre-tax Income/(Loss) from Continuing Operations			2,109			436			1,036			79
Pre-tax Margin			29.0	%		9.2	%		23.5	%		46.0	%
Change YTY Revenue			8.2	%		13.1	%		(0.2)	%		(29.4)	%
Change YTY Revenue - constant currency			10.1	%		15.7	%		1.7	%		(28.8)	%
		Three Months Ended December 31, 2020
(Dollars in Millions)		Software			Consulting			Infrastructure			Financing
Revenue		$	6,719		$	4,196		$	4,425		$	244
Pre-tax Income/(Loss) from Continuing Operations			1,151			62			629			110
Pre-tax Margin			17.1	%		1.5	%		14.2	%		45.1	%
		Year Ended December 31, 2021
(Dollars in Millions)		Software			Consulting			Infrastructure			Financing
Revenue		$	24,141		$	17,844		$	14,188		$	774
Pre-tax Income/(Loss) from Continuing Operations			4,722			1,449			2,025			441
Pre-tax Margin			19.6	%		8.1	%		14.3	%		57.0	%
Change YTY Revenue			5.3	%		9.8	%		(2.4)	%		(20.6)	%
Change YTY Revenue - constant currency			4.1	%		8.3	%		(3.4)	%		(21.9)	%
		Year Ended December 31, 2020
(Dollars in Millions)		Software			Consulting			Infrastructure			Financing
Revenue		$	22,927		$	16,257		$	14,533		$	975
Pre-tax Income/(Loss) from Continuing Operations			3,341			1,034			1,654			449
Pre-tax Margin			14.6	%		6.4	%		11.4	%		46.1	%

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts)
		Three Months Ended December 31, 2021
		Continuing Operations
					Acquisition-			Retirement-			Tax			Kyndryl-
					Related			Related			Reform			Related			Operating
		GAAP			Adjustments (1)			Adjustments (2)			Impacts			Impacts (4)			(Non-GAAP)
Gross Profit		$	9,500		$	182		$	—		$	—		$	—		$	9,682
Gross Profit Margin			56.9	%		1.1	Pts		—	Pts		—	Pts		—	Pts		58.0	%
S,G&A			4,903			(290)			—			—			(8)			4,605
Other (Income) & Expense			(18)			(1)			(315)			—			126			(208)
Total Expense & Other (Income)			6,632			(290)			(315)			—			118			6,145
Pre-tax Income from Continuing Operations			2,869			472			315			—			(118)			3,537
Pre-tax Income Margin from Continuing Operations			17.2	%		2.8	Pts		1.9	Pts		—	Pts		(0.7)	Pts		21.2	%
Provision for/(Benefit from) Income Taxes (3)			407			117			109			(94)			(37)			502
Effective Tax Rate			14.2	%		1.4	Pts		1.8	Pts		(2.7)	Pts		(0.6)	Pts		14.2	%
Income from Continuing Operations			2,462			355			206			94			(81)			3,035
Income Margin from Continuing Operations			14.7	%		2.1	Pts		1.2	Pts		0.6	Pts		(0.5)	Pts		18.2	%
Diluted Earnings/(Loss) Per Share: Continuing Operations		$	2.72		$	0.39		$	0.23		$	0.10		$	(0.09)		$	3.35
		Three Months Ended December 31, 2020
		Continuing Operations
					Acquisition-			Retirement-			Tax			Kyndryl-
					Related			Related			Reform			Related			Operating
		GAAP			Adjustments (1)			Adjustments (2)			Impacts			Impacts (4)			(Non-GAAP)
Gross Profit		$	9,238		$	176		$	—		$	—		$	—		$	9,414
Gross Profit Margin			58.9	%		1.1	Pts		—	Pts		—	Pts		—	Pts		60.0	%
S,G&A			6,256			(283)			—			—			—			5,973
Other (Income) & Expense			230			(1)			(278)			—			—			(49)
Total Expense & Other (Income)			8,224			(283)			(278)			—			—			7,662
Pre-tax Income/(Loss) from Continuing Operations			1,014			459			278			—			—			1,752
Pre-tax Income Margin from Continuing Operations			6.5	%		2.9	Pts		1.8	Pts		—	Pts		—	Pts		11.2	%
Provision for/(Benefit from) Income Taxes (3)			(175)			102			156			(18)			—			66
Effective Tax Rate			(17.3)	%		10.4	Pts		11.7	Pts		(1.0)	Pts		—	Pts		3.7	%
Income from Continuing Operations			1,190			357			122			18			—			1,686
Income Margin from Continuing Operations			7.6	%		2.3	Pts		0.8	Pts		0.1	Pts		—	Pts		10.8	%
Diluted Earnings/(Loss) Per Share: Continuing Operations		$	1.32		$	0.40		$	0.14		$	0.02		$	—		$	1.88

____________________
(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)	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)	Primarily relates to fair value changes in shares of Kyndryl common stock that were retained by IBM, employee awards, and separation related tax impacts.

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts)
		Year Ended December 31, 2021
		Continuing Operations
					Acquisition-			Retirement-			Tax			Kyndryl-
					Related			Related			Reform			Related			Operating
		GAAP			Adjustments (1)			Adjustments (2)			Impacts			Impacts (4)			(Non-GAAP)
Gross Profit		$	31,486		$	719		$	—		$	—		$	—		$	32,205
Gross Profit Margin			54.9	%		1.3	Pts		—	Pts		—	Pts		—	Pts		56.2	%
S,G&A			18,745			(1,160)			—			—			(8)			17,577
Other (Income) & Expense			873			(2)			(1,282)			—			126			(285)
Total Expense & Other (Income)			26,649			(1,162)			(1,282)			—			118			24,324
Pre-tax Income from Continuing Operations			4,837			1,881			1,282			—			(118)			7,881
Pre-tax Income Margin from Continuing Operations			8.4	%		3.3	Pts		2.2	Pts		—	Pts		(0.2)	Pts		13.7	%
Provision for/(Benefit from) Income Taxes (3)			124			457			251			(89)			(37)			706
Effective Tax Rate			2.6	%		5.2	Pts		2.8	Pts		(1.1)	Pts		(0.4)	Pts		9.0	%
Income from Continuing Operations			4,712			1,424			1,031			89			(81)			7,174
Income Margin from Continuing Operations			8.2	%		2.5	Pts		1.8	Pts		0.2	Pts		(0.1)	Pts		12.5	%
Diluted Earnings/(Loss) Per Share: Continuing Operations		$	5.21		$	1.57		$	1.14		$	0.10		$	(0.09)		$	7.93
		Year Ended December 31, 2020
		Continuing Operations
					Acquisition-			Retirement-			Tax			Kyndryl-
					Related			Related			Reform			Related			Operating
		GAAP			Adjustments (1)			Adjustments (2)			Impacts			Impacts (4)			(Non-GAAP)
Gross Profit		$	30,865		$	726		$	—		$	—		$	—		$	31,591
Gross Profit Margin			55.9	%		1.3	Pts		—	Pts		—	Pts		—	Pts		57.3	%
S,G&A			20,561			(1,117)			—			—			—			19,445
Other (Income) & Expense			802			(2)			(1,073)			—			—			(273)
Total Expense & Other (Income)			28,293			(1,119)			(1,073)			—			—			26,101
Pre-tax Income from Continuing Operations			2,572			1,845			1,073			—			—			5,490
Pre-tax Income Margin from Continuing Operations			4.7	%		3.3	Pts		1.9	Pts		—	Pts		—	Pts		9.9	%
Provision for/(Benefit from) Income Taxes (3)			(1,360)			411			208			110			—			(630)
Effective Tax Rate			(52.9)	%		25.3	Pts		14.1	Pts		2.0	Pts		—	Pts		(11.5)	%
Income from Continuing Operations			3,932			1,434			864			(110)			—			6,120
Income Margin from Continuing Operations			7.1	%		2.6	Pts		1.6	Pts		(0.2)	Pts		—	Pts		11.1	%
Diluted Earnings/(Loss) Per Share: Continuing Operations		$	4.38		$	1.60		$	0.96		$	(0.12)		$	—		$	6.82

____________________
(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)	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)	Primarily relates to fair value changes in shares of Kyndryl common stock that were retained by IBM, employee awards, and separation related tax impacts.

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in billions)
			Year Ended
IBM post-separation baseline Free Cash Flow Reconciliation			December 31, 2021
Consolidated Net Cash from Operations per GAAP		$	12.8
Less: change in Financing receivables			3.9
Capital Expenditures, net			(2.4)
Consolidated Free Cash Flow			6.5
Less: Kyndryl charges and pre-separation activity*			(1.4)	*
IBM post-separation baseline Free Cash Flow			7.9
____________________
* Includes Kyndryl portion of cash impacts incurred in the period related to structural actions initiated in 4Q20 and separation related costs. Kyndryl's estimated free cash flow was deemed immaterial.

 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/ibm-releases-fourth-quarter-results-301466868.html

SOURCE IBM

FAQ

What were IBM's fourth-quarter 2021 earnings results?

IBM reported a revenue of $16.7 billion, a 6.5% increase, with pre-tax income reaching $2.9 billion.

How much did IBM's hybrid cloud revenue increase in Q4 2021?

IBM's hybrid cloud revenue increased by 16% in Q4 2021, totaling $6.2 billion.

What factors contributed to IBM's revenue growth in Q4 2021?

Growth was driven by hybrid cloud adoption, with software and consulting revenues increasing by 8% and 13%, respectively.

Did IBM experience any declines in revenue in Q4 2021?

Yes, IBM's infrastructure revenue was flat, and financing revenue declined by 29.4%.

What are IBM's financial expectations for 2022?

IBM aims for mid-single digit revenue growth and strong free cash flow in 2022.