IBM RELEASES THIRD-QUARTER RESULTS
IBM reported Q3 2024 revenue of $15.0 billion, up 1% (2% at constant currency), driven by Software revenue growth of 10%. The company's generative AI business reached $3 billion, increasing by $1 billion quarter-over-quarter. Gross profit margin improved to 56.3% GAAP (up 190 basis points) and 57.5% Operating Non-GAAP (up 210 basis points). Software segment now represents nearly 45% of total revenue. The company maintains its full-year free cash flow guidance of over $12 billion, with Q4 revenue growth expected to be consistent with Q3.
IBM ha riportato un fatturato per il terzo trimestre del 2024 di 15,0 miliardi di dollari, in aumento dell'1% (2% a valuta costante), trainato da una crescita del fatturato del software del 10%. L'azienda ha raggiunto un fatturato nel business dell'IA generativa di 3 miliardi di dollari, con un incremento di 1 miliardo di dollari rispetto al trimestre precedente. Il margine di profitto lordo è migliorato al 56,3% GAAP (in aumento di 190 punti base) e al 57,5% Non-GAAP operativo (in aumento di 210 punti base). Il segmento software rappresenta ora quasi il 45% del fatturato totale. L'azienda mantiene la sua previsione di flusso di cassa libero per l'intero anno di oltre 12 miliardi di dollari, con una crescita del fatturato prevista per il quarto trimestre che dovrebbe essere coerente con quella del terzo trimestre.
IBM reportó ingresos en el tercer trimestre de 2024 de 15.0 mil millones de dólares, un aumento del 1% (2% a moneda constante), impulsado por un crecimiento del 10% en los ingresos por software. El negocio de IA generativa de la compañía alcanzó 3 mil millones de dólares, aumentando en 1 mil millones de dólares de un trimestre a otro. El margen de beneficio bruto mejoró al 56.3% GAAP (un aumento de 190 puntos base) y al 57.5% Non-GAAP operativo (un aumento de 210 puntos base). El segmento de software ahora representa casi el 45% de los ingresos totales. La compañía mantiene su guía de flujo de efectivo libre para todo el año de más de 12 mil millones de dólares, con un crecimiento de ingresos en el cuarto trimestre que se espera sea consistente con el del tercer trimestre.
IBM은 2024년 3분기 매출이 150억 달러에 이르렀다고 보고하며, 이는 1% 증가(환율을 고정하면 2% 증가)한 수치로 소프트웨어 매출이 10% 성장한 데 힘입은 것이다. 회사의 생성적 AI 사업은 30억 달러에 도달하여 분기 대비 10억 달러 증가했다. 총 매출총이익률은 GAAP 기준 56.3%로 190bps 상승했고, 운영 비GAAP 기준으로는 57.5%로 210bps 상승했다. 소프트웨어 부문은 이제 총 매출의 거의 45%를 차지한다. 회사는 연간 자유 현금흐름 지침을 120억 달러 이상으로 유지하고 있으며, 4분기 매출 성장률은 3분기와 일관될 것으로 예상하고 있다.
IBM a annoncé des revenus de 15,0 milliards de dollars pour le troisième trimestre de 2024, en hausse de 1% (2% à taux de change constant), grâce à une croissance de 10% des revenus issus des logiciels. L'activité d'IA générative de l'entreprise a atteint 3 milliards de dollars, augmentant de 1 milliard de dollars par rapport au trimestre précédent. La marge brute a été améliorée à 56,3% GAAP (en hausse de 190 points de base) et 57,5% Non-GAAP opérationnel (en hausse de 210 points de base). Le segment des logiciels représente désormais près de 45% des revenus totaux. L'entreprise maintient ses prévisions de flux de trésorerie libre pour l'année entière à plus de 12 milliards de dollars, avec une croissance des revenus au quatrième trimestre prévue pour être cohérente avec celle du troisième trimestre.
IBM berichtete im dritten Quartal 2024 von Einnahmen in Höhe von 15,0 Milliarden US-Dollar, ein Anstieg um 1% (2% bei konstanten Währungen), bedingt durch eine Wachstumsrate der Software-Einnahmen von 10%. Das Unternehmen erzielte im Bereich der generativen KI einen Umsatz von 3 Milliarden US-Dollar, was einem Anstieg um 1 Milliarde US-Dollar im Vergleich zum Vorquartal entspricht. Die Bruttogewinnmarge verbesserte sich auf 56,3% GAAP (Anstieg um 190 Basispunkte) und 57,5% betriebliches Non-GAAP (Anstieg um 210 Basispunkte). Der Software-Sektor macht nun fast 45% des Gesamterlöses aus. Das Unternehmen hält an seiner Prognose für den freien Cashflow von über 12 Milliarden US-Dollar für das gesamte Jahr fest, wobei die Umsatzentwicklung im vierten Quartal voraussichtlich im Einklang mit dem dritten Quartal stehen wird.
- Software revenue grew 10%, with Red Hat up 14%
- Generative AI business reached $3B, up $1B quarter-over-quarter
- Gross profit margin expanded by 190 basis points to 56.3%
- Free cash flow increased by $1.5B year-over-year to $6.6B YTD
- Operating (Non-GAAP) net income grew 6% to $2.2B
- Infrastructure revenue declined 7%
- IBM Z revenue down 19%
- Technology Consulting revenue decreased 4%
- GAAP net loss of $0.3B due to pension settlement charge
- Operating cash flow decreased by $0.4B year-over-year
Insights
IBM's Q3 results show significant transformation with Software revenue growing 9.7% to
IBM's strategic pivot toward AI and hybrid cloud is yielding results, evidenced by the
Accelerated Software revenue growth, expanded gross profit margin, and strong free cash flow
"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
Third-Quarter Highlights
- Revenue
- Revenue of$15.0 billion
- 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 $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 | % | (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 to the transfer of a portion of the company's announced in September 2024. | ||||||||||||||||||||
(2) | ||||||||||||||||||||
"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
- 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
- Business Transformation up 2 percent
- Technology Consulting down 4 percent
- Application Operations down 1 percent - Infrastructure — revenues of
$3.0 billion
- 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
Cash Flow and Balance Sheet
In the third quarter, the company generated net cash from operating activities of
For the first nine months of the year, the company generated net cash from operating activities of
IBM ended the third quarter with
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
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
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 | Nine Months Ended | ||||||||||
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 | |||||||||||
INTERNATIONAL BUSINESS MACHINES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) | ||||
(Dollars in Millions) | At September 30, | At December 31, | ||
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 | Nine Months Ended | |||||||
(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 | Nine Months Ended | |||||||
(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 | ||||||||
(3) 2024 includes proceeds of | ||||||||
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) 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 (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 | ||||||||||||||
(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 | ||||||||||||||
INTERNATIONAL BUSINESS MACHINES CORPORATION (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 | ||||||||||||||
(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 | ||||||||||||||
(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 | Nine Months Ended | |||||||
(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
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