Growth Across Key Segments Led by Hybrid Cloud Adoption;
Solid Cash and Profit Generation
ARMONK,
N.Y., July 18, 2022 /PRNewswire/ -- IBM (NYSE:
IBM) today announced second-quarter 2022 earnings results.
"In the quarter we delivered good revenue performance with
balanced growth across our geographies, driven by client demand for
our hybrid cloud and AI offerings. The IBM team executed our
strategy well," said Arvind Krishna,
IBM chairman and chief executive officer. "With our first half
results, we continue to expect full-year revenue growth at the high
end of our mid-single digit model."
Second-Quarter Highlights
- Revenue
- Revenue of $15.5 billion, up 9
percent, up 16 percent at constant currency (about 5 points from
sales to Kyndryl)
- Software revenue up 6 percent, up 12 percent at constant currency
(about 7 points from sales to Kyndryl)
- Consulting revenue up 10 percent, up 18 percent at constant
currency
- Infrastructure revenue up 19 percent, up 25 percent at constant
currency (about 7 points from sales to Kyndryl)
- Hybrid cloud revenue, over the last 12 months, of $21.7 billion, up 16 percent, up 19 percent at
constant currency
- Cash Flow
- On a consolidated basis, year to date, net cash from operating
activities of $4.6 billion; free cash
flow of $3.3 billion
SECOND QUARTER 2022 INCOME STATEMENT
SUMMARY
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
Pre-tax
|
|
Income
|
|
|
Net
|
|
|
Diluted
|
|
|
|
|
Revenue
|
|
|
Profit
|
|
|
Income
|
|
Margin
|
|
|
Income
|
|
|
EPS
|
|
GAAP from
Continuing
Operations
|
|
$
|
15.5B
|
|
$
|
8.3B
|
|
$
|
1.7B
|
|
11.1
|
%
|
$
|
1.5B
|
|
$
|
1.61
|
|
Year/Year
|
|
|
9
|
%*
|
|
6
|
%
|
|
89
|
%
|
4.7
|
Pts
|
|
81
|
%
|
|
79
|
%
|
Operating
(Non-GAAP)
|
|
|
|
|
$
|
8.5B
|
|
$
|
2.5B
|
|
16.2
|
%
|
$
|
2.1B
|
|
$
|
2.31
|
|
Year/Year
|
|
|
|
|
|
5
|
%
|
|
48
|
%
|
4.2
|
Pts
|
|
45
|
%
|
|
43
|
%
|
*16% at constant
currency
|
"We are a faster-growing, focused, disciplined company with
sound business fundamentals," said James
Kavanaugh, IBM senior vice president and chief financial
officer. "Our recurring revenue stream and solid cash generation
position us well to continue to invest in R&D, acquire new
companies, and strengthen our talent in every part of the business,
while also returning value to shareholders through our
dividend."
Segment Results for Second Quarter
- Software (includes Hybrid Platform & Solutions,
Transaction Processing)— revenues of $6.2 billion, up 6.4 percent, up 11.6 percent at
constant currency (about 7 points from sales to Kyndryl):
- Hybrid Platform & Solutions up 4 percent, up 9 percent at
constant currency (about 1.5 points from sales to Kyndryl):
-- Red Hat up 12 percent, up 17 percent at constant
currency
-- Automation up 4 percent, up 8 percent at constant
currency
-- Data & AI flat, up 4 percent at constant
currency
-- Security flat, up 5 percent at constant
currency
- Transaction Processing up 12 percent, up 19 percent at constant
currency (about 22 points from sales to Kyndryl)
- Software segment hybrid cloud revenue up 14 percent, up 18
percent at constant currency
- Consulting (includes Business Transformation, Technology
Consulting and Application Operations)— revenues of
$4.8 billion, up 9.8 percent, up 17.8
percent at constant currency:
- Business Transformation up 9 percent, up 16 percent at constant
currency
- Technology Consulting up 14 percent, up 23 percent at constant
currency
- Application Operations up 9 percent, up 17 percent at constant
currency
- Consulting segment hybrid cloud revenue up 20 percent, up 29
percent at constant currency
- Infrastructure (includes Hybrid Infrastructure,
Infrastructure Support)— revenues of $4.2 billion, up 19.0 percent, up 25.4 percent at
constant currency (about 7 points from sales to Kyndryl):
- Hybrid Infrastructure up 34 percent, up 41 percent at constant
currency (about 7 points from sales to Kyndryl)
-- IBM z Systems up 69 percent, up 77 percent at
constant currency
-- Distributed Infrastructure up 11 percent, up 17
percent at constant currency
- Infrastructure Support down 2 percent, up 5 percent at constant
currency (about 8 points from sales to Kyndryl)
- Infrastructure segment hybrid cloud revenue up 24 percent, up 30
percent at constant currency
- Financing (includes client and commercial financing)—
revenues of $0.1 billion, down 29.9
percent, down 26.6 percent at constant currency
Cash Flow and Balance Sheet
On a consolidated basis,
in the second quarter, the company generated net cash from
operating activities of $1.3 billion
or $2.6 billion excluding IBM
Financing receivables. IBM's free cash flow was $2.1 billion. The company returned $1.5 billion to shareholders in dividends in the
second quarter.
On a consolidated basis, for the first six months of the year,
the company generated net cash from operating activities of
$4.6 billion or $4.2 billion excluding IBM Financing receivables.
IBM's free cash flow was $3.3
billion, which includes cash impacts from the company's
structural actions initiated at the end of 2020.
IBM ended the second quarter with $7.8
billion of cash on hand (which includes marketable
securities), up $0.2 billion from
year-end 2021. Debt, including IBM Financing debt of $12.3 billion, totaled $50.3 billion, down $1.4
billion since the end of 2021.
Full-Year 2022 Expectations
- Revenue growth: The company continues to expect constant
currency revenue growth at the high end of its mid-single digit
model. The company also expects an additional 3.5 point
contribution from incremental sales to Kyndryl. At mid-July 2022 foreign exchange rates, currency is
expected to be about a six-point headwind.
- Free Cash Flow: The company now expects about $10 billion in consolidated free cash flow.
Forward-Looking and Cautionary Statements
Except for
the historical information and discussions contained herein,
statements contained in this release may constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are based on the
company's current assumptions regarding future business and
financial performance. These statements involve a number of risks,
uncertainties and other factors that could cause actual results to
differ materially, including, but not limited to, the following: a
downturn in economic environment and client spending budgets; a
failure of the company's innovation initiatives; damage to the
company's reputation; risks from investing in growth opportunities;
failure of the company's intellectual property portfolio to prevent
competitive offerings and the failure of the company to obtain
necessary licenses; the company's ability to successfully manage
acquisitions, alliances and dispositions, including integration
challenges, failure to achieve objectives, the assumption of
liabilities, and higher debt levels; fluctuations in financial
results; impact of local legal, economic, political, health and
other conditions; the company's failure to meet growth and
productivity objectives; ineffective internal controls; the
company's use of accounting estimates; impairment of the company's
goodwill or amortizable intangible assets; the company's ability to
attract and retain key employees and its reliance on critical
skills; impacts of relationships with critical suppliers; product
quality issues; impacts of business with government clients;
reliance on third party distribution channels and ecosystems;
cybersecurity and data privacy considerations; adverse effects
related to climate change and environmental matters, tax matters;
legal proceedings and investigatory risks; the company's pension
plans; currency fluctuations and customer financing risks; impact
of changes in market liquidity conditions and customer credit risk
on receivables; potential failure of the separation of Kyndryl
Holdings, Inc. to qualify for tax-free treatment; risk factors
related to IBM securities; and other risks, uncertainties and
factors discussed in the company's Form 10-Qs, Form 10-K and in the
company's other filings with the U.S. Securities and Exchange
Commission or in materials incorporated therein by reference. Any
forward-looking statement in this release speaks only as of the
date on which it is made. Except as required by law, the company
assumes no obligation to update or revise any forward-looking
statements.
Presentation of Information in this Press Release
On
November 3, 2021, IBM completed the
separation of Kyndryl. Unless otherwise specified, results are
presented on a continuing operations basis. All references to
revenue impacts from sales to Kyndryl are incremental sales
post-separation.
In an effort to provide investors with additional information
regarding the company's results as determined by generally accepted
accounting principles (GAAP), the company has also disclosed in
this press release the following non-GAAP information, which
management believes provides useful information to
investors:
IBM results —
- adjusting for currency (i.e., at constant currency);
- presenting operating (non-GAAP) earnings per share amounts and
related income statement items;
- consolidated free cash flow;
- consolidated cash from operating activities excluding IBM
Financing receivables;
The rationale for management's use of these non-GAAP measures is
included in Exhibit 99.2 in the Form 8‑K that includes
this press release and is being submitted today to the SEC.
Conference Call and Webcast
IBM's regular quarterly
earnings conference call is scheduled to begin at
5:00 p.m. EDT, today. The Webcast may be accessed via a
link at
https://www.ibm.com/investor/events/earnings-2q22. Presentation
charts will be available shortly before the Webcast.
Financial Results Below (certain amounts may not add
due to use of rounded numbers; percentages presented are
calculated from the underlying whole-dollar amounts).
Contact: IBM
Sarah Meron, 347 891 1770
sarah.meron@ibm.com
Tim Davidson, 914 844
7847
tfdavids@us.ibm.com
INTERNATIONAL
BUSINESS MACHINES CORPORATION
COMPARATIVE
FINANCIAL RESULTS
(Unaudited; Dollars
in millions except per share amounts)
|
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|
|
2022
|
|
2021*
|
|
|
|
2022
|
|
2021*
|
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
$
|
6,166
|
|
$
|
5,795
|
|
|
|
$
|
11,938
|
|
$
|
10,933
|
|
|
Consulting
|
|
|
4,809
|
|
|
4,378
|
|
|
|
|
9,637
|
|
|
8,641
|
|
|
Infrastructure
|
|
|
4,235
|
|
|
3,560
|
|
|
|
|
7,453
|
|
|
6,853
|
|
|
Financing
|
|
|
146
|
|
|
209
|
|
|
|
|
300
|
|
|
417
|
|
|
Other
|
|
|
180
|
|
|
277
|
|
|
|
|
404
|
|
|
561
|
|
|
TOTAL REVENUE
|
|
|
15,535
|
|
|
14,218
|
|
|
|
|
29,732
|
|
|
27,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
8,290
|
|
|
7,852
|
|
|
|
|
15,625
|
|
|
14,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
79.2
|
%
|
|
79.7
|
%
|
|
|
|
79.0
|
%
|
|
78.8
|
%
|
|
Consulting
|
|
|
24.2
|
%
|
|
27.6
|
%
|
|
|
|
24.3
|
%
|
|
27.7
|
%
|
|
Infrastructure
|
|
|
53.8
|
%
|
|
57.1
|
%
|
|
|
|
52.4
|
%
|
|
56.7
|
%
|
|
Financing
|
|
|
35.3
|
%
|
|
29.9
|
%
|
|
|
|
36.5
|
%
|
|
32.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT MARGIN
|
|
|
53.4
|
%
|
|
55.2
|
%
|
|
|
|
52.6
|
%
|
|
54.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S,G&A
|
|
|
4,855
|
|
|
4,849
|
|
|
|
|
9,452
|
|
|
9,536
|
|
|
R,D&E
|
|
|
1,673
|
|
|
1,641
|
|
|
|
|
3,352
|
|
|
3,257
|
|
|
Intellectual property
and custom development income
|
|
|
(176)
|
|
|
(133)
|
|
|
|
|
(297)
|
|
|
(278)
|
|
|
Other (income) and
expense
|
|
|
(81)
|
|
|
302
|
|
|
|
|
166
|
|
|
647
|
|
|
Interest
expense
|
|
|
297
|
|
|
281
|
|
|
|
|
607
|
|
|
561
|
|
|
TOTAL EXPENSE AND OTHER INCOME
|
|
|
6,568
|
|
|
6,940
|
|
|
|
|
13,280
|
|
|
13,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS) FROM CONTINUING
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEFORE INCOME TAXES
|
|
|
1,722
|
|
|
912
|
|
|
|
|
2,345
|
|
|
1,155
|
|
|
Pre-tax
margin
|
|
|
11.1
|
%
|
|
6.4
|
%
|
|
|
|
7.9
|
%
|
|
4.2
|
%
|
|
Provision for/(Benefit
from) income taxes
|
|
|
257
|
|
|
101
|
|
|
|
|
218
|
|
|
(58)
|
|
|
Effective tax
rate
|
|
|
14.9
|
%
|
|
11.1
|
%
|
|
|
|
9.3
|
%
|
|
(5.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING
OPERATIONS
|
|
$
|
1,465
|
|
$
|
810
|
|
|
|
$
|
2,127
|
|
$
|
1,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss) from
discontinued operations, net of taxes
|
|
|
(73)
|
|
|
515
|
|
|
|
|
(2)
|
|
|
1,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
1,392
|
|
$
|
1,325
|
|
|
|
$
|
2,125
|
|
$
|
2,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS/(LOSS) PER SHARE OF COMMON
STOCK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
$
|
1.61
|
|
$
|
0.90
|
|
|
|
$
|
2.34
|
|
$
|
1.34
|
|
|
Discontinued
Operations
|
|
$
|
(0.08)
|
|
$
|
0.57
|
|
|
|
$
|
0.00
|
|
$
|
1.18
|
|
|
TOTAL
|
|
$
|
1.53
|
|
$
|
1.47
|
|
|
|
$
|
2.34
|
|
$
|
2.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
$
|
1.62
|
|
$
|
0.91
|
|
|
|
$
|
2.36
|
|
$
|
1.36
|
|
|
Discontinued
Operations
|
|
$
|
(0.08)
|
|
$
|
0.57
|
|
|
|
$
|
0.00
|
|
$
|
1.19
|
|
|
TOTAL
|
|
$
|
1.54
|
|
$
|
1.48
|
|
|
|
$
|
2.36
|
|
$
|
2.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(M's)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
|
|
910.7
|
|
|
904.2
|
|
|
|
|
910.0
|
|
|
903.0
|
|
|
Basic
|
|
|
901.5
|
|
|
895.0
|
|
|
|
|
900.4
|
|
|
894.3
|
|
|
____________________
|
* Recast to conform
with 2022 presentation.
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEET
(Unaudited)
|
|
|
|
At
|
|
At
|
|
|
June 30,
|
|
December 31,
|
(Dollars in Millions)
|
|
2022
|
|
2021
|
ASSETS:
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
7,034
|
|
$
|
6,650
|
Restricted
cash
|
|
|
220
|
|
|
307
|
Marketable
securities
|
|
|
524
|
|
|
600
|
Notes and accounts
receivable - trade, net
|
|
|
5,867
|
|
|
6,754
|
Short-term financing
receivables, net
|
|
|
7,233
|
|
|
8,014
|
Other accounts
receivable, net
|
|
|
909
|
|
|
1,002
|
Inventories
|
|
|
1,684
|
|
|
1,649
|
Deferred
costs
|
|
|
1,010
|
|
|
1,097
|
Prepaid expenses and
other current assets
|
|
|
3,414
|
|
|
3,466
|
Total Current Assets
|
|
|
27,896
|
|
|
29,539
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
5,275
|
|
|
5,694
|
Operating right-of-use
assets, net
|
|
|
2,848
|
|
|
3,222
|
Long-term financing
receivables, net
|
|
|
5,316
|
|
|
5,425
|
Prepaid pension
assets
|
|
|
9,930
|
|
|
9,850
|
Deferred
costs
|
|
|
865
|
|
|
924
|
Deferred
taxes
|
|
|
7,073
|
|
|
7,370
|
Goodwill
|
|
|
55,039
|
|
|
55,643
|
Intangibles,
net
|
|
|
11,571
|
|
|
12,511
|
Investments and sundry
assets
|
|
|
1,689
|
|
|
1,823
|
Total Assets
|
|
$
|
127,503
|
|
$
|
132,001
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Taxes
|
|
$
|
1,742
|
|
$
|
2,289
|
Short-term
debt
|
|
|
5,981
|
|
|
6,787
|
Accounts
payable
|
|
|
3,707
|
|
|
3,955
|
Deferred
income
|
|
|
12,522
|
|
|
12,518
|
Operating lease
liabilities
|
|
|
884
|
|
|
974
|
Other
liabilities
|
|
|
7,008
|
|
|
7,097
|
Total Current Liabilities
|
|
|
31,844
|
|
|
33,619
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
44,328
|
|
|
44,917
|
Retirement related
obligations
|
|
|
13,118
|
|
|
14,435
|
Deferred
income
|
|
|
3,069
|
|
|
3,577
|
Operating lease
liabilities
|
|
|
2,182
|
|
|
2,462
|
Other
liabilities
|
|
|
13,486
|
|
|
13,996
|
Total Liabilities
|
|
|
108,026
|
|
|
113,005
|
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
|
|
IBM Stockholders' Equity:
|
|
|
|
|
|
|
Common stock
|
|
|
57,802
|
|
|
57,319
|
Retained
earnings
|
|
|
153,298
|
|
|
154,209
|
Treasury stock —
at cost
|
|
|
(169,522)
|
|
|
(169,392)
|
Accumulated other
comprehensive income/(loss)
|
|
|
(22,169)
|
|
|
(23,234)
|
Total IBM Stockholders' Equity
|
|
|
19,409
|
|
|
18,901
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
67
|
|
|
95
|
Total Equity
|
|
|
19,476
|
|
|
18,996
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
$
|
127,503
|
|
$
|
132,001
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH FLOW
ANALYSIS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
(Dollars in Millions)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Consolidated Net Cash from Operations per
GAAP
|
|
$
|
1,321
|
|
$
|
2,625
|
|
$
|
4,569
|
|
$
|
7,539
|
|
$
|
9,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: change in IBM
Financing receivables
|
|
|
(1,264)
|
|
|
900
|
|
|
367
|
|
|
3,763
|
|
|
511
|
Capital Expenditures,
net
|
|
|
(494)
|
|
|
(688)
|
|
|
(871)
|
|
|
(1,217)
|
|
|
(2,035)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Free Cash Flow
|
|
|
2,091
|
|
|
1,037
|
|
|
3,331
|
|
|
2,559
|
|
|
7,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
(260)
|
|
|
(1,747)
|
|
|
(958)
|
|
|
(2,866)
|
|
|
(1,385)
|
Divestitures
|
|
|
1,207
|
|
|
(10)
|
|
|
1,268
|
|
|
(25)
|
|
|
1,408
|
Dividends
|
|
|
(1,488)
|
|
|
(1,467)
|
|
|
(2,963)
|
|
|
(2,924)
|
|
|
(5,907)
|
Non-Financing
Debt
|
|
|
(2,934)
|
|
|
(586)
|
|
|
1,740
|
|
|
(2,331)
|
|
|
2,880
|
Other (includes IBM
Financing net receivables and debt)
|
|
|
(1,607)
|
|
|
(335)
|
|
|
(2,197)
|
|
|
(522)
|
|
|
(4,661)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Cash, Cash Equivalents, Restricted Cash and
Short-term
Marketable Securities*
|
|
$
|
(2,991)
|
|
$
|
(3,108)
|
|
$
|
221
|
|
$
|
(6,110)
|
|
$
|
(387)
|
____________________
|
* Cash flows are
presented on a consolidated basis.
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH
FLOW
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
(Dollars in Millions)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net Income from Operations
|
|
$
|
1,392
|
|
$
|
1,325
|
|
$
|
2,125
|
|
$
|
2,280
|
Depreciation/Amortization of Intangibles
|
|
|
1,245
|
|
|
1,680
|
|
|
2,501
|
|
|
3,352
|
Stock-based
Compensation
|
|
|
254
|
|
|
243
|
|
|
488
|
|
|
457
|
Working Capital /
Other
|
|
|
(307)
|
|
|
(1,524)
|
|
|
(912)
|
|
|
(2,313)
|
IBM Financing
A/R
|
|
|
(1,264)
|
|
|
900
|
|
|
367
|
|
|
3,763
|
Net Cash Provided by Operating
Activities
|
|
$
|
1,321
|
|
$
|
2,625
|
|
$
|
4,569
|
|
$
|
7,539
|
Capital Expenditures,
net of payments & proceeds
|
|
|
(494)
|
|
|
(688)
|
|
|
(871)
|
|
|
(1,217)
|
Divestitures, net of
cash transferred
|
|
|
1,207
|
|
|
(10)
|
|
|
1,268
|
|
|
(25)
|
Acquisitions, net of
cash acquired
|
|
|
(260)
|
|
|
(1,747)
|
|
|
(958)
|
|
|
(2,866)
|
Marketable Securities
/ Other Investments, net
|
|
|
(281)
|
|
|
(227)
|
|
|
(625)
|
|
|
(562)
|
Net Cash Provided by/(Used in) Investing
Activities
|
|
$
|
172
|
|
$
|
(2,671)
|
|
$
|
(1,186)
|
|
$
|
(4,671)
|
Debt, net of
payments & proceeds
|
|
|
(2,514)
|
|
|
(1,500)
|
|
|
434
|
|
|
(5,799)
|
Dividends
|
|
|
(1,488)
|
|
|
(1,467)
|
|
|
(2,963)
|
|
|
(2,924)
|
Financing -
Other
|
|
|
(195)
|
|
|
(163)
|
|
|
(290)
|
|
|
(190)
|
Net Cash Provided by/(Used in) Financing
Activities
|
|
$
|
(4,197)
|
|
$
|
(3,131)
|
|
$
|
(2,819)
|
|
$
|
(8,914)
|
Effect of Exchange Rate
changes on Cash
|
|
|
(262)
|
|
|
69
|
|
|
(267)
|
|
|
(65)
|
Net Change in Cash, Cash Equivalents and Restricted
Cash*
|
|
$
|
(2,965)
|
|
$
|
(3,108)
|
|
$
|
297
|
|
$
|
(6,110)
|
____________________
|
* Cash flows are
presented on a consolidated basis.
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
SEGMENT
DATA
(Unaudited)
|
|
|
|
|
Three Months Ended
June 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
|
Software
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
Revenue
|
|
$
|
6,166
|
|
$
|
4,809
|
|
$
|
4,235
|
|
$
|
146
|
|
Pre-tax Income/(Loss) from Continuing
Operations
|
|
$
|
1,375
|
|
$
|
343
|
|
$
|
757
|
|
$
|
102
|
|
Pre-tax Margin
|
|
|
22.3
|
%
|
|
7.1
|
%
|
|
17.9
|
%
|
|
69.7
|
%
|
Change YTY Revenue
|
|
|
6.4
|
%
|
|
9.8
|
%
|
|
19.0
|
%
|
|
(29.9)
|
%
|
Change YTY Revenue -
constant currency
|
|
|
11.6
|
%
|
|
17.8
|
%
|
|
25.4
|
%
|
|
(26.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2021*
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
|
Software
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
Revenue
|
|
$
|
5,795
|
|
$
|
4,378
|
|
$
|
3,560
|
|
$
|
209
|
|
Pre-tax Income/(Loss) from Continuing
Operations
|
|
$
|
1,059
|
|
$
|
270
|
|
$
|
489
|
|
$
|
131
|
|
Pre-tax Margin
|
|
|
18.3
|
%
|
|
6.2
|
%
|
|
13.7
|
%
|
|
63.0
|
%
|
____________________
|
* Recast to conform
with 2022 presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
|
Software
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
Revenue
|
|
$
|
11,938
|
|
$
|
9,637
|
|
$
|
7,453
|
|
$
|
300
|
|
Pre-tax Income/(Loss) from Continuing
Operations
|
|
$
|
2,509
|
|
$
|
691
|
|
$
|
956
|
|
$
|
186
|
|
Pre-tax Margin
|
|
|
21.0
|
%
|
|
7.2
|
%
|
|
12.8
|
%
|
|
62.0
|
%
|
Change YTY Revenue
|
|
|
9.2
|
%
|
|
11.5
|
%
|
|
8.8
|
%
|
|
(28.0)
|
%
|
Change YTY Revenue -
constant currency
|
|
|
13.4
|
%
|
|
17.6
|
%
|
|
13.4
|
%
|
|
(25.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2021*
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
|
Software
|
|
Consulting
|
|
Infrastructure
|
|
Financing
|
|
Revenue
|
|
$
|
10,933
|
|
$
|
8,641
|
|
$
|
6,853
|
|
$
|
417
|
|
Pre-tax Income/(Loss) from Continuing
Operations
|
|
$
|
1,717
|
|
$
|
547
|
|
$
|
780
|
|
$
|
229
|
|
Pre-tax Margin
|
|
|
15.7
|
%
|
|
6.3
|
%
|
|
11.4
|
%
|
|
55.0
|
%
|
____________________
|
* Recast to conform
with 2022 presentation.
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
U.S. GAAP TO
OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars
in millions except per share amounts)
|
|
|
|
Three Months Ended
June 30, 2022
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments (1)
|
|
Adjustments (2)
|
|
Impacts
|
|
Impacts (3)
|
|
(Non-GAAP)
|
|
Gross Profit
|
|
$
|
8,290
|
|
$
|
180
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
8,470
|
|
Gross Profit
Margin
|
|
|
53.4
|
%
|
|
1.2
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
54.5
|
%
|
S,G&A
|
|
$
|
4,855
|
|
$
|
(279)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0)
|
|
$
|
4,576
|
|
Other
(Income) & Expense
|
|
|
(81)
|
|
|
(1)
|
|
|
(192)
|
|
|
—
|
|
|
(145)
|
|
|
(418)
|
|
Total
Expense & Other (Income)
|
|
|
6,568
|
|
|
(280)
|
|
|
(192)
|
|
|
—
|
|
|
(145)
|
|
|
5,952
|
|
Pre-tax Income from
Continuing
Operations
|
|
|
1,722
|
|
|
460
|
|
|
192
|
|
|
—
|
|
|
145
|
|
|
2,518
|
|
Pre-tax Income Margin
from
Continuing Operations
|
|
|
11.1
|
%
|
|
3.0
|
pts.
|
|
1.2
|
pts.
|
|
—
|
pts.
|
|
0.9
|
pts.
|
|
16.2
|
%
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
257
|
|
$
|
115
|
|
$
|
46
|
|
$
|
(4)
|
|
$
|
—
|
|
$
|
413
|
|
Effective Tax
Rate
|
|
|
14.9
|
%
|
|
1.8
|
pts.
|
|
0.7
|
pts.
|
|
(0.2)
|
pts.
|
|
(0.9)
|
pts.
|
|
16.4
|
%
|
Income from Continuing
Operations
|
|
$
|
1,465
|
|
$
|
345
|
|
$
|
146
|
|
$
|
4
|
|
$
|
145
|
|
$
|
2,105
|
|
Income Margin from
Continuing
Operations
|
|
|
9.4
|
%
|
|
2.2
|
pts.
|
|
0.9
|
pts.
|
|
0.0
|
pts.
|
|
0.9
|
pts.
|
|
13.5
|
%
|
Diluted Earnings/(Loss)
Per Share:
Continuing Operations
|
|
$
|
1.61
|
|
$
|
0.38
|
|
$
|
0.16
|
|
$
|
0.00
|
|
$
|
0.16
|
|
$
|
2.31
|
|
|
|
|
Three Months Ended
June 30, 2021
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments (1)
|
|
Adjustments (2)
|
|
Impacts
|
|
Impacts (3)
|
|
(Non-GAAP)
|
|
Gross Profit
|
|
$
|
7,852
|
|
$
|
179
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
8,031
|
|
Gross Profit
Margin
|
|
|
55.2
|
%
|
|
1.3
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
56.5
|
%
|
S,G&A
|
|
$
|
4,849
|
|
$
|
(294)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
4,555
|
|
Other
(Income) & Expense
|
|
|
302
|
|
|
(1)
|
|
|
(317)
|
|
|
—
|
|
|
—
|
|
|
(16)
|
|
Total
Expense & Other (Income)
|
|
|
6,940
|
|
|
(294)
|
|
|
(317)
|
|
|
—
|
|
|
—
|
|
|
6,329
|
|
Pre-tax Income/(Loss)
from Continuing
Operations
|
|
|
912
|
|
|
474
|
|
|
317
|
|
|
—
|
|
|
—
|
|
|
1,702
|
|
Pre-tax Income Margin
from
Continuing Operations
|
|
|
6.4
|
%
|
|
3.3
|
pts.
|
|
2.2
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
12.0
|
%
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
101
|
|
$
|
105
|
|
$
|
53
|
|
$
|
(14)
|
|
$
|
—
|
|
$
|
246
|
|
Effective Tax
Rate
|
|
|
11.1
|
%
|
|
3.1
|
pts.
|
|
1.0
|
pts.
|
|
(0.8)
|
pts.
|
|
—
|
pts.
|
|
14.5
|
%
|
Income from Continuing
Operations
|
|
$
|
810
|
|
$
|
368
|
|
$
|
264
|
|
$
|
14
|
|
$
|
—
|
|
$
|
1,456
|
|
Income Margin from
Continuing
Operations
|
|
|
5.7
|
%
|
|
2.6
|
pts.
|
|
1.9
|
pts.
|
|
0.1
|
pts.
|
|
—
|
pts.
|
|
10.2
|
%
|
Diluted Earnings/(Loss)
Per Share:
Continuing Operations
|
|
$
|
0.90
|
|
$
|
0.41
|
|
$
|
0.29
|
|
$
|
0.01
|
|
$
|
—
|
|
$
|
1.61
|
|
____________________
|
(1) Includes
amortization of purchased intangible assets, in process R&D,
transaction costs, applicable restructuring and related expenses,
tax charges related to acquisition
integration and pre-closing charges,
such as financing costs.
|
(2) Includes
amortization of prior service costs, interest cost, expected return
on plan assets, amortized actuarial gains/losses, the impacts of
any plan curtailments/
settlements and pension insolvency costs
and other costs.
|
(3) Primarily
relates to the fair value changes in the retained Kyndryl common
stock and the related cash-settled swap.
|
(4) Tax impact on
operating (non-GAAP) pre-tax income from continuing operations is
calculated under the same accounting principles applied to the As
Reported pre-tax
income under ASC 740, which employs an
annual effective tax rate method to the results.
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
U.S. GAAP TO
OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars
in millions except per share amounts)
|
|
|
|
Six Months Ended
June 30, 2022
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments (1)
|
|
Adjustments (2)
|
|
Impacts
|
|
Impacts (3)
|
|
(Non-GAAP)
|
|
Gross Profit
|
|
$
|
15,625
|
|
$
|
361
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
15,986
|
|
Gross Profit
Margin
|
|
|
52.6
|
%
|
|
1.2
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
53.8
|
%
|
S,G&A
|
|
$
|
9,452
|
|
$
|
(565)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0)
|
|
$
|
8,887
|
|
Other
(Income) & Expense
|
|
|
166
|
|
|
(1)
|
|
|
(394)
|
|
|
—
|
|
|
(367)
|
|
|
(596)
|
|
Total
Expense & Other (Income)
|
|
|
13,280
|
|
|
(566)
|
|
|
(394)
|
|
|
—
|
|
|
(367)
|
|
|
11,953
|
|
Pre-tax Income from
Continuing
Operations
|
|
|
2,345
|
|
|
928
|
|
|
394
|
|
|
—
|
|
|
367
|
|
|
4,033
|
|
Pre-tax Income Margin
from
Continuing Operations
|
|
|
7.9
|
%
|
|
3.1
|
pts.
|
|
1.3
|
pts.
|
|
—
|
pts.
|
|
1.2
|
pts.
|
|
13.6
|
%
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
218
|
|
$
|
224
|
|
$
|
104
|
|
$
|
112
|
|
$
|
—
|
|
$
|
657
|
|
Effective Tax
Rate
|
|
|
9.3
|
%
|
|
3.4
|
pts.
|
|
1.7
|
pts.
|
|
2.8
|
pts.
|
|
(0.8)
|
pts.
|
|
16.3
|
%
|
Income from Continuing
Operations
|
|
$
|
2,127
|
|
$
|
704
|
|
$
|
290
|
|
$
|
(112)
|
|
$
|
367
|
|
$
|
3,376
|
|
Income Margin from
Continuing
Operations
|
|
|
7.2
|
%
|
|
2.4
|
pts.
|
|
1.0
|
pts.
|
|
(0.4)
|
pts.
|
|
1.2
|
pts.
|
|
11.4
|
%
|
Diluted Earnings/(Loss)
Per Share:
Continuing Operations
|
|
$
|
2.34
|
|
$
|
0.77
|
|
$
|
0.32
|
|
$
|
(0.12)
|
|
$
|
0.40
|
|
$
|
3.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2021
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
Acquisition-
|
|
Retirement-
|
|
Tax
|
|
Kyndryl-
|
|
|
|
|
|
|
|
|
|
Related
|
|
Related
|
|
Reform
|
|
Related
|
|
Operating
|
|
|
|
GAAP
|
|
Adjustments (1)
|
|
Adjustments (2)
|
|
Impacts
|
|
Impacts (3)
|
|
(Non-GAAP)
|
|
Gross Profit
|
|
$
|
14,879
|
|
$
|
353
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
15,232
|
|
Gross Profit
Margin
|
|
|
54.3
|
%
|
|
1.3
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
55.6
|
%
|
S,G&A
|
|
$
|
9,536
|
|
$
|
(582)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
8,954
|
|
Other
(Income) & Expense
|
|
|
647
|
|
|
(1)
|
|
|
(649)
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
Total
Expense & Other (Income)
|
|
|
13,724
|
|
|
(583)
|
|
|
(649)
|
|
|
—
|
|
|
—
|
|
|
12,491
|
|
Pre-tax Income from
Continuing
Operations
|
|
|
1,155
|
|
|
936
|
|
|
649
|
|
|
—
|
|
|
—
|
|
|
2,741
|
|
Pre-tax Income Margin
from
Continuing Operations
|
|
|
4.2
|
%
|
|
3.4
|
pts.
|
|
2.4
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
10.0
|
%
|
Provision for/(Benefit
from) Income
Taxes (4)
|
|
$
|
(58)
|
|
$
|
238
|
|
$
|
86
|
|
$
|
6
|
|
$
|
—
|
|
$
|
272
|
|
Effective Tax
Rate
|
|
|
(5.0)
|
%
|
|
10.4
|
pts.
|
|
4.3
|
pts.
|
|
0.2
|
pts.
|
|
—
|
pts.
|
|
9.9
|
%
|
Income from Continuing
Operations
|
|
$
|
1,213
|
|
$
|
699
|
|
$
|
563
|
|
$
|
(6)
|
|
$
|
—
|
|
$
|
2,469
|
|
Income Margin from
Continuing
Operations
|
|
|
4.4
|
%
|
|
2.5
|
pts.
|
|
2.1
|
pts.
|
|
(0.0)
|
pts.
|
|
—
|
pts.
|
|
9.0
|
%
|
Diluted Earnings/(Loss)
Per Share:
Continuing Operations
|
|
$
|
1.34
|
|
$
|
0.77
|
|
$
|
0.62
|
|
$
|
(0.01)
|
|
$
|
—
|
|
$
|
2.73
|
|
____________________
|
(1) Includes
amortization of purchased intangible assets, in process R&D,
transaction costs, applicable restructuring and related expenses,
tax charges related
to acquisition integration and
pre-closing charges, such as financing costs.
|
(2) Includes
amortization of prior service costs, interest cost, expected return
on plan assets, amortized actuarial gains/losses, the impacts of
any plan
curtailments/settlements and pension
insolvency costs and other costs.
|
(3) Primarily
relates to the fair value changes in the retained Kyndryl common
stock and the related cash-settled swap.
|
(4) Tax impact on
operating (non-GAAP) pre-tax income from continuing operations is
calculated under the same accounting principles applied to the
As
Reported pre-tax income under ASC 740,
which employs an annual effective tax rate method to the
results.
|
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SOURCE IBM