IBM RELEASES FOURTH-QUARTER RESULTS
"We closed the year with double-digit revenue growth in Software for the quarter, led by further acceleration in Red Hat. Clients globally continue to turn to
Fourth -Quarter Highlights
- Revenue
- Revenue of$17.6 billion , up 1 percent, up 2 percent at constant currency
- Software revenue up 10 percent, up 11 percent at constant currency
- Consulting revenue down 2 percent, down 1 percent at constant currency
- Infrastructure revenue down 8 percent, down 6 percent at constant currency - Profit
- Gross Profit Margin: GAAP: 59.5 percent, up 40 basis points; Operating (Non-GAAP): 60.6 percent, up 50 basis points
Full-Year Highlights
- Revenue
- Revenue of$62.8 billion , up 1 percent, up 3 percent at constant currency
- Software revenue up 8 percent, up 9 percent at constant currency
- Consulting revenue down 1 percent, up 1 percent at constant currency
- Infrastructure revenue down 4 percent, down 3 percent at constant currency - Profit
- Gross Profit Margin: GAAP: 56.7 percent, up 120 basis points; Operating (Non-GAAP): 57.8 percent, up 130 basis points - Cash Flow
- Net cash from operating activities of$13.4 billion ; free cash flow of$12.7 billion
|
FOURTH-QUARTER 2024 INCOME STATEMENT SUMMARY |
|
|||||||||||||||||||
|
GAAP results include impact of one-time, non-cash pension settlement charge (1) |
|
|||||||||||||||||||
|
|
Revenue |
|
Gross Profit |
|
|
Gross |
|
|
Pre-tax Income (1) |
|
Pre-tax Income Margin (1) |
|
Net Income (1) |
|
Diluted Earnings Per Share (1) |
|||||
|
GAAP from |
$ 17.6 B |
|
|
|
|
|
59.5 |
% |
|
$ 3.3 B |
|
|
18.8 |
% |
|
$ 2.9 B |
|
|
$ 3.11 |
|
|
Year/Year |
1 |
%(2) |
|
2 |
% |
|
0.4 |
Pts |
|
(12) |
% |
|
-2.8 |
Pts |
|
(11) |
% |
|
(12) |
% |
|
Operating (Non-GAAP) |
|
|
|
|
|
|
60.6 |
% |
|
$ 4.3 B |
|
|
24.3 |
% |
|
$ 3.7 B |
|
|
$ 3.92 |
|
|
Year/Year |
|
|
|
2 |
% |
|
0.5 |
Pts |
|
2 |
% |
|
0.4 |
Pts |
|
3 |
% |
|
1 |
% |
|
(1) 2024 GAAP results include the impact of a one-time, non-cash pension settlement charge of |
||||||||||||||||||||
|
(2) 2% at constant currency. |
||||||||||||||||||||
"With strong performance across our Software portfolio, we continue to drive solid fundamentals within our business," said
Segment Results for Fourth Quarter
-
Software — revenues of
$7.9 billion , up 10.4 percent, up 11.5 percent at constant currency:
- Hybrid Platform & Solutions up 11 percent, up 12 percent at constant currency
-- Red Hat up 16 percent, up 17 percent at constant currency
-- Automation up 15 percent, up 16 percent at constant currency
-- Data & AI up 4 percent, up 5 percent at constant currency
-- Security up 4 percent, up 5 percent at constant currency
- Transaction Processing up 10 percent, up 11 percent at constant currency -
Consulting — revenues of
$5.2 billion , down 2.0 percent, down 1.1 percent at constant currency:
- Business Transformation up 1 percent, up 2 percent at constant currency
- Technology Consulting down 7 percent, down 6 percent at constant currency
- Application Operations down 4 percent, down 3 percent at constant currency -
Infrastructure — revenues of
$4.3 billion , down 7.6 percent, down 6.0 percent at constant currency:
- Hybrid Infrastructure down 10 percent, down 8 percent at constant currency
-- IBM Z down 21 percent, down 20 percent at constant currency
-- Distributed Infrastructure flat, up 2 percent at constant currency
- Infrastructure Support down 2 percent, flat at constant currency -
Financing — revenues of
$0.2 billion , down 2.5 percent, down 0.5 percent at constant currency
Cash Flow and Balance Sheet
In the fourth quarter, the company generated net cash from operating activities of
For the year, the company generated net cash from operating activities of
Full-Year 2024 Results
|
FULL-YEAR 2024 INCOME STATEMENT SUMMARY |
|
|||||||||||||||||||
|
GAAP results include impacts of one-time, non-cash pension settlement charges (1) |
|
|||||||||||||||||||
|
|
Revenue |
|
Gross Profit |
|
|
Gross |
|
|
Pre-tax Income (1) |
|
Pre-tax Income Margin (1) |
|
Net Income (1) |
|
Diluted Earnings Per Share (1) |
|||||
|
GAAP from |
$ 62.8 B |
|
|
|
|
|
56.7 |
% |
|
$ 5.8 B |
|
|
9.2 |
% |
|
$ 6.0 B |
|
|
$ 6.42 |
|
|
Year/Year |
1 |
%(2) |
|
4 |
% |
|
1.2 |
Pts |
|
(33) |
% |
|
-4.8 |
Pts |
|
(20) |
% |
|
(21) |
% |
|
Operating (Non-GAAP) |
|
|
|
|
|
|
57.8 |
% |
|
|
|
|
17.9 |
% |
|
$ 9.7 B |
|
|
$ 10.33 |
|
|
Year/Year |
|
|
|
4 |
% |
|
1.3 |
Pts |
|
9 |
% |
|
1.2 |
Pts |
|
9 |
% |
|
7 |
% |
|
(1) 2024 GAAP results include the impacts of one-time, non-cash, |
||||||||||||||||||||
|
(2) 3% at constant currency |
||||||||||||||||||||
Full-Year 2025 Expectations
- Revenue: The company expects full-year constant currency revenue growth of at least 5 percent. At current foreign exchange rates, currency is expected to be about a two-point headwind to growth for the year.
- Free cash flow: The company expects about
$13.5 billion in free cash flow for the full year.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company's innovation initiatives; damage to the company's reputation; risks from investing in growth opportunities; failure of the company's intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company's ability to successfully manage acquisitions, alliances and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company's failure to meet growth and productivity objectives; ineffective internal controls; the company's use of accounting estimates; impairment of the company's goodwill or amortizable intangible assets; the company's ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; reliance on third-party distribution channels and ecosystems; cybersecurity and data privacy considerations; adverse effects related to climate change and environmental matters; tax matters; legal proceedings and investigatory risks; the company's pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; risk factors related to
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
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:
- adjusting for currency (i.e., at constant currency);
- presenting operating (non-GAAP) earnings per share amounts and related income statement items;
- free cash flow;
- net cash from operating activities excluding IBM Financing receivables;
- 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
Conference Call and 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@ibm.com
tfdavids@us.ibm.com
|
COMPARATIVE FINANCIAL RESULTS (Unaudited; Dollars in millions except per share amounts) |
|||||||||||
|
|
|||||||||||
|
|
Three Months Ended
|
|
|
Year Ended
|
|
||||||
|
|
2024 |
|
|
2023 (1) |
|
|
2024 |
|
|
2023 (1) |
|
|
REVENUE BY SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
Software |
$ 7,924 |
|
|
$ 7,179 |
|
|
$ 27,085 |
|
|
$ 25,011 |
|
|
Consulting |
5,175 |
|
|
5,283 |
|
|
20,692 |
|
|
20,884 |
|
|
Infrastructure |
4,256 |
|
|
4,604 |
|
|
14,020 |
|
|
14,593 |
|
|
Financing |
170 |
|
|
175 |
|
|
713 |
|
|
741 |
|
|
Other |
29 |
|
|
141 |
|
|
243 |
|
|
632 |
|
|
TOTAL REVENUE |
17,553 |
|
|
17,381 |
|
|
62,753 |
|
|
61,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
10,439 |
|
|
10,267 |
|
|
35,551 |
|
|
34,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT MARGIN |
|
|
|
|
|
|
|
|
|
|
|
|
Software |
85.0 |
% |
|
84.1 |
% |
|
83.7 |
% |
|
82.9 |
% |
|
Consulting |
28.0 |
% |
|
28.1 |
% |
|
27.0 |
% |
|
26.8 |
% |
|
Infrastructure |
56.9 |
% |
|
60.8 |
% |
|
55.8 |
% |
|
56.1 |
% |
|
Financing |
46.9 |
% |
|
50.2 |
% |
|
47.9 |
% |
|
48.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT MARGIN |
59.5 |
% |
|
59.1 |
% |
|
56.7 |
% |
|
55.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
S,G&A |
4,866 |
|
|
4,791 |
|
|
19,688 |
|
|
19,003 |
|
|
R,D&E |
1,967 |
|
|
1,748 |
|
|
7,479 |
|
|
6,775 |
|
|
Intellectual property and custom development income |
(301) |
|
|
(242) |
|
|
(996) |
|
|
(860) |
|
|
Other (income) and expense (2) |
177 |
|
|
(193) |
|
|
1,871 |
|
|
(914) |
|
|
Interest expense |
424 |
|
|
405 |
|
|
1,712 |
|
|
1,607 |
|
|
TOTAL EXPENSE AND OTHER INCOME |
7,133 |
|
|
6,509 |
|
|
29,754 |
|
|
25,610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
3,306 |
|
|
3,759 |
|
|
5,797 |
|
|
8,690 |
|
|
Pre-tax margin |
18.8 |
% |
|
21.6 |
% |
|
9.2 |
% |
|
14.0 |
% |
|
Provision for/(Benefit from) income taxes (2) |
379 |
|
|
474 |
|
|
(218) |
|
|
1,176 |
|
|
Effective tax rate |
11.5 |
% |
|
12.6 |
% |
|
(3.8) |
% |
|
13.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS |
$ 2,927 |
|
|
$ 3,285 |
|
|
$ 6,015 |
|
|
$ 7,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
Income/ (loss) from discontinued operations, net of |
(12) |
|
|
3 |
|
|
8 |
|
|
(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (2) |
$ 2,915 |
|
|
$ 3,288 |
|
|
$ 6,023 |
|
|
$ 7,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE OF COMMON STOCK (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Assuming Dilution |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations |
$ 3.11 |
|
|
$ 3.54 |
|
|
$ 6.42 |
|
|
$ 8.15 |
|
|
Discontinued Operations |
$ (0.01) |
|
|
$ 0.00 |
|
|
$ 0.01 |
|
|
$ (0.01) |
|
|
TOTAL |
$ 3.09 |
|
|
$ 3.55 |
|
|
$ 6.43 |
|
|
$ 8.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations |
$ 3.16 |
|
|
$ 3.59 |
|
|
$ 6.53 |
|
|
$ 8.25 |
|
|
Discontinued Operations |
$ (0.01) |
|
|
$ 0.00 |
|
|
$ 0.01 |
|
|
$ (0.01) |
|
|
TOTAL |
$ 3.15 |
|
|
$ 3.59 |
|
|
$ 6.53 |
|
|
$ 8.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES |
|
|
|
|
|
|
|
|
|
|
|
|
Assuming Dilution |
942.4 |
|
|
927.3 |
|
|
937.2 |
|
|
922.1 |
|
|
Basic |
926.0 |
|
|
914.7 |
|
|
921.8 |
|
|
911.2 |
|
|
____________________ |
|||||||||||
|
(1) Recast to reflect |
|||||||||||
|
(2) 2024 results include the impacts of one-time, non-cash pension settlement charges in the third quarter of
fourth quarter of |
|||||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) |
||||
|
|
||||
|
(Dollars in Millions) |
|
At
|
|
At
|
|
ASSETS: |
|
|
|
|
|
Current Assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ 13,947 |
|
$ 13,068 |
|
Restricted cash |
|
214 |
|
21 |
|
Marketable securities |
|
644 |
|
373 |
|
Notes and accounts receivable - trade, net |
|
6,804 |
|
7,214 |
|
Short-term financing receivables, net |
|
7,159 |
|
6,793 |
|
Other accounts receivable, net |
|
947 |
|
640 |
|
Inventories |
|
1,289 |
|
1,161 |
|
Deferred costs |
|
959 |
|
998 |
|
Prepaid expenses and other current assets |
|
2,520 |
|
2,639 |
|
Total Current Assets |
|
34,482 |
|
32,908 |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
5,731 |
|
5,501 |
|
Operating right-of-use assets, net |
|
3,197 |
|
3,220 |
|
Long-term financing receivables, net |
|
5,353 |
|
5,766 |
|
Prepaid pension assets |
|
7,492 |
|
7,506 |
|
Deferred costs |
|
788 |
|
842 |
|
Deferred taxes |
|
6,978 |
|
6,656 |
|
|
|
60,706 |
|
60,178 |
|
Intangibles, net |
|
10,660 |
|
11,036 |
|
Investments and sundry assets |
|
1,787 |
|
1,626 |
|
Total Assets |
|
$ 137,175 |
|
$ 135,241 |
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
Taxes |
|
$ 2,033 |
|
$ 2,270 |
|
Short-term debt |
|
5,089 |
|
6,426 |
|
Accounts payable |
|
4,032 |
|
4,132 |
|
Deferred income |
|
13,907 |
|
13,451 |
|
Operating lease liabilities |
|
768 |
|
820 |
|
Other liabilities |
|
7,313 |
|
7,022 |
|
Total Current Liabilities |
|
33,142 |
|
34,122 |
|
|
|
|
|
|
|
Long-term debt |
|
49,884 |
|
50,121 |
|
Retirement-related obligations |
|
9,432 |
|
10,808 |
|
Deferred income |
|
3,622 |
|
3,533 |
|
Operating lease liabilities |
|
2,655 |
|
2,568 |
|
Other liabilities |
|
11,048 |
|
11,475 |
|
Total Liabilities |
|
109,783 |
|
112,628 |
|
|
|
|
|
|
|
EQUITY: |
|
|
|
|
|
IBM Stockholders' Equity: |
|
|
|
|
|
Common stock |
|
61,380 |
|
59,643 |
|
Retained earnings |
|
151,163 |
|
151,276 |
|
|
|
(169,968) |
|
(169,624) |
|
Accumulated other comprehensive income/(loss) |
|
(15,269) |
|
(18,761) |
|
Total IBM Stockholders' Equity |
|
27,307 |
|
22,533 |
|
|
|
|
|
|
|
Noncontrolling interests |
|
86 |
|
80 |
|
Total Equity |
|
27,393 |
|
22,613 |
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ 137,175 |
|
$ 135,241 |
|
CASH FLOW (Unaudited) |
||||||||
|
|
||||||||
|
|
|
Three Months Ended
|
|
Year Ended
|
||||
|
(Dollars in Millions) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Net Income from Operations |
|
$ 2,915 |
|
$ 3,288 |
|
$ 6,023 |
|
$ 7,502 |
|
Pension Settlement Charges |
|
388 |
|
- |
|
3,113 |
|
- |
|
Depreciation/Amortization of Intangibles (1) |
|
1,112 |
|
1,152 |
|
4,667 |
|
4,395 |
|
Stock-based Compensation |
|
345 |
|
291 |
|
1,311 |
|
1,133 |
|
Operating assets and liabilities/Other, net (2) |
|
1,824 |
|
1,619 |
|
(1,238) |
|
(332) |
|
IBM Financing A/R |
|
(2,255) |
|
(1,887) |
|
(431) |
|
1,233 |
|
Net Cash Provided by Operating Activities |
|
$ 4,330 |
|
$ 4,463 |
|
$ 13,445 |
|
$ 13,931 |
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures, net of payments & proceeds (3) |
|
(422) |
|
(263) |
|
(1,127) |
|
(1,488) |
|
Divestitures, net of cash transferred |
|
(7) |
|
- |
|
698 |
|
(4) |
|
Acquisitions, net of cash acquired |
|
(541) |
|
(137) |
|
(3,289) |
|
(5,082) |
|
|
|
(409) |
|
3,236 |
|
(1,218) |
|
(496) |
|
Net Cash Provided by/(Used in) Investing Activities |
|
$ (1,379) |
|
$ 2,837 |
|
$ (4,937) |
|
$ (7,070) |
|
|
|
|
|
|
|
|
|
|
|
Debt, net of payments & proceeds |
|
(103) |
|
(122) |
|
(880) |
|
4,497 |
|
Dividends |
|
(1,546) |
|
(1,518) |
|
(6,147) |
|
(6,040) |
|
Financing - Other |
|
(26) |
|
26 |
|
(52) |
|
(226) |
|
Net Cash Provided by/(Used in) Financing Activities |
|
$ (1,675) |
|
$ (1,615) |
|
$ (7,079) |
|
$ (1,769) |
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate changes on Cash |
|
(330) |
|
128 |
|
(359) |
|
9 |
|
Net Change in Cash, Cash Equivalents and Restricted Cash |
|
$ 946 |
|
$ 5,814 |
|
$ 1,071 |
|
$ 5,101 |
|
____________________ |
||||||||
|
(1) Includes operating lease right-of-use assets amortization. |
||||||||
|
(2) The year ended charge in the third-quarter 2024. |
||||||||
|
(3) The year ended |
||||||||
|
GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION (Unaudited) |
||||||||||||
|
|
||||||||||||
|
|
|
Three Months Ended
|
|
Year Ended
|
||||||||
|
(Dollars in Billions) |
|
2024 |
|
2023 |
|
Yr/Yr |
|
2024 |
|
2023 |
|
Yr/Yr |
|
Net Income as reported (GAAP) (1) |
|
$ 2.9 |
|
$ 3.3 |
|
$ (0.4) |
|
$ 6.0 |
|
$ 7.5 |
|
$ (1.5) |
|
Less: Income/(loss) from discontinued operations, net of tax |
|
0.0 |
|
0.0 |
|
0.0 |
|
0.0 |
|
0.0 |
|
0.0 |
|
Income from continuing operations |
|
2.9 |
|
3.3 |
|
(0.4) |
|
6.0 |
|
7.5 |
|
(1.5) |
|
Provision for/(Benefit from) income taxes from continuing ops. |
|
0.4 |
|
0.5 |
|
(0.1) |
|
(0.2) |
|
1.2 |
|
(1.4) |
|
Pre-tax income from continuing operations (GAAP) |
|
3.3 |
|
3.8 |
|
(0.5) |
|
5.8 |
|
8.7 |
|
(2.9) |
|
Non-operating adjustments (before tax) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related charges (2) |
|
0.5 |
|
0.4 |
|
0.1 |
|
2.0 |
|
1.7 |
|
0.3 |
|
Non-operating retirement-related costs/(income) (1) |
|
0.5 |
|
0.0 |
|
0.5 |
|
3.5 |
|
0.0 |
|
3.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (non-GAAP) pre-tax income from continuing ops. |
|
4.3 |
|
4.2 |
|
0.1 |
|
11.2 |
|
10.3 |
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense |
|
0.3 |
|
0.3 |
|
0.0 |
|
1.0 |
|
0.9 |
|
0.0 |
|
Depreciation/Amortization of non-acquired intangible assets |
|
0.7 |
|
0.7 |
|
0.0 |
|
2.8 |
|
2.8 |
|
0.1 |
|
Stock-based compensation |
|
0.3 |
|
0.3 |
|
0.1 |
|
1.3 |
|
1.1 |
|
0.2 |
|
Workforce rebalancing charges |
|
0.0 |
|
0.0 |
|
0.0 |
|
0.7 |
|
0.4 |
|
0.3 |
|
Corporate (gains) and charges (3) |
|
0.0 |
|
0.0 |
|
0.0 |
|
(0.6) |
|
(0.1) |
|
(0.6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ 5.6 |
|
$ 5.5 |
|
$ 0.1 |
|
$ 16.4 |
|
$ 15.5 |
|
$ 0.9 |
|
____________________ |
||||||||||||
|
(1) 2024 results include the impacts of one-time, non-cash pension settlement charges in the third quarter of
quarter 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). |
||||||||||||
|
SEGMENT DATA (Unaudited) |
||||||||||||
|
|
||||||||||||
|
|
|
Three Months Ended |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
|
Consulting |
|
|
Infrastructure |
|
|
Financing |
|
|
Revenue |
|
$ 7,924 |
|
|
$ 5,175 |
|
|
$ 4,256 |
|
|
$ 170 |
|
|
Segment Profit |
|
$ 3,102 |
|
|
$ 606 |
|
|
$ 1,063 |
|
|
$ 94 |
|
|
Segment Profit Margin |
|
39.2 |
% |
|
11.7 |
% |
|
25.0 |
% |
|
55.0 |
% |
|
Change YTY Revenue |
|
10.4 |
% |
|
(2.0) |
% |
|
(7.6) |
% |
|
(2.5) |
% |
|
Change YTY Revenue - Constant Currency |
|
11.5 |
% |
|
(1.1) |
% |
|
(6.0) |
% |
|
(0.5) |
% |
|
|
||||||||||||
|
|
|
Three Months Ended |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
|
Consulting |
|
|
Infrastructure |
|
|
Financing |
|
|
Revenue |
|
$ 7,179 |
|
|
$ 5,283 |
|
|
$ 4,604 |
|
|
$ 175 |
|
|
Segment Profit |
|
$ 2,649 |
|
|
$ 654 |
|
|
$ 1,299 |
|
|
$ 117 |
|
|
Segment Profit Margin |
|
36.9 |
% |
|
12.4 |
% |
|
28.2 |
% |
|
67.0 |
% |
|
____________________ |
||||||||||||
|
(1) Recast to reflect |
||||||||||||
|
|
||||||||||||
|
|
|
Year Ended |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
|
Consulting |
|
|
Infrastructure |
|
|
Financing |
|
|
Revenue |
|
$ 27,085 |
|
|
$ 20,692 |
|
|
$ 14,020 |
|
|
$ 713 |
|
|
Segment Profit |
|
$ 8,684 |
|
|
$ 2,054 |
|
|
$ 2,450 |
|
|
$ 348 |
|
|
Segment Profit Margin |
|
32.1 |
% |
|
9.9 |
% |
|
17.5 |
% |
|
48.8 |
% |
|
Change YTY Revenue |
|
8.3 |
% |
|
(0.9) |
% |
|
(3.9) |
% |
|
(3.7) |
% |
|
Change YTY Revenue - Constant Currency |
|
9.0 |
% |
|
0.6 |
% |
|
(2.7) |
% |
|
(2.5) |
% |
|
|
||||||||||||
|
|
|
Year Ended |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
Software |
|
|
Consulting |
|
|
Infrastructure |
|
|
Financing |
|
|
Revenue |
|
$ 25,011 |
|
|
$ 20,884 |
|
|
$ 14,593 |
|
|
$ 741 |
|
|
Segment Profit |
|
$ 7,499 |
|
|
$ 2,130 |
|
|
$ 2,828 |
|
|
$ 373 |
|
|
Segment Profit Margin |
|
30.0 |
% |
|
10.2 |
% |
|
19.4 |
% |
|
50.3 |
% |
|
____________________ |
||||||||||||
|
(1) Recast to reflect |
||||||||||||
|
(Unaudited; Dollars in millions except per share amounts) |
||||||||||||||
|
|
||||||||||||||
|
|
Three Months Ended |
|
||||||||||||
|
|
Continuing Operations |
|
||||||||||||
|
|
GAAP |
|
|
Acquisition- Related Adjustments (1) |
|
|
Retirement- Related Adjustments (2) |
|
|
Tax Reform Impacts |
|
|
Operating (Non-GAAP) |
|
|
Gross Profit |
$ 10,439 |
|
|
$ 191 |
|
|
$ — |
|
|
$ — |
|
|
$ 10,630 |
|
|
Gross Profit Margin |
59.5 |
% |
|
1.1 |
pts |
|
— |
pts |
|
— |
pts |
|
60.6 |
% |
|
S,G&A |
$ 4,866 |
|
|
$ (305) |
|
|
$ — |
|
|
$ — |
|
|
$ 4,561 |
|
|
Other (Income) & Expense |
177 |
|
|
(2) |
|
|
(467) |
|
|
— |
|
|
(291) |
|
|
Total Expense & Other (Income) |
7,133 |
|
|
(307) |
|
|
(467) |
|
|
— |
|
|
6,359 |
|
|
Pre-tax Income from Continuing Operations |
3,306 |
|
|
498 |
|
|
467 |
|
|
— |
|
|
4,271 |
|
|
Pre-tax Income Margin from Continuing Operations |
18.8 |
% |
|
2.8 |
pts |
|
2.7 |
pts |
|
— |
pts |
|
24.3 |
% |
|
Provision for/(Benefit from) Income Taxes (3) |
$ 379 |
|
|
$ 123 |
|
|
$ 58 |
|
|
$ 21 |
|
|
$ 581 |
|
|
Effective Tax Rate |
11.5 |
% |
|
1.5 |
pts |
|
0.1 |
pts |
|
0.5 |
pts |
|
13.6 |
% |
|
Income from Continuing Operations |
$ 2,927 |
|
|
$ 375 |
|
|
$ 408 |
|
|
$ (21) |
|
|
$ 3,690 |
|
|
Income Margin from Continuing Operations |
16.7 |
% |
|
2.1 |
pts |
|
2.3 |
pts |
|
(0.1) |
pts |
|
21.0 |
% |
|
Diluted Earnings Per Share: Continuing Operations |
$ 3.11 |
|
|
$ 0.40 |
|
|
$ 0.43 |
|
|
$ (0.02) |
|
|
$ 3.92 |
|
|
|
||||||||||||||
|
|
Three Months Ended |
|
||||||||||||
|
|
Continuing Operations |
|
||||||||||||
|
|
GAAP |
|
|
Acquisition- Related Adjustments (1) |
|
|
Retirement- Related Adjustments (2) |
|
|
Tax Reform Impacts |
|
|
Operating (Non-GAAP) |
|
|
Gross Profit |
$ 10,267 |
|
|
$ 172 |
|
|
$ — |
|
|
$ — |
|
|
$ 10,439 |
|
|
Gross Profit Margin |
59.1 |
% |
|
1.0 |
pts |
|
— |
pts |
|
— |
pts |
|
60.1 |
% |
|
S,G&A |
$ 4,791 |
|
|
$ (271) |
|
|
$ — |
|
|
$ — |
|
|
$ 4,520 |
|
|
Other (Income) & Expense |
(193) |
|
|
12 |
|
|
22 |
|
|
— |
|
|
(159) |
|
|
Total Expense & Other (Income) |
6,509 |
|
|
(259) |
|
|
22 |
|
|
— |
|
|
6,272 |
|
|
Pre-tax Income from Continuing Operations |
3,759 |
|
|
431 |
|
|
(22) |
|
|
— |
|
|
4,167 |
|
|
Pre-tax Income Margin from Continuing Operations |
21.6 |
% |
|
2.5 |
pts |
|
(0.1) |
pts |
|
— |
pts |
|
24.0 |
% |
|
Provision for/(Benefit from) Income Taxes (3) |
$ 474 |
|
|
$ 91 |
|
|
$ 19 |
|
|
$ (4) |
|
|
$ 580 |
|
|
Effective Tax Rate |
12.6 |
% |
|
0.9 |
pts |
|
0.5 |
pts |
|
(0.1) |
pts |
|
13.9 |
% |
|
Income from Continuing Operations |
$ 3,285 |
|
|
$ 339 |
|
|
$ (41) |
|
|
$ 4 |
|
|
$ 3,587 |
|
|
Income Margin from Continuing Operations |
18.9 |
% |
|
2.0 |
pts |
|
(0.2) |
pts |
|
— |
pts |
|
20.6 |
% |
|
Diluted Earnings Per Share: Continuing Operations |
$ 3.54 |
|
|
$ 0.37 |
|
|
$ (0.04) |
|
|
$ — |
|
|
$ 3.87 |
|
|
____________________ |
||||||||||||||
|
(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. 2023 also includes a and webMethods from Software AG. |
||||||||||||||
|
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements and pension insolvency
costs and other costs. 2024 also includes the impact of a one-time, non-cash, non- |
||||||||||||||
|
(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. |
||||||||||||||
|
(Unaudited; Dollars in millions except per share amounts) |
||||||||||||||
|
|
||||||||||||||
|
|
Year Ended |
|
||||||||||||
|
|
Continuing Operations |
|
||||||||||||
|
|
GAAP |
|
|
Acquisition- Related Adjustments (1) |
|
|
Retirement- Related Adjustments (2) |
|
|
Tax Reform Impacts (3) |
|
|
Operating (Non-GAAP) |
|
|
Gross Profit |
$ 35,551 |
|
|
$ 724 |
|
|
$ — |
|
|
$ — |
|
|
$ 36,275 |
|
|
Gross Profit Margin |
56.7 |
% |
|
1.2 |
pts |
|
— |
pts |
|
— |
pts |
|
57.8 |
% |
|
S,G&A |
$ 19,688 |
|
|
$ (1,159) |
|
|
$ — |
|
|
$ — |
|
|
$ 18,529 |
|
|
Other (Income) & Expense |
1,871 |
|
|
(70) |
|
|
(3,457) |
|
|
— |
|
|
(1,656) |
|
|
Total Expense & Other (Income) |
29,754 |
|
|
(1,229) |
|
|
(3,457) |
|
|
— |
|
|
25,068 |
|
|
Pre-tax Income from Continuing Operations |
5,797 |
|
|
1,953 |
|
|
3,457 |
|
|
— |
|
|
11,207 |
|
|
Pre-tax Income Margin from Continuing Operations |
9.2 |
% |
|
3.1 |
pts |
|
5.5 |
pts |
|
— |
pts |
|
17.9 |
% |
|
Provision for/(Benefit from) Income Taxes (4) |
$ (218) |
|
|
$ 497 |
|
|
$ 790 |
|
|
$ 455 |
|
|
$ 1,523 |
|
|
Effective Tax Rate |
(3.8) |
% |
|
5.1 |
pts |
|
8.2 |
pts |
|
4.1 |
pts |
|
13.6 |
% |
|
Income from Continuing Operations |
$ 6,015 |
|
|
$ 1,456 |
|
|
$ 2,668 |
|
|
$ (455) |
|
|
$ 9,684 |
|
|
Income Margin from Continuing Operations |
9.6 |
% |
|
2.3 |
pts |
|
4.3 |
pts |
|
(0.7) |
pts |
|
15.4 |
% |
|
Diluted Earnings Per Share: Continuing Operations |
$ 6.42 |
|
|
$ 1.55 |
|
|
$ 2.85 |
|
|
$ (0.49) |
|
|
$ 10.33 |
|
|
|
||||||||||||||
|
|
Year Ended |
|
||||||||||||
|
|
Continuing Operations |
|
||||||||||||
|
|
GAAP |
|
|
Acquisition- Related Adjustments (1) |
|
|
Retirement- Related Adjustments (2) |
|
|
Tax Reform Impacts |
|
|
Operating (Non-GAAP) |
|
|
Gross Profit |
$ 34,300 |
|
|
$ 631 |
|
|
$ — |
|
|
$ — |
|
|
$ 34,931 |
|
|
Gross Profit Margin |
55.4 |
% |
|
1.0 |
pts |
|
— |
pts |
|
— |
pts |
|
56.5 |
% |
|
S,G&A |
$ 19,003 |
|
|
$ (1,039) |
|
|
$ — |
|
|
$ — |
|
|
$ 17,964 |
|
|
Other (Income) & Expense |
(914) |
|
|
10 |
|
|
39 |
|
|
— |
|
|
(866) |
|
|
Total Expense & Other (Income) |
25,610 |
|
|
(1,029) |
|
|
39 |
|
|
— |
|
|
24,620 |
|
|
Pre-tax Income from Continuing Operations |
8,690 |
|
|
1,660 |
|
|
(39) |
|
|
— |
|
|
10,311 |
|
|
Pre-tax Income Margin from Continuing Operations |
14.0 |
% |
|
2.7 |
pts |
|
(0.1) |
pts |
|
— |
pts |
|
16.7 |
% |
|
Provision for/(Benefit from) Income Taxes (4) |
$ 1,176 |
|
|
$ 368 |
|
|
$ (8) |
|
|
$ (95) |
|
|
$ 1,441 |
|
|
Effective Tax Rate |
13.5 |
% |
|
1.4 |
pts |
|
— |
pts |
|
(0.9) |
pts |
|
14.0 |
% |
|
Income from Continuing Operations |
$ 7,514 |
|
|
$ 1,292 |
|
|
$ (30) |
|
|
$ 95 |
|
|
$ 8,870 |
|
|
Income Margin from Continuing Operations |
12.1 |
% |
|
2.1 |
pts |
|
0.0 |
pts |
|
0.2 |
pts |
|
14.3 |
% |
|
Diluted Earnings Per Share: Continuing Operations |
$ 8.15 |
|
|
$ 1.40 |
|
|
$ (0.03) |
|
|
$ 0.10 |
|
|
$ 9.62 |
|
|
____________________ |
||||||||||||||
|
(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 and 2023 also include a prior to the acquisition of StreamSets and webMethods from Software AG. |
||||||||||||||
|
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements and pension insolvency
costs and other costs. 2024 also includes the impacts of one-time, non-cash, |
||||||||||||||
|
(3) 2024 includes a net benefit from income taxes due to the resolution of certain tax audit matters. |
||||||||||||||
|
(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. |
||||||||||||||
|
GAAP OPERATING CASH FLOW TO FREE CASH FLOW RECONCILIATION (Unaudited) |
||||||||
|
|
||||||||
|
|
|
Three Months Ended
|
|
Year Ended
|
||||
|
(Dollars in Millions) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
$ 4,330 |
|
$ 4,463 |
|
$ 13,445 |
|
$ 13,931 |
|
|
|
|
|
|
|
|
|
|
|
Less: change in IBM Financing receivables |
|
(2,255) |
|
(1,887) |
|
(431) |
|
1,233 |
|
|
|
|
|
|
|
|
|
|
|
Net cash from operating activities excl. IBM Financing receivables |
|
6,584 |
|
6,350 |
|
13,876 |
|
12,699 |
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures, net |
|
(422) |
|
(263) |
|
(1,127) |
|
(1,488) |
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
6,163 |
|
6,087 |
|
12,749 |
|
11,210 |
|
GAAP OPERATING CASH FLOW TO ADJUSTED EBITDA RECONCILIATION (Unaudited) |
||||||||
|
|
||||||||
|
|
|
Three Months Ended
|
|
Year Ended
|
||||
|
(Dollars in Billions) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Net Cash Provided by Operating Activities |
|
$ 4.3 |
|
$ 4.5 |
|
$ 13.4 |
|
$ 13.9 |
|
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
Net interest expense |
|
0.3 |
|
0.3 |
|
1.0 |
|
0.9 |
|
Provision for/(Benefit from) income taxes from continuing operations |
|
0.4 |
|
0.5 |
|
(0.2) |
|
1.2 |
|
|
|
|
|
|
|
|
|
|
|
Less change in: |
|
|
|
|
|
|
|
|
|
Financing receivables |
|
(2.3) |
|
(1.9) |
|
(0.4) |
|
1.2 |
|
Other assets and liabilities/other, net (1) |
|
1.7 |
|
1.6 |
|
(1.8) |
|
(0.7) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ 5.6 |
|
$ 5.5 |
|
$ 16.4 |
|
$ 15.5 |
|
____________________ |
||||||||
|
(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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