Improved Revenue Growth Led by Hybrid Cloud Platform Adoption, Consulting and Software
Highlights
Second Quarter:
-
Revenue of $18.7 billion, up 3 percent (flat adjusting for divested businesses and currency)
— Cloud & Cognitive Software up 6 percent (up 2 percent adjusting for currency)
— Global Business Services up 12 percent (up 7 percent adjusting for currency) - Net cash from operating activities of $17.7 billion and adjusted free cash flow of $11.0 billion, over last 12 months
- Total cloud revenue over last 12 months of $27.0 billion, up 15 percent (up 13 percent adjusting for divested businesses and currency)
-
Total cloud revenue in the quarter of $7.0 billion, up 13 percent (up 9 percent adjusting for divested businesses and currency) led by
— Cloud & Cognitive Software cloud revenue up 29 percent (up 25 percent adjusting for currency)
— Global Business Services cloud revenue up 35 percent (up 30 percent adjusting for currency) - Red Hat revenue up 20 percent (up 17 percent adjusting for currency), normalized for historical comparability
- GAAP gross profit margin of 48.0 percent, flat; Operating (non-GAAP) gross profit margin of 49.3 percent, up 30 basis points
- Debt reduced by $6.4 billion since year-end 2020
ARMONK, N.Y.–(BUSINESS WIRE)–$ibm #ibm–IBM (NYSE: IBM) today announced second-quarter 2021 earnings results.
“In the second quarter client adoption of our hybrid cloud platform contributed to strong performance in Global Business Services and software and drove improved overall revenue growth. At the same time, we continued to help clients infuse our AI-based technology offerings into their core business workflows,” said Arvind Krishna, IBM chairman and chief executive officer. “We are pleased with our progress and we remain on track to deliver full-year revenue growth and meet our cash flow objective.”
|
|
|
SECOND QUARTER 2021 |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax |
|
Gross |
|
|
|
|
|
Diluted |
|
|
Net |
|
|
Pre-tax |
|
Income |
|
Profit |
|
|
|
|
|
EPS |
|
|
Income |
|
|
Income |
|
Margin |
|
Margin |
|
|
GAAP from Continuing Operations |
|
$ |
1.47 |
|
$ |
1.3B |
|
$ |
1.6B |
|
8.3 |
% |
48.0 |
% |
|
Year/Year |
|
|
(3) |
% |
|
(3) |
% |
|
(1) |
% |
(0.4) |
Pts |
0.0 |
Pts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (Non-GAAP) |
|
$ |
2.33 |
|
$ |
2.1B |
|
$ |
2.5B |
|
13.5 |
% |
49.3 |
% |
|
Year/Year |
|
|
7 |
% |
|
8 |
% |
|
9 |
% |
0.7 |
Pts |
0.3 |
Pts |
|
GAAP EPS results include impacts related to the amortization of purchased intangible assets and other acquisition-related charges, retirement-related charges, U.S. tax reform enactment impacts, and transaction costs associated with the Kyndryl separation. The impact of the Kyndryl separation costs for second-quarter 2021 was ($0.15) per share. |
||||||||||||||
“We expanded operating margins and grew profit dollars in the quarter, providing a key contribution to our cash performance,” said James Kavanaugh, IBM senior vice president and chief financial officer. “In the first half of the year we increased adjusted free cash flow, invested in strategic acquisitions to strengthen our hybrid cloud and AI capabilities, continued to deleverage and, consistent with our commitment, again increased our dividend.”
Cash Flow and Balance Sheet
In the second quarter, the company generated net cash from operating activities of $2.6 billion. IBM’s free cash flow was $1.0 billion, which includes $0.6 billion of cash impacts from the company’s structural actions initiated in the fourth quarter of 2020 and the transaction costs associated with the separation of Kyndryl. IBM’s adjusted free cash flow, excluding these cash impacts, was $1.6 billion. The company returned $1.5 billion to shareholders in dividends.
In the first six months of the year, the company generated net cash from operating activities of $7.5 billion. Free cash flow for the first six months was $2.6 billion. The company’s adjusted free cash flow, excluding cash impacts of $1.2 billion for the structural actions and transaction separation costs, was $3.8 billion.
Over the last 12 months, the company generated net cash from operating activities of $17.7 billion. IBM’s free cash flow for the last 12 months was $9.7 billion. The company’s adjusted free cash flow, excluding cash impacts of $1.3 billion for the structural actions and transaction separation costs, was $11.0 billion.
IBM ended the second quarter with $8.2 billion of cash on hand (includes marketable securities), down $6.1 billion from year-end 2020 due primarily to acquisitions and debt reduction payments. Debt, including Global Financing debt of $17.5 billion, totaled $55.2 billion, down $6.4 billion since the end of 2020, and down $17.9 billion since closing the Red Hat acquisition.
Segment Results for Second Quarter
- Cloud & Cognitive Software (includes Cloud & Data Platforms, Cognitive Applications and Transaction Processing Platforms) —revenues of $6.1 billion, up 6.1 percent (up 2.5 percent adjusting for currency). Cloud & Data Platforms grew 12 percent (up 8 percent adjusting for currency), led by the company’s hybrid cloud platform and Cloud Pak growth. Cognitive Applications grew 12 percent (up 8 percent adjusting for currency), led by growth in Security and AI applications. Transaction Processing Platforms declined 7 percent (down 11 percent adjusting for currency). Cloud revenue up 29 percent (up 25 percent adjusting for currency).
- Global Business Services (includes Consulting, Application Management and Global Process Services) — revenues of $4.3 billion, up 11.6 percent (up 7.3 percent adjusting for currency), with growth in Consulting, up 16 percent (up 11 percent adjusting for currency), Application Management up 5 percent (up 1 percent adjusting for currency) and Global Process Services up 28 percent (up 25 percent adjusting for currency). Cloud revenue up 35 percent (up 30 percent adjusting for currency). Gross profit margin declined 60 basis points.
- Global Technology Services (includes Infrastructure & Cloud Services and Technology Support Services) — revenues of $6.3 billion, up 0.4 percent (down 4.1 percent adjusting for currency). Both Infrastructure & Cloud Services and Technology Support Services were flat (down 4 percent adjusting for currency). Cloud revenue down 1 percent (down 5 percent adjusting for currency). Gross profit margin up 110 basis points.
- Systems (includes Systems Hardware and Operating Systems Software) — revenues of $1.7 billion, down 7.3 percent (down 10.2 percent adjusting for currency), driven by declines in IBM Z (down 11 percent; down 13 percent adjusting for currency) and Storage Systems (down 7 percent, down 10 percent adjusting for currency). Power systems declined 2 percent (down 5 percent adjusting for currency). Cloud revenue down 16 percent (down 19 percent adjusting for currency).
- Global Financing (includes financing and used equipment sales) — revenues of $242 million, down 8.6 percent (down 11.6 percent adjusting for currency).
Year-To-Date 2021 Results
Revenues for the six-month period ended June 30, 2021 totaled $36.5 billion, an increase of 2 percent year to year (down 1 percent adjusting for divested businesses and currency) compared with $35.7 billion for the first six months of 2020. Net income was $2.3 billion, down 10 percent year to year. Diluted earnings per share was $2.52 compared with $2.83 per diluted share for the 2020 period, a decrease of 11 percent.
GAAP earnings per share results include a ($1.58) per-share impact for charges related to amortization of purchased intangible assets and other acquisition-related charges, retirement-related charges, U.S. tax reform enactment impacts, and transaction costs associated with the Kyndryl separation. The impact of the Kyndryl separation costs was ($0.20) per share.
Operating (non-GAAP) net income for the six months ended June 30, 2021 was $3.7 billion compared with $3.6 billion in the prior-year period, an increase of 3 percent. Operating (non-GAAP) diluted earnings per share from continuing operations was $4.10 compared with $4.02 per diluted share for the 2020 period, an increase of 2 percent.
Full-Year 2021 Expectations
The company expects to grow revenue for the full year 2021 based on mid-July 2021 foreign exchange rates. The company continues to expect adjusted free cash flow of $11 billion to $12 billion in 2021. Adjusted free cash flow expectations exclude approximately $3 billion of cash impacts from the company’s structural actions initiated in the fourth quarter of 2020 and the transaction costs associated with the separation of Kyndryl.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company’s current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company’s innovation initiatives; damage to the company’s reputation; risks from investing in growth opportunities; failure of the company’s intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the possibility that the proposed separation of the managed infrastructure services unit of the company’s Global Technology Services segment will not be completed within the anticipated time period or at all, the possibility of disruption or unanticipated costs in connection with the proposed separation or the possibility that the separation will not achieve its intended benefits; the company’s ability to successfully manage acquisitions, alliances and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities, and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company’s failure to meet growth and productivity objectives; ineffective internal controls; the company’s use of accounting estimates; impairment of the company’s goodwill or amortizable intangible assets; the company’s ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity and data privacy considerations; adverse effects from environmental matters, tax matters; legal proceedings and investigatory risks; the company’s pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company’s Form 10-Qs, Form 10-K and in the company’s other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the company’s results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information, which management believes provides useful information to investors:
IBM results —
- adjusting for currency (i.e., at constant currency);
- total revenue and cloud revenue adjusting for divested businesses and currency;
- Red Hat revenue normalized for historical comparability;
- presenting operating (non-GAAP) earnings per share amounts and related income statement items;
- free cash flow;
- adjusted free cash flow.
The rationale for management’s use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8‑K that includes this press release and is being submitted today to the SEC.
Conference Call and Webcast
IBM’s regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. EDT, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-2q21. 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).
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, |
|
||||||||||||
|
|
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
||||||||
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cloud & Cognitive Software |
|
$ |
6,098 |
|
|
$ |
5,748 |
|
|
|
$ |
11,534 |
|
|
$ |
10,987 |
|
|
|
Global Business Services |
|
|
4,341 |
|
|
|
3,890 |
|
|
|
|
8,575 |
|
|
|
8,027 |
|
|
|
Global Technology Services |
|
|
6,342 |
|
|
|
6,316 |
|
|
|
|
12,712 |
|
|
|
12,783 |
|
|
|
Systems |
|
|
1,717 |
|
|
|
1,852 |
|
|
|
|
3,144 |
|
|
|
3,220 |
|
|
|
Global Financing |
|
|
242 |
|
|
|
265 |
|
|
|
|
482 |
|
|
|
564 |
|
|
|
Other |
|
|
5 |
|
|
|
50 |
|
|
|
|
28 |
|
|
|
113 |
|
|
|
TOTAL REVENUE |
|
|
18,745 |
|
|
|
18,123 |
|
|
|
|
36,474 |
|
|
|
35,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
GROSS PROFIT |
|
|
9,004 |
|
|
|
8,700 |
|
|
|
|
17,208 |
|
|
|
16,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
GROSS PROFIT MARGIN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cloud & Cognitive Software |
|
|
78.1 |
|
% |
|
77.1 |
|
% |
|
|
77.1 |
|
% |
|
76.3 |
|
% |
|
Global Business Services |
|
|
27.9 |
|
% |
|
28.4 |
|
% |
|
|
28.0 |
|
% |
|
27.8 |
|
% |
|
Global Technology Services |
|
|
35.3 |
|
% |
|
34.2 |
|
% |
|
|
34.9 |
|
% |
|
34.1 |
|
% |
|
Systems |
|
|
55.1 |
|
% |
|
57.8 |
|
% |
|
|
54.8 |
|
% |
|
54.6 |
|
% |
|
Global Financing |
|
|
27.4 |
|
% |
|
38.6 |
|
% |
|
|
29.7 |
|
% |
|
39.7 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
TOTAL GROSS PROFIT MARGIN |
|
|
48.0 |
|
% |
|
48.0 |
|
% |
|
|
47.2 |
|
% |
|
46.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
EXPENSE AND OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
S,G&A |
|
|
5,334 |
|
|
|
5,248 |
|
|
|
|
10,508 |
|
|
|
11,203 |
|
|
|
R,D&E |
|
|
1,657 |
|
|
|
1,582 |
|
|
|
|
3,286 |
|
|
|
3,207 |
|
|
|
Intellectual property and custom development income |
|
|
(135 |
) |
|
|
(203 |
) |
|
|
|
(282 |
) |
|
|
(319 |
) |
|
|
Other (income) and expense |
|
|
315 |
|
|
|
179 |
|
|
|
|
676 |
|
|
|
361 |
|
|
|
Interest expense |
|
|
281 |
|
|
|
323 |
|
|
|
|
562 |
|
|
|
649 |
|
|
|
TOTAL EXPENSE AND OTHER INCOME |
|
|
7,451 |
|
|
|
7,129 |
|
|
|
|
14,751 |
|
|
|
15,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
INCOME/(LOSS) FROM CONTINUING OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
BEFORE INCOME TAXES |
|
|
1,552 |
|
|
|
1,571 |
|
|
|
|
2,457 |
|
|
|
1,522 |
|
|
|
Pre-tax margin |
|
|
8.3 |
|
% |
|
8.7 |
|
% |
|
|
6.7 |
|
% |
|
4.3 |
|
% |
|
Provision for/(Benefit from) income taxes |
|
|
227 |
|
|
|
209 |
|
|
|
|
177 |
|
|
|
(1,017 |
) |
|
|
Effective tax rate |
|
|
14.7 |
|
% |
|
13.3 |
|
% |
|
|
7.2 |
|
% |
|
(66.8 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
INCOME FROM CONTINUING OPERATIONS |
|
$ |
1,325 |
|
|
$ |
1,362 |
|
|
|
$ |
2,281 |
|
|
$ |
2,538 |
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income/(Loss) from discontinued operations, net of taxes |
|
|
— |
|
|
|
(1 |
) |
|
|
|
(1 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
NET INCOME |
|
$ |
1,325 |
|
|
$ |
1,361 |
|
|
|
$ |
2,280 |
|
|
$ |
2,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
EARNINGS/(LOSS) PER SHARE OF COMMON STOCK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Assuming Dilution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Continuing Operations |
|
$ |
1.47 |
|
|
$ |
1.52 |
|
|
|
$ |
2.52 |
|
|
$ |
2.83 |
|
|
|
Discontinued Operations |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
|
TOTAL |
|
$ |
1.47 |
|
|
$ |
1.52 |
|
|
|
$ |
2.52 |
|
|
$ |
2.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Continuing Operations |
|
$ |
1.48 |
|
|
$ |
1.53 |
|
|
|
$ |
2.55 |
|
|
$ |
2.85 |
|
|
|
Discontinued Operations |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
|
TOTAL |
|
$ |
1.48 |
|
|
$ |
1.53 |
|
|
|
$ |
2.55 |
|
|
$ |
2.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M’s) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Assuming Dilution |
|
|
904.2 |
|
|
|
894.9 |
|
|
|
|
903.0 |
|
|
|
895.0 |
|
|
|
Basic |
|
|
895.0 |
|
|
|
889.4 |
|
|
|
|
894.3 |
|
|
|
888.7 |
|
|
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
|
|
|
At |
|
At |
||||
|
|
|
June 30, |
|
December 31, |
||||
|
(Dollars in Millions) |
|
2021 |
|
2020 |
||||
|
ASSETS: |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Current Assets: |
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
7,350 |
|
|
$ |
13,212 |
|
|
Restricted cash |
|
|
215 |
|
|
|
463 |
|
|
Marketable securities |
|
|
600 |
|
|
|
600 |
|
|
Notes and accounts receivable – trade, net |
|
|
6,827 |
|
|
|
7,132 |
|
|
Short-term financing receivables, net |
|
|
8,194 |
|
|
|
10,892 |
|
|
Other accounts receivable, net |
|
|
802 |
|
|
|
714 |
|
|
Inventories |
|
|
1,807 |
|
|
|
1,839 |
|
|
Deferred costs |
|
|
2,211 |
|
|
|
2,107 |
|
|
Prepaid expenses and other current assets |
|
|
2,768 |
|
|
|
2,206 |
|
|
Total Current Assets |
|
|
30,774 |
|
|
|
39,165 |
|
|
|
|
|
|
|
|
|
||
|
Property, plant and equipment, net |
|
|
9,423 |
|
|
|
10,040 |
|
|
Operating right-of-use assets, net |
|
|
4,387 |
|
|
|
4,686 |
|
|
Long-term financing receivables, net |
|
|
5,674 |
|
|
|
7,086 |
|
|
Prepaid pension assets |
|
|
8,046 |
|
|
|
7,610 |
|
|
Deferred costs |
|
|
2,362 |
|
|
|
2,449 |
|
|
Deferred taxes |
|
|
8,954 |
|
|
|
9,241 |
|
|
Goodwill |
|
|
61,645 |
|
|
|
59,617 |
|
|
Intangibles, net |
|
|
13,539 |
|
|
|
13,796 |
|
|
Investments and sundry assets |
|
|
2,010 |
|
|
|
2,282 |
|
|
Total Assets |
|
$ |
146,814 |
|
|
$ |
155,971 |
|
|
|
|
|
|
|
|
|
||
|
LIABILITIES: |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Current Liabilities: |
|
|
|
|
|
|
||
|
Taxes |
|
$ |
2,260 |
|
|
$ |
3,301 |
|
|
Short-term debt |
|
|
6,442 |
|
|
|
7,183 |
|
|
Accounts payable |
|
|
4,214 |
|
|
|
4,908 |
|
|
Deferred income |
|
|
13,272 |
|
|
|
12,833 |
|
|
Operating lease liabilities |
|
|
1,334 |
|
|
|
1,357 |
|
|
Other liabilities |
|
|
9,095 |
|
|
|
10,287 |
|
|
Total Current Liabilities |
|
|
36,616 |
|
|
|
39,869 |
|
|
|
|
|
|
|
|
|
||
|
Long-term debt |
|
|
48,735 |
|
|
|
54,355 |
|
|
Retirement related obligations |
|
|
17,265 |
|
|
|
18,248 |
|
|
Deferred income |
|
|
4,113 |
|
|
|
4,301 |
|
|
Operating lease liabilities |
|
|
3,278 |
|
|
|
3,574 |
|
|
Other liabilities |
|
|
14,741 |
|
|
|
14,897 |
|
|
Total Liabilities |
|
|
124,747 |
|
|
|
135,244 |
|
|
|
|
|
|
|
|
|
||
|
EQUITY: |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
IBM Stockholders’ Equity: |
|
|
|
|
|
|
||
|
Common stock |
|
|
56,912 |
|
|
|
56,556 |
|
|
Retained earnings |
|
|
162,086 |
|
|
|
162,717 |
|
|
Treasury stock — at cost |
|
|
(169,404 |
) |
|
|
(169,339 |
) |
|
Accumulated other comprehensive income/(loss) |
|
|
(27,652 |
) |
|
|
(29,337 |
) |
|
Total IBM Stockholders’ Equity |
|
|
21,942 |
|
|
|
20,597 |
|
|
|
|
|
|
|
|
|
||
|
Noncontrolling interests |
|
|
125 |
|
|
|
129 |
|
|
Total Equity |
|
|
22,067 |
|
|
|
20,727 |
|
|
|
|
|
|
|
|
|
||
|
Total Liabilities and Equity |
|
$ |
146,814 |
|
|
$ |
155,971 |
|
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) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
||||||||||
|
Net Cash Provided by Operating Activities per GAAP: |
|
$ |
2,625 |
|
|
$ |
3,576 |
|
|
$ |
7,539 |
|
|
$ |
8,052 |
|
|
$ |
17,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Less: Change in Global Financing (GF) Receivables |
|
|
900 |
|
|
|
589 |
|
|
|
3,763 |
|
|
|
2,971 |
|
|
|
5,142 |
|
|
Capital Expenditures, net |
|
|
(688 |
) |
|
|
(697 |
) |
|
|
(1,217 |
) |
|
|
(1,434 |
) |
|
|
(2,826 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Free Cash Flow |
|
|
1,037 |
|
|
|
2,290 |
|
|
|
2,559 |
|
|
|
3,647 |
|
|
|
9,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Structural actions initiated in 4Q20 & Separation charges (1) |
|
|
595 |
|
|
|
— |
|
|
|
1,224 |
|
|
|
— |
|
|
|
1,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Adjusted Free Cash Flow |
|
|
1,631 |
|
|
|
2,290 |
|
|
|
3,783 |
|
|
|
3,647 |
|
|
|
10,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Free Cash Flow |
|
|
1,037 |
|
|
|
2,290 |
|
|
|
2,559 |
|
|
|
3,647 |
|
|
|
9,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Acquisitions |
|
|
(1,747 |
) |
|
|
(6 |
) |
|
|
(2,866 |
) |
|
|
(19 |
) |
|
|
(3,182 |
) |
|
Divestitures |
|
|
(10 |
) |
|
|
731 |
|
|
|
(25 |
) |
|
|
757 |
|
|
|
(280 |
) |
|
Dividends |
|
|
(1,467 |
) |
|
|
(1,450 |
) |
|
|
(2,924 |
) |
|
|
(2,890 |
) |
|
|
(5,832 |
) |
|
Non-GF Debt |
|
|
(586 |
) |
|
|
455 |
|
|
|
(2,331 |
) |
|
|
3,958 |
|
|
|
(6,068 |
) |
|
Other (includes GF Net Receivables and GF Debt) |
|
|
(335 |
) |
|
|
213 |
|
|
|
(522 |
) |
|
|
(213 |
) |
|
|
(440 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Change in Cash, Cash Equivalents, Restricted Cash and Short-term Marketable Securities |
|
$ |
(3,108 |
) |
|
$ |
2,233 |
|
|
$ |
(6,110 |
) |
|
$ |
5,241 |
|
|
$ |
(6,085 |
) |
___________________________
(1) Includes cash impacts incurred in the period related to structural actions initiated in 4Q20 and separation related costs.
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW
(Unaudited)
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
June 30, |
|
June 30, |
||||||||||||
|
(Dollars in Millions) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
Net Income from Operations |
|
$ |
1,325 |
|
|
$ |
1,361 |
|
|
$ |
2,280 |
|
|
$ |
2,536 |
|
|
Depreciation/Amortization of Intangibles |
|
|
1,680 |
|
|
|
1,678 |
|
|
|
3,352 |
|
|
|
3,313 |
|
|
Stock-based Compensation |
|
|
243 |
|
|
|
247 |
|
|
|
457 |
|
|
|
436 |
|
|
Working Capital / Other |
|
|
(1,524 |
) |
|
|
(300 |
) |
|
|
(2,313 |
) |
|
|
(1,204 |
) |
|
Global Financing A/R |
|
|
900 |
|
|
|
589 |
|
|
|
3,763 |
|
|
|
2,971 |
|
|
Net Cash Provided by Operating Activities |
|
$ |
2,625 |
|
|
$ |
3,576 |
|
|
$ |
7,539 |
|
|
$ |
8,052 |
|
|
Capital Expenditures, net of payments & proceeds |
|
|
(688 |
) |
|
|
(697 |
) |
|
|
(1,217 |
) |
|
|
(1,434 |
) |
|
Divestitures, net of cash transferred |
|
|
(10 |
) |
|
|
731 |
|
|
|
(25 |
) |
|
|
757 |
|
|
Acquisitions, net of cash acquired |
|
|
(1,747 |
) |
|
|
(6 |
) |
|
|
(2,866 |
) |
|
|
(19 |
) |
|
Marketable Securities / Other Investments, net |
|
|
(227 |
) |
|
|
(1,264 |
) |
|
|
(562 |
) |
|
|
(1,442 |
) |
|
Net Cash Provided by/(Used in) Investing Activities |
|
$ |
(2,671 |
) |
|
$ |
(1,236 |
) |
|
$ |
(4,671 |
) |
|
$ |
(2,138 |
) |
|
Debt, net of payments & proceeds |
|
|
(1,500 |
) |
|
|
(38 |
) |
|
|
(5,799 |
) |
|
|
1,319 |
|
|
Dividends |
|
|
(1,467 |
) |
|
|
(1,450 |
) |
|
|
(2,924 |
) |
|
|
(2,890 |
) |
|
Common Stock Transactions – Other |
|
|
(163 |
) |
|
|
(137 |
) |
|
|
(190 |
) |
|
|
(168 |
) |
|
Net Cash Provided by/(Used in) Financing Activities |
|
$ |
(3,131 |
) |
|
$ |
(1,624 |
) |
|
$ |
(8,914 |
) |
|
$ |
(1,739 |
) |
|
Effect of Exchange Rate changes on Cash |
|
|
69 |
|
|
|
101 |
|
|
|
(65 |
) |
|
|
(301 |
) |
|
Net Change in Cash, Cash Equivalents and Restricted Cash |
|
$ |
(3,108 |
) |
|
$ |
817 |
|
|
$ |
(6,110 |
) |
|
$ |
3,874 |
|
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
|
|
|
Three Months Ended June 30, 2021 |
|
||||||||||||||||
|
|
|
Cloud & |
|
Global |
|
Global |
|
|
|
|
|
|
|
||||||
|
|
|
Cognitive |
|
Business |
|
Technology |
|
|
|
|
Global |
|
|||||||
|
(Dollars in Millions) |
|
Software |
|
Services |
|
Services |
|
Systems |
|
Financing |
|
||||||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
External |
|
$ |
6,098 |
|
$ |
4,341 |
|
$ |
6,342 |
|
|
$ |
1,717 |
|
|
$ |
242 |
|
|
|
Internal |
|
|
726 |
|
|
58 |
|
|
326 |
|
|
|
241 |
|
|
|
260 |
|
|
|
Total Segment Revenue |
|
$ |
6,824 |
|
$ |
4,399 |
|
$ |
6,668 |
|
|
$ |
1,958 |
|
|
$ |
502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Pre-tax Income/(Loss) from Continuing Operations |
|
|
1,720 |
|
|
371 |
|
|
381 |
|
|
|
176 |
|
|
|
246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Pre-tax Margin |
|
|
25.2 |
% |
|
8.4 |
% |
|
5.7 |
|
% |
|
9.0 |
|
% |
|
48.9 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Change YTY Revenue – External |
6.1 |
% |
11.6 |
% |
0.4 |
|
% |
(7.3 |
) |
% |
(8.6 |
) |
% | ||||||
|
Change YTY Revenue – External @constant currency |
|
|
2.5 |
% |
|
7.3 |
% |
|
(4.1 |
) |
% |
|
(10.2 |
) |
% |
|
(11.6 |
) |
% |
|
|
|
Three Months Ended June 30, 2020 |
|
|||||||||||||
|
|
|
Cloud & |
|
Global |
|
Global |
|
|
|
|
|
|
|
|||
|
|
|
Cognitive |
|
Business |
|
Technology |
|
|
|
|
Global |
|
||||
|
(Dollars in Millions) |
|
Software |
|
Services |
|
Services |
|
Systems |
|
Financing |
|
|||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External |
|
$ |
5,748 |
|
$ |
3,890 |
|
$ |
6,316 |
|
$ |
1,852 |
|
$ |
265 |
|
|
Internal |
|
|
743 |
|
|
55 |
|
|
304 |
|
|
240 |
|
|
241 |
|
|
Total Segment Revenue |
|
$ |
6,491 |
|
$ |
3,945 |
|
$ |
6,621 |
|
$ |
2,092 |
|
$ |
506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax Income/(Loss) from Continuing Operations |
|
|
1,708 |
|
|
362 |
|
|
250 |
|
|
248 |
|
|
176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax Margin |
|
|
26.3 |
% |
|
9.2 |
% |
|
3.8 |
% |
|
11.8 |
% |
|
34.9 |
% |
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
|
|
|
Six Months Ended June 30, 2021 |
|
||||||||||||||||
|
|
|
Cloud & |
|
Global |
|
Global |
|
|
|
|
|
|
|
||||||
|
|
|
Cognitive |
|
Business |
|
Technology |
|
|
|
|
Global |
|
|||||||
|
(Dollars in Millions) |
|
Software |
|
Services |
|
Services |
|
Systems |
|
Financing |
|
||||||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
External |
|
$ |
11,534 |
|
$ |
8,575 |
|
$ |
12,712 |
|
|
$ |
3,144 |
|
|
$ |
482 |
|
|
|
Internal |
|
|
1,558 |
|
|
113 |
|
|
639 |
|
|
|
430 |
|
|
|
428 |
|
|
|
Total Segment Revenue |
|
$ |
13,093 |
|
$ |
8,688 |
|
$ |
13,351 |
|
|
$ |
3,574 |
|
|
$ |
910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Pre-tax Income/(Loss) from Continuing Operations |
|
|
3,147 |
|
|
761 |
|
|
520 |
|
|
|
174 |
|
|
|
412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Pre-tax Margin |
|
|
24.0 |
% |
|
8.8 |
% |
|
3.9 |
|
% |
|
4.9 |
|
% |
|
45.3 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Change YTY Revenue – External |
|
|
5.0 |
% |
|
6.8 |
% |
|
(0.6 |
) |
% |
|
(2.4 |
) |
% |
|
(14.7 |
) |
% |
|
Change YTY Revenue – External @constant currency |
|
|
1.6 |
% |
|
2.8 |
% |
|
(4.7 |
) |
% |
|
(5.0 |
) |
% |
|
(17.1 |
) |
% |
|
|
|
Six Months Ended June 30, 2020 |
|
|||||||||||||
|
|
|
Cloud & |
|
Global |
|
Global |
|
|
|
|
|
|
|
|||
|
|
|
Cognitive |
|
Business |
|
Technology |
|
|
|
|
Global |
|
||||
|
(Dollars in Millions) |
|
Software |
|
Services |
|
Services |
|
Systems |
|
Financing |
|
|||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External |
|
$ |
10,987 |
|
$ |
8,027 |
|
$ |
12,783 |
|
$ |
3,220 |
|
$ |
564 |
|
|
Internal |
|
|
1,556 |
|
|
101 |
|
|
599 |
|
|
388 |
|
|
453 |
|
|
Total Segment Revenue |
|
$ |
12,543 |
|
$ |
8,128 |
|
$ |
13,382 |
|
$ |
3,608 |
|
$ |
1,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax Income/(Loss) from Continuing Operations |
|
|
2,641 |
|
|
633 |
|
|
72 |
|
|
31 |
|
|
370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax Margin |
|
|
21.1 |
% |
|
7.8 |
% |
|
0.5 |
% |
|
0.9 |
% |
|
36.4 |
% |
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, 2021 |
|
|||||||||||||||||||||
|
|
|
Continuing Operations |
|
|||||||||||||||||||||
|
|
|
|
|
|
Acquisition- |
|
Retirement- |
|
Tax |
|
Separation- |
|
|
|
|
|||||||||
|
|
|
|
|
|
Related |
|
Related |
|
Reform |
|
Related |
|
Operating |
|
||||||||||
|
|
|
GAAP |
|
Adjustments (1) |
|
Adjustments (2) |
|
Impacts |
|
Charges (4) |
|
(Non-GAAP) |
|
|||||||||||
|
Gross Profit |
|
$ |
9,004 |
|
$ |
180 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
58 |
|
|
$ |
9,242 |
|
|
|
Gross Profit Margin |
|
|
48.0 |
% |
|
1.0 |
|
Pts |
|
— |
|
Pts |
|
— |
|
Pts |
|
0.3 |
|
Pts |
|
49.3 |
|
% |
|
S,G&A |
|
|
5,334 |
|
|
(298 |
) |
|
|
— |
|
|
|
— |
|
|
|
(116 |
) |
|
|
4,919 |
|
|
|
R,D&E |
|
|
1,657 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0 |
) |
|
|
1,656 |
|
|
|
Other (Income) & Expense |
|
|
315 |
|
|
(1 |
) |
|
|
(328 |
) |
|
|
— |
|
|
|
— |
|
|
|
(14 |
) |
|
|
Interest Expense |
|
|
281 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
281 |
|
|
|
Total Expense & Other (Income) |
|
|
7,451 |
|
|
(299 |
) |
|
|
(328 |
) |
|
|
— |
|
|
|
(117 |
) |
|
|
6,708 |
|
|
|
Pre-tax Income from Continuing Operations |
|
|
1,552 |
|
|
479 |
|
|
|
328 |
|
|
|
— |
|
|
|
175 |
|
|
|
2,534 |
|
|
|
Pre-tax Income Margin from Continuing Operations |
|
|
8.3 |
% |
|
2.6 |
|
Pts |
|
1.7 |
|
Pts |
|
— |
|
Pts |
|
0.9 |
|
Pts |
|
13.5 |
|
% |
|
Provision for/(Benefit from) Income Taxes (3) |
|
|
227 |
|
|
107 |
|
|
|
67 |
|
|
|
(14 |
) |
|
|
44 |
|
|
|
431 |
|
|
|
Effective Tax Rate |
|
|
14.7 |
% |
|
1.4 |
|
Pts |
|
0.7 |
|
Pts |
|
(0.5 |
) |
Pts |
|
0.7 |
|
Pts |
|
17.0 |
|
% |
|
Income from Continuing Operations |
|
|
1,325 |
|
|
373 |
|
|
|
261 |
|
|
|
14 |
|
|
|
131 |
|
|
|
2,103 |
|
|
|
Income Margin from Continuing Operations |
|
|
7.1 |
% |
|
2.0 |
|
Pts |
|
1.4 |
|
Pts |
|
0.1 |
|
Pts |
|
0.7 |
|
Pts |
|
11.2 |
|
% |
|
Diluted Earnings/(Loss) Per Share: Continuing Operations |
|
$ |
1.47 |
|
$ |
0.41 |
|
|
$ |
0.29 |
|
|
$ |
0.01 |
|
|
$ |
0.15 |
|
|
$ |
2.33 |
|
|
Contacts
IBM
Sarah Meron, 347‑891‑1770
sarah.meron@ibm.com
John Bukovinsky, 732‑618‑3531
jbuko@us.ibm.com
Read full story here
