Revenue growth in all segments; Strong margin expansion and
cash generation
ARMONK,
N.Y., Jan. 24, 2024 /PRNewswire/ -- IBM (NYSE:
IBM) today announced fourth-quarter 2023 earnings results.
"In the fourth quarter, we grew revenue in all of our segments,
driven by continued adoption of our hybrid cloud and AI offerings.
Client demand for AI is accelerating and our book of business for
watsonx and generative AI roughly doubled from the third to the
fourth quarter," said Arvind
Krishna, IBM chairman and chief executive officer. "For the
year, revenue growth was in line with our expectations, and we
exceeded our free cash flow objective. Based on the strength of our
portfolio and demonstrated track record of innovation, for 2024 we
expect revenue performance in line with our mid-single digit model
and about $12 billion in free cash
flow."
Fourth-Quarter Highlights
- Revenue
- Revenue of $17.4 billion, up 4
percent, up 3 percent at constant currency
- Software revenue up 3 percent, up 2 percent at constant
currency
- Consulting revenue up 6 percent, up 5 percent at constant
currency
- Infrastructure revenue up 3 percent, up 2 percent at constant
currency
- Profit Margin
- Gross Profit Margin: GAAP: 59.1 percent, up 1.4 points; Operating
(Non-GAAP): 60.1 percent, up 1.4 points
- Pre-Tax Income Margin: GAAP: 21.6 percent, up 1.8 points;
Operating (Non-GAAP): 24.0 percent, up 1.1 points
Full-Year Highlights
- Revenue of $61.9 billion, up 2
percent, up 3 percent at constant currency
- Software revenue up 5 percent
- Consulting revenue up 5 percent, up 6 percent at constant
currency
- Infrastructure revenue down 5 percent, down 4 percent at constant
currency
- Profit Margin
- Gross Profit Margin: GAAP: 55.4 percent, up 1.4 points; Operating
(Non-GAAP): 56.5 percent, up 1.3 points
- Pre-Tax Income Margin: GAAP: 14.0 percent, up 12.1 points;
Operating (Non-GAAP): 16.7 percent, up 0.4 points
- Cash Flow
- Net cash from operating activities of $13.9 billion, up $3.5
billion; free cash flow of $11.2
billion, up $1.9 billion
|
FOURTH
QUARTER 2023 INCOME STATEMENT SUMMARY
|
|
|
Revenue
|
|
Gross
Profit
|
|
|
Gross
Profit
Margin
|
|
|
Pre-tax
Income
|
|
Pre-tax
Income
Margin
|
|
Net
Income
|
|
Diluted
Earnings
Per
Share
|
GAAP from
Continuing
Operations
|
$ 17.4
B
|
|
|
$ 10.3
B
|
|
|
59.1
|
%
|
|
$ 3.8
B
|
|
|
21.6
|
%
|
|
$ 3.3 B
|
|
|
$ 3.54
|
|
Year/Year
|
4
|
%(1)
|
|
7
|
%
|
|
1.4
|
Pts
|
|
13
|
%
|
|
1.8
|
Pts
|
|
14
|
%
|
|
13
|
%
|
Operating
(Non-GAAP)
|
|
|
|
$ 10.4
B
|
|
|
60.1
|
%
|
|
$ 4.2
B
|
|
|
24.0
|
%
|
|
$ 3.6 B
|
|
|
$ 3.87
|
|
Year/Year
|
|
|
|
7
|
%
|
|
1.4
|
Pts
|
|
9
|
%
|
|
1.1
|
Pts
|
|
9
|
%
|
|
8
|
%
|
(1) 3% at
constant currency
|
"We again demonstrated the fundamental strengths of our business
in the fourth quarter through solid, broad-based revenue growth,
continued profit margin expansion, increased productivity gains and
strong cash generation," said James
Kavanaugh, IBM senior vice president and chief financial
officer. "Throughout 2023, those strengths enabled us to increase
our investment in R&D and talent, and complete nine
acquisitions to bolster our hybrid cloud and AI capabilities, all
while continuing to return value to shareholders through our
dividend."
Segment Results for Fourth Quarter
- Software — revenues of $7.5
billion, up 3.1 percent, up 2.0 percent at constant
currency:
- Hybrid Platform & Solutions up 2 percent, up 1 percent at
constant currency:
-- Red Hat up 8 percent, up 7 percent at constant
currency
-- Automation up 1 percent, flat at constant
currency
-- Data & AI up 1 percent
-- Security down 5 percent, down 6 percent at constant
currency
- Transaction Processing up 5 percent, up 4 percent at constant
currency
- Consulting — revenues of $5.0
billion, up 5.8 percent, up 5.5 percent at constant
currency:
- Business Transformation up 6 percent, up 5 percent at constant
currency
- Technology Consulting up 5 percent, up 4 percent at constant
currency
- Application Operations up 7 percent, up 6 percent at constant
currency
- Infrastructure — revenues of $4.6
billion, up 2.7 percent, up 2.0 percent at constant
currency:
- Hybrid Infrastructure up 8 percent, up 7 percent at constant
currency
-- IBM zSystems up 8 percent
-- Distributed Infrastructure up 8 percent, up 7
percent at constant currency
- Infrastructure Support down 9 percent
- Financing — revenues of $0.2
billion, up 1.8 percent, up 0.3 percent at constant
currency
Cash Flow and Balance Sheet
In the fourth quarter, the
company generated net cash from operating activities of
$4.5 billion, up $0.5 billion year to year. Net cash from
operating activities excluding IBM Financing receivables was
$6.3 billion. IBM's free cash flow
was $6.1 billion, up $0.9 billion year to year. The company returned
$1.5 billion to shareholders in
dividends in the fourth quarter.
For the year, the company generated net cash from operating
activities of $13.9 billion, up
$3.5 billion year to year. Net cash
from operating activities excluding IBM Financing receivables was
$12.7 billion. IBM's free cash flow
was $11.2 billion, up $1.9 billion year to year.
IBM ended the fourth quarter with $13.5
billion of cash and marketable securities, up $4.6 billion from year-end 2022. Debt, including
IBM Financing debt of $11.9 billion,
totaled $56.5 billion, up
$5.6 billion since the end of
2022.
Full-Year 2023 Results
|
FULL-YEAR
2023 INCOME STATEMENT SUMMARY
|
|
|
Revenue
|
|
Gross
Profit
|
|
|
Gross
Profit
Margin
|
|
|
Pre-tax
Income
|
|
Pre-tax
Income
Margin
|
|
Net
Income
|
|
Diluted
Earnings
Per
Share
|
GAAP from
Continuing
Operations
|
$ 61.9
B
|
|
|
$ 34.3
B
|
|
|
55.4
|
%
|
|
$ 8.7
B
|
|
|
14.0
|
%
|
|
$ 7.5 B
|
|
|
$ 8.15
|
|
Year/Year
|
2
|
%(1)
|
|
5
|
%
|
|
1.4
|
Pts
|
|
NM
|
(2)
|
|
12.1
|
Pts(2)
|
|
NM
|
(2)
|
|
NM
|
%(2)
|
Operating
(Non-GAAP)
|
|
|
|
$ 34.9
B
|
|
|
56.5
|
%
|
|
$ 10.3
B
|
|
|
16.7
|
%
|
|
$ 8.9 B
|
|
|
$ 9.62
|
|
Year/Year
|
|
|
|
5
|
%
|
|
1.3
|
Pts
|
|
5
|
%
|
|
0.4
|
Pts
|
|
7
|
%
|
|
5
|
%
|
(1) 3% at
constant currency
|
(2)
GAAP YTY results include the impact of a one-time,
non-cash pension settlement charge related to the transfer of a
portion of the
company's U.S. defined benefit pension obligations and related plan
assets to third-party insurers in third-quarter
2022.
|
Full-Year 2024 Expectations
- Revenue: The company expects constant currency revenue growth
consistent with its mid-single digit model. At current foreign
exchange rates, currency is expected to be about a one-point
headwind to revenue growth
- Free cash flow: The company expects about $12 billion in 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
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;
- 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 SEC.
For watsonx and generative AI, book of business includes
Software transactional revenue, SaaS Annual Contract Value and
Consulting signings.
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-4q23.
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
December 31,
|
|
|
Year Ended
December 31,
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022(1)
|
|
REVENUE BY
SEGMENT
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
$
7,514
|
|
|
$
7,288
|
|
|
$
26,308
|
|
|
$
25,037
|
|
Consulting
|
5,048
|
|
|
4,770
|
|
|
19,985
|
|
|
19,107
|
|
Infrastructure
|
4,604
|
|
|
4,483
|
|
|
14,593
|
|
|
15,288
|
|
Financing
|
175
|
|
|
172
|
|
|
741
|
|
|
645
|
|
Other
|
41
|
|
|
(22)
|
|
|
233
|
|
|
453
|
|
TOTAL
REVENUE
|
17,381
|
|
|
16,690
|
|
|
61,860
|
|
|
60,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
10,267
|
|
|
9,632
|
|
|
34,300
|
|
|
32,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
81.7
|
%
|
|
81.2
|
%
|
|
80.1
|
%
|
|
79.6
|
%
|
Consulting
|
27.7
|
%
|
|
27.4
|
%
|
|
26.6
|
%
|
|
25.5
|
%
|
Infrastructure
|
60.6
|
%
|
|
54.9
|
%
|
|
56.0
|
%
|
|
52.8
|
%
|
Financing
|
50.2
|
%
|
|
47.1
|
%
|
|
48.1
|
%
|
|
38.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT
MARGIN
|
59.1
|
%
|
|
57.7
|
%
|
|
55.4
|
%
|
|
54.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
S,G&A
|
4,791
|
|
|
4,765
|
|
|
19,003
|
|
|
18,609
|
|
R,D&E
|
1,748
|
|
|
1,604
|
|
|
6,775
|
|
|
6,567
|
|
Intellectual property
and custom development
income
|
(242)
|
|
|
(245)
|
|
|
(860)
|
|
|
(663)
|
|
Other (income) and
expense
|
(193)
|
|
|
(118)
|
|
|
(914)
|
|
|
5,803
|
|
Interest
expense
|
405
|
|
|
313
|
|
|
1,607
|
|
|
1,216
|
|
TOTAL EXPENSE AND
OTHER INCOME
|
6,509
|
|
|
6,320
|
|
|
25,610
|
|
|
31,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
CONTINUING OPERATIONS
BEFORE INCOME
TAXES
|
3,759
|
|
|
3,312
|
|
|
8,690
|
|
|
1,156
|
|
Pre-tax
margin
|
21.6
|
%
|
|
19.8
|
%
|
|
14.0
|
%
|
|
1.9
|
%
|
Provision for/(Benefit
from) income taxes
|
474
|
|
|
443
|
|
|
1,176
|
|
|
(626)
|
|
Effective tax
rate
|
12.6
|
%
|
|
13.4
|
%
|
|
13.5
|
%
|
|
(54.2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
CONTINUING OPERATIONS
|
$
3,285
|
|
|
$
2,869
|
|
|
$
7,514
|
|
|
$
1,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) from
discontinued operations, net of
taxes
|
3
|
|
|
(159)
|
|
|
(12)
|
|
|
(143)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
$
3,288
|
|
|
$
2,711
|
|
|
$
7,502
|
|
|
$
1,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS/(LOSS) PER
SHARE OF COMMON STOCK
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
$
3.54
|
|
|
$
3.13
|
|
|
$
8.15
|
|
|
$
1.95
|
|
Discontinued
Operations
|
$
0.00
|
|
|
$
(0.17)
|
|
|
$
(0.01)
|
|
|
$
(0.16)
|
|
TOTAL
|
$
3.55
|
|
|
$
2.96
|
|
|
$
8.14
|
|
|
$
1.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
$
3.59
|
|
|
$
3.17
|
|
|
$
8.25
|
|
|
$
1.97
|
|
Discontinued
Operations
|
$
0.00
|
|
|
$
(0.18)
|
|
|
$
(0.01)
|
|
|
$
(0.16)
|
|
TOTAL
|
$
3.59
|
|
|
$
2.99
|
|
|
$
8.23
|
|
|
$
1.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING (M's)
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
927.3
|
|
|
915.9
|
|
|
922.1
|
|
|
912.3
|
|
Basic
|
914.7
|
|
|
905.8
|
|
|
911.2
|
|
|
902.7
|
|
____________________
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes a
one-time, non-cash, pre-tax pension settlement charge of $5.9
billion ($4.4 billion net of tax).
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEET
(Unaudited)
|
|
(Dollars in
Millions)
|
|
At
December 31,
2023
|
|
At
December 31,
2022
|
ASSETS:
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
13,068
|
|
$
7,886
|
Restricted
cash
|
|
21
|
|
103
|
Marketable
securities
|
|
373
|
|
852
|
Notes and accounts
receivable - trade, net
|
|
7,214
|
|
6,541
|
Short-term financing
receivables, net
|
|
6,793
|
|
7,790
|
Other accounts
receivable, net
|
|
640
|
|
817
|
Inventories
|
|
1,161
|
|
1,552
|
Deferred
costs
|
|
998
|
|
967
|
Prepaid expenses and
other current assets
|
|
2,639
|
|
2,611
|
Total Current
Assets
|
|
32,908
|
|
29,118
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
5,501
|
|
5,334
|
Operating right-of-use
assets, net
|
|
3,220
|
|
2,878
|
Long-term financing
receivables, net
|
|
5,766
|
|
5,806
|
Prepaid pension
assets
|
|
7,506
|
|
8,236
|
Deferred
costs
|
|
842
|
|
866
|
Deferred
taxes
|
|
6,656
|
|
6,256
|
Goodwill
|
|
60,178
|
|
55,949
|
Intangibles,
net
|
|
11,036
|
|
11,184
|
Investments and sundry
assets
|
|
1,626
|
|
1,617
|
Total
Assets
|
|
$
135,241
|
|
$
127,243
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Taxes
|
|
$
2,270
|
|
$
2,196
|
Short-term
debt
|
|
6,426
|
|
4,760
|
Accounts
payable
|
|
4,132
|
|
4,051
|
Deferred
income
|
|
13,451
|
|
12,032
|
Operating lease
liabilities
|
|
820
|
|
874
|
Other
liabilities
|
|
7,022
|
|
7,592
|
Total Current
Liabilities
|
|
34,122
|
|
31,505
|
|
|
|
|
|
Long-term
debt
|
|
50,121
|
|
46,189
|
Retirement related
obligations
|
|
10,808
|
|
9,596
|
Deferred
income
|
|
3,533
|
|
3,499
|
Operating lease
liabilities
|
|
2,568
|
|
2,190
|
Other
liabilities
|
|
11,475
|
|
12,243
|
Total
Liabilities
|
|
112,628
|
|
105,222
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
IBM Stockholders'
Equity:
|
|
|
|
|
Common stock
|
|
59,643
|
|
58,343
|
Retained
earnings
|
|
151,276
|
|
149,825
|
Treasury stock — at
cost
|
|
(169,624)
|
|
(169,484)
|
Accumulated other
comprehensive income/(loss)
|
|
(18,761)
|
|
(16,740)
|
Total IBM
Stockholders' Equity
|
|
22,533
|
|
21,944
|
|
|
|
|
|
Noncontrolling
interests
|
|
80
|
|
77
|
Total
Equity
|
|
22,613
|
|
22,021
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
$
135,241
|
|
$
127,243
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH FLOW
ANALYSIS
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
(Dollars in
Millions)
|
|
2023
|
|
2022
|
|
2023
|
|
2022(1)
|
|
Net Cash from
Operations per GAAP
|
|
$
4,463
|
|
$
3,965
|
|
$
13,931
|
|
$
10,435
|
|
|
|
|
|
|
|
|
|
|
|
Less: change in IBM
Financing receivables
|
|
(1,887)
|
|
(1,788)
|
|
1,233
|
|
(717)
|
|
Capital Expenditures,
net
|
|
(263)
|
|
(544)
|
|
(1,488)
|
|
(1,860)
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
|
6,087
|
|
5,209
|
|
11,210
|
|
9,291
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
(137)
|
|
(1,329)
|
|
(5,082)
|
|
(2,348)
|
|
Divestitures
|
|
—
|
|
1
|
|
(4)
|
|
1,272
|
|
Dividends
|
|
(1,518)
|
|
(1,494)
|
|
(6,040)
|
|
(5,948)
|
|
Non-Financing
Debt
|
|
(2,025)
|
|
(2,777)
|
|
5,547
|
|
1,909
|
|
Other (includes IBM
Financing net receivables and debt)
|
|
59
|
|
(498)
|
|
(1,009)
|
|
(2,893)
|
|
|
|
|
|
|
|
|
|
|
|
Change in Cash, Cash
Equivalents, Restricted Cash and Short-term
Marketable Securities
|
|
$
2,466
|
|
$
(888)
|
|
$
4,622
|
|
$
1,283
|
|
____________________
|
(1) Includes immaterial
cash flows from discontinued operations.
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH
FLOW
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
(Dollars in
Millions)
|
|
2023
|
|
2022
|
|
2023
|
|
2022(1)
|
Net Income from
Operations
|
|
$
3,288
|
|
$
2,711
|
|
$
7,502
|
|
$
1,639
|
Pension Settlement
Charge
|
|
-
|
|
-
|
|
-
|
|
5,894
|
Depreciation/Amortization of Intangibles
|
|
1,152
|
|
1,137
|
|
4,395
|
|
4,802
|
Stock-based
Compensation
|
|
291
|
|
248
|
|
1,133
|
|
987
|
Operating assets and
liabilities / Other, net(2)
|
|
1,619
|
|
1,657
|
|
(332)
|
|
(2,170)
|
IBM Financing
A/R
|
|
(1,887)
|
|
(1,788)
|
|
1,233
|
|
(717)
|
Net Cash Provided by
Operating Activities
|
|
$
4,463
|
|
$
3,965
|
|
$
13,931
|
|
$
10,435
|
|
|
|
|
|
|
|
|
|
Capital Expenditures,
net of payments & proceeds
|
|
(263)
|
|
(544)
|
|
(1,488)
|
|
(1,860)
|
Divestitures, net of
cash transferred
|
|
-
|
|
1
|
|
(4)
|
|
1,272
|
Acquisitions, net of
cash acquired
|
|
(137)
|
|
(1,329)
|
|
(5,082)
|
|
(2,348)
|
Marketable Securities
/ Other Investments, net
|
|
3,236
|
|
553
|
|
(496)
|
|
(1,265)
|
Net Cash Provided
by/(Used in) Investing Activities
|
|
$
2,837
|
|
$
(1,318)
|
|
$
(7,070)
|
|
$
(4,202)
|
|
|
|
|
|
|
|
|
|
Debt, net of payments
& proceeds
|
|
(122)
|
|
(1,350)
|
|
4,497
|
|
1,221
|
Dividends
|
|
(1,518)
|
|
(1,494)
|
|
(6,040)
|
|
(5,948)
|
Financing -
Other
|
|
26
|
|
(8)
|
|
(226)
|
|
(231)
|
Net Cash Provided
by/(Used in) Financing Activities
|
|
$
(1,615)
|
|
$
(2,852)
|
|
$
(1,769)
|
|
$
(4,958)
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate
changes on Cash
|
|
128
|
|
219
|
|
9
|
|
(244)
|
Net Change in Cash,
Cash Equivalents and Restricted
Cash
|
|
$
5,814
|
|
$
13
|
|
$
5,101
|
|
$
1,032
|
____________________
|
(1)
Includes immaterial cash flows from discontinued
operations.
|
(2)
Full-year 2022 includes a $1.5 billion tax effect associated with
the one-time, non-cash, pension settlement charge.
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
GAAP NET INCOME TO
ADJUSTED EBITDA RECONCILIATION
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
(Dollars in
Billions)
|
|
2023
|
|
2022
|
|
Yr/Yr
|
|
2023
|
|
2022
|
|
Yr/Yr
|
Net Income as
reported (GAAP)
|
|
$
3.3
|
|
$
2.7
|
|
$
0.6
|
|
$
7.5
|
|
$
1.6
|
|
$
5.9
|
Less: Income/(loss)
from discontinued operations, net of tax
|
|
0.0
|
|
(0.2)
|
|
0.2
|
|
0.0
|
|
(0.1)
|
|
0.1
|
Income from continuing
operations
|
|
3.3
|
|
2.9
|
|
0.4
|
|
7.5
|
|
1.8
|
|
5.7
|
Provision for/(Benefit
from) income taxes from continuing ops.
|
|
0.5
|
|
0.4
|
|
0.0
|
|
1.2
|
|
(0.6)
|
|
1.8
|
Pre-tax income from
continuing operations (GAAP)
|
|
3.8
|
|
3.3
|
|
0.4
|
|
8.7
|
|
1.2
|
|
7.5
|
Non-operating
adjustments (before tax)
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
charges(1)
|
|
0.4
|
|
0.4
|
|
0.0
|
|
1.7
|
|
1.8
|
|
(0.1)
|
Non-operating
retirement-related costs/(income)(2)
|
|
0.0
|
|
0.1
|
|
(0.1)
|
|
0.0
|
|
6.5
|
|
(6.6)
|
Kyndryl-related
impacts
|
|
—
|
|
0.0
|
|
0.0
|
|
—
|
|
0.4
|
|
(0.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (non-GAAP)
pre-tax income from continuing ops.
|
|
4.2
|
|
3.8
|
|
0.3
|
|
10.3
|
|
9.8
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
expense
|
|
0.3
|
|
0.2
|
|
0.0
|
|
0.9
|
|
1.1
|
|
(0.1)
|
Depreciation/Amortization of non-acquired intangible
assets
|
|
0.7
|
|
0.7
|
|
0.0
|
|
2.8
|
|
3.1
|
|
(0.3)
|
Stock-based
compensation
|
|
0.3
|
|
0.2
|
|
0.0
|
|
1.1
|
|
1.0
|
|
0.1
|
Workforce rebalancing
charges
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.4
|
|
0.0
|
|
0.4
|
Corporate (gains) and
charges(3)
|
|
0.0
|
|
0.0
|
|
0.0
|
|
(0.1)
|
|
(0.3)
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
5.5
|
|
$
5.0
|
|
$
0.4
|
|
$
15.5
|
|
$
14.6
|
|
$
0.9
|
____________________
|
(1)
Primarily consists of amortization of acquired intangible
assets.
|
(2)
Full-year 2022 includes a one-time, non-cash, pre-tax pension
settlement charge of $5.9 billion.
|
(3)
Corporate (gains) and charges primarily consists of unique
corporate actions such as gains on divestitures.
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
SEGMENT
DATA
(Unaudited)
|
|
|
|
Three Months Ended
December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
Revenue
|
|
$
7,514
|
|
|
$
5,048
|
|
|
$
4,604
|
|
|
$
175
|
|
Pre-tax Income from
Continuing Operations(1)
|
|
$
2,417
|
|
|
$
582
|
|
|
$
1,185
|
|
|
$
117
|
|
Pre-tax
Margin(1)
|
|
32.2
|
%
|
|
11.5
|
%
|
|
25.7
|
%
|
|
67.3
|
%
|
Change YTY
Revenue
|
|
3.1
|
%
|
|
5.8
|
%
|
|
2.7
|
%
|
|
1.8
|
%
|
Change YTY Revenue -
Constant Currency
|
|
2.0
|
%
|
|
5.5
|
%
|
|
2.0
|
%
|
|
0.3
|
%
|
|
|
|
Three Months Ended
December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
Revenue
|
|
$
7,288
|
|
|
$
4,770
|
|
|
$
4,483
|
|
|
$
172
|
|
Pre-tax Income from
Continuing Operations
|
|
$
2,347
|
|
|
$
523
|
|
|
$
1,026
|
|
|
$
75
|
|
Pre-tax
Margin
|
|
32.2
|
%
|
|
11.0
|
%
|
|
22.9
|
%
|
|
43.6
|
%
|
____________________
|
(1) The fourth-quarter
2023 pre-tax charge of approximately $0.03 billion for
workforce rebalancing is not included in the measure
of
segment pre-tax income, consistent with the
company's management system.
|
|
|
|
|
|
Year Ended December
31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
Revenue
|
|
$
26,308
|
|
|
$
19,985
|
|
|
$
14,593
|
|
|
$
741
|
|
Pre-tax Income from
Continuing Operations(1)
|
|
$
6,571
|
|
|
$
1,918
|
|
|
$
2,421
|
|
|
$
374
|
|
Pre-tax
Margin(1)
|
|
25.0
|
%
|
|
9.6
|
%
|
|
16.6
|
%
|
|
50.5
|
%
|
Change YTY
Revenue
|
|
5.1
|
%
|
|
4.6
|
%
|
|
(4.5)
|
%
|
|
14.8
|
%
|
Change YTY Revenue -
Constant Currency
|
|
5.2
|
%
|
|
6.1
|
%
|
|
(3.9)
|
%
|
|
15.0
|
%
|
|
|
|
Year Ended December
31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
Revenue
|
|
$
25,037
|
|
|
$
19,107
|
|
|
$
15,288
|
|
|
$
645
|
|
Pre-tax Income from
Continuing Operations
|
|
$
6,162
|
|
|
$
1,677
|
|
|
$
2,262
|
|
|
$
340
|
|
Pre-tax
Margin
|
|
24.6
|
%
|
|
8.8
|
%
|
|
14.8
|
%
|
|
52.6
|
%
|
____________________
|
(1) The full-year 2023
pre-tax charge of approximately $0.4 billion for
workforce rebalancing is not included in the measure of
segment
pre-tax income, consistent with the company's
management system.
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
U.S. GAAP TO
OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars
in millions except per share amounts)
|
|
|
Three Months Ended
December 31, 2023
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Kyndryl-
Related
Impacts
|
|
|
Operating
(Non-
GAAP)
|
|
Gross Profit
|
$
10,267
|
|
|
$
172
|
|
|
$
—
|
|
|
$
—
|
|
|
$
—
|
|
|
$
10,439
|
|
Gross Profit
Margin
|
59.1
|
%
|
|
1.0
|
pts.
|
|
—
|
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.
|
|
—
|
pts.
|
|
24.0
|
%
|
Provision for/(Benefit
from)
Income Taxes (4)
|
$
474
|
|
|
$
91
|
|
|
$
19
|
|
|
$
(4)
|
|
|
$
—
|
|
|
$
580
|
|
Effective Tax
Rate
|
12.6
|
%
|
|
0.9
|
pts.
|
|
0.5
|
pts.
|
|
(0.1)
|
pts.
|
|
—
|
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.
|
|
0.0
|
pts.
|
|
—
|
pts.
|
|
20.6
|
%
|
Diluted Earnings Per
Share:
Continuing Operations
|
$
3.54
|
|
|
$
0.37
|
|
|
$
(0.04)
|
|
|
$
0.00
|
|
|
$
—
|
|
|
$
3.87
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2022
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Kyndryl-
Related
Impacts
(3)
|
|
|
Operating
(Non-
GAAP)
|
|
Gross Profit
|
$ 9,632
|
|
|
$
156
|
|
|
$
—
|
|
|
$
—
|
|
|
$
—
|
|
|
$
9,788
|
|
Gross Profit
Margin
|
57.7
|
%
|
|
0.9
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
58.6
|
%
|
S,G&A
|
$ 4,765
|
|
|
$
(262)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
0
|
|
|
$
4,503
|
|
Other (Income) &
Expense
|
(118)
|
|
|
(1)
|
|
|
(93)
|
|
|
—
|
|
|
2
|
|
|
(210)
|
|
Total Expense &
Other (Income)
|
6,320
|
|
|
(263)
|
|
|
(93)
|
|
|
—
|
|
|
2
|
|
|
5,965
|
|
Pre-tax Income from
Continuing
Operations
|
3,312
|
|
|
419
|
|
|
93
|
|
|
—
|
|
|
(2)
|
|
|
3,823
|
|
Pre-tax Income Margin
from
Continuing Operations
|
19.8
|
%
|
|
2.5
|
pts.
|
|
0.6
|
pts.
|
|
—
|
pts.
|
|
0.0
|
pts.
|
|
22.9
|
%
|
Provision for/(Benefit
from)
Income Taxes (4)
|
$
443
|
|
|
$
109
|
|
|
$
16
|
|
|
$
(42)
|
|
|
$
—
|
|
|
$
526
|
|
Effective Tax
Rate
|
13.4
|
%
|
|
1.4
|
pts.
|
|
0.1
|
pts.
|
|
(1.1)
|
pts.
|
|
0.0
|
pts.
|
|
13.8
|
%
|
Income from
Continuing
Operations
|
$
2,869
|
|
|
$
310
|
|
|
$
77
|
|
|
$
42
|
|
|
$
(2)
|
|
|
$
3,296
|
|
Income Margin from
Continuing
Operations
|
17.2
|
%
|
|
1.9
|
pts.
|
|
0.5
|
pts.
|
|
0.3
|
pts.
|
|
0.0
|
pts.
|
|
19.8
|
%
|
Diluted Earnings Per
Share:
Continuing Operations
|
$
3.13
|
|
|
$
0.34
|
|
|
$
0.08
|
|
|
$
0.05
|
|
|
$
0.00
|
|
|
$
3.60
|
|
____________________
|
(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 gain of $12 million on foreign
exchange call option contracts related
to the company's planned 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.
|
(3)
Primarily relates to fair value changes in shares
of Kyndryl common stock that were retained by IBM 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)
|
|
|
Year Ended December
31, 2023
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Kyndryl-
Related
Impacts
|
|
|
Operating
(Non-
GAAP)
|
|
Gross Profit
|
$
34,300
|
|
|
$
631
|
|
|
$
—
|
|
|
$
—
|
|
|
$
—
|
|
|
$
34,931
|
|
Gross Profit
Margin
|
55.4
|
%
|
|
1.0
|
pts.
|
|
—
|
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.
|
|
—
|
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.
|
|
0.0
|
pts.
|
|
(0.9)
|
pts.
|
|
—
|
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.
|
|
—
|
pts.
|
|
14.3
|
%
|
Diluted Earnings Per
Share:
Continuing Operations
|
$
8.15
|
|
|
$
1.40
|
|
|
$
(0.03)
|
|
|
$
0.10
|
|
|
$
—
|
|
|
$
9.62
|
|
|
|
|
Year Ended December
31, 2022
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Kyndryl-
Related
Impacts
(3)
|
|
|
Operating
(Non-
GAAP)
|
|
Gross Profit
|
$
32,687
|
|
|
$
682
|
|
|
$
—
|
|
|
$
—
|
|
|
$
—
|
|
|
$
33,370
|
|
Gross Profit
Margin
|
54.0
|
%
|
|
1.1
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
—
|
pts.
|
|
55.1
|
%
|
S,G&A
|
$
18,609
|
|
|
$
(1,080)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
0
|
|
|
$
17,529
|
|
Other (Income) &
Expense
|
5,803
|
|
|
(3)
|
|
|
(6,548)
|
|
|
—
|
|
|
(351)
|
|
|
(1,099)
|
|
Total Expense &
Other (Income)
|
31,531
|
|
|
(1,083)
|
|
|
(6,548)
|
|
|
—
|
|
|
(351)
|
|
|
23,549
|
|
Pre-tax Income from
Continuing
Operations
|
1,156
|
|
|
1,765
|
|
|
6,548
|
|
|
—
|
|
|
351
|
|
|
9,821
|
|
Pre-tax Income Margin
from
Continuing Operations
|
1.9
|
%
|
|
2.9
|
pts.
|
|
10.8
|
pts.
|
|
—
|
pts.
|
|
0.6
|
pts.
|
|
16.2
|
%
|
Provision for/(Benefit
from)
Income Taxes (4)
|
$
(626)
|
|
|
$
436
|
|
|
$
1,615
|
|
|
$
70
|
|
|
$
—
|
|
|
$
1,495
|
|
Effective Tax
Rate
|
(54.2)
|
%
|
|
14.2
|
pts.
|
|
52.6
|
pts.
|
|
0.7
|
pts.
|
|
1.9
|
pts.
|
|
15.2
|
%
|
Income from
Continuing
Operations
|
$
1,783
|
|
|
$
1,329
|
|
|
$
4,933
|
|
|
$
(70)
|
|
|
$
351
|
|
|
$
8,326
|
|
Income Margin from
Continuing
Operations
|
2.9
|
%
|
|
2.2
|
pts.
|
|
8.1
|
pts.
|
|
(0.1)
|
pts.
|
|
0.6
|
pts.
|
|
13.8
|
%
|
Diluted Earnings Per
Share:
Continuing Operations
|
$
1.95
|
|
|
$
1.46
|
|
|
$
5.41
|
|
|
$
(0.08)
|
|
|
$
0.38
|
|
|
$
9.13
|
|
____________________
|
(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 gain of $12 million on foreign
exchange call option contracts related
to the company's planned 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. 2022 also includes a one-time,
non-cash, pre-tax pension settlement
charge of $5.9 billion ($4.4 billion
net of tax).
|
(3)
Primarily relates to fair value changes in shares
of Kyndryl common stock that were retained by IBM 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
GAAP OPERATING CASH
FLOW TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
(Dollars in
Billions)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net Cash Provided by
Operating Activities
|
|
$
4.5
|
|
$
4.0
|
|
$
13.9
|
|
$
10.4
|
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
Net interest
expense
|
|
0.3
|
|
0.2
|
|
0.9
|
|
1.1
|
Provision for /
(Benefit from) income taxes from continuing
operations(1)
|
|
0.5
|
|
0.4
|
|
1.2
|
|
(0.6)
|
|
|
|
|
|
|
|
|
|
Less change
in:
|
|
|
|
|
|
|
|
|
Financing
receivables
|
|
(1.9)
|
|
(1.8)
|
|
1.2
|
|
(0.7)
|
Other assets and
liabilities / Other, net(1)(2)
|
|
1.6
|
|
1.4
|
|
(0.7)
|
|
(3.1)
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
5.5
|
|
$
5.0
|
|
$
15.5
|
|
$
14.6
|
__________
|
(1)
Full-year 2022 includes a $1.5 billion tax effect associated with
the one-time, non-cash pension settlement charge.
|
(2) 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