IBM
$121.63
IBM
($1.13)
(.92%)
Earnings Details
2nd Quarter June 2022
Monday, July 18, 2022 4:08:00 PM
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Summary

IBM Misses

IBM (IBM) reported 2nd Quarter June 2022 earnings of $2.31 per share on revenue of $15.5 billion. The consensus earnings estimate was $2.29 per share on revenue of $15.3 billion. The Earnings Whisper number was $2.34 per share. Revenue fell 17.1% compared to the same quarter a year ago.

The company said it now expects 2022 revenue of approximately $60.22 billion, including sales to Kyndryl. The company's previous guidance was revenue of approximately $61.36 billion to $61.94 billion and the current consensus revenue estimate is $60.89 billion for the year ending December 31, 2022.

International Business Machines Corp is an Information Technology (IT) company. It creates business value for clients and solves business problems through integrated solutions that leverage information technology & knowledge of business processes.

Results
Reported Earnings
$2.31
Earnings Whisper
$2.34
Consensus Estimate
$2.29
Reported Revenue
$15.54 Bil
Revenue Estimate
$15.25 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

IBM RELEASES SECOND QUARTER RESULTS

Growth Across Key Segments Led by Hybrid Cloud Adoption; Solid Cash and Profit Generation

ARMONK, N.Y., July 18, 2022 /PRNewswire/ -- IBM (NYSE: IBM) today announced second-quarter 2022 earnings results.

"In the quarter we delivered good revenue performance with balanced growth across our geographies, driven by client demand for our hybrid cloud and AI offerings. The IBM team executed our strategy well," said Arvind Krishna, IBM chairman and chief executive officer. "With our first half results, we continue to expect full-year revenue growth at the high end of our mid-single digit model."

Second-Quarter Highlights

  • Revenue
    - Revenue of $15.5 billion, up 9 percent, up 16 percent at constant currency (about 5 points from sales to Kyndryl)
    - Software revenue up 6 percent, up 12 percent at constant currency (about 7 points from sales to Kyndryl)
    - Consulting revenue up 10 percent, up 18 percent at constant currency
    - Infrastructure revenue up 19 percent, up 25 percent at constant currency (about 7 points from sales to Kyndryl)
    - Hybrid cloud revenue, over the last 12 months, of $21.7 billion, up 16 percent, up 19 percent at constant currency
  • Cash Flow
    - On a consolidated basis, year to date, net cash from operating activities of $4.6 billion; free cash flow of $3.3 billion 

SECOND QUARTER 2022 INCOME STATEMENT SUMMARY












Pre-tax 














Gross



Pre-tax 


Income 



Net 



Diluted 





Revenue



Profit



Income


Margin



Income



EPS


GAAP from
Continuing
Operations


$

15.5B


$

8.3B


$

1.7B


11.1

%

$

1.5B


$

1.61


    Year/Year



9

%*


6

%


89

%

4.7

Pts


81

%


79

%

Operating
(Non-GAAP)





$

8.5B


$

2.5B


16.2

%

$

2.1B


$

2.31


    Year/Year






5

%


48

%

4.2

Pts


45

%


43

%

*16% at constant currency

"We are a faster-growing, focused, disciplined company with sound business fundamentals," said James Kavanaugh, IBM senior vice president and chief financial officer. "Our recurring revenue stream and solid cash generation position us well to continue to invest in R&D, acquire new companies, and strengthen our talent in every part of the business, while also returning value to shareholders through our dividend."

Segment Results for Second Quarter

  • Software (includes Hybrid Platform & Solutions, Transaction Processing)— revenues of $6.2 billion, up 6.4 percent, up 11.6 percent at constant currency (about 7 points from sales to Kyndryl):
    - Hybrid Platform & Solutions up 4 percent, up 9 percent at constant currency (about 1.5 points from sales to Kyndryl):
       -- Red Hat up 12 percent, up 17 percent at constant currency
       -- Automation up 4 percent, up 8 percent at constant currency
       -- Data & AI flat, up 4 percent at constant currency
       -- Security flat, up 5 percent at constant currency
    - Transaction Processing up 12 percent, up 19 percent at constant currency (about 22 points from sales to Kyndryl)
    - Software segment hybrid cloud revenue up 14 percent, up 18 percent at constant currency

  • Consulting (includes Business Transformation, Technology Consulting and Application Operations)— revenues of $4.8 billion, up 9.8 percent, up 17.8 percent at constant currency:
    - Business Transformation up 9 percent, up 16 percent at constant currency
    - Technology Consulting up 14 percent, up 23 percent at constant currency
    - Application Operations up 9 percent, up 17 percent at constant currency
    - Consulting segment hybrid cloud revenue up 20 percent, up 29 percent at constant currency

  • Infrastructure (includes Hybrid Infrastructure, Infrastructure Support)— revenues of $4.2 billion, up 19.0 percent, up 25.4 percent at constant currency (about 7 points from sales to Kyndryl):
    - Hybrid Infrastructure up 34 percent, up 41 percent at constant currency (about 7 points from sales to Kyndryl)
       -- IBM z Systems up 69 percent, up 77 percent at constant currency
       -- Distributed Infrastructure up 11 percent, up 17 percent at constant currency
    - Infrastructure Support down 2 percent, up 5 percent at constant currency (about 8 points from sales to Kyndryl)
    - Infrastructure segment hybrid cloud revenue up 24 percent, up 30 percent at constant currency

  • Financing (includes client and commercial financing)— revenues of $0.1 billion, down 29.9 percent, down 26.6 percent at constant currency

Cash Flow and Balance Sheet
On a consolidated basis, in the second quarter, the company generated net cash from operating activities of $1.3 billion or $2.6 billion excluding IBM Financing receivables. IBM's free cash flow was $2.1 billion. The company returned $1.5 billion to shareholders in dividends in the second quarter.

On a consolidated basis, for the first six months of the year, the company generated net cash from operating activities of $4.6 billion or $4.2 billion excluding IBM Financing receivables. IBM's free cash flow was $3.3 billion, which includes cash impacts from the company's structural actions initiated at the end of 2020.

IBM ended the second quarter with $7.8 billion of cash on hand (which includes marketable securities), up $0.2 billion from year-end 2021. Debt, including IBM Financing debt of $12.3 billion, totaled $50.3 billion, down $1.4 billion since the end of 2021.

Full-Year 2022 Expectations

  • Revenue growth: The company continues to expect constant currency revenue growth at the high end of its mid-single digit model. The company also expects an additional 3.5 point contribution from incremental sales to Kyndryl. At mid-July 2022 foreign exchange rates, currency is expected to be about a six-point headwind.

  • Free Cash Flow: The company now expects about $10 billion in consolidated free cash flow.

Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company's innovation initiatives; damage to the company's reputation; risks from investing in growth opportunities; failure of the company's intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company's ability to successfully manage acquisitions, alliances and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities, and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company's failure to meet growth and productivity objectives; ineffective internal controls; the company's use of accounting estimates; impairment of the company's goodwill or amortizable intangible assets; the company's ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity and data privacy considerations; adverse effects related to climate change and environmental matters, tax matters; legal proceedings and investigatory risks; the company's pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; potential failure of the separation of Kyndryl Holdings, Inc. to qualify for tax-free treatment; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company's Form 10-Qs, Form 10-K and in the company's other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.

Presentation of Information in this Press Release
On November 3, 2021, IBM completed the separation of Kyndryl. Unless otherwise specified, results are presented on a continuing operations basis. All references to revenue impacts from sales to Kyndryl are incremental sales post-separation.

In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information, which management believes provides useful information to investors: 

IBM results —

  • adjusting for currency (i.e., at constant currency);
  • presenting operating (non-GAAP) earnings per share amounts and related income statement items;
  • consolidated free cash flow;
  • consolidated cash from operating activities excluding IBM Financing receivables;

The rationale for management's use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.

Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. EDT, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-2q22. Presentation charts will be available shortly before the Webcast.

Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).

Contact:       IBM
                    Sarah Meron, 347 891 1770
                    sarah.meron@ibm.com 
    
                    Tim Davidson, 914 844 7847
                    tfdavids@us.ibm.com  

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

COMPARATIVE FINANCIAL RESULTS

(Unaudited; Dollars in millions except per share amounts)




Three Months Ended




Six Months Ended





June 30




June 30





2022


2021*




2022


2021*



REVENUE

















Software


$

6,166


$

5,795




$

11,938


$

10,933



Consulting



4,809



4,378





9,637



8,641



Infrastructure



4,235



3,560





7,453



6,853



Financing



146



209





300



417



Other



180



277





404



561



TOTAL REVENUE



15,535



14,218





29,732



27,405




















GROSS PROFIT



8,290



7,852





15,625



14,879




















GROSS PROFIT MARGIN

















Software



79.2

%


79.7

%




79.0

%


78.8

%


Consulting



24.2

%


27.6

%




24.3

%


27.7

%


Infrastructure



53.8

%


57.1

%




52.4

%


56.7

%


Financing



35.3

%


29.9

%




36.5

%


32.7

%



















TOTAL GROSS PROFIT MARGIN



53.4

%


55.2

%




52.6

%


54.3

%



















EXPENSE AND OTHER INCOME

















S,G&A



4,855



4,849





9,452



9,536



R,D&E



1,673



1,641





3,352



3,257



Intellectual property and custom development income



(176)



(133)





(297)



(278)



Other (income) and expense



(81)



302





166



647



Interest expense



297



281





607



561



TOTAL EXPENSE AND OTHER INCOME



6,568



6,940





13,280



13,724




















INCOME/(LOSS) FROM CONTINUING OPERATIONS

















BEFORE INCOME TAXES



1,722



912





2,345



1,155



Pre-tax margin



11.1

%


6.4

%




7.9

%


4.2

%


Provision for/(Benefit from) income taxes



257



101





218



(58)



Effective tax rate



14.9

%


11.1

%




9.3

%


(5.0)

%



















INCOME FROM CONTINUING OPERATIONS


$

1,465


$

810




$

2,127


$

1,213




















DISCONTINUED OPERATIONS

















Income/(Loss) from discontinued operations, net of taxes



(73)



515





(2)



1,067




















NET INCOME


$

1,392


$

1,325




$

2,125


$

2,280




















EARNINGS/(LOSS) PER SHARE OF COMMON STOCK

















Assuming Dilution

















Continuing Operations


$

1.61


$

0.90




$

2.34


$

1.34



Discontinued Operations


$

(0.08)


$

0.57




$

0.00


$

1.18



TOTAL


$

1.53


$

1.47




$

2.34


$

2.52




















Basic

















Continuing Operations


$

1.62


$

0.91




$

2.36


$

1.36



Discontinued Operations


$

(0.08)


$

0.57




$

0.00


$

1.19



TOTAL


$

1.54


$

1.48




$

2.36


$

2.55




















WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M's)

















Assuming Dilution



910.7



904.2





910.0



903.0



Basic



901.5



895.0





900.4



894.3



____________________

* Recast to conform with 2022 presentation.

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)




At


At



June 30


December 31

(Dollars in Millions)


2022


2021

ASSETS:







Current Assets:







Cash and cash equivalents


$

7,034


$

6,650

Restricted cash



220



307

Marketable securities



524



600

Notes and accounts receivable - trade, net



5,867



6,754

Short-term financing receivables, net



7,233



8,014

Other accounts receivable, net



909



1,002

Inventories



1,684



1,649

Deferred costs



1,010



1,097

Prepaid expenses and other current assets



3,414



3,466

Total Current Assets



27,896



29,539








Property, plant and equipment, net



5,275



5,694

Operating right-of-use assets, net



2,848



3,222

Long-term financing receivables, net



5,316



5,425

Prepaid pension assets



9,930



9,850

Deferred costs



865



924

Deferred taxes



7,073



7,370

Goodwill



55,039



55,643

Intangibles, net



11,571



12,511

Investments and sundry assets



1,689



1,823

Total Assets


$

127,503


$

132,001








LIABILITIES:







Current Liabilities:







Taxes


$

1,742


$

2,289

Short-term debt



5,981



6,787

Accounts payable



3,707



3,955

Deferred income



12,522



12,518

Operating lease liabilities



884



974

Other liabilities



7,008



7,097

Total Current Liabilities



31,844



33,619








Long-term debt



44,328



44,917

Retirement related obligations



13,118



14,435

Deferred income



3,069



3,577

Operating lease liabilities



2,182



2,462

Other liabilities



13,486



13,996

Total Liabilities



108,026



113,005








EQUITY:







IBM Stockholders' Equity:







Common stock



57,802



57,319

Retained earnings



153,298



154,209

Treasury stock — at cost



(169,522)



(169,392)

Accumulated other comprehensive income/(loss)



(22,169)



(23,234)

Total IBM Stockholders' Equity



19,409



18,901








Noncontrolling interests



67



95

Total Equity



19,476



18,996








Total Liabilities and Equity


$

127,503


$

132,001

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW ANALYSIS

(Unaudited)
















Trailing Twelve



Three Months Ended


Six Months Ended


Months Ended



June 30


June 30


June 30

(Dollars in Millions)


2022


2021


2022


2021


2022

Consolidated Net Cash from Operations per GAAP


$

1,321


$

2,625


$

4,569


$

7,539


$

9,826

















Less: change in IBM Financing receivables



(1,264)



900



367



3,763



511

Capital Expenditures, net



(494)



(688)



(871)



(1,217)



(2,035)

















Consolidated Free Cash Flow



2,091



1,037



3,331



2,559



7,279

















Acquisitions



(260)



(1,747)



(958)



(2,866)



(1,385)

Divestitures



1,207



(10)



1,268



(25)



1,408

Dividends



(1,488)



(1,467)



(2,963)



(2,924)



(5,907)

Non-Financing Debt



(2,934)



(586)



1,740



(2,331)



2,880

Other (includes IBM Financing net receivables and debt)



(1,607)



(335)



(2,197)



(522)



(4,661)

















Change in Cash, Cash Equivalents, Restricted Cash and Short-term
Marketable Securities*


$

(2,991)


$

(3,108)


$

221


$

(6,110)


$

(387)

____________________

* Cash flows are presented on a consolidated basis. 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW

(Unaudited)




Three Months Ended


Six Months Ended



June 30


June 30

(Dollars in Millions)


2022


2021


2022


2021

Net Income from Operations


$

1,392


$

1,325


$

2,125


$

2,280

Depreciation/Amortization of Intangibles



1,245



1,680



2,501



3,352

Stock-based Compensation



254



243



488



457

Working Capital / Other



(307)



(1,524)



(912)



(2,313)

IBM Financing A/R



(1,264)



900



367



3,763

Net Cash Provided by Operating Activities


$

1,321


$

2,625


$

4,569


$

7,539

Capital Expenditures, net of payments & proceeds



(494)



(688)



(871)



(1,217)

Divestitures, net of cash transferred



1,207



(10)



1,268



(25)

Acquisitions, net of cash acquired



(260)



(1,747)



(958)



(2,866)

Marketable Securities / Other Investments, net



(281)



(227)



(625)



(562)

Net Cash Provided by/(Used in) Investing Activities


$

172


$

(2,671)


$

(1,186)


$

(4,671)

Debt, net of payments & proceeds



(2,514)



(1,500)



434



(5,799)

Dividends



(1,488)



(1,467)



(2,963)



(2,924)

Financing - Other



(195)



(163)



(290)



(190)

Net Cash Provided by/(Used in) Financing Activities


$

(4,197)


$

(3,131)


$

(2,819)


$

(8,914)

Effect of Exchange Rate changes on Cash



(262)



69



(267)



(65)

Net Change in Cash, Cash Equivalents and Restricted Cash*


$

(2,965)


$

(3,108)


$

297


$

(6,110)

____________________

* Cash flows are presented on a consolidated basis. 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

(Unaudited)





Three Months Ended June 30, 2022













(Dollars in Millions)


Software


Consulting


Infrastructure


Financing


Revenue


$

6,166


$

4,809


$

4,235


$

146


Pre-tax Income/(Loss) from Continuing Operations


$

1,375


$

343


$

757


$

102


Pre-tax Margin



22.3

%


7.1

%


17.9

%


69.7

%

Change YTY Revenue



6.4

%


9.8

%


19.0

%


(29.9)

%

Change YTY Revenue - constant currency



11.6

%


17.8

%


25.4

%


(26.6)

%































Three Months Ended June 30, 2021*













(Dollars in Millions)


Software


Consulting


Infrastructure


Financing


Revenue


$

5,795


$

4,378


$

3,560


$

209


Pre-tax Income/(Loss) from Continuing Operations


$

1,059


$

270


$

489


$

131


Pre-tax Margin



18.3

%


6.2

%


13.7

%


63.0

%

____________________

* Recast to conform with 2022 presentation. 


















Six Months Ended June 30, 2022













(Dollars in Millions)


Software


Consulting


Infrastructure


Financing


Revenue


$

11,938


$

9,637


$

7,453


$

300


Pre-tax Income/(Loss) from Continuing Operations


$

2,509


$

691


$

956


$

186


Pre-tax Margin



21.0

%


7.2

%


12.8

%


62.0

%

Change YTY Revenue



9.2

%


11.5

%


8.8

%


(28.0)

%

Change YTY Revenue - constant currency



13.4

%


17.6

%


13.4

%


(25.5)

%













































Six Months Ended June 30, 2021*













(Dollars in Millions)


Software


Consulting


Infrastructure


Financing


Revenue


$

10,933


$

8,641


$

6,853


$

417


Pre-tax Income/(Loss) from Continuing Operations


$

1,717


$

547


$

780


$

229


Pre-tax Margin



15.7

%


6.3

%


11.4

%


55.0

%

____________________

* Recast to conform with 2022 presentation.

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION

(Unaudited; Dollars in millions except per share amounts)




Three Months Ended June 30, 2022




Continuing Operations







Acquisition-


Retirement-


Tax


Kyndryl-










Related


Related


Reform


Related


Operating




GAAP


Adjustments (1)


Adjustments (2)


Impacts


Impacts (3)


(Non-GAAP)


Gross Profit


$

8,290


$

180


$


$


$


$

8,470


Gross Profit Margin



53.4

%


1.2

 pts.  


 pts.  


 pts.  


 pts.  


54.5

%

S,G&A


$

4,855


$

(279)


$


$


$

(0)


$

4,576


Other (Income) & Expense



(81)



(1)



(192)





(145)



(418)


Total Expense & Other (Income)



6,568



(280)



(192)





(145)



5,952


Pre-tax Income from Continuing
Operations



1,722



460



192





145



2,518


Pre-tax Income Margin from
Continuing Operations



11.1

%


3.0

 pts.  


1.2

 pts.  


 pts.  


0.9

 pts.  


16.2

%

Provision for/(Benefit from) Income
Taxes
(4)


$

257


$

115


$

46


$

(4)


$


$

413


Effective Tax Rate



14.9

%


1.8

 pts.  


0.7

 pts.  


(0.2)

 pts.  


(0.9)

 pts.  


16.4

%

Income from Continuing Operations


$

1,465


$

345


$

146


$

4


$

145


$

2,105


Income Margin from Continuing
Operations



9.4

%


2.2

 pts.  


0.9

 pts.  


0.0

 pts.  


0.9

 pts.  


13.5

%

Diluted Earnings/(Loss) Per Share:
Continuing Operations


$

1.61


$

0.38


$

0.16


$

0.00


$

0.16


$

2.31





Three Months Ended June 30, 2021




Continuing Operations







Acquisition-


Retirement-


Tax


Kyndryl-










Related


Related


Reform


Related


Operating




GAAP


Adjustments (1)


Adjustments (2)


Impacts


Impacts (3)


(Non-GAAP)


Gross Profit


$

7,852


$

179


$


$


$


$

8,031


Gross Profit Margin



55.2

%


1.3

 pts.  


 pts.  


 pts.  


 pts.  


56.5

%

S,G&A


$

4,849


$

(294)


$


$


$


$

4,555


Other (Income) & Expense



302



(1)



(317)







(16)


Total Expense & Other (Income)



6,940



(294)



(317)







6,329


Pre-tax Income/(Loss) from Continuing
Operations



912



474



317







1,702


Pre-tax Income Margin from
Continuing Operations



6.4

%


3.3

 pts.  


2.2

 pts.  


 pts.  


 pts.  


12.0

%

Provision for/(Benefit from) Income
Taxes
(4)


$

101


$

105


$

53


$

(14)


$


$

246


Effective Tax Rate



11.1

%


3.1

 pts.  


1.0

 pts.  


(0.8)

 pts.  


 pts.  


14.5

%

Income from Continuing Operations


$

810


$

368


$

264


$

14


$


$

1,456


Income Margin from Continuing
Operations



5.7

%


2.6

 pts.  


1.9

 pts.  


0.1

 pts.  


 pts.  


10.2

%

Diluted Earnings/(Loss) Per Share:
Continuing Operations


$

0.90


$

0.41


$

0.29


$

0.01


$


$

1.61


____________________

(1)  Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related to acquisition
       integration and pre-closing charges, such as financing costs.

(2)  Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/
       settlements and pension insolvency costs and other costs.

(3)  Primarily relates to the fair value changes in the retained Kyndryl common stock and the related cash-settled swap.

(4)  Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax
       income under ASC 740, which employs an annual effective tax rate method to the results.

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION

(Unaudited; Dollars in millions except per share amounts)




Six Months Ended June 30, 2022




Continuing Operations







Acquisition-


Retirement-


Tax


Kyndryl-










Related


Related


Reform


Related


Operating




GAAP


Adjustments (1)


Adjustments (2)


Impacts


Impacts (3)


(Non-GAAP)


Gross Profit


$

15,625


$

361


$


$


$


$

15,986


Gross Profit Margin



52.6

%


1.2

 pts.  


 pts.  


 pts.  


 pts.  


53.8

%

S,G&A


$

9,452


$

(565)


$


$


$

(0)


$

8,887


Other (Income) & Expense



166



(1)



(394)





(367)



(596)


Total Expense & Other (Income)



13,280



(566)



(394)





(367)



11,953


Pre-tax Income from Continuing
Operations



2,345



928



394





367



4,033


Pre-tax Income Margin from
Continuing Operations



7.9

%


3.1

 pts.  


1.3

 pts.  


 pts.  


1.2

 pts.  


13.6

%

Provision for/(Benefit from) Income
Taxes
(4)


$

218


$

224


$

104


$

112


$


$

657


Effective Tax Rate



9.3

%


3.4

 pts.  


1.7

 pts.  


2.8

 pts.  


(0.8)

 pts.  


16.3

%

Income from Continuing Operations


$

2,127


$

704


$

290


$

(112)


$

367


$

3,376


Income Margin from Continuing
Operations



7.2

%


2.4

 pts.  


1.0

 pts.  


(0.4)

 pts.  


1.2

 pts.  


11.4

%

Diluted Earnings/(Loss) Per Share:
Continuing Operations


$

2.34


$

0.77


$

0.32


$

(0.12)


$

0.40


$

3.71
























Six Months Ended June 30, 2021




Continuing Operations







Acquisition-


Retirement-


Tax


Kyndryl-










Related


Related


Reform


Related


Operating




GAAP


Adjustments (1)


Adjustments (2)


Impacts


Impacts (3)


(Non-GAAP)


Gross Profit


$

14,879


$

353


$


$


$


$

15,232


Gross Profit Margin



54.3

%


1.3

 pts.  


 pts.  


 pts.  


 pts.  


55.6

%

S,G&A


$

9,536


$

(582)


$


$


$


$

8,954


Other (Income) & Expense



647



(1)



(649)







(3)


Total Expense & Other (Income)



13,724



(583)



(649)







12,491


Pre-tax Income from Continuing
Operations



1,155



936



649







2,741


Pre-tax Income Margin from
Continuing Operations



4.2

%


3.4

 pts.  


2.4

 pts.  


 pts.  


 pts.  


10.0

%

Provision for/(Benefit from) Income
Taxes
(4)


$

(58)


$

238


$

86


$

6


$


$

272


Effective Tax Rate



(5.0)

%


10.4

 pts.  


4.3

 pts.  


0.2

 pts.  


 pts.  


9.9

%

Income from Continuing Operations


$

1,213


$

699


$

563


$

(6)


$


$

2,469


Income Margin from Continuing
Operations



4.4

%


2.5

 pts.  


2.1

 pts.  


(0.0)

 pts.  


 pts.  


9.0

%

Diluted Earnings/(Loss) Per Share:
Continuing Operations


$

1.34


$

0.77


$

0.62


$

(0.01)


$


$

2.73


____________________

(1)  Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related
       to acquisition integration and pre-closing charges, such as financing costs.

(2)  Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan
       curtailments/settlements and pension insolvency costs and other costs.

(3)  Primarily relates to the fair value changes in the retained Kyndryl common stock and the related cash-settled swap.

(4)  Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As
       Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

 

 

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SOURCE IBM