Early Access

10-QPeriod: Q3 FY2016

INTERNATIONAL BUSINESS MACHINES CORP Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 25, 2016For Securities:IBM

Summary

For the third quarter of 2016, International Business Machines Corporation (IBM) reported total revenue of $19.2 billion, which was flat year-over-year, and a slight decrease in net income to $2.9 billion. The company's strategic imperatives—cloud, analytics, mobile, social, and security solutions—continued to show strong growth, increasing 16% year-over-year and now representing 40% of total revenue. Cloud revenue specifically surged 44%, with Cloud as-a-Service revenue up over 60%, reaching an annual run rate of $7.5 billion by the end of the quarter. Despite overall revenue flatness, the company is demonstrating progress in its transformation toward becoming a cognitive solutions and cloud platform company. The acquisition of The Weather Company and Truven Health Analytics further bolsters IBM's strategic imperative growth, particularly in the Cognitive Solutions segment. However, the Systems segment experienced a significant revenue decline of 21%, largely due to product cycle dynamics and market shifts. IBM generated substantial operating cash flow of $4.2 billion in the quarter and continued to return value to shareholders through share repurchases and dividends.

Financial Highlights

51 data points
Beta

Revenue

$19.23B

0.5% Gross Margin

Net Income

$2.85B

0.1% Net Margin

EPS (Diluted)

$2.98

Total Assets

$115.61B

Cash & Equivalents

$9.04B

Free Cash Flow

$3.35B

Financial Statements
Beta
Revenue$19.23B
Cost of Revenue$10.21B
Gross Profit$9.01B
R&D Expenses$1.40B
SG&A Expenses$4.73B
Operating Income$7.38B
Interest Expense$158.00M
Net Income$2.85B
EPS (Basic)$2.99
EPS (Diluted)$2.98
Shares Outstanding (Basic)954.00M
Shares Outstanding (Diluted)957.32M

Key Highlights

  • 1Total revenue for Q3 2016 was $19.2 billion, flat year-over-year, with a 1.1% decrease adjusted for currency.
  • 2Net income decreased 3.3% to $2.9 billion, while diluted EPS was $2.98.
  • 3Strategic Imperatives (Cloud, Analytics, Mobile, Social, Security) revenue grew 16% year-over-year, now comprising 40% of total revenue.
  • 4Cloud revenue increased 44% year-over-year, with Cloud as-a-Service revenue up over 60%.
  • 5The Systems segment saw a significant revenue decline of 21%, impacted by product cycles and market shifts.
  • 6IBM generated $4.2 billion in cash from operations in the quarter.
  • 7The company made significant acquisitions, including The Weather Company and Truven Health Analytics, to bolster its strategic areas.

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