Summary
This IBM 10-Q filing for the period ending June 29, 2017, reveals a challenging quarter marked by a decline in revenue and net income compared to the previous year. Total revenue decreased by 4.7% to $19.29 billion, and net income fell by 6.9% to $2.33 billion, or $2.48 per diluted share. This performance was impacted by a decline across most business segments, including Systems, Global Business Services, and Technology Services & Cloud Platforms, though the strategic imperatives (cloud, analytics, mobile, security) showed continued growth, representing 45% of revenue for the quarter. The company also saw a significant increase in non-operating retirement-related costs, which impacted GAAP earnings, though operating (non-GAAP) earnings remained relatively stable. Despite the revenue and profit declines, IBM's financial position remained solid with $12.3 billion in cash and marketable securities. The company continued its capital allocation strategy, repurchasing $1.4 billion in common stock during the quarter and returning value through dividends. Management reiterated full-year expectations for GAAP earnings per share and operating earnings, while noting the expected positive impact of new product cycles and large services contracts in the latter half of the year.
Financial Highlights
51 data points| Revenue | $19.29B |
| Cost of Revenue | $10.32B |
| Gross Profit | $8.97B |
| R&D Expenses | $1.44B |
| SG&A Expenses | $5.03B |
| Operating Income | $4.08B |
| Interest Expense | $147.00M |
| Net Income | $2.33B |
| EPS (Basic) | $2.49 |
| EPS (Diluted) | $2.48 |
| Shares Outstanding (Basic) | 934.92M |
| Shares Outstanding (Diluted) | 939.56M |
Key Highlights
- 1Total revenue for the quarter was $19.29 billion, a 4.7% decrease year-over-year, or 3.3% decrease adjusted for currency.
- 2Net income decreased by 6.9% to $2.33 billion, resulting in diluted earnings per share of $2.48, down 5.0% from the prior year.
- 3Strategic imperatives revenue grew 5% (7% adjusted for currency) and now represents 45% of total revenue.
- 4Cloud revenue increased 15% (17% adjusted for currency) with an as-a-Service revenue run rate of $8.8 billion.
- 5Systems revenue declined 10.4% (10% adjusted for currency) due to product cycle dynamics, particularly in z Systems.
- 6The company repurchased $1.4 billion of common stock and paid $1.5 billion in dividends during the quarter.
- 7Operating (non-GAAP) earnings per diluted share were $2.97, a slight increase of 0.7% year-over-year.