10-QPeriod: Q1 FY2018

INTERNATIONAL BUSINESS MACHINES CORP Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 24, 2018For Securities:IBM

Summary

For the first quarter ended March 31, 2018, International Business Machines Corp. (IBM) reported total revenue of $19.07 billion, a 5.1% increase year-over-year, or flat when adjusted for currency. Net income was $1.68 billion, a decrease of 4.1% compared to the prior year, resulting in diluted earnings per share of $1.81. The company continued its strategic shift, with 'strategic imperatives' revenue (cloud, analytics, mobile, security) increasing 15% and representing 47% of total revenue over the trailing twelve months. Key financial highlights include a strong operational cash flow of $4.6 billion. The company also maintained a robust liquidity position with $13.2 billion in cash, cash equivalents, and restricted cash. IBM announced a quarterly dividend of $1.57 per share, a 5% increase, indicating continued confidence in its financial performance and commitment to returning value to shareholders. The company reaffirmed its full-year 2018 guidance for GAAP earnings per share and operating (non-GAAP) earnings per share.

Financial Highlights

51 data points
Beta

Revenue

$19.07B

43.2% Gross Margin

Net Income

$1.68B

8.8% Net Margin

EPS (Diluted)

$1.81

Total Assets

$125.28B

Cash & Equivalents

$11.95B

Free Cash Flow

$3.73B

Financial Statements
Beta
Revenue$19.07B
Cost of Revenue$10.82B
Gross Profit$8.25B
R&D Expenses$1.41B
SG&A Expenses$5.45B
Operating Income$1.68B
Interest Expense$165.00M
Net Income$1.68B
EPS (Basic)$1.82
EPS (Diluted)$1.81
Shares Outstanding (Basic)920.68M
Shares Outstanding (Diluted)925.41M

Key Highlights

  • 1Total revenue increased 5.1% to $19.07 billion, with strategic imperatives revenue growing 15% year-over-year.
  • 2Net income decreased 4.1% to $1.68 billion, resulting in diluted EPS of $1.81.
  • 3Operating cash flow was strong at $4.6 billion, demonstrating healthy operational performance.
  • 4The company maintained a strong liquidity position with $13.2 billion in cash, cash equivalents, and restricted cash.
  • 5IBM announced a 5% increase in its quarterly dividend to $1.57 per share, signaling confidence and commitment to shareholder returns.
  • 6Full-year 2018 guidance for GAAP EPS and operating (non-GAAP) EPS was reaffirmed.

Frequently Asked Questions

IBM's total revenue for the first quarter of 2018 increased by 5.1% to $19.07 billion, compared to $18.16 billion in the same period of 2017. When adjusted for currency fluctuations, the revenue was flat year-over-year. Revenue from 'strategic imperatives' (cloud, analytics, security, mobile) showed robust growth.

Net income for the first quarter of 2018 was $1.68 billion, a decrease of 4.1% from $1.75 billion in the prior year's quarter. Diluted earnings per share (EPS) for continuing operations was $1.81, down from $1.85 in Q1 2017. The company also reported operating (non-GAAP) diluted EPS of $2.45, an increase of 4.3%.

IBM generated strong cash flow from operating activities of $4.6 billion in the first quarter of 2018, an increase from $3.96 billion in Q1 2017. The company maintained a healthy liquidity position with $13.2 billion in cash, cash equivalents, and restricted cash at the end of the quarter.

IBM continues to focus on its 'strategic imperatives,' which include cloud, analytics, security, and mobile. Revenue from these areas grew 15% year-over-year and represented 47% of the company's total revenue over the last twelve months. Specifically, cloud revenue grew 20% and as-a-Service revenue grew 25% in Q1 2018.