8-KRegulation FDExhibits & Filings

INTERNATIONAL BUSINESS MACHINES CORP 8-K Report, Regulation FD Disclosure (Jan 22, 2020)

Filed January 22, 2020For Securities:IBM

Summary

This 8-K filing from IBM announces the company's fourth-quarter and full-year 2019 earnings presentation. The key takeaway for investors is IBM's outlook for 2020, with management signaling that external estimates of approximately 3% revenue growth for the full year are reasonable. This growth projection accounts for divestitures, currency fluctuations, and an anticipated improvement in the Global Technology Services segment, particularly in the latter half of 2020. The filing also provides guidance on the first quarter of 2020, indicating that reported revenue growth is expected to be similar to the fourth quarter of 2019 due to sequential revenue growth and currency translation impacts. Furthermore, the company shared expectations for first-quarter 2020 earnings per share (both GAAP and non-GAAP), which reflect typical seasonality and the accounting adjustments related to the Red Hat acquisition.

Key Highlights

  • 1IBM anticipates approximately 3% revenue growth for full-year 2020, with this figure including impacts from 2019 divestitures and currency translation.
  • 2An improving trend in Global Technology Services is a key assumption for achieving full-year 2020 revenue growth, primarily expected in the second half of the year.
  • 3First-quarter 2020 reported revenue growth is projected to be similar to fourth-quarter 2019 levels.
  • 4IBM expects a sequential improvement in revenue growth at constant currency from Q4 2019 to Q1 2020.
  • 5First-quarter 2020 GAAP diluted earnings per share from continuing operations are expected to be between 12% and 13% of the full-year target.
  • 6First-quarter 2020 operating (non-GAAP) earnings per share are expected to be between 14% and 15% of the full-year target.
  • 7The Red Hat deferred revenue purchase accounting adjustment is noted as an impact on Q1 2020 earnings.

Frequently Asked Questions

IBM's management considers external estimates of approximately 3% revenue growth for full-year 2020 to be reasonable. This projection factors in approximately a 1% impact from businesses divested in 2019, current currency translation expectations, and an assumption of an improving trend in Global Technology Services, particularly in the second half of 2020.

IBM expects an improvement in revenue growth at constant currency of approximately 0.5 points from the fourth quarter of 2019 to the first quarter of 2020. However, due to a sequential impact from currency translation, the company's as reported revenue growth in the first quarter of 2020 is expected to be similar to the fourth quarter of 2019.

The Red Hat deferred revenue purchase accounting adjustment is expected to impact IBM's earnings. Specifically, it is mentioned as a factor contributing to the expected range of GAAP and non-GAAP earnings per share for the first quarter of 2020.

IBM directs investors to its website, www.ibm.com, and specifically the investor relations section (www.ibm.com/investor/), for a significant amount of financial and other information about the company, which is updated regularly.