International Business Machines (IBM) Slips Post-Earnings

International Business Machines released its latest earnings report after closing bell tonight, posting non-GAAP earnings of $3.84 per share, a 15% year over year decline, and revenue of $20.8 billion, a 1% year over year decline after adjusting for currencies and the divesture of the System x business. Analysts had been expecting earnings of $3.78 per share on $20.95 billion in revenue.

Key metrics from International Business Machines earnings report

GAAP earnings were $3.58 per share, a 15% year over year increase. Gross margin was 50.9% on a non-GAAP basis, a 20 basis point increase, and 49.9% on a GAAP basis, a 20 basis point decline. Revenue from continuing operations was $40.4 billion.

IBM’s strategic imperatives revenue climbed more than 30% on an adjusted basis and more than 20% on a reported basis. The company’s cloud revenue increased by over 70% on an adjusted basis and more than 50% on a reported basis. Cloud delivered as a service brought a $4.5 billion annual run rate compared to $2.8 billion in last year’s second quarter.

Revenue from business analytics climbed more than 20% on an adjusted basis and more than 10% on a reported basis. Total cloud services revenue reached $8.7 billion over the last 12 months after adjusting for the divesture of the System x business. Systems Hardware revenue fell 32% year over year to $2.1 billion. Software revenues fell 10% year over year to $5.8 billion. The Global Financing segment recorded a 5% decline in revenue to $0.5 billion.

IBM reported a services backlog of $122 billion, a more than 1% increase after adjustments for currency. Free cash flow during the quarter increased $0.8 billion year over year to $4.5 billion.

International Business Machines maintains earnings guidance

For the full year, IBM management continues to expect non-GAAP earnings to be between $15.75 and $16.50 per share. They also expect GAAP earnings of between $14.25 and $15 per share. They now expect free cash flow to increase modestly year over year.

As of this writing, shares of IBM were down 3.6% at $167.01 per share in after-hours trades.

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at Mjones@valuewalk.com.

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