International Business Machines released the earnings results from its third quarter after closing bell tonight, posting adjusted earnings of $3.34 per share, a 9% year over year decline, on revenue of $19.28 billion (from continuing operations). Analysts had been expecting IBM to report earnings of $3.30 per share and revenue of $19.62 billion. In last year’s third quarter, the company posted earnings of $3.68 per share on $22.4 billion in revenue.
International Business Machines’ earnings fall
GAAP earnings fell 13% year over year to $3.02 per share. Non-GAAP operating margin for continuing operations was 50%, an increase of 80 basis points. GAAP gross margin was 48.9%, an increase of 40 basis points.
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IBM said revenue from its strategic imperatives climbed 27% year over year after adjusting for currencies and divestures. On a reported basis, it increased 17%. Cloud revenue climbed by more than 65% when adjusting for currencies and divestures but only 45% on a reported basis. Total cloud revenue was $9.4 billion over the trailing 12 months, and IBM’s cloud as a service segment recorded an annual run rate of $4.5 billion, compared to $3.1 billion in last year’s third quarter. Revenue from IBM’s business analytics segment climbed 19% on an adjusted basis and 9% on a reported basis.
“In the third quarter we again made progress in the transformation of our business to higher value, with strong growth in our strategic imperatives and expanded operating margins,” IBM Chairman, President and CEO Ginni Rometty said in a statement. “We are continuing to make significant investments to build platforms around analytics, cloud, mobility and security that lay the foundation for a new era of cognitive business — where we see long-term value for our clients and shareholders.”
IBM’s services backlog increased 1% on an adjusted basis to $118 billion.
International Business Machines updates guidance
International Business Machines management said they expect non-GAAP earnings for the full year to be between $14.75 and $15.75 per share and GAAP earnings of between $13.25 and $14.25 per share. Items this year include amortization and charges related to recent acquisitions. They expect free cash flow for the year to be “relatively flat.”
As of this writing, shares of International Business Machines were down 3.99% at $143.26 per share in after-hours trades.