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International Business Machines Corporation (IBM) reported solid second-quarter results, wherein both the bottom and top lines beat the respective Zacks Consensus Estimate. The company witnessed healthy demand trends for hybrid cloud and AI solutions with a client-focused portfolio and broad-based growth and remains firmly on track to reach its targets for 2024.Net IncomeOn a GAAP basis, net income from continuing operations was $1.83 billion or $1.96 per share compared with $1.58 billion or $1.72 per share ...

Financial Data and Key Metrics - Revenue for Q2 2024 was $15.8 billion, with a 4% growth at constant currency [18] - Operating pre-tax income was $2.8 billion, up 17% year-over-year [18] - Operating diluted earnings per share grew 11% to $2.43 [18] - Free cash flow for the first half of 2024 was $4.5 billion, up $1.1 billion year-over-year [21] - Adjusted EBITDA increased by more than $350 million in Q2 2024 [20] Business Line Performance - Software revenue grew 8%, driven by hybrid platform and solutions, and transaction processing [19][22] - Infrastructure revenue increased 3%, with IBM Z revenue up 8% [19][30] - Consulting revenue grew 2%, impacted by a pullback in discretionary spending [19][26] - Red Hat annual bookings grew over 20%, with OpenShift bookings up over 40% [22] Market Performance - Strong demand for hybrid cloud solutions, including app modernization, management automation, and generative AI [22] - IBM Z continues to outperform prior cycles, driven by increasing workloads and cybersecurity demands [30] - Distributed infrastructure revenue grew 5%, fueled by demand for data-intensive workloads on Power10 [31] Strategic Direction and Industry Competition - The company's hybrid cloud and AI strategy is driving growth, with generative AI book of business exceeding $2 billion [12] - IBM is investing in open-source AI models, such as Granite, and tools like InstructLab for rapid model tuning [9][10] - The company is expanding its ecosystem with partnerships, including Adobe, AWS, Microsoft, and SAP [16] Management Commentary on Operating Environment and Future Outlook - Technology spending remains robust, but interest rates and inflation have impacted discretionary spending in consulting [7] - The company is confident in the long-term growth of generative AI, with early leadership positioning it for success [12] - IBM raised its free cash flow expectations for 2024 to over $12 billion, driven by strong first-half performance [17] Other Important Information - IBM completed the acquisition of StreamSets and webMethods from Software AG and expects to close the HashiCorp acquisition by year-end [25] - The company is investing in quantum computing, with updates to Qiskit aimed at enhancing stability and efficiency [15] Q&A Session Summary Question: Trajectory of transaction processing growth in 2024 and 2025 [38] - Transaction processing grew 13% in Q2 2024, driven by strong client renewals and large deal performance [38][40] - The company expects mid-single-digit growth for 2024 and remains confident in continued growth in 2025 [41] Question: AI signings and their impact on consulting spend [43] - AI signings are largely a shift from other areas of consulting, with potential for accretive growth in the future [44] - Consulting signings for generative AI reached $1.5 billion, with strong quarter-over-quarter momentum [47] Question: Consulting growth expectations for 2024 [51] - Consulting is expected to grow low-single-digits for 2024, with some pressure from discretionary spending constraints [54] - The company remains optimistic about medium-term and long-term growth in consulting [53] Question: M&A environment and strategy [59] - IBM remains disciplined in M&A, focusing on hybrid cloud and AI, with valuations in the public and private markets being reasonable [60][63] - The company expects the HashiCorp acquisition to close in the second half of 2024 [64] Question: Red Hat business performance [74] - Red Hat bookings grew over 20% in Q2 2024, with OpenShift bookings up over 40% [22][75] - The company expects low double-digit growth for Red Hat in 2024, driven by strong demand for hybrid cloud solutions [76] Question: Open-source AI models and developer-focused strategy [78] - IBM's open-source Granite models are designed to be cost-effective and customizable, with a focus on developer adoption [79][82] - The company believes open-source models will expand the market and allow developers to experiment and innovate [84]

2Q 2024 Earnings July 24, 2024 ibm.com/investor Forward-looking statements and non-GAAP information Certain comments made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Forward- looking statements are based on the company's current assumptions regarding future business and financial performance. Those statements by their nature address matters that are uncertain to different degrees. Those statements involve a number of factors that c ...

Key TakeawaysIBM's second-quarter results surpassed revenue and earnings expectations, lifting its shares in after-hours trading. Software revenue rose 7% to $6.7 billion in the latest quarter. The company said its generative AI business has grown to $2 billion. International Business Machines (IBM) beat analysts’ expectations on the top and bottom lines with its second-quarter results Wednesday, sending shares higher in aftermarket trading as CEO Arvind Krishna pointed to the company’s expanding artificial ...

Revenue Performance - Revenue for Q2 2024 was $15.8 billion, an increase of 2%, and 4% at constant currency[2] - Total revenue for the three months ended June 30, 2024, was $15,770 million, an increase from $15,475 million in the same period last year, representing a growth of 1.9%[14] - Total revenue for the six months ended June 30, 2024, was $16,692 million, with a gross profit margin of 55.2%[29] - Software revenue rose to $6.7 billion, up 7.1%, and 8.4% at constant currency; Automation segment grew by 15%[5] - Consulting revenue decreased by 0.9% to $5.2 billion, but increased by 1.8% at constant currency[5] - Infrastructure revenue was $3.6 billion, up 0.7%, and 2.7% at constant currency[5] - The Financing segment reported revenue of $169 million for the three months ended June 30, 2024, reflecting a year-over-year decline of 8.3%[21] - Total capital expenditures for the three months ended June 30, 2024, were $399 million, down from $487 million in the same period of 2023[18] Profitability Metrics - Gross profit margin improved to 56.8%, up 180 basis points year-over-year[2] - Gross profit for the same period was $8,950 million, up from $8,501 million, resulting in a gross profit margin of 56.8%, compared to 54.9% year-over-year[14] - The gross profit margin for the software segment was 83.6%, up from 82.1% year-over-year[14] - Income from continuing operations was $1,830 million, an increase from $1,581 million, with an effective tax rate of 17.5%, down from 21.0%[14] - The company reported a pre-tax margin of 14.1%, an improvement from 12.9% in the previous year[14] - Pre-tax income from continuing operations for the same period was $2,219 million, with a pre-tax income margin of 14.1%[26] Cash Flow and Financial Position - Free cash flow for Q2 2024 was $2.6 billion, an increase of $0.5 billion year-over-year; year-to-date free cash flow reached $4.5 billion[6] - The company expects full-year free cash flow to exceed $12 billion, raising its previous guidance[7] - Net cash from operating activities for Q2 was $2.1 billion, down $0.6 billion year-over-year[6] - Net cash provided by operating activities for the three months ended June 30, 2024, was $2.1 billion, compared to $2.6 billion for the same period in 2023, reflecting a decrease of approximately 19.2%[32] - For the six months ended June 30, 2024, net cash provided by operating activities was $6.2 billion, slightly down from $6.4 billion in the same period of 2023[32] - The company ended Q2 with $16.0 billion in cash, restricted cash, and marketable securities, an increase of $2.5 billion from year-end 2023[6] Shareholder Returns - The company declared dividends of $1,537 million for the three months ended June 30, 2024, compared to $1,510 million in the same period of 2023[18] - IBM stockholders' equity increased to $24,026 million from $22,533 million, reflecting a positive trend in retained earnings[16] Research and Development - Research, development, and engineering expenses were $1,840 million, compared to $1,687 million in the same period last year[14] Other Financial Metrics - Adjusted EBITDA for the three months ended June 30, 2024, was $4,000 million, an increase of 10.8% from $3,700 million in the same period of 2023[20] - The adjusted EBITDA for the six months ended June 30, 2024, was $7.1 billion, compared to $6.5 billion for the same period in 2023, indicating a growth of approximately 9.2%[32] - Net interest expense remained stable at $0.2 billion for the three months ended June 30, 2024, and 2023[32] - The overall financial performance indicates a mixed trend with improvements in adjusted EBITDA but declines in net cash from operating activities for the three months ended June 30, 2024[32] Generative AI Business - IBM's book of business for generative AI has grown to over $2 billion since the launch of watsonx[1]

Arvind Krishna, CEO of IBM, arrives for the Inaugural AI Insight Forum in Russell Building on Capitol Hill, on Wednesday, September 13, 2023.IBM shares rose 5% in extended trading on Wednesday, after the company reported second-quarter results that surpassed analysts' predictions.Here are the key numbers.Earnings per share: $2.43 adjusted vs. $2.20 expected, according to LSEGRevenue: $15.77 billion vs. $15.62 billion expected, according to LSEG.Revenue increased 1.9% from $15.48 billion a year ago, IBM said ...

Accelerated revenue growth led by Software; Raises full-year free cash flow expectationARMONK, N.Y., July 24, 2024 /PRNewswire/ -- IBM (NYSE: IBM) today announced second-quarter 2024 earnings results."We had a strong second quarter, exceeding our expectations, driven by growth in both revenue and free cash flow. We continue to see that clients turn to IBM for our technology and our expertise in enterprise AI, and our book of business for generative AI has grown to more than two billion dollars since the lau ...

International Business Machines Corporation IBM will release its fiscal third quarter 2024 financial results, after the closing bell on Wednesday, July 24.Analysts expect the Armonk, New York-based company to report quarterly earnings at $2.19 per share, up from $2.18 per share in the year-ago period. IBM is expected to post revenue of $15.62 billion, compared to $15.57 billion a year ago, according to data from Benzinga Pro.On July 17, IBM disclosed securing a five-year contract with $26 million in initial ...

International Business Machines Corporation (IBM) is scheduled to report second-quarter 2024 results on Jul 24, after the closing bell. The company is expected to have registered higher revenues from the consulting segment, backed by rising demand for technology consulting and business transformation services. Factors at Play The Consulting segment comprises Business Transformation, Technology Consulting and Application Operations. It provides consulting and application management services that offer value ...