In the early hours of April 20, Beijing time, IBM released the company’s first quarter financial report for the 2023 fiscal year today. The report shows,IBM’s first-quarter revenue was $14.252 billion, up 0.4% from $14.197 billion in the same period last yearexcluding the impact of exchange rate changes, it increased by 4.4% year-on-year; net profit was US$927 million, compared with US$733 million in the same period last year;Profit from continuing operations was $934 million, an increase of 41% compared to $662 million in the same period last year.
IBM missed first-quarter revenue estimates but adjusted earnings per share topped Wall Street analysts’ expectations, sending its shares up nearly 2 percent after hours.
Main achievement:
For the fiscal quarter ended March 31, 2023, IBM’s net income was $927 million, compared with $733 million a year earlier.
IBM’s first-quarter profit from continuing operations was $934 million, an increase of 41% compared to $662 million in the same period last year; diluted earnings per share from continuing operations was $1.03, compared with $0.73 in the same period last year. Compared with the US dollar, it increased by 41%. IBM’s loss from discontinued operations was $7 million in the first quarter, compared to a profit from discontinued operations of $71 million in the year-ago quarter; diluted loss per share from discontinued operations was 0.01 , compared with diluted earnings per share from discontinued operations of $0.08 in the prior year period.
Non-GAAP net operating income from continuing operations was $1.2 billion in the first quarter, down 2% from $1.3 billion in the same period last year; Diluted earnings per share from continuing operations was $1.36, down 3% from $1.40 a year earlier, but still beat analysts’ expectations. According to data provided by the Yahoo Finance website, 12 analysts had expected IBM’s first-quarter earnings per share to reach $1.26 on average.
IBM’s revenue in the first quarter was US$14.252 billion, an increase of 0.4% compared with US$14.197 billion in the same period last year, and a year-on-year increase of 4.4% excluding the impact of exchange rate changes. This performance failed to meet analysts’ previous expectations. According to data provided by the Yahoo Finance website, 11 analysts had expected IBM’s first-quarter revenue to reach $14.35 billion on average.
IBM’s gross profit in the first quarter was $7.509 billion, an increase of 2% compared to the $7.335 billion in the same period last year; not in accordance with US GAAP (excluding certain one-time items), IBM’s first-quarter operating It was US$7.658 billion, an increase of 2% compared with US$7.516 billion in the same period of the previous year.
IBM’s overall gross margin for the first quarter was 52.7 percent, compared to 51.7 percent for the same period a year earlier. On a non-GAAP basis, which excludes certain one-time items, IBM’s total operating gross margin in the first quarter was 53.7%, compared with 52.9% a year earlier. Broken down by business unit, IBM’s software division had a gross profit margin of 79.5 percent in the first quarter, compared with 78.8 percent in the same period last year; %; the first-quarter gross profit margin of the Infrastructure segment was 51.7%, compared with 50.5% in the same period last year; the first-quarter gross profit margin of the financing segment was 43.9%, compared with 37.7% in the same period last year.
Costs and expenses:
IBM’s total expenses and other income for the first quarter were $6.451 billion, compared with $6.712 billion for the same period a year earlier. Among them, sales, general and administrative expenses were $4.853 billion, compared with $4.597 billion in the same period last year; research and development and engineering expenses were $1.655 billion, compared with $1.679 billion in the same period last year; intellectual property and customs Development income was $180 million, compared to $121 million in the year-ago period; other income was $245 million, compared to other expenses of $246 million in the year-ago period; interest expense was $367 million, compared to That was down from $311 million a year earlier.
Performance data of each department:
For the first quarter of fiscal 2023, IBM Software business unit revenue (including Hybrid Platforms and Solutions business and Transaction Processing business) was $5.921 billion, an increase of 2.6% from $5.772 billion in the same period last year, excluding currency The impact of the change was a year-on-year increase of 5.6%. in:
– Hybrid Platforms & Solutions segment revenue increased 2% year-over-year, or 5% year-over-year excluding currency effects;
– Red Hat segment revenue increased 8% year-over-year, or 11% year-over-year excluding the impact of currency changes;
– Automation segment revenue decreased by 1% year-on-year, and increased by 2% year-on-year excluding the impact of currency changes;
– Data and AI (artificial intelligence) segment revenue increased 1% year-over-year, or 3% year-over-year excluding the impact of currency changes;
– Security segment revenue decreased by 1% year-over-year, and increased by 2% year-on-year excluding the impact of currency changes;
– Transaction Processing segment revenue increased 3% year-over-year, or 7% year-over-year excluding the impact of currency movements.
IBM Consulting business unit (including business transformation, technology consulting and application business) in the first quarter revenue was $4.962 billion, an increase of 2.8% compared with the $4.829 billion in the same period last year, and an increase of 8.2% year-on-year, excluding the impact of exchange rate changes. %. in:
– Business transformation revenue increased by 1% year-on-year, excluding the impact of exchange rate changes, it increased by 6% year-on-year;
– Technical consulting revenue decreased by 1% year-on-year, excluding the impact of exchange rate changes, it increased by 4% year-on-year;
– Application operating revenue increased 7% year-over-year, or 13% year-over-year excluding the impact of currency changes.
IBM’s infrastructure business unit (including hybrid infrastructure and infrastructure support business) revenue in the first quarter was $3.098 billion, a decrease of 3.7% from $3.219 billion in the same period last year, an increase year-over-year excluding the impact of currency changes 0.1%. in:
– Hybrid Infrastructure segment revenue increased 1% year-over-year, or 4% year-over-year excluding currency effects;
– “z Systems” revenue increased 7% year-over-year, or 11% year-over-year excluding currency effects;
– Distributed Infrastructure segment revenue decreased by 3% year-over-year, and was flat year-over-year excluding the impact of currency changes;
– Infrastructure Support segment revenues decreased 9% year-over-year, or 4% year-over-year excluding currency effects.
IBM Financing segment revenues (including client and commercial financing businesses) were $196 million in the first quarter, an increase of 27.3 percent compared to $154 million in the same period last year, or 31.0 percent excluding currency effects.
IBM’s other business unit revenue was $75 million in the first quarter, compared with $224 million in other business unit revenue in the same period a year earlier.
Additional financial information:
IBM’s net cash from operating activities in the first quarter was $3.8 billion, an increase of $500 million from the same period last year; excluding accounts receivable from Global Financing, IBM’s net cash from operating activities in the first quarter Cash was $1.8 billion.
IBM’s free cash flow for the first quarter was $1.3 billion, an increase of $100 million compared to the same period last year.
During the first quarter, IBM returned $1.5 billion in cash to shareholders in the form of dividends.
IBM ended Q1 2023 with $17.6 billion in cash (including marketable securities), an increase of $8.8 billion compared to end 2022; total debt of $58.7 billion (including $10.5 billion in Global Financing USD), an increase of USD 7.8 billion compared to the end of 2022.
Performance outlook:
IBM currently expects full-year fiscal 2020 revenue growth of between 3% and 5% year-over-year, excluding the impact of currency movements.
According to IBM’s previously released financial report, the company’s revenue for fiscal year 2022 will be US$60.530 billion. Based on this calculation, IBM’s above-mentioned performance outlook means that the company expects revenue in fiscal year 2023 to reach between US$62.346 billion and US$63.557 billion, which is lower than analysts’ expectations. According to data provided by the Yahoo Finance website, 16 analysts on average expect IBM’s fiscal year 2023 revenue to reach $64.95 billion.
IBM also expects the company’s total free cash flow to be around $10.5 billion in fiscal 2023, an increase of more than $1 billion compared to fiscal 2022.
Stock price reaction:
On the same day, IBM’s share price fell $1.46 in regular trading on the New York Stock Exchange to close at $126.32, a drop of 1.14%. In subsequent after-hours trading as of 6:19 pm Eastern Time on the 19th (6:19 am Beijing Time on the 20th), IBM’s stock price rose by $2.39 to $128.71, an increase of 1.89%. Over the past 52 weeks, IBM’s highest price was $153.21 and its lowest price was $115.55.
