International Business Machines Corp 10-Q Filing

Ticker: IBM · Form: 10-Q · Filed: Apr 30, 2024 · CIK: 51143

International Business Machines Corp 10-Q Filing Summary
FieldDetail
CompanyInternational Business Machines Corp (IBM)
Form Type10-Q
Filed DateApr 30, 2024
Pages16
Reading Time19 min
Sentimentneutral

Sentiment: neutral

FAQ

What type of filing is this?

This is a 10-Q filing submitted by International Business Machines Corp (ticker: IBM) to the SEC on Apr 30, 2024.

How long is this filing?

International Business Machines Corp's 10-Q filing is 16 pages with approximately 4,651 words. Estimated reading time is 19 minutes.

Where can I view the full 10-Q filing?

The complete filing is available on SEC EDGAR. You can also read the AI-decoded analysis with risk assessment and key highlights on ReadTheFiling.

Filing Stats: 4,651 words · 19 min read · ~16 pages · Grade level 14.8 · Accepted 2024-04-30 11:00:50

Filing Documents

- Financial Information

Part I - Financial Information :

Consolidated Financial Statements (Unaudited)

Item 1. Consolidated Financial Statements (Unaudited) : Consolidated Income Statement for the three months ended March 31 , 202 4 and 202 3 3 Consolidated Statement of Comprehensive Income for the three months ended March 31 , 202 4 and 20 23 4 Consolidated Balance Sheet at March 31 , 202 4 and December 31, 202 3 5 Consolidated Statement of Cash Flows for the three months ended March 31 , 202 4 and 20 23 7 Consolidated Statement of Equity for the three months ended March 31 , 202 4 and 202 3 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9

Management's Discussion and Analysis of Results of Operations and Financial Condition

Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 41

Controls and Procedures

Item 4. Controls and Procedures 65

- Other Information

Part II - Other Information :

Legal Proceedings

Item 1. Legal Proceedings 66

Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities 66

Other Information

Item 5. Other Information 66

Exhibits

Item 6. Exhibits 67 2 Table of C ontent s

- Financial Information

Part I - Financial Information

Consolidated Financial Statements

Item 1. Consolidated Financial Statements: INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED INCOME STATEMENT (UNAUDITED) Three Months Ended March 31, (Dollars in millions except per share amounts) 2024 2023 Revenue: Services $ 7,470 $ 7,524 Sales 6,799 6,532 Financing 192 196 Total revenue 14,462 14,252 Cost: Services 5,239 5,310 Sales 1,381 1,322 Financing 99 110 Total cost 6,719 6,743 Gross profit 7,742 7,509 Expense and other (income): Selling, general and administrative 4,974 4,853 Research, development and engineering 1,796 1,655 Intellectual property and custom development income ( 216 ) ( 180 ) Other (income) and expense ( 317 ) ( 245 ) Interest expense 432 367 Total expense and other (income) 6,669 6,451 Income from continuing operations before income taxes 1,074 1,058 Provision for/(benefit from) income taxes ( 502 ) 124 Income from continuing operations $ 1,575 $ 934 Income/(loss) from discontinued operations, net of tax 30 ( 7 ) Net income $ 1,605 $ 927 Earnings/(loss) per share of common stock: Assuming dilution: Continuing operations $ 1.69 $ 1.02 Discontinued operations 0.03 ( 0.01 ) Total $ 1.72 $ 1.01 Basic: Continuing operations $ 1.72 $ 1.03 Discontinued operations 0.03 ( 0.01 ) Total $ 1.75 $ 1.02 Weighted-average number of common shares outstanding: (millions) Assuming dilution 933.4 917.8 Basic 917.2 907.5 (Amounts may not add due to rounding.) (The accompanying notes are an integral part of the financial statements.) 3 Table of C ontent s INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended March 31, (Dollars in millions) 2024 2023 Net income $ 1,605 $ 927 Other comprehensive income/(loss), before tax: Foreign currency translation adjustments 55 ( 87 ) Net changes related to available-for-sale securities: Unrealized gains/(losses) arising during the period

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 1. Basis of Presentation: The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial statements and footnotes are unaudited. In the opinion of the company's management, these statements include all adjustments, which are only of a normal recurring nature, necessary to present a fair statement of the company's results of operations, financial position and cash flows. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management's best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. In the first quarter of 2024, the company made changes to its organizational structure and management system to better align its portfolio to the market, increase transparency and improve segment comparability to peers. These changes did not impact the company's Consolidated Financial Statements, but did impact its reportable segments. Refer to note 4, "Segments," for additional information on the company's reportable segments. The segments are reported on a comparable basis for all periods. For the three months ended March 31, 2024, the company reported a benefit from income taxes of $ 502 million and its effective tax rate was ( 46.7 ) percent. The rate was primarily driven by the resolution of certain tax audit matters. For the t

Notes to Consolidated Financial Statements — (continued)

Notes to Consolidated Financial Statements — (continued) Effective Date and Adoption Considerations –The guidance is effective January 1, 2025 and early adoption is permitted. The company expects to adopt the guidance as of the effective date. Effect on Financial Statements or Other Significant Matters –As the guidance is a change to disclosures only, it will impact the "Taxes" note within the company's annual financial statements but will not impact the consolidated financial results. Segment Reporting Disclosures Standard/Description –Issuance date: November 2023. This guidance requires the disclosure of significant segment expenses that are regularly provided to a company's chief operating decision maker and included within each reported measure of segment profit or loss. The company must also disclose "other segment items," which is the difference between segment revenue less significant expenses for each reported measure of segment profit or loss, and a description of its composition. This guidance also requires all segment annual disclosures to be provided on an interim basis. Effective Date and Adoption Considerations –The guidance is effective for annual periods beginning in 2024, and for interim periods beginning January 1, 2025, and is required to be applied on a retrospective basis to all prior periods presented. Early adoption is permitted. The company will adopt the guidance as of the effective date. Effect on Financial Statements or Other Significant Matters –As the guidance is a change to disclosures only, it will impact the "Segments" note within the company's quarterly and annual financial statements but will not have an impact in the consolidated financial results. Standards Implemented Disclosures of Supplier Finance Program Obligations Standard/Description– Issuance date: September 2022. This guidance requires an entity to provide certain interim and annual disclosures about the use of supplier finance programs in connection with the pu

Notes to Consolidated Financial Statements — (continued)

Notes to Consolidated Financial Statements — (continued) 3. Revenue Recognition: Disaggregation of Revenue The following tables provide details of revenue by major products/service offerings and revenue by geography. Revenue by Major Products/Service Offerings (Dollars in millions) For the three months ended March 31: 2024 2023 (1) Hybrid Platform & Solutions $ 4,098 $ 3,850 Transaction Processing 1,800 1,742 Total Software $ 5,899 $ 5,591 Business Transformation 2,317 2,283 Application Operations 1,938 1,989 Technology Consulting 931 925 Total Consulting $ 5,186 $ 5,197 Hybrid Infrastructure 1,803 1,709 Infrastructure Support 1,273 1,389 Total Infrastructure $ 3,076 $ 3,098 Financing (2) 193 196 Other 108 169 Total revenue $ 14,462 $ 14,252 (1) Recast to reflect segment changes. (2) Contains lease and loan financing arrangements which are not subject to the guidance on revenue from contracts with customers. Revenue by Geography (Dollars in millions) For the three months ended March 31: 2024 2023 Americas $ 7,296 $ 7,078 Europe/Middle East/Africa 4,313 4,331 Asia Pacific 2,853 2,843 Total $ 14,462 $ 14,252 Remaining Performance Obligations The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange

Notes to Consolidated Financial Statements — (continued)

Notes to Consolidated Financial Statements — (continued) to be recognized as revenue in the subsequent two years , approximately 27 percent in the subsequent three to five years and the balance thereafter. Revenue Recognized for Performance Obligations Satisfied (or Partially Satisfied) in Prior Periods For the three months ended March 31, 2024, revenue recognized for performance obligations satisfied or partially satisfied in prior periods was immaterial. Reconciliation of Contract Balances The following table provides information about notes and accounts receivable–trade, contract assets and deferred income balances. (Dollars in millions) At March 31, 2024 At December 31, 2023 Notes and accounts receivable — trade (net of allowances of $ 152 in 2024 and $ 192 in 2023) $ 6,041 $ 7,214 Contract assets (1) $ 527 $ 505 Deferred income (current) $ 14,051 $ 13,451 Deferred income (noncurrent) $ 3,488 $ 3,533 (1) Included within prepaid expenses and other current assets in the Consolidated Balance Sheet. The amount of revenue recognized during the three months ended March 31, 2024 that was included within the deferred income balance at December 31, 2023 was $ 4.3 billion and was primarily related to software and services. The following table provides roll forwards of the notes and accounts receivable–trade allowance for expected credit losses for the three months ended March 31, 2024 and the year ended December 31, 2023. (Dollars in millions) January 1, 2024 Additions / (Releases) Write-offs (1) Foreign currency and other March 31, 2024 $ 192 $( 8 ) $( 29 ) $( 3 ) $ 152 January 1, 2023 Additions / (Releases) Write-offs (1) Foreign currency and other December 31, 2023 $ 233 $ 32 $( 79 ) $ 6 $ 192 (1) The majority of the write-offs during the period related to receivables which had been previously reserved. The contract assets allowance for expected credit losses was not material in any of the periods presented. 12 Table of Contents

Notes to Consolidated Financial Statements — (continued)

Notes to Consolidated Financial Statements — (continued) 4. Segments: In the first quarter of 2024, the company made changes to its organization structure and management system to better align its portfolio with the market, increase transparency and improve segment comparability to peers. These changes did not impact the company's Consolidated Financial Statements, but did impact its reportable segments. Due to the removal of certain components of segment profitability, as described below, the company also updated the title of its segment performance metric from pre-tax income from continuing operations to segment profit. The following table displays the segment updates: Reportable Segment Change Resulting Segment Implications The Weather Company asset divestiture - Software Segment + Other-divested businesses Security Services realignment - Software Segment + Consulting Segment Removal of stock-based compensation and net interest allocations from segment profitability - Software Segment, Consulting Segment, Infrastructure Segment, Financing Segment (1) + Other (1) Presentation of interest for the Financing Segment did not change. The following tables reflect the results of continuing operations of the company's segments consistent with the management and measurement system utilized within the company and have been recast for the prior-year periods to reflect the company's segment changes described above. These results are used by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments. 13 Table of Contents

Notes to Consolidated Financial Statements — (continued)

Notes to Consolidated Financial Statements — (continued) SEGMENT INFORMATION (Dollars in millions) Software Consulting Infrastructure Financing Total Segments For the three months ended March 31, 2024: Revenue $ 5,899 $ 5,186 $ 3,076 $ 193 $ 14,354 Segment profit $ 1,500 $ 424 $ 311 $ 92 $ 2,327 Revenue year-to-year change 5.5 % ( 0.2 ) % ( 0.7 ) % ( 1.6 ) % 1.9 % Segment profit year-to-year change 8.8 % ( 0.6 ) % 1.4 % ( 8.4 ) % 5.2 % Segment profit margin 25.4 % 8.2 % 10.1 % 47.7 % 16.2 % For the three months ended March 31, 2023 (1) Revenue $ 5,591 $ 5,197 $ 3,098 $ 196 $ 14,083 Segment profit $ 1,379 $ 427 $ 307 $ 100 $ 2,213 Segment profit margin 24.7 % 8.2 % 9.9 % 51.2 % 15.7 % (1) Recast to reflect segment changes. Reconciliations to IBM as Reported: (Dollars in millions) For the three months ended March 31: 2024 2023 (1) Revenue: Total reportable segments $ 14,354 $ 14,083 Other divested businesses 35 94 Other revenue 73 75 Total revenue from continuing operations $ 14,462 $ 14,252 Pre-tax income from continuing operations: Total reportable segment profit $ 2,327 $ 2,213 Amortization of acquired intangible assets ( 428 ) ( 392 ) Acquisition-related (charges)/income (2) ( 60 ) ( 3 ) Non-operating retirement-related (costs)/income ( 96 ) 5 Stock-based compensation ( 320 ) ( 268 ) Net i

View Full Filing

View this 10-Q filing on SEC EDGAR

View on ReadTheFiling | About | Contact | Privacy | Terms

Data from SEC EDGAR. Not affiliated with the SEC. Not investment advice. © 2026 OpenDataHQ.