IBM Files Q3 2024 10-Q

TL;DR

IBM's Q3 2024 10-Q is in: financials and biz updates are here.

AI Summary

International Business Machines Corp. (IBM) filed its 10-Q for the period ending September 30, 2024. The filing details financial performance and operational updates for the third quarter. Key financial metrics and business segment information are provided, reflecting IBM's ongoing strategic initiatives and market position.

Why It Matters

This filing provides investors and analysts with the latest official financial data for IBM, crucial for understanding the company's performance and making informed investment decisions.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial disclosures.

Key Players & Entities

• INTERNATIONAL BUSINESS MACHINES CORP (company) — Filer
• 0000051143 (company) — Central Index Key
• 20240930 (date) — Period of Report
• 20241030 (date) — Filed as of Date
• 1 NEW ORCHARD ROAD (address) — Business Address
• ARMONK (city) — Business Address City
• NY (state) — Business Address State
• 10504 (zip_code) — Business Address Zip
• 9144991900 (phone_number) — Business Phone

FAQ

Filing Documents

• ibm-20240930.htm (10-Q) — 3858KB
• form10-q3q24ex101103024.htm (EX-10.1) — 17KB
• form10-q3q24ex311103024.htm (EX-31.1) — 10KB
• form10-q3q24ex312103024.htm (EX-31.2) — 10KB
• form10-q3q24ex321103024.htm (EX-32.1) — 5KB
• form10-q3q24ex322103024.htm (EX-32.2) — 5KB
• form10-q3q24ex101103024001.jpg (GRAPHIC) — 174KB
• form10-q3q24ex101103024002.jpg (GRAPHIC) — 263KB
• form10-q3q24ex101103024003.jpg (GRAPHIC) — 223KB
• form10-q3q24ex101103024004.jpg (GRAPHIC) — 243KB
• form10-q3q24ex101103024005.jpg (GRAPHIC) — 251KB
• form10-q3q24ex101103024006.jpg (GRAPHIC) — 70KB
• 0000051143-24-000049.txt ( ) — 20287KB
• ibm-20240930.xsd (EX-101.SCH) — 98KB
• ibm-20240930_cal.xml (EX-101.CAL) — 148KB
• ibm-20240930_def.xml (EX-101.DEF) — 582KB
• ibm-20240930_lab.xml (EX-101.LAB) — 1032KB
• ibm-20240930_pre.xml (EX-101.PRE) — 805KB
• ibm-20240930_htm.xml (XML) — 4160KB

- Financial Information

Part I - Financial Information :

Consolidated Financial Statements (Unaudited)

Item 1. Consolidated Financial Statements (Unaudited) : Consolidated Income Statement for the three and ni ne months ended Septem ber 30, 2024 and 2023 3 Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2024 and 2023 4 Consolidated Balance Sheet at September 30, 2024 and December 31, 2023 5 Consolidated Statement of Cash Flows for the nine months ended September 30, 2024 and 2023 7 Consolidated Statement of Equity for the three and nine months ended September 30, 2024 and 2023 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 10

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 51

Controls and Procedures

Item 4. Controls and Procedures 87

- Other Information

Part II - Other Information :

Legal Proceedings

Item 1. Legal Proceedings 88

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 88

Exhibits

Item 6. Exhibits 89 2 Table of Contents

- 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 September 30, Nine Months Ended September 30, (Dollars in millions except per share amounts) 2024 2023 2024 2023 Revenue: Services $ 7,453 $ 7,541 $ 22,329 $ 22,618 Sales 7,334 7,025 22,329 21,296 Financing 180 186 542 566 Total revenue 14,968 14,752 45,199 44,479 Cost: Services 5,048 5,217 15,414 15,821 Sales 1,404 1,419 4,393 4,329 Financing 95 94 281 297 Total cost 6,548 6,729 20,087 20,446 Gross profit 8,420 8,023 25,112 24,033 Expense and other (income): Selling, general and administrative 4,911 4,458 14,823 14,212 Research, development and engineering 1,876 1,685 5,512 5,027 Intellectual property and custom development income ( 238 ) ( 190 ) ( 696 ) ( 618 ) Other (income) and expense 2,244 ( 215 ) 1,694 ( 721 ) Interest expense 429 412 1,288 1,202 Total expense and other (income) 9,222 6,150 22,621 19,102 Income/(loss) from continuing operations before income taxes ( 802 ) 1,873 2,491 4,931 Provision for/(benefit from) income taxes ( 485 ) 159 ( 597 ) 702 Income/(loss) from continuing operations $ ( 317 ) $ 1,714 $ 3,088 $ 4,229 Income/(loss) from discontinued operations, net of tax ( 13 ) ( 10 ) 21 ( 15 ) Net income/(loss) (1) $ ( 330 ) $ 1,704 $ 3,109 $ 4,214 Earnings/(loss) per share of common stock: (1) Assuming dilution: Continuing operations $ ( 0.34 ) $ 1.86 $ 3.30 $ 4.59 Discontinued operations ( 0.01 ) ( 0.01 ) 0.02 ( 0.02 ) Total $ ( 0.36 ) $ 1.84 $ 3.32 $ 4.58 Basic: Continuing operations $ ( 0.34 ) $ 1.88 $ 3.36 $ 4.65 Discontinued operations ( 0.01 ) ( 0.01 ) 0.02 ( 0.02 ) Total $ ( 0.36 ) $ 1.87 $ 3.38 $ 4.63 Weighted-average number of common shares outstanding: (millions) Assuming dilution 923.6 923.7 935.4 920.3 Basic 923.6 912.8 920.3 910.1 (1) 2024 includes the impact of a one-time, non-cash pension settlement charge. Refe

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 1 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 September 2024, the IBM Qualified Personal Pension Plan (Qualified PPP) purchased a nonparticipating single premium group annuity contract from The Prudential Insurance Company of America (the Insurer) and irrevocably transferred to the Insurer approximately $ 6 billion of the Qualified PPP's defined benefit pension obligations and related plan assets, thereby reducing the company's pension obligations and assets by the same amount. The group annuity contract was purchased using assets of the Qualified PPP and no additional funding contribution was required from the company. As a result of this transaction, the company recognized a one-time, non-cash, pre-tax pension settlement charge of $ 2.7 billion ($ 2.0 billion net of tax

Notes to Consolidated Financial Statements — (continued)

Notes to Consolidated Financial Statements — (continued) 2. Accounting Changes: New Standards to be Implemented Income Tax Disclosures Standard/Description –Issuance date: December 2023. This guidance requires disaggregated disclosure of the tax rate reconciliation into eight categories, with further disaggregation required for items greater than a specific threshold. Additionally, the guidance requires the disclosure of income taxes paid disaggregated by federal, state and foreign jurisdictions. 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 onl

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 Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2024 2023 (1) 2024 2023 (1) Hybrid Platform & Solutions $ 4,600 $ 4,187 $ 13,272 $ 12,388 Transaction Processing 1,925 1,759 5,889 5,444 Total Software $ 6,524 $ 5,947 $ 19,162 $ 17,832 Business Transformation 2,327 2,291 7,004 6,869 Application Operations 1,921 1,944 5,761 5,924 Technology Consulting 905 943 2,752 2,808 Total Consulting $ 5,152 $ 5,178 $ 15,517 $ 15,601 Hybrid Infrastructure 1,765 1,943 5,928 5,912 Infrastructure Support 1,277 1,329 3,835 4,076 Total Infrastructure $ 3,042 $ 3,272 $ 9,764 $ 9,988 Financing (2) 181 186 543 566 Other 68 170 214 491 Total revenue $ 14,968 $ 14,752 $ 45,199 $ 44,479 (1) Recast to reflect January 2024 segment changes. Refer to note 4, "Segments," for additional information. (2) Contains lease and loan financing arrangements which are not subject to the guidance on revenue from contracts with customers. Revenue by Geography Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) 2024 2023 2024 2023 Americas $ 7,453 $ 7,686 $ 22,727 $ 22,810 Europe/Middle East/Africa 4,584 4,223 13,619 13,156 Asia Pacific 2,932 2,843 8,853 8,513 Total $ 14,968 $ 14,752 $ 45,199 $ 44,479 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 com

Notes to Consolidated Financial Statements — (continued)

Notes to Consolidated Financial Statements — (continued) At September 30, 2024, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was approximately $ 57 billion. Approximately 70 percent of the amount is expected 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 O

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View this 10-Q filing on SEC EDGAR