Shulou(Shulou.com)11/24 Report--

On the morning of July 20, Beijing time, IBM today released the company's second-quarter results for fiscal year 2023. According to the report, IBM's total revenue in the second quarter was $15.475 billion, down 0.4% from $15.535 billion in the same period last year, up 0.4% year-on-year, excluding exchange rate changes, and net profit was $1.583 billion, compared with $1.392 billion in the same period last year. Net profit from continuing operations was $1.581 billion, compared with $1.465 billion from continuing operations in the same period last year, up 8 per cent from a year earlier.

IBM's adjusted earnings per share beat Wall Street analysts' expectations in the second quarter, but revenue failed to meet expectations, causing its shares to fall more than 1 per cent in after-hours trading.

Key results for the second quarter: IBM's net profit for the quarter ended June 30, 2023 was $1.583 billion, compared with $1.392 billion in the same period last year.

IBM's second-quarter net profit from continuing operations was $1.581 billion, up 8 per cent from $1.465 billion a year earlier, and diluted earnings per share from continuing operations were $1.72, up 7 per cent from $1.61 a year earlier. IBM's second-quarter profit from non-continuing operations was $2 million, compared with a loss of $73 million from non-continuing operations in the same period last year.

Excluding certain one-time items (not in accordance with GAAP), IBM's second-quarter net operating profit from continuing operations was $2.003 billion, down 5% from $2.105 billion a year earlier; diluted earnings per share from continuing operations were $2.18, down 6% from $2.31 a year earlier, but still beat analysts' expectations. On average, 12 analysts had expected IBM to earn $2.01 a share in the second quarter, according to data provided by Yahoo Finance.

IBM's total revenue in the second quarter was $15.475 billion, down 0.4% from $15.535 billion a year earlier, and rose 0.4% year-on-year, excluding currency changes, which fell short of analysts' expectations. On average, 11 analysts had expected IBM's second-quarter revenue to reach $15.57 billion, according to Yahoo Finance.

IBM's gross profit from continuing operations in the second quarter was $8.501 billion, up 3% from $8.29 billion in the same period last year. Gross profit margin was 54.9%, compared with 53.4% in the same period last year, up 1.6% from a year earlier. Excluding certain one-time items (not in accordance with US GAAP), IIBM's total gross profit from continuing operations in the second quarter was $8.65 billion, up 2% from $8.47 billion in the same period last year; total gross profit margin was 55.9%, compared with 54.5% in the same period last year, up 1.4% from a year earlier.

Second quarter costs and expenses: IBM's total expenditure and other income from ongoing operations was $6.501 billion in the second quarter, compared with $6.568 billion in the same period last year. Of this total, sales, general and administrative expenses were $4.9 billion, compared with $4.855 billion in the same period last year; R & D and engineering expenditure was $1.687 billion, compared with $1.673 billion in the same period last year; intellectual property and customs development income was $248 million, compared with $176 million in the same period last year; other income was $261 million, compared with $8100 in the same period last year. Interest expense was $423 million, compared with $297 million in the same period last year.

Second quarter results by division: revenue from the IBM software business, which includes hybrid platforms and solutions and transaction processing, was $6.608 billion in the second quarter of fiscal 2023, up 7.2 per cent from $6.166 billion a year earlier, and 7.5 per cent year-on-year, excluding the impact of exchange rate changes. The gross profit margin of the software business unit was 79.3%, compared with 79.2% in the same period last year.

Where:

-the revenue of the hybrid platform and solutions business increased by 6% year-on-year, excluding exchange rate changes, by 7% year-on-year. Within the business: revenue in the Red Hat division grew 11 per cent year-on-year; revenue in the automation division grew 1 per cent year-on-year, 2 per cent year-on-year, excluding currency changes; revenue in data and artificial intelligence grew 10 per cent year-on-year, 11 per cent year-on-year excluding currency changes; and revenue in the security sector fell 2 per cent year-on-year, excluding currency changes.

-revenue from the transaction processing business increased by 9% year-on-year, with 10% year-on-year growth excluding exchange rate changes.

Revenue from the IBM consulting business, which includes business transformation, technology consulting and applications, was $5.013 billion in the second quarter, up 4.3 per cent from $4.809 billion a year earlier, and 5.9 per cent year-on-year, excluding currency changes.

Where:

-Business transformation revenue increased by 3% year-on-year, excluding exchange rate changes, by 5% year-on-year

-Technical consulting revenue increased by 4% year-on-year, excluding exchange rate changes, by 5% year-on-year

-Application operating revenue increased by 6% year-on-year, excluding exchange rate changes, by 8% year-on-year

Revenue from IBM's infrastructure business unit, which includes hybrid infrastructure and infrastructure support businesses, was $3.618 billion in the second quarter, down 14.6 per cent from $4.235 billion a year earlier, and 13.8 per cent year-on-year, excluding exchange rate changes.

Where:

-revenue from the hybrid infrastructure business fell 18 per cent year-on-year. Within this business, IBM z revenue fell 30 per cent year-on-year and distributed infrastructure revenue fell 6 per cent year-on-year.

-revenue from the infrastructure support business fell 8% year-on-year, excluding exchange rate changes, by 6% year-on-year.

Revenue from IBM's financing division, which includes customers and commercial finance, was $185 million in the second quarter, up 26.2 per cent from $146 million a year earlier, and 27.1 per cent year-on-year, excluding exchange rate changes.

IBM's revenue from other business units was $51 million in the second quarter, compared with $180 million a year earlier.

Other financial information in the second quarter: IBM's net cash from operating activities in the second quarter was $2.6 billion, an increase of $1.3 billion compared to the same period last year. Excluding accounts receivable from IBM financing, IBM also had net cash from operating activities of $2.6 billion in the second quarter. IBM's free cash flow was $2.1 billion in the second quarter, flat from a year earlier. In the second quarter, IBM returned $1.5 billion in cash to shareholders in the form of dividends.

At the end of the second quarter of 2023, IBM held $16.3 billion in cash (including marketable securities), an increase of $7.5 billion compared to the end of 2022; total debt, including $10.6 billion of debt in the global finance division, was $57.5 billion, an increase of $6.5 billion since the end of 2022.

Main results for the first half: IBM's total revenue for the first half of the year was $29.727 billion, compared with $29.732 billion in the same period last year. IBM's first-half net profit from continuing operations was $2.515 billion, compared with $2.127 billion a year earlier, and diluted earnings per share from continuing operations were $2.73, compared with $2.34 a year earlier.

Excluding certain one-time items (not in accordance with GAAP), IBM's net profit from continuing operations was $3.252 billion in the first half, compared with $3.376 billion in the same period last year. Excluding certain one-time items (not in accordance with GAAP), IBM's diluted earnings per share from continuing operations were $3.54 in the first half, compared with $3.71 in the same period last year.

IBM's net cash from operating activities in the first half of the year was $6.4 billion, an increase of $1.8 billion compared to the same period last year. Excluding accounts receivable from IBM financing, IBM had net cash of $4.4 billion from operating activities in the first half of the year. IBM's free cash flow in the first half of the year was $3.4 billion, an increase of $100 million compared with the same period last year.

Full-year performance outlook for 2023: IBM continues to expect year-on-year revenue growth in fiscal 2023 (excluding currency movements) to reach 3 to 5 per cent. IBM said that at current exchange rates, the impact of exchange rate movements on the company's revenue growth is expected to be neutral.

According to IBM's previous financial results, the company's total revenue in fiscal 2022 was $60.53 billion, while 18 analysts now expect total revenue of $62.27 billion in fiscal 2023, according to Yahoo Finance.

IBM also continues to predict that the company's free cash flow will reach about $10.5 billion in fiscal 2023, an increase of more than $100 million compared to fiscal year 2022.

Share price movements: IBM shares rose 12 cents, or 0.09 percent, to close at $135.48 in regular trading on the New York Stock Exchange. IBM shares fell $1.68, or 1.24%, to $133.80 in after-hours trading as of 07:28 EDT on Wednesday (07:28 Beijing time on Thursday). Over the past 52 weeks, the IBM has peaked at $153.21 and the lowest at $115.55.

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