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

In the early morning of October 26, Beijing time, IBM today released the company's third-quarter results for fiscal year 2023. According to the report, IBM's total revenue in the third quarter was $14.752 billion, up 4.6% from $14.107 billion in the same period last year, and 3.5% year-on-year, excluding exchange rate changes. Net profit was $1.704 billion, compared with a net loss of $3.196 billion in the same period last year. Profit from continuing operations was $1.714 billion, compared with a loss of $3.214 billion from continuing operations in the same period last year, while operating profit from continuing operations, not in accordance with GAAP, was $2 billion, an increase of 23% over the same period last year.

IBM's third-quarter revenue and adjusted earnings per share both beat Wall Street analysts' expectations, pushing its shares up more than 1 per cent in after-hours trading on Wednesday.

Key performance indicator: IBM's net profit for the quarter ended September 30, 2023 was $1.704 billion, compared with a net loss of $3.196 billion in the same period last year.

IBM's third-quarter profit from continuing operations was $1.714 billion, compared with a loss of $3.214 billion from continuing operations in the same period last year, and diluted earnings per share were $1.84, compared with a diluted loss of $3.54 per share in the same period last year. IBM posted a loss of $10 million from unsustainable operations in the third quarter, compared with a profit of $18 million from unsustainable operations in the same period last year.

IBM's operating net income from continuing operations was $2 billion in the third quarter, up 23% from the same period last year, and diluted earnings per share from continuing operations was $2.20, up 22% from the same period last year, which exceeded analysts' expectations. On average, 11 analysts expect IBM to earn $2.01 a share in the third quarter, according to data provided by Yahoo Finance.

IBM's third-quarter revenue was $14.752 billion, up 4.6% from $14.107 billion in the same period last year, and 3.5% year-on-year, excluding currency changes, which also beat analysts' expectations. On average, 10 analysts expect IBM's third-quarter revenue to reach $13.91 billion, according to Yahoo Finance.

IBM's pre-tax profit from continuing operations was $1.9 billion in the third quarter, and its pre-tax margin was 12.7%, up 44.6% from the same period last year. IBM's pre-tax profit from continuing operations was $2.3 billion in the third quarter, up 17% from the same period last year, and its pre-tax profit margin was 15.6%, up 1.7% from the same period last year.

IBM's total gross profit from continuing operations was $8 billion in the third quarter, up 8 per cent from the same period last year. IBM's total operating gross profit from continuing operations was $8.2 billion in the third quarter, up 8 per cent from the same period last year, not in accordance with US GAAP.

Costs and expenses: IBM's total expenditure and other income from ongoing operations was $6.15 billion in the third quarter, compared with $11.931 billion in the same period last year. Of this total, sales, general and administrative expenses were $4.458 billion, compared with $4.391 billion in the same period last year; R & D and engineering expenditure was $1.685 billion, compared with $1.611 billion in the same period last year; and intellectual property and customs development revenue was $190 million, compared with $121 million in the same period last year. Other income was $215 million, compared with $5.755 billion for the same period last year, and interest expense was $412 million, compared with $295 million for the same period last year.

Performance by division: revenue from IBM's software business, which includes hybrid platforms and solutions and transaction processing, was $6.265 billion in the third quarter of fiscal 2023, up 7.8 per cent from $5.811 billion in the same period last year, and 6.3 per cent year-on-year, excluding currency changes. The gross profit margin of the software business unit was 79.5%, compared with 79.0% in the same period last year.

Where:

-the revenue of the hybrid platform and solutions business increased by 8% year-on-year, excluding exchange rate changes, by 7% year-on-year. Within the business: revenue in the Red Hat division grew 9 per cent year-on-year, 8 per cent year-on-year, excluding currency changes; automation division revenue grew 14 per cent year-on-year, excluding currency changes for 13 per cent; data and AI revenue grew 6 per cent year-on-year; security sector revenue fell 2 per cent year-on-year, excluding exchange rate changes.

-the revenue of the transaction processing business increased by 7% year-on-year, and grew by 5% year-on-year, excluding exchange rate changes.

Revenue from the IBM consulting business, which includes business transformation, technology consulting and applications, was $4.963 billion in the third quarter, up 5.6 per cent from $4.7 billion a year earlier, excluding currency changes. The gross margin of the consulting business was 27.4 per cent, compared with 26.0 per cent in the same period last year.

Where:

-Business transformation revenue increased by 6% year-on-year, excluding exchange rate changes, 5% year-on-year growth

-Technical consulting revenue increased by 2% year-on-year, excluding exchange rate changes, by 1% year-on-year

-Application operating revenue increased by 7% year-on-year.

Revenue from IBM's infrastructure business unit, which includes hybrid infrastructure and infrastructure support, was $3.272 billion in the second quarter, down 2.4 per cent from $3.352 billion a year earlier, and 3.2 per cent year-on-year, excluding currency changes. The gross margin of the infrastructure business unit was 53.5 per cent, compared with 50.8 per cent in the same period last year.

Among them:-revenue from the hybrid infrastructure business increased by 1% year-on-year, excluding the impact of exchange rate changes. Within this business, revenue from IBM z is up 9 per cent year-on-year; revenue from distributed infrastructure is down 4 per cent from a year earlier, excluding currency changes.

-revenue from the infrastructure support business fell 6% year-on-year, with a 7% year-on-year decline excluding exchange rate changes.

Revenue from IBM's financing division, which includes customers and commercial finance, was $186 million in the second quarter, up 6.9 per cent from $174 million a year earlier, and 5.1 per cent year-on-year, excluding currency changes. The gross margin of the financing division was 49.7 per cent, compared with 32.8 per cent in the same period last year.

IBM's revenue from other business units was $67 million in the second quarter, compared with $70 million in the same period a year earlier.

Other financial information: IBM had net cash from operating activities of $3.1 billion in the third quarter, an increase of $1.2 billion compared to the same period last year. Excluding accounts receivable from IBM financing, IBM had net cash from operating activities of $2 billion in the third quarter. IBM's free cash flow in the third quarter was $1.7 billion, an increase of $900 million compared to the same period last year. In the third quarter, IBM returned $1.5 billion in cash to shareholders in the form of dividends.

In the past nine months, IBM's net cash from operating activities was $9.5 billion, an increase of $3 billion compared to the same period last year. Excluding accounts receivable from IBM financing, IBM had net cash from operating activities of $6.3 billion over the past nine months. IBM's free cash flow over the past nine months was $5.1 billion, an increase of $1 billion compared with the same period last year.

At the end of the third quarter of 2023, IBM held $11 billion in cash and marketable securities, an increase of $2.2 billion compared to the end of 2022; total debt, including $9.9 billion of debt in the global finance division, was $55.2 billion, an increase of $4.3 billion since the end of 2022.

Performance outlook: IBM now expects revenue growth of between 3 and 5 per cent for fiscal 2023, excluding currency movements. At current exchange rates, IBM expects exchange rate movements to have a negative impact on revenue growth of about 1 percentage point.

In addition, IBM continues to predict that free cash flow for the whole of fiscal 2023 will reach about $10.5 billion, an increase of more than $1 billion year-on-year.

Share price movements: IBM shares fell 71 cents, or 0.52 percent, to close at $137.08 in regular trading on the New York Stock Exchange. IBM shares rose $2.02, or 1.47 per cent, to $139.10 in after-hours trading as of 06:40 EDT on the 25th (06:40 Beijing time on the 26th). Over the past 52 weeks, the IBM has peaked at $153.21 and the lowest at $120.55.

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