IBM Reports 2016 First-Quarter Earnings

ARMONK, N.Y. – 18 Apr 2016: IBM today announced first-quarter 2016 earnings results. “We are pleased with the progress we have made helping our clients apply new cognitive solutions and hybrid cloud platforms,” said Ginni Rometty, IBM chairman, president and chief executive officer.  “IBM has established itself as the industry leader in total cloud, analytics and cognitive, all of which helped drive our strategic imperatives revenue growth at a strong double-digit rate, substantially faster than the market.”

 FIRST – QUARTER 2016
   Gross Profit
 Diluted EPSNet IncomeMargin
Operating (Non-GAAP)$2.35$2.3B47.5%
  Year/Year-19%-21%-1.8Pts
GAAP from Continuing Operations$2.09$2.0B46.5%
  Year/Year-14%-17%-1.8Pts
   
  Strategic 
REVENUETotal IBMImperativesCloud
As reported (US$)$18.7B$7.0B$2.6B
  Year/Year-5%14%34%
  Year/Year adjusting for currency-2%17%36%

“In the first quarter, we invested $3.6 billion in acquisitions and capital expenditures, and returned $2.2 billion to shareholders through dividends and gross share repurchases,” said Martin Schroeter, IBM senior vice president and chief financial officer.  “We will continue to invest as we transform our operations, expanding our industry expertise and our cognitive and cloud capabilities.”

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Strategic Imperatives

First-quarter revenues from the company’s strategic imperatives — cloud, analytics and engagement — increased 14 percent year to year (up 17 percent adjusting for currency).  Total cloud revenues (public, private and hybrid) for the quarter increased 34 percent (up 36 percent adjusting for currency).  Cloud revenue over the trailing 12 months was $10.8 billion.  The annual exit run rate for cloud delivered as a service — a subset of the total cloud revenue — increased to $5.4 billion from $3.8 billion in the first quarter of 2015.  Revenues from analytics increased 7 percent (up 9 percent adjusting for currency).  Revenues from mobile increased 88 percent (up 93 percent adjusting for currency) and from security increased 18 percent (up 20 percent adjusting for currency).

Full-Year 2016 Expectations

IBM continues to expect full-year 2016 operating (non-GAAP) diluted earnings per share of at least $13.50.  The company expects GAAP diluted earnings per share of at least $12.35.  The 2016 operating (non-GAAP) earnings expectation excludes $1.15 per share of charges for amortization of purchased intangible assets, other acquisition-related charges and retirement-related charges.

IBM had previously expected a free cash flow realization of GAAP net income which implied a full-year free cash flow range of $11 billion to $12 billion.  The company now expects free cash flow to be at the high end of that range at the same base level of operating (non-GAAP) EPS.

Read the full report.

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