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IBM Tops Q1 Earnings Estimates on Hybrid Cloud and AI Demand
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International Business Machines Corporation (IBM - Free Report) reported impressive first-quarter 2022 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate.
Net Income
On a GAAP basis, net income from continuing operations was $662 million or 73 cents per share compared with $403 million or 45 cents per share in the year-ago quarter. The improvement mainly resulted from higher aggregate revenues.
Non-GAAP net income was $1.40 per share compared with $1.12 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 6 cents.
International Business Machines Corporation Price, Consensus and EPS Surprise
Quarterly total revenues increased 7.7% year over year to $14,197 million, backed by strong demand for hybrid cloud and AI, driving growth in Software and Consulting. The top line surpassed the consensus estimate of $13,734 million.
Gross profit was $7,335 million compared with $7,027 million in the prior-year quarter, resulting in respective gross margins of 51.7% and 53.3%. Total expenses declined to $6,712 million from $6,784 million.
Segmental Performance
Software: Revenues improved to $5,772 million from $5,138 million, driven by growth in Hybrid Platform & Solutions and Transaction Processing. Segment pre-tax income was $1,134 million compared with $658 million in the year-ago quarter for respective margins of 19.7% and 12.8%.
Consulting: Revenues were $4,829 million, up from $4,262 million, led by a strong demand profile, growing revenues and signings at double-digit rates across all business lines and regions. Segment pre-tax income was $348 million compared with $277 million in the year-ago quarter for respective margins of 7.2% and 6.5%.
Infrastructure: Revenues were $3,219 million, down from $3,293 million, due to lower Hybrid Infrastructure revenues. Segment pre-tax income was $199 million compared with $292 million in the year-ago quarter for respective margins of 6.2% and 8.9%.
Financing: Revenues were $154 million, down from $208 million due to the challenging macroeconomic environment. Segment pre-tax income was $84 million compared with $98 million in the year-ago quarter for respective margins of 54.6% and 47%.
Cash Flow & Liquidity
During the first quarter of 2022, IBM generated $3,248 million in cash from operations compared with $4,914 million in the year-ago quarter. Free cash flow was $1,240 million, down from $1,522 million.
As of Mar 31, 2022, the company had $9,934 million in cash and cash equivalents with $46,545 million of long-term debt.
Outlook
For full-year 2022, the company expects revenue growth at the high end of the mid-single-digit range. Free cash flow is estimated to be $10-10.5 billion.
Gogo Inc. (GOGO - Free Report) is a better-ranked stock in the broader Zacks Computer and Technology sector, sporting a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 25% over the past 60 days.
Gogo delivered a trailing four-quarter earnings surprise of 65%, on average. It has soared 117.7% in the past year.
Nokia (NOK - Free Report) , carrying a Zacks Rank #2 (Buy), is another solid pick for investors. The consensus estimate for current-year earnings has been revised upward by 5% over the past 60 days.
Nokia pulled off a trailing four-quarter earnings surprise of 205.2%, on average. It has moved up 23.6% in the past year.
Sierra Wireless, Inc. carries a Zacks Rank #2. The consensus mark for current-year earnings has been revised upward by 237.5% over the past 60 days.
Sierra Wireless pulled off a trailing four-quarter earnings surprise of 58%, on average. The stock has returned 12.1% in the past year.
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IBM Tops Q1 Earnings Estimates on Hybrid Cloud and AI Demand
International Business Machines Corporation (IBM - Free Report) reported impressive first-quarter 2022 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate.
Net Income
On a GAAP basis, net income from continuing operations was $662 million or 73 cents per share compared with $403 million or 45 cents per share in the year-ago quarter. The improvement mainly resulted from higher aggregate revenues.
Non-GAAP net income was $1.40 per share compared with $1.12 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 6 cents.
International Business Machines Corporation Price, Consensus and EPS Surprise
International Business Machines Corporation price-consensus-eps-surprise-chart | International Business Machines Corporation Quote
Quarter Details
Quarterly total revenues increased 7.7% year over year to $14,197 million, backed by strong demand for hybrid cloud and AI, driving growth in Software and Consulting. The top line surpassed the consensus estimate of $13,734 million.
Gross profit was $7,335 million compared with $7,027 million in the prior-year quarter, resulting in respective gross margins of 51.7% and 53.3%. Total expenses declined to $6,712 million from $6,784 million.
Segmental Performance
Software: Revenues improved to $5,772 million from $5,138 million, driven by growth in Hybrid Platform & Solutions and Transaction Processing. Segment pre-tax income was $1,134 million compared with $658 million in the year-ago quarter for respective margins of 19.7% and 12.8%.
Consulting: Revenues were $4,829 million, up from $4,262 million, led by a strong demand profile, growing revenues and signings at double-digit rates across all business lines and regions. Segment pre-tax income was $348 million compared with $277 million in the year-ago quarter for respective margins of 7.2% and 6.5%.
Infrastructure: Revenues were $3,219 million, down from $3,293 million, due to lower Hybrid Infrastructure revenues. Segment pre-tax income was $199 million compared with $292 million in the year-ago quarter for respective margins of 6.2% and 8.9%.
Financing: Revenues were $154 million, down from $208 million due to the challenging macroeconomic environment. Segment pre-tax income was $84 million compared with $98 million in the year-ago quarter for respective margins of 54.6% and 47%.
Cash Flow & Liquidity
During the first quarter of 2022, IBM generated $3,248 million in cash from operations compared with $4,914 million in the year-ago quarter. Free cash flow was $1,240 million, down from $1,522 million.
As of Mar 31, 2022, the company had $9,934 million in cash and cash equivalents with $46,545 million of long-term debt.
Outlook
For full-year 2022, the company expects revenue growth at the high end of the mid-single-digit range. Free cash flow is estimated to be $10-10.5 billion.
Zacks Rank & Stocks to Consider
IBM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Gogo Inc. (GOGO - Free Report) is a better-ranked stock in the broader Zacks Computer and Technology sector, sporting a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 25% over the past 60 days.
Gogo delivered a trailing four-quarter earnings surprise of 65%, on average. It has soared 117.7% in the past year.
Nokia (NOK - Free Report) , carrying a Zacks Rank #2 (Buy), is another solid pick for investors. The consensus estimate for current-year earnings has been revised upward by 5% over the past 60 days.
Nokia pulled off a trailing four-quarter earnings surprise of 205.2%, on average. It has moved up 23.6% in the past year.
Sierra Wireless, Inc. carries a Zacks Rank #2. The consensus mark for current-year earnings has been revised upward by 237.5% over the past 60 days.
Sierra Wireless pulled off a trailing four-quarter earnings surprise of 58%, on average. The stock has returned 12.1% in the past year.