And that’s sort of a bit of color on what we’re seeing play out already this year and we expect that to maybe increase next year. So, the book-to-bill, combined with the shorter-term signings, gives us confidence that we will be able to maintain that model. Look, I think Consulting to the point, I think you’re all trying to ask, the nature of our Consulting business is very different than some others. The bulk of our Consulting business is in digital transformation, helping our clients move to cloud, not just our cloud, but AWS and Azure among it. It’s on properties that I think are fairly essential to our clients.
In April, IBM forecast free cash flow for 2022 in the range of $10 billion and $10.5 billion. IBM CFO Jim Kavanaugh reduced that to $10 billion due to the strong dollar and the suspension of its “highly profitable” business in Russia. The good news was that IBM reported 9% sales growth and an 80% surge in earnings per share both of which exceeded investor expectations, according to the Wall Street Journal. The strong dollar will cut into 2022 earnings growth for the S&P 500. Ben Laidler, global markets strategist at eToro, estimated that the strong dollar will reduce S&P 500 earnings growth by five percent — or about $100 billion. That represents a big portion of Factset’s estimated 10% 2022 earnings growth forecast, noted the Times.
Let’s discuss how you can maximize your IBM investment with comprehensive 24x7x365 managed services and cloud solutions that protect your diverse workloads. IBM skills can deriv.com review be difficult to find and cultivate. IndustriesTierPoint delivers customized solutions that include cloud, disaster recovery, cybersecurity, and data center services.
Prepared Remarks:
We do have a robust hedging program as we are not immune. I mean, we do business in 170 countries around the world, over 100 currencies. As we talked about 90 days ago, we do not hedge 100% of our currencies. I would like to say, as Jim pointed out in 4xcube review his prepared remarks, that there is an impact on FX. That is probably the biggest impact to what we are seeing right now. I certainly, I’ll say, hope that we are seeing the end of the dollar strengthening as opposed to another significant change.
IBM Support professionals may request that problem information or test cases be provided in order to help troubleshoot. By the terms and conditions set forth in a support agreement, this information will be non-confidential (for example, not labeled “your company confidential”). Once the information is received, IBM will use it only for the purposes for which it was provided – that is, to fix defects or to provide support for IBM products or services. IBM will not disclose it to other parties, except to contractors of IBM who may be used to help resolve technical issues.
Finally, some comments made in this presentation may be considered forward-looking under the Private Securities Litigation Reform Act of 1995. ResourcesWhat you’ll findIBM StyleIBM Style is the corporate reference for all IBM writers and editors and applies to all content published by IBM. Read them to understand the rationale behind every visual and verbal detail.
To provide additional information to our investors, our presentation includes certain non-GAAP measures. For example, all of our references to revenue growth are at constant currency. We have provided reconciliation charts for these and other non-GAAP measures at the end of the presentation, which is posted to our investor website.
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While other tools may be available for use, IBM primarily uses these tools to ensure the security of the data exchange. As a reminder, the information shared should be non-confidential in nature and should not contain personally-identifiable markers. IBM does not warrant that its products are defect free; however, IBM does endeavor to fix its products to work as designed.
As Arvind said, our revenue growth this quarter was pervasive. Clients are dealing with everything from inflation to demographic shifts, from supply chain bottlenecks to sustainability efforts. By deploying powerful hybrid cloud and AI technologies, IBM is helping businesses seize new opportunities, overcome today’s challenges, and emerge stronger. We, too, are building a stronger company that is closely aligned to the needs of our clients. In line with our hybrid cloud and AI strategy, we have continued to focus our portfolio; invest in our offerings, technical talent, and ecosystem; and streamline our go-to-market model. In the end, IBM was forced to cut its annual guidance thanks to the stronger US dollar.
That’s probably the main reason hurting the stock despite the top line beat. Infrastructure revenues really took off in the period, which is likely the main driver of the overall beat. Consulting revenues basically showed the main story ongoing right now, that is a solid business whose reported numbers get hurt by foreign exchange. IBM will use commercially reasonable efforts to respond to cases raised by authorized contacts within the criteria outlined in the IBM Support Guide. IBM’s initial response may result in resolution of the request, or it will form the basis for determining what additional actions may be required to achieve technical resolution.
While we’re still operating in a competitive labor environment, we see some encouraging signs in our Consulting margin profile exiting the third quarter. We now expect a Consulting pre-tax margin for the year at the low end of our previous 9% to 10% range, which is up about one point year to year. Our Infrastructure revenue performance, as always, reflects product cycle dynamics. A large part of that growth comes from the wrap on the Kyndryl spin-related and structural payments. But we’re also driving working capital efficiency and improving operating profit profile.
IBM/SalesEnablement-L3-Guidance
The Adversarial Robustness 360 Toolkit provides a comprehensive and growing set of tools to systematically assess and improve the robustness of AI models against adversarial attacks, including evasion and poisoning. Being pit bull trader a comprehensive set of capabilities, it may be confusing to figure out which metrics and algorithms are most appropriate for a given use case. To help, we have created some guidance material that can be consulted.
We expect strong free cash flow performance in the fourth quarter while we continue to face some external headwinds, including appreciation of the U.S. More than half of our revenue is recurring, and this annuity content, which is driven by software, continues to grow. Americas, EMEA, and Asia Pacific revenue were all up double digits, and we gained share overall.
But we’re three quarters into that midterm outlook right now.
We are actively working to introduce new innovations and shape the technologies of the future.
Given how interest rates around the globe have risen a bit lately, and the Fed could hike again next week, paying back less debt moving forward dings the long-term profitability and cash flow situation just a little.
Over the last year, our book-to-bill ratio is 1.05.
Analysts expect 2022 earnings per share of $9.28.
Revenue in the company’s software segment grew 7.5%. Consulting revenue rose 5.4%, while the company’s infrastructure segment jumped 14.8%. That’s an improvement over the previous regime — in the decade between 2010 and 2020 IBM’s revenue fell at an average 3% annual rate while its stock dropped at a 1.5% average annual rate. There is an increasing call for AI transparency and governance. The FactSheets project’s goal is to foster trust in AI by increasing understanding and governance of how AI was created and deployed.
Partner Content
Unfortunately, a couple of major items are trending in the wrong direction, which seems likely to mean that IBM will need to cut its yearly guidance at next month’s earnings report. After the bell on Monday, the firm released its second quarter results, and while the headline numbers initially looked good, the stock dropped in the after-hours session. IBM Support Center hours cover the prevailing business hours in the country where the product is licensed and/or the contract is registered. Keep this in mind if operations are outsourced to a help desk or firm that is overseas or working in another time zone. Product upgrades ensure that you can take advantage of performance, security, usability and innovative technology built into the products you already own. We recommend you install product updates and fixes regularly to avoid encountering product defects that have been corrected.
And while there is always more to do, we are pleased with our first year’s progress. As we look forward, we remain confident in our strategy and execution and feel we are well-positioned to address today’s client needs. Our revenue performance so far this year demonstrates that. And based on this revenue performance in the first three quarters, as Arvind said, we now see constant-currency revenue growth above our mid-single-digit model for the year.
When you take a look at our free cash flow posture, one, I think we have quantified back in, earlier this year in April, about our Russia business. And we had said Consulting to grow in high single digits, and we had said that Infrastructure will be about flat. This year will be a good year because of the product cycle and then probably somewhere in late ’23 or ’24, we’ll get the flip side of that, up from this year. So then you get into Consulting, our long-term model was not in the teens, which it has done this year. So, Keith, let me just maybe use the opportunity to remind everybody of what we had talked about as our midterm model, which was sort of the three-year model that we laid out last October. We had said that we expect Software to grow in mid-single digits, so think 4% to 6%.
We also continue to make progress in quantum computing. Software revenues, which include Hybrid Platform & Solutions, and Transaction Processing, grew 6.4% (or 11.6% at constant currency) to $6.2 billion. Consulting revenues, which include Business Transformation, Technology Consulting, and Application Operations, grew 9.8% (or 17.8% at constant currency) to $4.8 billion. Infrastructure revenues, which include Hybrid Infrastructure, and Infrastructure Support, grew 19% (or 25.4% at constant currency) to $4.2 billion. Financing revenues, which include client and commercial financing, grew 29.9% (or 26.6% at constant currency) to $0.1 billion.
I’m curious, just from an acquisition perspective, you talked about the small acquisitions you’ve made during the year. How are you thinking about maybe a larger acquisition? How should we think about the step-up in cash flow? And what would be the key drivers of that outside of the top-line growth conversion?
Contents
And that’s sort of a bit of color on what we’re seeing play out already this year and we expect that to maybe increase next year. So, the book-to-bill, combined with the shorter-term signings, gives us confidence that we will be able to maintain that model. Look, I think Consulting to the point, I think you’re all trying to ask, the nature of our Consulting business is very different than some others. The bulk of our Consulting business is in digital transformation, helping our clients move to cloud, not just our cloud, but AWS and Azure among it. It’s on properties that I think are fairly essential to our clients.
In April, IBM forecast free cash flow for 2022 in the range of $10 billion and $10.5 billion. IBM CFO Jim Kavanaugh reduced that to $10 billion due to the strong dollar and the suspension of its “highly profitable” business in Russia. The good news was that IBM reported 9% sales growth and an 80% surge in earnings per share both of which exceeded investor expectations, according to the Wall Street Journal. The strong dollar will cut into 2022 earnings growth for the S&P 500. Ben Laidler, global markets strategist at eToro, estimated that the strong dollar will reduce S&P 500 earnings growth by five percent — or about $100 billion. That represents a big portion of Factset’s estimated 10% 2022 earnings growth forecast, noted the Times.
Let’s discuss how you can maximize your IBM investment with comprehensive 24x7x365 managed services and cloud solutions that protect your diverse workloads. IBM skills can deriv.com review be difficult to find and cultivate. IndustriesTierPoint delivers customized solutions that include cloud, disaster recovery, cybersecurity, and data center services.
Prepared Remarks:
We do have a robust hedging program as we are not immune. I mean, we do business in 170 countries around the world, over 100 currencies. As we talked about 90 days ago, we do not hedge 100% of our currencies. I would like to say, as Jim pointed out in 4xcube review his prepared remarks, that there is an impact on FX. That is probably the biggest impact to what we are seeing right now. I certainly, I’ll say, hope that we are seeing the end of the dollar strengthening as opposed to another significant change.
IBM Support professionals may request that problem information or test cases be provided in order to help troubleshoot. By the terms and conditions set forth in a support agreement, this information will be non-confidential (for example, not labeled “your company confidential”). Once the information is received, IBM will use it only for the purposes for which it was provided – that is, to fix defects or to provide support for IBM products or services. IBM will not disclose it to other parties, except to contractors of IBM who may be used to help resolve technical issues.
Finally, some comments made in this presentation may be considered forward-looking under the Private Securities Litigation Reform Act of 1995. ResourcesWhat you’ll findIBM StyleIBM Style is the corporate reference for all IBM writers and editors and applies to all content published by IBM. Read them to understand the rationale behind every visual and verbal detail.
To provide additional information to our investors, our presentation includes certain non-GAAP measures. For example, all of our references to revenue growth are at constant currency. We have provided reconciliation charts for these and other non-GAAP measures at the end of the presentation, which is posted to our investor website.
Join Over 1 Million Premium Members Receiving…
While other tools may be available for use, IBM primarily uses these tools to ensure the security of the data exchange. As a reminder, the information shared should be non-confidential in nature and should not contain personally-identifiable markers. IBM does not warrant that its products are defect free; however, IBM does endeavor to fix its products to work as designed.
As Arvind said, our revenue growth this quarter was pervasive. Clients are dealing with everything from inflation to demographic shifts, from supply chain bottlenecks to sustainability efforts. By deploying powerful hybrid cloud and AI technologies, IBM is helping businesses seize new opportunities, overcome today’s challenges, and emerge stronger. We, too, are building a stronger company that is closely aligned to the needs of our clients. In line with our hybrid cloud and AI strategy, we have continued to focus our portfolio; invest in our offerings, technical talent, and ecosystem; and streamline our go-to-market model. In the end, IBM was forced to cut its annual guidance thanks to the stronger US dollar.
That’s probably the main reason hurting the stock despite the top line beat. Infrastructure revenues really took off in the period, which is likely the main driver of the overall beat. Consulting revenues basically showed the main story ongoing right now, that is a solid business whose reported numbers get hurt by foreign exchange. IBM will use commercially reasonable efforts to respond to cases raised by authorized contacts within the criteria outlined in the IBM Support Guide. IBM’s initial response may result in resolution of the request, or it will form the basis for determining what additional actions may be required to achieve technical resolution.
While we’re still operating in a competitive labor environment, we see some encouraging signs in our Consulting margin profile exiting the third quarter. We now expect a Consulting pre-tax margin for the year at the low end of our previous 9% to 10% range, which is up about one point year to year. Our Infrastructure revenue performance, as always, reflects product cycle dynamics. A large part of that growth comes from the wrap on the Kyndryl spin-related and structural payments. But we’re also driving working capital efficiency and improving operating profit profile.
IBM/SalesEnablement-L3-Guidance
The Adversarial Robustness 360 Toolkit provides a comprehensive and growing set of tools to systematically assess and improve the robustness of AI models against adversarial attacks, including evasion and poisoning. Being pit bull trader a comprehensive set of capabilities, it may be confusing to figure out which metrics and algorithms are most appropriate for a given use case. To help, we have created some guidance material that can be consulted.
We expect strong free cash flow performance in the fourth quarter while we continue to face some external headwinds, including appreciation of the U.S. More than half of our revenue is recurring, and this annuity content, which is driven by software, continues to grow. Americas, EMEA, and Asia Pacific revenue were all up double digits, and we gained share overall.
Revenue in the company’s software segment grew 7.5%. Consulting revenue rose 5.4%, while the company’s infrastructure segment jumped 14.8%. That’s an improvement over the previous regime — in the decade between 2010 and 2020 IBM’s revenue fell at an average 3% annual rate while its stock dropped at a 1.5% average annual rate. There is an increasing call for AI transparency and governance. The FactSheets project’s goal is to foster trust in AI by increasing understanding and governance of how AI was created and deployed.
Partner Content
Unfortunately, a couple of major items are trending in the wrong direction, which seems likely to mean that IBM will need to cut its yearly guidance at next month’s earnings report. After the bell on Monday, the firm released its second quarter results, and while the headline numbers initially looked good, the stock dropped in the after-hours session. IBM Support Center hours cover the prevailing business hours in the country where the product is licensed and/or the contract is registered. Keep this in mind if operations are outsourced to a help desk or firm that is overseas or working in another time zone. Product upgrades ensure that you can take advantage of performance, security, usability and innovative technology built into the products you already own. We recommend you install product updates and fixes regularly to avoid encountering product defects that have been corrected.
And while there is always more to do, we are pleased with our first year’s progress. As we look forward, we remain confident in our strategy and execution and feel we are well-positioned to address today’s client needs. Our revenue performance so far this year demonstrates that. And based on this revenue performance in the first three quarters, as Arvind said, we now see constant-currency revenue growth above our mid-single-digit model for the year.
When you take a look at our free cash flow posture, one, I think we have quantified back in, earlier this year in April, about our Russia business. And we had said Consulting to grow in high single digits, and we had said that Infrastructure will be about flat. This year will be a good year because of the product cycle and then probably somewhere in late ’23 or ’24, we’ll get the flip side of that, up from this year. So then you get into Consulting, our long-term model was not in the teens, which it has done this year. So, Keith, let me just maybe use the opportunity to remind everybody of what we had talked about as our midterm model, which was sort of the three-year model that we laid out last October. We had said that we expect Software to grow in mid-single digits, so think 4% to 6%.
We also continue to make progress in quantum computing. Software revenues, which include Hybrid Platform & Solutions, and Transaction Processing, grew 6.4% (or 11.6% at constant currency) to $6.2 billion. Consulting revenues, which include Business Transformation, Technology Consulting, and Application Operations, grew 9.8% (or 17.8% at constant currency) to $4.8 billion. Infrastructure revenues, which include Hybrid Infrastructure, and Infrastructure Support, grew 19% (or 25.4% at constant currency) to $4.2 billion. Financing revenues, which include client and commercial financing, grew 29.9% (or 26.6% at constant currency) to $0.1 billion.
I’m curious, just from an acquisition perspective, you talked about the small acquisitions you’ve made during the year. How are you thinking about maybe a larger acquisition? How should we think about the step-up in cash flow? And what would be the key drivers of that outside of the top-line growth conversion?
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