The increase in zSystems’ installed capacity over the last couple of cycles and continued strong renewal rates are recognition of the importance of this platform in a hybrid cloud environment. IBM’s software has been optimized to run on that platform and includes advanced data and AI, automation, and security capabilities. Our consultants offer deep business expertise and co-create with clients to accelerate their digital transformation journeys. And our infrastructure allows clients to take full advantage of a hybrid cloud environment. Our platform-centric strategy continues to have good momentum, adding a couple of hundred hybrid cloud platform clients in the third quarter.

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A procedure for reducing unwanted bias in training data or models. This expert guide contains practical guidance on topic-based writing, writing content for different media types, and writing for global audiences. IBM kicked off tech earnings season with better-than-expected quarterly results, despite headwinds from the strong dollar.

ibm guidance

And at mid-October spot rates, currency translation will now be about a seven-point headwind to growth for the year. As I mentioned earlier, this impacts profit and free cash flow as well. Looking at free cash flow, our other key metric, we continue to expect to generate about $10 billion for the year.

IBM Reports Q2 Beat, Reiterates 2022 Guidance

Our pre-tax profit also includes the contribution from incremental sales to Kyndryl. Like our clients, we are focused on digitally transforming our own operations, applying AI and automation to drive productivity and efficiency in the spend base. This provides flexibility to continue to invest in talent, innovation, and our ecosystem in an inflationary environment. Ninety days ago, we spent some time talking about currency dynamics. In the third quarter, we delivered $14.1 billion in revenue, $2 billion of operating pre-tax income and a margin of nearly 14%, and operating earnings per share of $1.81. For the first three quarters of the year, we generated over $4 billion of free cash flow.

While that doesn’t seem like a big change, you have to remember that IBM is using about $6 billion of that for the dividend, which means the amount left over after those cash payments is a bit less. This means that less money is available for other uses, which primarily is debt repayments currently. 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.

Software had a very strong quarter, 14% growth at constant currency. That is all organic because we wrapped on our Turbonomic acquisition, which, by the way, still has done extremely well. Two, especially if it’s going to be larger, it’s got to be accretive. Whether we talk about at the end of the first year or definitely in the second year, it’s got to be accretive to cash flow. And third, we’re going to continue driving a higher revenue profile, get operating cash out of that by driving operating leverage in our business.

Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements. But afterward, some analysts raised questions about IBM’s ability to grow sales and compete in the cloud-services industry. Francisco Partners, an investment firm, this year also acquired health-care data and analytics assets that were part of IBM’s Watson Health segment. Group fairness, in its broadest sense, partitions a population into groups defined by protected attributes and seeks for some statistical measure to be equal across groups.

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“When I talk with clients it’s clear there’s a real opportunity to help businesses leverage technology in today’s environment,” Krishna said during the call. How much does the strong dollar hurt such big tech companies. Consider Microsoft — about half of its profits come from outside the U.S.. In the June-ending dual momentum investing deutsch quarter, the strong dollar reduced its sales by $302 million. For the next quarter, Microsoft’s sales and profits could be $460 million and $250 million lower, respectively, due to the strong dollar, according to Business Insider. A quantification of unwanted bias in training data or models.

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ibm guidance

This includes about eight points of Kyndryl contribution, both of our revenue categories, Hybrid Platform and Solutions, and Transaction Processing through this quarter. This performance reflects our strong and growing recurring revenue base, which is about 80% of our annual Software revenue. A stronger dollar impacts our revenue and gross profit dollars. We execute a hedging program, which defers versus eliminates the impact of currency. The gains from these hedging programs are reflected primarily in other income and expense. This is Patricia Murphy, and I’d like to welcome you to IBM’s third-quarter 2022 earnings presentation.

The package includes tutorials and notebooks for a deeper, data scientist-oriented introduction. I’ll take the front end of this, and then Arvind can talk about the environment and our services portfolio overall. Really getting right to it, our inorganic contribution in the quarter to IBM was about one point worth of growth overall. When you take a look at that, we grew six and a half at actual rates, roughly 15% at constant currency, five points of that being Kyndryl year to year contribution, so read that, about 10 points worth of growth. ZSystems remains an enduring platform, playing an important role in a hybrid cloud environment. Recent innovation across the portfolio enabled broad-based growth within both storage and power.

Before I turn it over to Arvind, let’s just talk a little bit about what we see underneath signings. First of all, we still have, we believe, a solid book-to-bill on a trailing 12 months. Underneath that, it’s still about two points in Consulting, which we’re seeing nice scale of the Consulting acquisitions.

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A good portion of these borrowings were low rate debts, like a sub 2% 10-year offering coming due this August. Refinancing that debt now would likely cost twice the amount in interest. The US Dollar isn’t the only thing that’s moved higher lately that will impact corporate results.

ibm guidance

And then separately, Arvind, given how strong the cycle is and given your comments about Europe, are you still comfortable about delivering mid-single-digit growth in 2023? You saw really strong strength in mainframe, which I think was not anticipated 90 days ago, and you also saw a really commensurately strong transaction processing quarter. And I’m wondering whether you saw some strong ELAs in the quarter and maybe you could put that in context in terms of what ELA percentage was in Transaction Processing. Thanks for taking my question and a really impressive set of numbers, especially from a revenue perspective over here. I guess, Arvind, maybe the question is for you, but there’s a lot of anxiety, I think, among investors in the markets in terms of what the macro situation is and what it means for IT spending going forward. What are you hearing from your customers as they think about their IT budgets going forward?

Why The Dollar Is Strong

Fears of a recession have risen recently, and the Atlanta Fed GDP Now Tracker is calling for less than 1% growth in Q2. We’ve heard a lot of comments in the tech space about job cuts and reductions videforex review in spending lately, and I don’t think IBM will be immune here. Big Blue reported decent results back in April, so investors have been quite happy to hold the name in this tough environment.

IBM reported third-quarter results late Wednesday that beat analyst expectations, as the tech giant’s chief boosted the company’s full-year revenue outlook. The company said foreign-exchange rates should result in 7% less revenue than it otherwise would generate in the full year. IBM reiterated its guidance from July of around $10 billion in free cash flow.

And we returned nearly $4.5 billion to shareholders in the form of dividends. Software revenue was up 14% and Consulting up 16%. These are our growth vectors and represent over 70% of our revenue. Infrastructure was up 23%, reflecting solid product cycle dynamics. Software and Infrastructure include about eight and nine points of growth, respectively, from the commercial relationship with Kyndryl.

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