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IBM Reports Second Quarter 2020 Results; Arvind Krishna, James Kavanaugh Quoted

3 mins read
Arvind Krishna
Arvind Krishna

IBM has announced the company’s second quarter 2020 results on Tuesday, noting a GAAP EPS from continuing operations of $1.52, operating (non-GAAP) EPS of $2.18 and revenue of $18.1 billion, down 5.4 percent. 

“Our clients see the value of IBM’s hybrid cloud platform, based on open technologies, at a time of unprecedented business disruption," said Arvind Krishna, IBM chief executive officer. "We are committed to building, with a growing ecosystem of partners, an enduring hybrid cloud platform that will serve as a powerful catalyst for innovation for our clients and the world.”

IBM reported that its Cloud and Cognitive Software revenue up 3 percent and the systems revenue was up 6 percent. The company’s total cloud revenue of $6.3 billion, up 30 percent. IBM’s noted a total cloud revenue of $23.5 billion over the past year, up 20 percent. 

The company’s Red Hat revenue up 17 percent and GAAP gross profit margin of 48 percent, up 100 basis points; Operating (non-GAAP) gross profit margin of 49 percent up 160 basis points

Net cash from operating activities of $15.1 billion and free cash flow of $11.5 billion, over the last 12 months. 

In the second quarter, the company generated net cash from operating activities of $3.6 billion, or $3.0 billion excluding Global Financing receivables. IBM’s free cash flow was $2.3 billion. The company returned $1.5 billion to shareholders in dividends.

IBM ended the second quarter with $14.3 billion of cash on hand which includes marketable securities, up $5.2 billion from year-end 2019. Debt, including Global Financing debt of $21.9 billion, totaled $64.7 billion.

Segment results reflect growing adoption of IBM's hybrid cloud platform while clients continue to shift priorities to preserve cash and maintain operational stability.

Consolidated diluted earnings per share was $2.83 compared to $4.58, down 38 percent year to year. Consolidated net income was $2.5 billion, down 38 percent year to year. Revenues for the six-month period ended June 30, 2020 totaled $35.7 billion, a decrease of 4 percent year to year (down 1 percent adjusting for divested businesses and currency) compared with $37.3 billion for the first six months of 2019.

“Our prudent financial management in these turbulent times enabled us to expand our gross profit margin, generate strong free cash flow and improve our liquidity position," said James Kavanaugh, IBM senior vice president and chief financial officer. "We have the financial flexibility to continue to invest in our business and return value to our shareholders through our dividend policy.”