International Business Machines Corporation (NYSE:IBM) Q1 2018 Earnings Conference Call Transcript

Apr 17, 2018 • 05:00 pm ET


International Business Machines Corporation (NYSE:IBM) Q1 2018 Earnings Conference Call Transcript


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Welcome and thank you for standing by. At this time, all participants are in a listen-only mode. Today's conference is being recorded. If you any objections you may disconnect at this time. Now I would turn the meeting over to Ms. Patricia Murphy with IBM. Ma'am you may begin.

Patricia Murphy

Thank you. This is Patricia Murphy, Vice President of Investor Relations for IBM, and I'd like to welcome you to our First Quarter Earnings Presentation. I'm here today with Jim Kavanaugh, IBM's Senior Vice President and Chief Financial Officer.

Before we get into the call I want to make you aware that the third party that host our event is having technical issue this afternoon. If you're having trouble accessing the webcast, we provide an alternate link to the audio webcast just below as well as the PDF of the presentation that you can download and follow along with Jim's comments. So with that I will get back to my standard opening comments. As usual, the prepared remarks will be available within a couple of hours, and a replay of the webcast will be posted by this time tomorrow.

(Forward-Looking Statements)

Additional information concerning these factors is contained in the company's filings with the SEC. Copies are available from the SEC, from the IBM website or from us in Investor Relations. Our presentation also includes certain non-GAAP financial measures in an effort to provide additional information to investors. All non-GAAP measures have been reconciled to the related GAAP measures in accordance with SEC rules. You'll find the reconciliation charts at the end of the presentation and in the Form 8-K submitted to the SEC.

So with that, I'll turn the call over to Jim.

Jim Kavanaugh

Thanks, Patricia, and thanks to all of you for joining us. As we wrapped up 2017 and in our Investor Briefing webcast in early March, we talked about the work we've done to reposition our business to lead in the high value segments of IT, our differentiated value proposition, and how our financial strategy and model is built to deliver value to our clients and our shareholders over the long term.

We made progress in our financial performance in the second half of last year, and now our first quarter results demonstrate further progress toward our model. So, we're clearly moving in the right direction. In the quarter, we delivered $19.1 billion of revenue, $2.3 billion of operating net income, and $2.45 of operating earnings per share. And with this start to the year, we continue to expect at least $13.80 of operating earnings per share in 2018. Our revenue in the quarter was up 5% year-to-year. Without the currency tailwind, our revenue was up modestly, though you'll see on the chart constant currency rounds to flat.

Now turning to profit, our operating gross profit was up 3%, with broad-based improvement in our year-to-year gross margin performance versus last quarter. Our operating net income was up 2% and earnings per share was up 4%. Those are inclusive of