International Business Machines Corporation (NYSE:IBM) Q1 2019 Earnings Conference Call - Final Transcript
Apr 16, 2019 • 05:00 pm ET
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 have any objections you may disconnect at this time.
Now I will turn the meeting over to Ms. Patricia Murphy with IBM. Ma'am, you may begin.
Thank you. This is Patricia Murphy, Vice President of Investor Relations for IBM. And I want to welcome you to our First Quarter 2019 Earnings Presentation. I'm here with Jim Kavanaugh, IBM's, Senior Vice President and Chief Financial Officer. We'll post today's prepared remarks on the IBM Investor website within a couple of hours and a replay will be available by this time tomorrow.
Some comments made in this presentation may be considered forward-looking under the Private Securities Litigation Reform Act of 1995. Those statements involve factors that could cause our actual results to differ materially. Additional information about these factors is included in the Company's SEC filings.
Our presentation also includes non-GAAP measures to provide additional information to investors. We've provided reconciliation charts at the end of the presentation and in the 8-K submitted to the SEC.
Before turning the call over to Jim, I want to remind you we recently made changes to our management system and our organizational structure. Our segment reporting for 2019 has been updated to reflect this business structure. We provided two years of historical financial information by quarter on these segments a couple of weeks ago. And this can be found on our Investor website. And today we'll be discussing our first quarter results in this new segment structure.
So with that, I'll turn the call over to Jim.
James J. Kavanaugh
Thanks, Patricia, and thanks to all of you for joining us. In the first quarter, we delivered $18.2 billion of revenue with significant operating leverage. We delivered $2.2 billion of operating pre-tax income and $2.25 of operating earnings per share. And we've now generated over $12 billion of free cash flow over the last year, with realization well over 100%. We had strong performance and offerings that help clients with their digital transformations and Journeys to cloud. At the same time, we continue to take actions to optimize our portfolio while investing to lead in the emerging high value areas of the IT industry. You saw this play out in our results. Our cloud growth accelerated to 12% at constant currency.
Our cloud and cognitive software was up 2% and our consulting revenue was up 9% also both at constant currency. We had significant margin expansion with operating gross margin up 90 basis points, driven by both services segments and we had solid free cash flow. Improving margin has been a focus for us. And our performance this quarter is the result of actions we've been taking, not only our focus on higher value and portfolio optimization, but also driving productivity and operational efficiency, especially in our services business.
With this start to the year, we are maintaining our full year expectations for operating earnings