International Business Machines Corporation (NYSE:IBM) Q2 2020 Earnings Conference Call - Final Transcript

Jul 20, 2020 • 05:00 pm ET


International Business Machines Corporation (NYSE:IBM) Q2 2020 Earnings Conference Call - Final Transcript


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Welcome and thank you for standing by. [Operator Instructions] 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.

Patricia Murphy

Thank you. This is Patricia Murphy and I want to welcome you to IBM's Second Quarter 2020 Earnings Presentation. I'm here with Arvind Krishna, IBM's Chief Executive Officer and 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. These 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, provide additional information to investors. For example, we present revenue and signings growth at constant currency throughout the presentation. In addition to provide a view consistent with our go-forward business, we'll focus on constant currency growth adjusting for the divested businesses for the impacted lines of total revenue, cloud and our geographic performance. We have provided reconciliation charts for these and other non-GAAP measures at the end of the presentation and in the 8-K submitted to the SEC.

Finally, consistent with our last few quarters, IBM's revenue, profit and earnings per share reflect the impact of purchase accounting and other transaction related adjustments, associated with the acquisition of Red Hat. These adjustments and charges are primarily non-cash.

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

Arvind Krishna

Hello, everyone. I'm pleased to be speaking with you again. In April's call, I talked about the impact of the global public health crisis and I told you about the important work we are carrying out to help the shifting needs of our clients. I also told you about the confidence I have in our strategy and our portfolio, which is focused on hybrid cloud, as well as data and AI, all of this continues.

Today there are two topics I'd like to cover. First, I want to tell you about what we're seeing in the market, and then I want to discuss our priorities and actions we have taken to move them forward. From a market perspective, while the current environment poses certain short-term challenges, it also presents long-term opportunities that IBM will see, as our clients accelerate their shift to hybrid cloud and AI. The essential work that we do in terms of running our clients mission critical processes continues. More profoundly, we see that the digital transformation of businesses is accelerating.

Our second quarter results demonstrate this with an increase of over 10 points in our cloud revenue growth over last quarter. The trend we see in the market is clear. Clients want to modernize apps, move more workloads to the cloud and automate IT task. They want to infuse