International Business Machines Corporation (NYSE:IBM) Q3 2020 Earnings Conference Call - Final Transcript

Oct 19, 2020 • 05:00 pm ET

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International Business Machines Corporation (NYSE:IBM) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

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.

Executive
Patricia Murphy

Thank you. This is Patricia Murphy, and I want to welcome you to IBM's third 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 to 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, while we have wrapped on the majority of the impacts of the divestures in 2019, we will continue to focus on constant currency growth, adjusting for the divested businesses for the impacted lines of total revenue, cloud and our geographic performance. We've 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 year-over-year revenue, profit and earnings per share reflect the impact of purchase accounting and other transaction-related impacts associated with the acquisition of Red Hat.

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

Executive
Arvind Krishna

Thanks, Patricia. I'm pleased to be speaking with you again just a week and a half after our strategic update on October 8.

Today, we'll focus on our third-quarter performance, which you'll see is unchanged from the preliminary results we announced. But I want to start with a summary of our strategic discussion. We are redefining our future as a hybrid cloud platform and AI company. Over the last few years, we have built a solid foundation for hybrid cloud. With the acceleration of the Red Hat platform adoption and the changes to clients' needs for application versus infrastructure services, we are separating our managed infrastructure services into a new publicly traded company. The result is two market leaders with focused strategies and missions and improved growth trajectories.

IBM is the number one hybrid cloud platform and AI company. NewCo will become the number one managed infrastructure services company. As separate businesses, each can capitalize on the respective missions. Both will have more agility to focus on their operating and financial models, both will have greater freedom to partner with others and both will align their investment and capital structures to their strategic focus areas. All of this will