IBM reports lowest revenue this century

There was some hope last year that IBM was finally turning things around: after all, after 5 consecutive quarters of declining revenues, the company had just managed to grow its top-line for the first time since Q2 2018, and only for the 4th time in the past 8 years. Alas, it was not meant to be, and moments ago IBM revealed that revenue declined in Q3, dropping for the third consecutive quarter, sliding another 2.6%, and while Red Hat sales boosted cloud and cognitive sales by 7% to $5.55BN Y/Y the number was an ominous slowdown in cloud sales of $5.748BN reported last quarter, with total Y/Y cloud growth also slowing from 30% in Q2 to just 19% last quarter.

Then again “boosted” may be using the term loosely: at $17.560BN in total revenue, and just shy of consensus expectations of a $17.6BN print, IBM’s Q3 2020 was its worst quarter for sales this century, below even the Q1 “covid quarter” revenue of $17.571 billion.

Some more Q3 revenue details, which beat across the key categories:

• Cloud and cognitive software revenue $5.55 billion, estimate $5.41 billion
• Global business services revenue $3.97 billion, estimate $3.93 billion
• Global technology services revenue $6.46 billion, estimate $6.33 billion
• Systems revenue $1.26 billion, estimate $1.46 billion
• Global Financing revenue $273 million, estimate $280.6 million

And while IBM’s EPS of $2.58 came inline with expectations, and down 4% Y/Y, as usual this was the product of lots of “artificial intelligence” and aggressive accounting magic because the unadjusted EPS was $1.89, or 27% below the adjusted number. The GAAP to non-GAAP bridge was, as usual, ridiculous and a continuation of an “one-time, non-recurring” addback trend that started so many years ago we can’t even remember when, but one thing is certain: none of IBM’s multiple-time, recurring charges are either one-time, or non-recurring.

Talkmarkets