IBM Investor Briefing 2021

Earlier today, several members of our senior executive team and I had the pleasure of briefing financial analysts and investors on the continued evolution of our business. Our message to investors is clear and compelling: IBM’s strategy around hybrid cloud and AI is resonating strongly with our clients; and the significant changes we are making to bring this strategy to life are delivering results. While much work remains to be done, IBM is already beginning to look like a very different company.?

Here are the three key tenets we discussed today. It’s important to remember that all three are interconnected and together will deliver our committed outcomes:?

1. We are optimizing our portfolio to drive sustainable mid-single digit revenue growth.?Just under half of IBM’s portfolio will be software and a little under a third will be consulting. Both will serve as strong drivers of growth, with Red Hat growing at a healthy rate. This allows us to have a platform-centric model with Red Hat at the core. Meanwhile, infrastructure remains an important part of our foundation. This portfolio, together with the investments we are making and the expansion of our ecosystem, will deliver mid-single digit revenue growth starting in 2022.
2. We are increasing our focus and agility to better serve clients.?From simplifying our go-to-market model, to making decisions a lot easier across the company, to leaning more heavily into our ecosystem, we have improved our ability to accelerate our clients’ digital transformation journeys. As a result, we are seeing early signs of improved productivity among our sales team. IBM Garages – we have done more than 4,000 so far – are a great exemplar of the changes we are making to engage clients.?
3. We are generating strong free cash flow to enable investments.?In the next three years, we expect to generate $35 billion of free cash flow. Importantly, free cash flow enables us to make the investments we need in our business, as well as offer attractive shareholder returns through dividends.?

?While IBM may look very different from when we entered this decade, what continues to set us apart is our unique ability to take different pieces of technology — hardware, software or services — and bring them all together in a way that creates long-lasting value for our clients and solves their most pressing business problems. We are the ‘catalyst’ that innovates and deploys technology to move their businesses forward.?

Clients in every industry and in every part of the world are working with IBM to transform their business. For example, we are helping telcos like Verizon build cloud-based networks to quickly adapt to massive shifts in traffic patterns. Banks such as Citibank use our AI capabilities to help auditors save crucial time as they analyze thousands of transcripts. And business services firm such as EY rely on our AI-powered software to drastically reduce the time it takes to do due diligence in mergers and acquisitions.

In closing, I have immense confidence in IBM’s future and our ability to achieve and maintain sustainable growth. I am excited about the possibilities ahead as we work with our clients to write the next chapter of their digital transformation journeys. The grit, ingenuity, and talent of IBMers is critical to this success. Thank for all that you have done to bring us to this point and your continued commitment to helping our clients transform their business.

I look forward to continuing our conversation about IBM’s future. You will, of course, hear more from me when Kyndryl becomes an independent company, which is on track to be completed this quarter.

In the meantime, please take the time to watch the replay of our Investor Briefing.?It will be available?here?soon.?