A pop in International Business Machines Corp. stock cooled Monday after Big Blue declined to provide an earnings forecast.
shares rose 2.6% in after-hours trading late Monday following a conference call in which executives shared their forecast, following an initial after-hours surge of more than 6% after the results showed a beat on earnings and revenue. In the conference call, executives underscored that revenue growth and free cash flow were the centerpiece of their 2022 forecast for IBM following the spinoff of the company’s managed infrastructure-service business, Kyndryl Holdings Inc.
and declined to give guidance for earnings per share, or EPS.
“I am not going to talk about EPS guidance,” Chief Financial Officer James Kavanaugh said on the call. “And by the way, EPS as you know quite well, there are many ways of getting to an EPS number.”
Predictions for full-year revenue growth were in-line with what analysts expected, according to FactSet, with the average prediction for 2022 calling for $59.48 billion, or a 3.7% increase from 2021.
“As we look to 2022, we expect mid-single-digit revenue growth before Kyndryl and currency and $10 billion to $10.5 billion of free cash flow for the year,” Chief Executive Arvind Krishna said on the call. “Both of these are consistent with our medium-term model.”
On the call, as analysts tried to pick apart the forecast, Kavanaugh characterized the free cash flow estimate as “all in,” and added some color to the mid-single-digit forecast.
“On top of that, in 2022, the new commercial relationship with Kyndryl will contribute an additional 3 points of growth spread across the first three quarters,” Kavanaugh said. “Currency dynamics unfortunately will be a headwind. At current spot rates, currency is roughly a two-point headwind to reported revenue growth for the year and three points in the first quarter.”
Kavanaugh also said he was not going to disclose “based on commercial…