ARMONK, N.Y. -- IBM (NYSE: IBM) today announced first-quarter 2022 earnings results.

"Demand for hybrid cloud and AI drove growth in both Software and Consulting in the first quarter. Today we're a more focused business and our results reflect the execution of our strategy," said Arvind Krishna, IBM chairman and chief executive officer. "We are off to a solid start for the year, and we now see revenue growth for 2022 at the high end of our model."

First-Quarter Highlights

• Revenue
  - Revenue of $14.2 billion, up 8 percent, up 11 percent at constant currency (over 5 points from incremental sales to Kyndryl) 
  - Software revenue up 12 percent, up 15 percent at constant currency (over 8 points from incremental sales to Kyndryl)
  - Consulting revenue up 13 percent, up 17 percent at constant currency
  - Infrastructure revenue down 2 percent, flat at constant currency (over 8 points from incremental sales to Kyndryl)
  - Hybrid cloud revenue:
     -- First Quarter: $5.0 billion, up 14 percent, up 17 percent at constant currency
     -- Last 12 months: $20.8 billion, up 17 percent
• Free Cash Flow
  - On a consolidated basis, net cash from operating activities of $3.2 billion; free cash flow of $1.2 billion

"In the first quarter we continued to strengthen the fundamentals of our business, consistent with our medium-term model," said James Kavanaugh, IBM senior vice president and chief financial officer. "We are a faster growing, more profitable company with a higher-value business mix, a significant recurring revenue base and strong cash generation."

Segment Results for First Quarter

• Software (includes Hybrid Platform & Solutions, Transaction Processing)— revenues of $5.8 billion, up 12.3 percent, up 15.4 percent at constant currency (over 8 points from incremental sales to Kyndryl):
  - Hybrid Platform & Solutions up 7 percent, up 10 percent at constant currency (about  1.5 points from incremental sales to Kyndryl):
     -- Red Hat up 18 percent, up 21 percent at constant currency
     -- Automation up 3 percent, up 5 percent at constant currency
     -- Data & AI up 2 percent, up 4 percent at constant currency
     -- Security up 5 percent, up 8 percent at constant currency
  - Transaction Processing up 26 percent, up 31 percent at constant currency (about 28 points from incremental sales to Kyndryl)
  - Software segment hybrid cloud revenue up 22 percent, up 25 percent at constant currency
   
• Consulting (includes Business Transformation, Technology Consulting and Application Operations)—  revenues of $4.8 billion, up 13.3 percent, up 17.4 percent at constant currency:
  - Business Transformation up 15 percent, up 19 percent at constant currency
  - Technology Consulting up 14 percent, up 19 percent at constant currency
  - Application Operations up 10 percent, up 14 percent at constant currency
  - Consulting segment hybrid cloud revenue up 24 percent, up 29 percent at constant currency
   
• Infrastructure (includes Hybrid Infrastructure, Infrastructure Support)—  revenues of $3.2 billion, down 2.3 percent, up 0.3 percent at constant currency (over 8 points from incremental sales to Kyndryl):
  - Hybrid Infrastructure down 5 percent, down 2 percent at constant currency (over 8 points from incremental sales to Kyndryl)
     -- IBM z Systems down 19 percent, down 18 percent at constant currency
     -- Distributed Infrastructure up 5 percent, up 8 percent at constant currency
  - Infrastructure Support flat, up 4 percent at constant currency (over 8 points from incremental sales to Kyndryl)
  - Infrastructure segment hybrid cloud revenue down 20 percent, down 18 percent at constant currency
   
• Financing (includes client and commercial financing)— revenues of $0.2 billion, down 26.2 percent, down 24.5 percent at constant currency

Cash Flow and Balance Sheet
On a consolidated basis, in the first quarter, the company generated net cash from operating activities of $3.2 billion or $1.6 billion excluding IBM Financing receivables. IBM's free cash flow was $1.2 billion, which includes cash impacts from the company's structural actions initiated at the end of 2020.

IBM ended the first quarter with $10.8 billion of cash on hand (which includes marketable securities), up $3.2 billion from year-end 2021. Debt, including IBM Financing debt of $12.2 billion, totaled $54.2 billion, up $2.5 billion since the end of 2021. The company returned $1.5 billion to shareholders in dividends in the first quarter.

Full-Year 2022 Expectations

• Revenue growth: The company now expects constant currency revenue growth at the high end of the mid-single digit range. The company also expects an additional 3.5 point contribution from incremental sales to Kyndryl. At mid-April 2022 foreign exchange rates, currency is expected to be a three to four point headwind.
   
• Free Cash Flow: The company continues to expect $10 billion to $10.5 billion in consolidated free cash flow.