International Business Machines (IBM) reported strong fourth-quarter earnings, beating analyst expectations on both the top and bottom lines. The company also issued a bullish outlook for 2024, with strong guidance for free cash flow and revenue growth. IBM shares are up nearly 13% after yesterday’s report.
Key Highlights:
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile app- Revenue: $17.38 billion, up 4.1% year-over-year (y/y), above the consensus estimate of $17.29 billion
- Software revenue: $7.51 billion, up 3.1% y/y, just below the consensus estimate of $7.69 billion
- Consulting revenue: $5.05 billion, up 5.8% y/y, just below the consensus estimate of $5.11 billion
- Infrastructure revenue: $4.60 billion, up 2.7% y/y, in line with the consensus estimate of $4.35 billion
- Adjusted gross margin: 60.1%, up from 58.6% y/y
- Operating EPS: $3.87, up from $3.60 y/y
- Free cash flow: $6.09 billion, up 17% y/y
Comments from company:
CEO of the company, Arvind Krishna attributed the strong fourth-quarter results to continued adoption of hybrid cloud and AI offerings. He also said that client demand for AI is accelerating, with IBM's book of business for Watson X and generative AI doubling from the third quarter to the fourth quarter. IBM's strong outlook for 2024 is based on its expectation for continued strong demand for hybrid cloud and AI offerings. The company also expects to benefit from its investments in data and automation. IBM also announced further job cuts, similar to other tech companies like Alphabet or Amazon.
Comments from Wall Street analysts:
Analysts were positive about IBM's fourth-quarter results and outlook. Analysts from Evercore Isi called the results positive for the story and said that IBM is an underappreciated AI beneficiary. Jefferies analyst Brent Thill said that IBM's revenue beat was driven by its infrastructure business and that the company is "on a turnaround story with FCF support." Bloomberg Intelligence said that IBM's outlook for free cash flow is "encouraging and suggests greater operational efficiencies and steady organic growth."
Overall, IBM's fourth-quarter results and outlook were strong. The company is well-positioned to benefit from the continued growth of hybrid cloud and AI, and its investments in data and automation should drive future growth.
IBM shares have jumped to the highest since 2024 and are only 10% off the all time highs. Source: xStation5
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
