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IBM’s shares surged by as much as 8% in extended trading following the announcement of its fourth-quarter results, which outperformed Wall Street expectations. Despite facing a challenging and volatile macroeconomic environment, IBM showcased resilience and reported notable figures that surpassed analyst consensus.
Key financial highlights for the fourth quarter include:
Earnings per share: $3.87 (adjusted) vs. $3.78 expected.
Revenue: $17.38 billion vs. $17.30 billion expected.
IBM’s revenue demonstrated a 4% year-over-year increase in the quarter, reaching $17.38 billion. Net income for the quarter was $3.29 billion, or $3.55 per share, compared to $2.71 billion, or $2.96 per share, in the same period the previous year.
Chief Financial Officer James Kavanaugh acknowledged the challenging economic conditions, emphasizing the company’s ability to navigate the uncertainties successfully. Free cash flow for the year exceeded expectations, totaling $11.2 billion, while the fourth-quarter gross margin of 59.1% marked the widest since 1999.
Revenue breakdown by segment:
Software Revenue: $7.51 billion, up 3% year over year.
Consulting Revenue: $5.05 billion, a growth of about 6%.
Infrastructure Revenue: $4.60 billion, up around 3%.
IBM’s strategic moves during the quarter included the introduction of a $500 million venture fund targeting enterprise artificial intelligence startups. Additionally, plans were announced to acquire StreamSets and webMethods, two businesses majority-owned by Software AG, for $2.32 billion.
IBM CEO Arvind Krishna highlighted the significant growth in the book of business for generative AI and Watsonx products, which doubled compared to the third quarter. The company anticipates $12 billion in free cash flow and mid-single-digit revenue growth at constant currency for the year 2024.
Despite the positive after-hours movement, IBM shares have already seen a 7% increase in 2024. This growth surpasses the S&P 500 U.S. stock index, which gained 2% during the same period. The company remains focused on productivity gains and workforce rebalancing consistent with the trends observed in 2023.
IBM’s robust performance in the face of economic uncertainties underscores its ability to adapt and thrive in dynamic market conditions. The positive reception from investors reflects confidence in the company’s strategic initiatives and financial outlook.