IBM’s stock surged by up to 6% in after-hours trading on Wednesday following the announcement of better-than-expected fourth-quarter results by the technology and services giant.
Here’s a breakdown of IBM’s performance compared to analyst forecasts from LSEG (formerly known as Refinitiv):
- Earnings per share came in at \(3.87, surpassing the expected \)3.78.
- Revenue stood at \(17.38 billion, slightly above the anticipated \)17.30 billion.
IBM reported a 4% year-over-year increase in revenue for the quarter. Net income rose from \(2.71 billion, or \)2.96 per share, in the previous quarter to \(3.29 billion, or \)3.55 per share. During an interview with CNBC, Chief Financial Officer James Kavanaugh described the economic landscape as “very challenging and uncertain.”
The company’s free cash flow for the year totaled \(11.2 billion, exceeding the targeted \)10.5 billion. IBM’s net ratio reached its highest level since 1999, at 59.1%.
Software revenue climbed to \(7.51 billion, marking a 3% increase from the StreetAccount analysts’ consensus of \)7.67 billion. Consulting revenue reached \(5.05 billion, reflecting a 6% rise but falling short of the \)5.12 billion consensus from StreetAccount.
Revenue from infrastructure, including mainframe computers, reached \(4.60 billion, up approximately 3% from the \)4.28 billion consensus on StreetAccount. Notably, the distributed infrastructure segment, which includes servers powered by IBM’s Power chips, saw an 8% growth compared to a 4% decline in the previous quarter.
In the fourth quarter, IBM announced its acquisition of StreamSets and webMethods, primarily owned by Software AG, for \(2.13 billion or \)2.32 billion at the current market price. Additionally, IBM unveiled a $500 million venture fund aimed at enterprise artificial intelligence companies.
Looking ahead, IBM projected a free cash flow of $12 billion in 2024 and revenue growth in the mid-single digits at constant currency.
Despite the positive after-hours trading movement, IBM shares have risen by approximately 7% year-to-date in 2024, outperforming the 2% increase in the S&P 500 U.S. stock index.
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