IBM shares surged by 8% in after-hours trading following the announcement of its fourth-quarter results, which surpassed Wall Street’s expectations. The tech and services provider reported earnings per share of $3.87, adjusted, compared to the expected $3.78, and revenue of $17.38 billion, exceeding the anticipated $17.30 billion.
Despite a challenging economic environment, IBM’s revenue for the quarter increased by 4% year over year, reaching $3.29 billion in net income. The company also exceeded its projected free cash flow, totaling $11.2 billion for the year, surpassing the expected $10.5 billion. Additionally, IBM’s fourth-quarter gross margin of 59.1% marked its widest since 1999.
While software revenue grew by 3% to $7.51 billion, it fell short of the $7.67 billion consensus among analysts. Consulting revenue saw a 6% increase to $5.05 billion, slightly below the $5.12 billion StreetAccount consensus. Revenue from infrastructure, including mainframe computers, totaled $4.60 billion, surpassing the $4.28 billion StreetAccount consensus. The distributed infrastructure category, particularly servers with IBM’s Power chips, experienced an 8% growth, a significant improvement from the previous quarter’s 4% decline.
During the quarter, IBM announced a $500 million venture fund for enterprise artificial intelligence startups and revealed plans to acquire StreamSets and webMethods, two businesses majority-owned by Software AG, for 2.13 billion euros ($2.32 billion).
Looking ahead, IBM anticipates $12 billion in free cash flow for 2024 and mid-single-digit revenue growth at constant currency. This positive outlook reflects the company’s confidence in navigating the uncertain economic landscape.
