IBM Beats Q4 Earnings Estimates on Solid Cloud & AI Traction

Core Insights - IBM reported strong fourth-quarter 2024 results, with adjusted earnings and revenues exceeding Zacks Consensus Estimate [1][2] - The company experienced healthy demand for hybrid cloud and AI solutions, achieving growth across its client-focused portfolio despite economic uncertainties [2] Financial Performance - GAAP net income for the quarter was $2.91 billion or $3.09 per share, down from $3.29 billion or $3.55 per share year-over-year due to high operating expenses [3] - Non-GAAP net income from continuing operations was $3.92 per share, slightly up from $3.87 in the prior-year quarter, beating the Zacks Consensus Estimate by 19 cents [3] - For 2024, net income was reported at $6.02 billion or $6.43 per share, compared to $7.5 billion or $8.14 per share in 2023 [4] Revenue Growth - Quarterly total revenues increased to $17.55 billion from $17.38 billion, driven by strong demand for hybrid cloud and AI, exceeding the consensus estimate of $17.51 billion [5] - On a constant currency basis, revenues were up 2% year-over-year [5] Segment Performance - Software segment revenues improved to $7.92 billion from $7.18 billion, with notable growth in Red Hat (up 17%), Automation (16%), and Data & AI (5%) [7] - Consulting segment revenues were $5.17 billion, down from $5.28 billion year-over-year, missing estimates due to clients prioritizing spending [8] - Infrastructure segment revenues decreased to $4.26 billion from $4.6 billion, reflecting lower demand and higher investments in AI and hybrid cloud [9] - Financing segment revenues declined to $170 million from $175 million year-over-year [10] Cash Flow and Liquidity - IBM generated $4.33 billion in cash from operations during the quarter, bringing total cash from operations for 2024 to $13.44 billion [11] - Free cash flow was $6.16 billion in the quarter, up from $6.09 billion in the prior-year period [11] - As of December 31, 2024, the company had $13.95 billion in cash and cash equivalents, with long-term debt at $49.88 billion [11] Future Outlook - For 2025, IBM expects revenues to grow at least 5% on a constant currency basis, driven by a strong portfolio mix and productivity initiatives [12]