The chart below shows how IBM performed 10 days before and after its earnings report, based on data from the past quarters. Typically, IBM sees a -0.42% change in stock price 10 days leading up to the earnings, and a +1.31% change 10 days following the report. On the earnings day itself, the stock moves by +0.05%. This data can give you a slight idea of what to expect for the next quarter's release.
Positive
Q4 Revenue Growth: IBM delivered a revenue growth of 3% for Q4 2024, with a total revenue of $63 billion for the year, exceeding expectations and demonstrating strong performance across all segments.
Record Free Cash Flow: Free cash flow reached $12.7 billion, marking the highest level of free cash flow generation in many years, with a free cash flow margin that is the highest in reported history.
Software Revenue Growth: Software revenue grew by 11% in Q4, driven by strong performance in Red Hat, which saw a 17% increase, and overall software now represents 45% of IBM's business with over $15 billion in annual recurring revenue.
Operating Margin Expansion: The operating pre-tax margin expanded by 120 basis points, leading to a 9% increase in operating pre-tax profit and a 14% growth in free cash flow, showcasing effective cost management and operational efficiency.
Generative AI Business Growth: IBM's generative AI book of business grew to over $5 billion, with a $2 billion increase quarter over quarter, reflecting strong demand and positioning in the AI market.
Negative
Consulting Revenue Decline: Consulting revenue decreased by 1% in Q4, reflecting a dynamic market environment as clients reprioritized spending.
Infrastructure Revenue Decline: Infrastructure revenue fell by 6% in Q4, primarily due to product cycle dynamics, with IBM Z revenue down 20% in the quarter.
Minimal Earnings Growth: Operating earnings per share increased by only 1% to $3.92, indicating minimal growth in profitability despite strong revenue performance.
Free Cash Flow Dynamics: Free cash flow growth was driven by adjusted EBITDA, which increased by only $900 million year-over-year, suggesting limited operational efficiency improvements.
Currency Impact on Revenue: The company expects a 2-point headwind to revenue growth in 2025 due to currency fluctuations, which may impact overall financial performance.
Earnings call transcript: IBM Q4 2024 sees record cash flow, stock dips
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