IBM Q1 earnings: software revenue up as AI fruits begin to materialize
International Business Machines Corporation (NYSE: IBM) published its Q1 financial outcomes on Wednesday after market close.
The company’s revenue came at $14.46, slightly lower than the predicted $14.54 billion, whereas operating earnings per share beat the $1.59 forecast to $1.68.
Nonetheless, IBM’s software revenue jumped 5% to 5.90 billion as the tech titan capitalizes on the surging AI demand.
IBM CEO Arvind Krishna stated,
“We began the year with solid revenue and free cash flow growth, reflecting the strength of our hybrid cloud and AI strategy. We continue to capitalize on the excitement and demand for enterprise AI from our clients. Our book of business for watsonx and generative AI again showed strong momentum, growing quarter over quarter, and has now eclipsed one billion dollars since we launched watsonx in mid-2023.”
Innovative business units keeping IBM afloat
IBM’s advanced business segments catalyzed the company’s Q1 financial performance.
It has seen rapid growth in the artificial intelligence sector, with the IBM #GenA1 segment displaying robust upward momentum.
Some experts trust IBM’s generative AI earnings will skyrocket to billions of dollars in the coming quarters.
Moreover, hybrid cloud technologies have vastly anchored IBM’s business, fueling its impressive financial performance.
IBM’s significant steps in hybrid cloud and artificial intelligence confirm the soaring demand for AI and the company’s prowess in satisfying market needs with high-end offerings.
Strategic collaborations and noteworthy strides in its Watsonx platform, which has remained vital in fulfilling IBM’s promise, showcase the firm’s dedication to hybrid cloud and artificial intelligence.
Furthermore, IBM plans to acquire HashiCorp to cement it presence in the hybrid cloud and artificial intelligence landscapes.
IBM’s earnings highlights
- Net income jumped YoY to $1.6B
- EPS $1.68 versus predicted $1.59
- Software revenue increased by 5% to $5.90B
- Infrastructure revenue surpassed estimated $2.94B to $3.08B
- Free cash flow stood at $1.91 billion.
- Consulting revenue of $5.19B, lower than expected $5.10B
IBM share price outlook
IBM stock reacted to the missed revenue with bearishness on Wednesday’s extended hours, dropping over 7% to trade at $171.85.
Despite the after-market dip, the share has gained 12.4% year-to-date and 35% within the last six months.
Meanwhile, IBM CEO remains optimistic about the company’s 2024 performance, expecting $12B in free cash flow and revenue to match the mid-single digit model.
“For the full year, we continue to expect revenue performance in line with our mid-single digit model and about $12 billion in free cash flow,”
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