International Business Machines Corporation (IBM) Q4 2023 Earnings Call Transcript Summary

By / / IBM

The following is a summary of the International Business Machines Corporation (IBM) Q4 2023 Earnings Call Transcript:

Financial Performance:

  • IBM reported Q4 revenue of $17.4 billion, operating pretax income of $4.2 billion, and operating earnings per share of $3.87.
  • The company’s total revenue for the year was nearly $62 billion, up 3% with free cash flow at $11.2 billion, the strongest level of cash generation since 2019.
  • IBM ended the year with cash of $13.5 billion, up $4.6 billion year-over-year with total debt at $56.5 billion.
  • Operating gross profit margin expanded by 130 basis points and operating pretax margin expanded by 40 basis points.
  • For 2024, IBM expects performance to be in line with its mid-term model with mid-single digit revenue growth and about $12 million of free cash flow.

Business Progress:

  • IBM noted solid growth in both software and consulting and anticipates software revenue growth to be slightly above the mid-single digit model for 2024.
  • The company completed 9 acquisitions in 2021, including Apptio, and anticipates acquisitions of Stream Sets and Web Methods from Software AG midyear 2024.
  • IBM is strengthening its consulting position, investing in their software portfolio, and expanding strategic partnerships with SAP, AWS, Microsoft, Salesforce, and Adobe.
  • The company’s AI venture, WatsonX, doubled its book of business from Q3 to Q4.
  • IBM established a $500 million Enterprise AI Venture Fund to partner with start-ups for scaling AI innovations.
  • By the end of 2024, IBM is targeting $2 billion in annual run rate savings, of which it has already achieved $1.5 billion. These investments are primarily aimed at innovation within their hybrid cloud and AI sections.
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