We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
IBM Beats Q4 Earnings Estimates on Solid AI, Cloud Demand
Read MoreHide Full Article
International Business Machines Corporation (IBM - Free Report) ended 2023 on a positive note with strong fourth-quarter results, wherein both the top and bottom lines beat the respective Zacks Consensus Estimate. The company witnessed healthy demand for hybrid cloud and AI solutions with a client-focused portfolio and broad-based growth.
Net Income
On a GAAP basis, net income from continuing operations was $3,285 million or $3.54 per share compared with $2,711 million or $3.13 per share in the year-ago quarter. The improvement in GAAP earnings was primarily attributable to top-line growth.
Excluding non-recurring items, non-GAAP net income from continuing operations was $3.87 per share compared with $3.60 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 9 cents.
International Business Machines Corporation Price, Consensus and EPS Surprise
For 2023, GAAP net income from continuing operations was $7,514 million or $8.15 per share compared with $1,783 million or $1.95 per share in 2022. Non-GAAP net income from continuing operations was $9.62 per share compared with $9.13 in 2022.
Quarter Details
Quarterly total revenues increased to $17,381 million from $16,690 million on strong demand for hybrid cloud and AI, driving growth in the Software and Consulting segments. On a constant currency basis, revenues were up 3% year over year. The top line beat the consensus estimate of $17,279 million.
Gross profit was $10,267 million compared with $9,632 million in the prior-year quarter, resulting in respective gross margins of 59.1% and 57.7% owing to a strong portfolio mix. Total expenses increased to $6,509 million from $6,320 million, driven by higher interest expense and R&D costs.
Segmental Performance
Software: Revenues improved to $7,514 million from $7,288 million, driven by growth in Hybrid Platform & Solutions, Red Hat, Automation, Data & AI and Transaction Processing. The reported segment revenues exceeded our estimate of $6,936 million owing to solid hybrid cloud traction. Segment pre-tax income from continuing operations was $2,417 million compared with $2,347 million in the year-ago quarter for margins of 32.2% each. The company is witnessing healthy hybrid cloud adoption by clients and solid demand trends across RedHat, automation and Data & AI.
Consulting: Revenues were $5,048 million, up from $4,770 million, led by pervasive growth driven by demand for digital transformation, increasing revenues across all business lines and regions. The segment’s revenues beat our estimate of $5,017 million. Segment pre-tax income was $582 million compared with $523 million in the year-ago quarter, driven by productivity enhancement initiatives for respective margins of 11.5% and 11%.
Infrastructure: Revenues were $4,604 million, up from $4,483 million, as lower demand for support services was more than offset by higher demand for hybrid and distributed infrastructure. Segment pre-tax income was $1,185 million compared with $1,026 million in the year-ago quarter for respective margins of 25.7% and 22.9%.
Financing: Revenues improved to $175 million from $172 million. Segment pre-tax income was $117 million compared with $75 million in the year-ago quarter for respective margins of 67.3% and 43.6%.
Cash Flow & Liquidity
During the fourth quarter, IBM generated $4,463 million in cash from operations compared with $3,965 million in the year-ago quarter, bringing the respective tallies for 2023 and 2022 to $13,931 million and $10,435 million. Free cash flow was $6,087 million in the quarter, up from $5,209 million in the prior-year period, driven by higher profit and working capital efficiencies. As of Dec 31, 2023, the company had $13,068 million in cash and cash equivalents with $50,121 million of long-term debt compared with respective tallies of $7,886 million and $46,189 million in the year-ago period.
Outlook
For full-year 2024, the company expects revenue growth in the mid-single digit on a constant currency basis. Free cash flow is expected to be in the vicinity of $12 billion.
Workday Inc. (WDAY - Free Report) , carrying a Zacks Rank #2, delivered a trailing four-quarter average earnings surprise of 13.24%. In the last reported quarter, it delivered an earnings surprise of 9.29%. It has a long-term earnings growth expectation of 26.5%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Headquartered in Wilmington, DE, InterDigital, Inc. (IDCC - Free Report) is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
This Zacks Rank #2 stock has a long-term earnings growth expectation of 17.4% and has surged 75.3% in the past year. A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. The addition of technologies related to sensors, user interface and video to its already strong portfolio of wireless technology solutions is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
Juniper Networks Inc. (JNPR - Free Report) , carrying a Zacks Rank #2, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products.
It delivered an earnings surprise of 6.5%, on average, in the trailing four quarters. Juniper has a long-term earnings growth expectation of 9.9%. It has a VGM Score of B.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
IBM Beats Q4 Earnings Estimates on Solid AI, Cloud Demand
International Business Machines Corporation (IBM - Free Report) ended 2023 on a positive note with strong fourth-quarter results, wherein both the top and bottom lines beat the respective Zacks Consensus Estimate. The company witnessed healthy demand for hybrid cloud and AI solutions with a client-focused portfolio and broad-based growth.
Net Income
On a GAAP basis, net income from continuing operations was $3,285 million or $3.54 per share compared with $2,711 million or $3.13 per share in the year-ago quarter. The improvement in GAAP earnings was primarily attributable to top-line growth.
Excluding non-recurring items, non-GAAP net income from continuing operations was $3.87 per share compared with $3.60 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 9 cents.
International Business Machines Corporation Price, Consensus and EPS Surprise
International Business Machines Corporation price-consensus-eps-surprise-chart | International Business Machines Corporation Quote
For 2023, GAAP net income from continuing operations was $7,514 million or $8.15 per share compared with $1,783 million or $1.95 per share in 2022. Non-GAAP net income from continuing operations was $9.62 per share compared with $9.13 in 2022.
Quarter Details
Quarterly total revenues increased to $17,381 million from $16,690 million on strong demand for hybrid cloud and AI, driving growth in the Software and Consulting segments. On a constant currency basis, revenues were up 3% year over year. The top line beat the consensus estimate of $17,279 million.
Gross profit was $10,267 million compared with $9,632 million in the prior-year quarter, resulting in respective gross margins of 59.1% and 57.7% owing to a strong portfolio mix. Total expenses increased to $6,509 million from $6,320 million, driven by higher interest expense and R&D costs.
Segmental Performance
Software: Revenues improved to $7,514 million from $7,288 million, driven by growth in Hybrid Platform & Solutions, Red Hat, Automation, Data & AI and Transaction Processing. The reported segment revenues exceeded our estimate of $6,936 million owing to solid hybrid cloud traction. Segment pre-tax income from continuing operations was $2,417 million compared with $2,347 million in the year-ago quarter for margins of 32.2% each. The company is witnessing healthy hybrid cloud adoption by clients and solid demand trends across RedHat, automation and Data & AI.
Consulting: Revenues were $5,048 million, up from $4,770 million, led by pervasive growth driven by demand for digital transformation, increasing revenues across all business lines and regions. The segment’s revenues beat our estimate of $5,017 million. Segment pre-tax income was $582 million compared with $523 million in the year-ago quarter, driven by productivity enhancement initiatives for respective margins of 11.5% and 11%.
Infrastructure: Revenues were $4,604 million, up from $4,483 million, as lower demand for support services was more than offset by higher demand for hybrid and distributed infrastructure. Segment pre-tax income was $1,185 million compared with $1,026 million in the year-ago quarter for respective margins of 25.7% and 22.9%.
Financing: Revenues improved to $175 million from $172 million. Segment pre-tax income was $117 million compared with $75 million in the year-ago quarter for respective margins of 67.3% and 43.6%.
Cash Flow & Liquidity
During the fourth quarter, IBM generated $4,463 million in cash from operations compared with $3,965 million in the year-ago quarter, bringing the respective tallies for 2023 and 2022 to $13,931 million and $10,435 million. Free cash flow was $6,087 million in the quarter, up from $5,209 million in the prior-year period, driven by higher profit and working capital efficiencies. As of Dec 31, 2023, the company had $13,068 million in cash and cash equivalents with $50,121 million of long-term debt compared with respective tallies of $7,886 million and $46,189 million in the year-ago period.
Outlook
For full-year 2024, the company expects revenue growth in the mid-single digit on a constant currency basis. Free cash flow is expected to be in the vicinity of $12 billion.
Zacks Rank & Other Stocks to Consider
IBM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Workday Inc. (WDAY - Free Report) , carrying a Zacks Rank #2, delivered a trailing four-quarter average earnings surprise of 13.24%. In the last reported quarter, it delivered an earnings surprise of 9.29%. It has a long-term earnings growth expectation of 26.5%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Headquartered in Wilmington, DE, InterDigital, Inc. (IDCC - Free Report) is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
This Zacks Rank #2 stock has a long-term earnings growth expectation of 17.4% and has surged 75.3% in the past year. A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. The addition of technologies related to sensors, user interface and video to its already strong portfolio of wireless technology solutions is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
Juniper Networks Inc. (JNPR - Free Report) , carrying a Zacks Rank #2, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products.
It delivered an earnings surprise of 6.5%, on average, in the trailing four quarters. Juniper has a long-term earnings growth expectation of 9.9%. It has a VGM Score of B.