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After the closing bell on Jan 24, International Business Machines (IBM - Free Report) reported solid fourth-quarter 2023 results. IBM shares gained as much as 9.5% in the key trading session on Jan 25, 2024. The company 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.
For full-year 2024, the Zacks Rank #2 (Buy) 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. The stock hails from a top-ranked Zacks Sector (top 31%) and top-ranked Zacks industry (top 45%). The stock has a dividend yield of 3.82% annually.
This has put focus on IBM-heavy ETFs like FT Vest DJIA Dogs 10 Target Income ETF (DOGG - Free Report) , First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) , FT Vest Technology Dividend Target Income ETF (TDVI - Free Report) , Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report) and First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report) . These ETFs have exposure to IBM in the range of 10.6% to 5%.
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.
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.
IBM said software revenue came to $7.51 billion, up 3% but less than the $7.67 billion consensus among analysts surveyed by StreetAccount, as quoted on CNBC. Consulting revenue, at $5.05 billion, jumped about 6% but fell shy of the $5.12 bllion StreetAccount consensus.
Revenue from infrastructure, such as mainframe computers, totaled $4.60 billion, up around 3%. Thus beat the StreetAccount consensus of $4.28 billion. The distributed infrastructure category in particular, containing servers with IBM’s Power chips, accelerated to 8% growth, compared to a decline of 4% in the third quarter.
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IBM Shares Surges Post Upbeat Q4: ETFs in Focus
After the closing bell on Jan 24, International Business Machines (IBM - Free Report) reported solid fourth-quarter 2023 results. IBM shares gained as much as 9.5% in the key trading session on Jan 25, 2024. The company 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.
For full-year 2024, the Zacks Rank #2 (Buy) 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. The stock hails from a top-ranked Zacks Sector (top 31%) and top-ranked Zacks industry (top 45%). The stock has a dividend yield of 3.82% annually.
This has put focus on IBM-heavy ETFs like FT Vest DJIA Dogs 10 Target Income ETF (DOGG - Free Report) , First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) , FT Vest Technology Dividend Target Income ETF (TDVI - Free Report) , Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report) and First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report) . These ETFs have exposure to IBM in the range of 10.6% to 5%.
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.
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.
IBM said software revenue came to $7.51 billion, up 3% but less than the $7.67 billion consensus among analysts surveyed by StreetAccount, as quoted on CNBC. Consulting revenue, at $5.05 billion, jumped about 6% but fell shy of the $5.12 bllion StreetAccount consensus.
Revenue from infrastructure, such as mainframe computers, totaled $4.60 billion, up around 3%. Thus beat the StreetAccount consensus of $4.28 billion. The distributed infrastructure category in particular, containing servers with IBM’s Power chips, accelerated to 8% growth, compared to a decline of 4% in the third quarter.