IBM shares rise after earnings top estimates in ‘uncertain, volatile’ economy

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IBM shares rose as much as 6% in extended trading Wednesday after the tech and services provider announced fourth-quarter results that exceeded Wall Street's expectations.

Here's how the company did, compared to the consensus among analysts surveyed by LSEG, formerly known as Refinitiv:

• Earnings per share: $3.87, adjusted vs. $3.78 expected
• Revenue: $17.38 billion vs. $17.30 billion expected

IBM's revenue increased 4% year over year for the quarter, according to a statement. Net income, at $3.29 billion, or $3.55 per share, increased from $2.71 billion, or $2.96 per share, in the year-ago quarter. The company confronted "a very challenging, uncertain, volatile macroeconomic environment," Chief Financial Officer James Kavanaugh said in an interview with Our.

Free cash flow for the year totaled $11.2 billion, more than the $10.5 billion that management had called for. The company's gross margin, at 59.1% was the widest since 1999.

IBM said software revenue came to $7.51 billion, up 3% but less than the $7.67 billion consensus among analysts surveyed by StreetAccount.

Consulting revenue, at $5.05 billion, grew about 6% and ended up less than the $5.12 StreetAccount consensus.

Revenue from infrastructure, such as mainframe computers, totaled $4.60 billion, up around 3%. The StreetAccount consensus was $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.

During the quarter, IBM introduced a $500 million venture fund targeting enterprise artificial intelligence startups, and it announced plans to pay 2.13 billion euros, or $2.32 billion at the current exchange rate, for StreamSets and webMethods, two businesses majority-owned by Software AG.

With respect to guidance, IBM said it sees $12 billion in 2024 free cash flow and revenue growth in the mid-single digits at constant currency.

Notwithstanding the after-hours move, IBM shares are up about 7% so far in 2024, while the S&P 500 U.S. stock index has gained 2% during the same period.

Executives will discuss the results on a conference call starting at 5 p.m. ET.

— Our's Kristina Partsinevelos contributed to this report.

This is breaking news. Please check back for updates.

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