Source: Zhithon Finance
On Wednesday after Post-Market Trading, the 'Blue Giant' $IBM Corp (IBM.US)$ announced its Q4 earnings for 2024. The data shows that the company's total revenue in Q4 increased by 1% year-on-year to 17.6 billion dollars, while the market expected 17.5 billion dollars; the adjusted EPS was 3.92 dollars, with the market expecting 3.74 dollars.
IBM's stock price surged at the beginning of today's trading, and as of the time of writing, the stock has risen over 12%, reaching 257.029 dollars.
The Software department is IBM's largest and fastest-growing segment, with revenue in the fourth quarter growing by 10% to reach 7.92 billion USD. The expansion of the software business is attributed to a 16% growth in the Red Hat business. IBM acquired Red Hat in 2019.
IBM's consulting department saw revenue decline for the fourth consecutive quarter, down to 5.18 billion USD. Chief Financial Officer Jim Kavanaugh stated that clients continue to shift funds from traditional consulting projects to AI-focused projects.
Notably, IBM expects strong revenue growth in the new fiscal year, with a significant increase in AI-related Orders.
IBM predicts that the free cash flow for the fiscal year ending December 2025 will reach 13.5 billion USD, exceeding Wall Street's expectation of 12.9 billion USD. IBM stated in a statement on Wednesday that revenue will grow at least 5% at constant exchange rates, although current exchange rates will reduce this increase by two percentage points.
IBM stated that since mid-2023, AI consulting and software Orders have exceeded 5 billion USD. This figure is higher than the 3 billion USD disclosed by IBM in the previous Earnings Reports. Approximately 80% of the Orders come from the consulting department, with the remainder from the software department.
IBM is dedicated to transforming itself from a traditional computer company into one focused on high-growth Software and services. The company is expanding its product line through acquisitions, including the announcement of its acquisition plan for Hashicorp Inc. in April last year and the $4.6 billion acquisition of Apptio in 2023.
The Trump administration has announced plans to cut spending across various government departments, causing investors to worry about potential impacts on Technology companies. IBM's Kavanaugh stated that 3%-4% of IBM's revenue is linked to the USA federal government, and the technological initiatives that the new government may undertake represent a "significant opportunity."
IBM will hold an event for Analysts next week, during which the company is expected to Share more detailed guidance on performance for the coming years.
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