IBM announced fourth-quarter 2024 earnings results.
"We closed the year with double-digit revenue growth in Software for the quarter, led by further acceleration in Red Hat. Clients globally continue to turn to IBM to transform with AI. Our generative AI book of business now stands at more than $5 billion inception-to-date, up nearly $2 billion quarter over quarter," said Arvind Krishna, IBM chairman, president and chief executive officer. "Three years ago, we laid out a vision for a faster-growing, more-profitable IBM. I'm proud of the work the IBM team has done to meet or exceed our commitments. With our focused strategy, enhanced portfolio, and culture of innovation, we're well-positioned for 2025 and beyond and expect revenue growth of at least five percent and free cash flow of about $13.5 billion this year."
Fourth-Quarter Highlights
- Revenue
- Revenue of $17.6 billion, up 1 percent, up 2 percent at constant currency
- Software revenue up 10 percent, up 11 percent at constant currency
- Consulting revenue down 2 percent, down 1 percent at constant currency
- Infrastructure revenue down 8 percent, down 6 percent at constant currency - Profit
- Gross Profit Margin: GAAP: 59.5 percent, up 40 basis points; Operating (Non-GAAP): 60.6 percent, up 50 basis points
Full-Year Highlights
- Revenue
- Revenue of $62.8 billion, up 1 percent, up 3 percent at constant currency
- Software revenue up 8 percent, up 9 percent at constant currency
- Consulting revenue down 1 percent, up 1 percent at constant currency
- Infrastructure revenue down 4 percent, down 3 percent at constant currency - Profit
- Gross Profit Margin: GAAP: 56.7 percent, up 120 basis points; Operating (Non-GAAP): 57.8 percent, up 130 basis points - Cash Flow
- Net cash from operating activities of $13.4 billion; free cash flow of $12.7 billion
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FOURTH-QUARTER 2024 INCOME STATEMENT SUMMARY |
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GAAP results include impact of one-time, non-cash pension settlement charge (1) |
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Revenue |
Gross Profit |
Gross |
Pre-tax Income (1) |
Pre-tax Income Margin (1) |
Net Income (1) |
Diluted Earnings Per Share (1) |
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|
GAAP from |
$ 17.6 B |
$ 10.4 B |
59.5 |
% |
$ 3.3 B |
18.8 |
% |
$ 2.9 B |
$ 3.11 |
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|
Year/Year |
1 |
%(2) |
2 |
% |
0.4 |
Pts |
(12) |
% |
-2.8 |
Pts |
(11) |
% |
(12) |
% |
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|
Operating (Non-GAAP) |
$ 10.6 B |
60.6 |
% |
$ 4.3 B |
24.3 |
% |
$ 3.7 B |
$ 3.92 |
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|
Year/Year |
2 |
% |
0.5 |
Pts |
2 |
% |
0.4 |
Pts |
3 |
% |
1 |
% |
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|
(1) 2024 GAAP results include the impact of a one-time, non-cash pension settlement charge of $0.4 billion related to the transfer of a |
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(2) 2% at constant currency. |
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"With strong performance across our Software portfolio, we continue to drive solid fundamentals within our business," said James Kavanaugh, IBM senior vice president and chief financial officer. "As a result, we generated $12.7 billion in free cash flow, far-outpacing our expectation for the year. Continued strength in operating profitability and free cash flow fuels our ability to invest for the future while returning value to shareholders through dividends."
Segment Results for Fourth Quarter
- Software — revenues of $7.9 billion, up 10.4 percent, up 11.5 percent at constant currency:
- Hybrid Platform & Solutions up 11 percent, up 12 percent at constant currency
-- Red Hat up 16 percent, up 17 percent at constant currency
-- Automation up 15 percent, up 16 percent at constant currency
-- Data & AI up 4 percent, up 5 percent at constant currency
-- Security up 4 percent, up 5 percent at constant currency
- Transaction Processing up 10 percent, up 11 percent at constant currency - Consulting — revenues of $5.2 billion, down 2.0 percent, down 1.1 percent at constant currency:
- Business Transformation up 1 percent, up 2 percent at constant currency
- Technology Consulting down 7 percent, down 6 percent at constant currency
- Application Operations down 4 percent, down 3 percent at constant currency - Infrastructure — revenues of $4.3 billion, down 7.6 percent, down 6.0 percent at constant currency:
- Hybrid Infrastructure down 10 percent, down 8 percent at constant currency
-- IBM Z down 21 percent, down 20 percent at constant currency
-- Distributed Infrastructure flat, up 2 percent at constant currency
- Infrastructure Support down 2 percent, flat at constant currency - Financing — revenues of $0.2 billion, down 2.5 percent, down 0.5 percent at constant currency
Cash Flow and Balance Sheet
In the fourth quarter, the company generated net cash from operating activities of $4.3 billion, down $0.1 billion year to year. IBM's free cash flow was $6.2 billion, up $0.1 billion year to year. The company returned $1.5 billion to shareholders in dividends in the fourth quarter.
For the year, the company generated net cash from operating activities of $13.4 billion, down $0.5 billion year to year. Net cash from operating activities excluding IBM financing receivables was $13.9 billion, up $1.2 billion. IBM's free cash flow was $12.7 billion, up $1.5 billion year to year.
IBM ended the fourth quarter with $14.8 billion of cash, restricted cash and marketable securities, up $1.3 billion from year-end 2023. Debt, including IBM Financing debt of $12.1 billion, totaled $55.0 billion, down $1.6 billion since year-end 2023.
Full-Year 2025 Expectations
- Revenue: The company expects full-year constant currency revenue growth of at least 5 percent. At current foreign exchange rates, currency is expected to be about a two-point headwind to growth for the year.
- Free cash flow: The company expects about $13.5 billion in free cash flow for the full year.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. ET, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-4q24. Presentation charts will be available shortly before the Webcast.
