IBM (IBM.US) Q4 revenue increased by 6% year-on-year, exceeding expectations. Free cash flow for the year is expected to reach US$10.5 billion
Zhitong Finance APP learned that IBM ( IBM (NYSE:).US) reported better-than-expected fourth-quarter financial results and confirmed cash flow expectations on Wednesday, Jan. 25 (Wed.) will remain stable. The financial report shows that the company’s fourth-quarter revenue increased by 6% year-on-year to approximately US$16.69 billion, and market analysts expected US$16.4 billion; adjusted earnings per share were US$3.60, while analysts expected earnings per share of US$3.58; Net income rose 16% year-over-year to approximately $2.71 billion.
By business, the company’s software sales rose 2.8 percent to $7.29 billion; sales in its infrastructure unit rose 1.6 percent to $4.48 billion, and analysts had expected sales to decline in the company’s two business units; consulting business Revenue rose 0.5 percent to $4.77 billion. Additionally, revenue from the company’s acquired Red Hat unit, a key part of Krishna’s strategy, rose 10%, another relatively slow quarter for the unit, which has lost 10% of its revenue since the 2019 acquisition. Growth often exceeds 20%. It is understood that the Red Hat division has been a key part of IBM’s transformation strategy.
Looking ahead, IBM expects free cash flow in fiscal 2023 to be $10.5 billion, while analysts expect the company to have an average free cash flow of $9.18 billion and annual sales growth of 1.2%. Arvind Krishna, CEO of the company, said: “As technology remains a differentiating force in today’s business environment, customers in all regions are increasingly embracing our hybrid cloud and artificial intelligence solutions (hybrid cloud revenue in 2022 of 22.4 billion, an increase of 11% year-on-year). The company is expected to achieve mid-single-digit revenue growth in 2023.”
Some analysts pointed out that IBM’s announcement of performance guidance shows that the market’s demand for the company’s consulting and software products remains stable. And the full-year free cash flow guidance of $10.5 billion will give the company some flexibility to make software acquisitions, especially given the impact of the recent decline in the company’s valuation on its transactions.
Chief Financial Officer James Kavanaugh (James Kavanaugh) said in an interview on Wednesday, “IBM expects to benefit from the impact of a weaker dollar exchange rate in 2023.” It will drag down the company’s performance in the first half of the year, and will have a positive impact on the company’s performance in the second half of the year.”
The upbeat annual forecast came as the company announced plans to cut roughly 1.5% of its global workforce, following similar layoffs by many of its tech peers over the past few months. Kavanaugh said. “The number of layoffs will reach about 3,900 people. The focus of the layoffs will be on the remaining employees after the spinoff of Kyndryl and Watson Health. The company will accrue about $300 million in expenses due to the layoff plan. IBM will still be committed to ” High-growth area “recruiting talent.”
As of press time, IBM’s share price fell 1.96% after hours to $138. The stock is up 5.4% in 2022 and is one of the few major tech companies to have gained in market capitalization in the last year.
