IBM (IBM) Reports Q3 2024 Financial Results with Revenue Growth, But Misses Forecasts

IBM has unveiled its financial results for the third quarter of the 2024 fiscal year, showing a modest growth in total revenue but missing analysts’ expectations. The company reported a total revenue of $14.968 billion, marking a 1% increase from the previous year, and 2% when not accounting for currency fluctuations. However, IBM faced a net loss of $330 million, turning from a profit of $1.704 billion in the same period last year.

The operational loss from continuing operations amounted to $317 million, a significant shift from a profit of $1.714 billion the previous year. Adjusted operating income stood at $2.2 billion, up 6% year-over-year, but still below the expected revenue performance. Despite surpassing analysts’ expectations for earnings per share, IBM’s revenue fell short, resulting in a nearly 3% drop in the stock price.

Key metrics include a tax loss before currency adjustments of $800 million, with a negative tax margin of 5.4%, and pre-tax profit from continuing operations of $2.5 billion. The software business segment, which includes hybrid platforms and transaction processing, saw a 9.7% revenue increase to $6.524 billion, whereas consulting and infrastructure segments faced declines.

Software margins improved to 83.2%, with mixed growth across different sectors such as a 14% rise in the Red Hat division and a slight decline in the security sector by 1%. Meanwhile, the consulting segment’s revenue declined slightly, and the infrastructure business faced a 7% drop in revenue due to a decrease in hybrid infrastructure sales.

IBM’s financing segment revenues decreased by 2.5%, and other business activities declined by 60%. Operational cash flow for the quarter was $2.9 billion, and free cash flow increased to $2.1 billion, with $1.5 billion returned to shareholders via dividends. The company maintains cash and securities worth $13.7 billion.

Looking ahead, IBM anticipates that its Q4 2024 revenue growth will align with the third quarter’s 2% rise, despite a 0.5 percentage point negative impact from currency changes. This forecast falls short of analyst expectations, with revenue predictions falling below the consensus of $17.91 billion.