IBM's Q3 2024 Revenue: Lower than Expected

IBM's stock took a dip in after-hours trading on Wednesday, slipping around 3%. The reason? The tech giant didn't quite meet Wall Street's expectations for quarterly revenue. Let's dive into the details. IBM reported earnings per share of $2. 30, just a touch higher than the $2. 23 analysts had predicted. However, the company's total revenue stood at $14. 97 billion, falling short of the projected $15. 07 billion. Looking at the year-over-year growth, IBM saw a 1. 5% increase in overall revenue. But, it posted a net loss of $330 million, compared to a net income of $1. 70 billion in the same period last year. This turnaround happened due to a one-time pension charge tied to a deal with Prudential. For the upcoming quarter, IBM expects revenue growth at constant currency to keep pace with the recently reported quarter's 2% growth. The company also reaffirmed its target of exceeding $12 billion in free cash flow for 2024. In the software segment, IBM raked in $6. 52 billion, a 10% rise from the previous year. This beat analyst expectations of $6. 37 billion. Notably, revenue from Red Hat, an acquisition from 2019, jumped 14%, compared to 7% in the second quarter.

The consulting revenue, on the other hand, saw a minor decline of 0. 5%, landing at $5. 15 billion. This is a bit less than the projected $5. 19 billion. The consulting unit faced economic uncertainties, similar to its competitors. Infrastructure segment revenue dropped 7% to $3. 04 billion, falling below the $3. 24 billion analysts had forecasted. Clients are eagerly awaiting new mainframe computers, expected in the first half of 2025. IBM's generative AI business is booming, with a book of business now exceeding $3 billion, a significant increase from the previous quarter. Additionally, IBM expanded its Oracle product consultant network and purchased Oracle services company Accelalpha. It sold QRadar cloud software assets to Palo Alto Networks and acquired StreamSets and webMethods from Software AG. Year-to-date, IBM shares have risen about 43%, outperforming the S&P 500 index's 21% gain over the same period. IBM executives will discuss these results in a call with analysts starting at 5 p. m. ET. Stay tuned for updates.

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