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Highlights
- Q4 Revenue: $17.6 billion, up 1% YoY (2% in constant currency).
- Software Revenue: Increased 10% in Q4 and 8% for the year.
- Full-Year Free Cash Flow: $12.7 billion, with a strong outlook for $13.5 billion in 2025.
IBM Corporation (NYSE:IBM) has announced its fourth-quarter 2024 earnings results, reflecting a solid performance in software and profitability, despite challenges in its consulting and infrastructure segments. The company’s robust cash flow generation and positive outlook for 2025 demonstrate its continued focus on driving growth in strategic areas.
Q4 2024 Performance
IBM reported Q4 revenue of $17.6 billion, marking a 1% increase year-over-year, or 2% growth in constant currency. The company showed strength in its Software segment, with a 10% increase in revenue (11% at constant currency). Conversely, Consulting revenue declined by 2%, and Infrastructure revenue saw a downward slide of 8% (6% decline in constant currency).
Profitability in the quarter was strong, with the gross profit margin reaching 59.5% on a GAAP basis, up 40 basis points from the previous year. On an operating (non-GAAP) basis, the gross margin was 60.6%, up 50 basis points. These margins reflect the company’s ability to manage costs and drive growth in higher-margin software and consulting businesses.
Full-Year 2024 Results
For the full year, IBM achieved $62.8 billion in total revenue, representing a 1% increase year-over-year, or 3% growth at constant currency. Software revenue saw an 8% increase for the year (9% in constant currency), while Consulting revenue remained relatively flat, declining by just 1%. Infrastructure revenue was down by 4%, or 3% at constant currency.
The company posted a strong gross profit margin for the year, with GAAP margins reaching 56.7%, up 120 basis points from the prior year. The operating (non-GAAP) margin was 57.8%, reflecting an increase of 130 basis points.
IBM also generated impressive free cash flow for the year, totaling $12.7 billion, underpinned by strong operational performance. Net cash from operating activities was $13.4 billion, solidifying the company’s financial strength.
2025 Outlook
Looking ahead to full-year 2025, IBM expects constant currency revenue growth of at least 5%. However, at current foreign exchange rates, currency fluctuations are expected to create a two-point headwind to growth. The company also anticipates generating around $13.5 billion in free cash flow for the year, indicating continued strong cash generation and financial discipline.
