IBM Q4 2022 Earnings

IBM CEO Arvind Krishna speaks at a panel session at the World Economic Forum in Davos, Switzerland on January 17, 2023.

Stefan Wermuth | Bloomberg | Getty Images

IBM reported quarterly revenue on Wednesday that beat analysts’ estimates, boosted by stronger-than-expected growth in the company’s software and infrastructure segments. Here’s how the company did it:

  • Earnings: $3.60 per share, adjusted, versus $3.60 per share as expected by analysts, according to Refinitiv.
  • income: $16.69 billion, versus the $16.4 billion expected by analysts, according to Refinitiv.

Analysts had expected IBM’s total revenue to decline for the first time in two years, but it ended up being flat, the statement said. Net income rose 16% to $2.71 billion.

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The company plans to cut about 3,900 jobs, representing 1.5% of IBM’s workforce, CNBC confirmed. Bloomberg previously reported the cuts. IBM said it expects to take a $300 million charge in the first quarter related to the spinoff of Kindril, its managed infrastructure business, and last year’s sale of its Watson healthcare unit.

IBM’s software segment posted $7.29 billion, up nearly 3% and above the $7.12 billion consensus among analysts polled by StreetAccount.

The company collected $4.77 billion in consulting revenue, up 0.5% and slightly below StreetAccount’s consensus of $4.8 billion.

IBM’s infrastructure segment generated $4.48 billion, up nearly 2% and beating the StreetAccount consensus of $4.18 billion. Revenue from IBM’s Z Systems line of mainframe computers jumped 16% after the Z16 model became generally available last May.

As for guidance, IBM called for 2023 revenue growth in constant currency — Jim Kavanaugh, IBM’s chief financial officer, said on a conference call that it would be prudent to expect it to be at the lower end of its model for mid-single-digit growth. of revenue — and about $10.5 billion in free cash flow. In 2021, IBM announced a goal of delivering $35 billion in free cash flow between 2022 and 2024, with 2022 free cash flow of $9.29 billion.

The company is also extending the life of servers and network equipment, starting Jan. 1, which will increase pretax income by more than $200 million, Cavanaugh said. Amazon and Microsoft they have made similar changes before.

During the quarter, IBM revealed a plan to invest $20 billion in New York’s Hudson Valley area over a decade. The company also announced a next-generation quantum computer with 433 qubits and the acquisition of Octo, one of several consulting firms IBM has absorbed since its founding. Kindril in 2021

IBM outperformed its tech peers in 2022, the worst year for the Nasdaq since 2008. IBM rose 11% last year and was one of only two U.S. technology companies valued at $50 billion or more to post gains. The other was VMware, which in May agreed to be bought by Broadcom for $61 billion.

Executives will discuss the results with analysts on a conference call beginning at 5:00 PM ET.

This is breaking news. Check back for updates.

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