International Business Machines Corp. (IBM) reported its fourth-quarter 2024 earnings, showcasing better-than-expected sales and profit figures, largely driven by its expanding generative AI business. The company achieved a 1% increase in revenue to $17.6 billion, with software revenue climbing 10%, bolstered by a 16% rise in Red Hat sales. IBM's generative AI bookings have surged to over $5 billion, marking a $2 billion increase from the previous quarter. CEO Arvind Krishna highlighted the company's strategic focus on AI and software, stating, "Clients globally continue to turn to IBM to transform with AI."
IBM's gross profit margin improved, with GAAP margins rising by 40 basis points to 59.5%, and operating margins increasing by 50 basis points to 60.6%. The company's free cash flow for the year reached $12.7 billion, surpassing expectations. IBM's strong performance in its software segment, particularly in hybrid platforms and solutions, has been a key driver of its financial success. The company also announced its expectations for 2025, projecting at least 5% revenue growth and $13.5 billion in free cash flow, indicating continued confidence in its strategic direction.
IBM shares closed at $228.63, up 1.32% from the previous close of $225.66, and surged 7.68% to $246.2 in after-hours trading on January 29th.