IBM's first-quarter revenue was $14.462 billion, with a year-on-year net profit growth of 69%.

Sina Technology News, April 25th, Beijing time, IBM released its first quarter financial report for 2024 today: revenue was $14.462 billion, a year-on-year increase of 1%, and a 3% increase excluding the impact of exchange rate changes; net profit was $1.605 billion, a significant increase compared to $927 million in the same period last year; net profit from continuing operations was $1.575 billion, a 69% increase compared to $934 million in the same period last year.

IBM's adjusted earnings per share for the first quarter exceeded Wall Street analysts' expectations, but revenue did not meet expectations. In addition, IBM announced its plan to acquire cloud software developer HashiCorp at a price of $35 per share, with the payment in cash, valuing the latter at $6.4 billion. IBM expects the transaction to be completed by the end of 2024 and to generate gains in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in the first year after the completion of the transaction.

After releasing the first quarter financial report and announcing the acquisition, IBM's stock price fell more than 8% after hours.

Key performance:

For the fiscal quarter ending March 31, 2024, IBM's net profit was $1.605 billion, a significant increase compared to $927 million in the same period last year.

In the first quarter, IBM's profit from continuing operations was $1.575 billion, a 69% increase compared to $934 million in the same period last year; diluted earnings per share from continuing operations were $1.69, a 66% increase compared to $1.03 in the same period last year. IBM's profit from non-continuing operations in the first quarter was $30 million, while the loss from non-continuing operations in the same period last year was $7 million; diluted earnings per share from non-continuing operations were $0.03, while the diluted loss per share from non-continuing operations in the same period last year was $0.01.

Excluding certain one-time items according to US GAAP, IBM's operating profit from continuing operations in the first quarter was $1.6 billion, a 25% increase compared to $1.2 billion in the same period last year; diluted operating earnings per share from continuing operations were $1.68, a 24% increase compared to $1.36 in the same period last year, which exceeded analysts' previous expectations. According to data provided by Yahoo Finance, 12 analysts had previously expected IBM's first quarter earnings per share to reach $1.60.

IBM's revenue for the first quarter was $14.462 billion, a 1% increase compared to $14.252 billion in the same period last year, and a 3% increase excluding the impact of exchange rate changes, but this performance did not meet analysts' previous expectations. According to data provided by Yahoo Finance, 11 analysts had previously expected IBM's first quarter revenue to reach $14.55 billion.

IBM's gross profit for the first quarter was $7.742 billion, a 3% increase compared to $7.509 billion in the same period last year; excluding certain one-time items according to US GAAP, IBM's operating gross profit for the first quarter was $7.913 billion, a 3% increase compared to $7.658 billion in the same period last year.

IBM's total gross profit margin for the first quarter was 53.5%, an increase of 80 basis points compared to 52.7% in the same period last year. Excluding certain one-time items according to US GAAP, IBM's total operating gross profit margin for the first quarter was 54.7%, an increase of 100 basis points compared to 53.7% in the same period last year. By business segment, IBM's software department's gross profit margin for the first quarter was 82.4%, a slight decrease compared to 82.6% in the same period last year; the consulting department's gross profit margin for the first quarter was 25.3%, a slight decrease compared to 25.5% in the same period last year; the infrastructure department's gross profit margin for the first quarter was 54.2%, a slight increase compared to 51.8% in the same period last year; the financing department's gross profit margin for the first quarter was 48.5%, an increase compared to 43.9% in the same period last year.

Costs and expenses:

IBM's total expenses and other income for the first quarter were $6.669 billion, an increase compared to $6.451 billion in the same period last year. Among them, selling, general and administrative expenses were $4.974 billion, an increase compared to $4.853 billion in the same period last year; research and development expenses were $1.796 billion, an increase compared to $1.655 billion in the same period last year; intellectual property and custom development income were $216 million, an increase compared to $180 million in the same period last year; other income was $317 million, an increase compared to $245 million in the same period last year; interest expenses were $432 million, an increase compared to $367 million in the same period last year.

Performance data for each department:

For the first quarter of the 2024 fiscal year, IBM's software business department (including hybrid platform and solution business and transaction processing business) had revenue of $5.899 billion, a 5.5% increase compared to $5.591 billion in the same period last year, and a 5.9% increase excluding the impact of exchange rate changes. Among them:

(1) Revenue from the hybrid platform and solution department increased by 6%, and by 7% excluding the impact of exchange rate changes. Within the hybrid platform and solution segment:

- Revenue from the Red Hat department increased by 9%;

- Revenue from the Automation department increased by 13%;

- Revenue from the Data and AI (Artificial Intelligence) department increased by 1%;

- Revenue from the Security department decreased by 3%.

(2) Revenue from the transaction processing department increased by 3%, and by 4% excluding the impact of exchange rate changes.

For the first quarter of the 2024 fiscal year, IBM's consulting business department (including business transformation, technology consulting, and application business) had revenue of $5.186 billion, a 0.2% decrease compared to $5.197 billion in the same period last year, and a 1.7% increase excluding the impact of exchange rate changes. Among them:

- Business transformation revenue increased by 1%, and by 3% excluding the impact of exchange rate changes.

- Technical consulting revenue increased by 1% year-on-year, excluding the impact of exchange rate changes, it increased by 3% year-on-year.

- Application operation revenue decreased by 3% year-on-year, excluding the impact of exchange rate changes, it decreased by 1% year-on-year.

In the first quarter of the fiscal year 2024, IBM's Infrastructure Business Unit (including Hybrid Infrastructure and Infrastructure Support) revenue was $30.76 billion, a decrease of 0.7% compared to $30.98 billion in the same period last year, excluding the impact of exchange rate changes, it increased by 0.2% year-on-year. Among them:

(1) Revenue of the Hybrid Infrastructure unit increased by 5% year-on-year, excluding the impact of exchange rate changes, it increased by 6% year-on-year. Within the Hybrid Infrastructure unit:

- Revenue of "z Systems" increased by 4% year-on-year, excluding the impact of exchange rate changes, it increased by 5% year-on-year;

- Revenue of the Distributed Infrastructure unit increased by 6% year-on-year, excluding the impact of exchange rate changes, it increased by 7% year-on-year.

(2) Revenue of the Infrastructure Support unit decreased by 8% year-on-year, excluding the impact of exchange rate changes, it decreased by 7% year-on-year.

In the first quarter of the fiscal year 2024, IBM's Financing Department (including Customer and Commercial Financing Business) revenue was $1.93 billion, a decrease of 1.6% compared to $1.96 billion in the same period last year, excluding the impact of exchange rate changes, it decreased by 1.5% year-on-year.

Revenue from other business units in the first quarter of IBM was $1.08 billion, a decrease compared to $1.69 billion in the same period last year.

Other financial information:

IBM's net cash flow from operating activities in the first quarter was $4 billion, an increase of $400 million compared to the same period last year; excluding accounts receivable from the Global Financing Department, IBM's net cash flow from operating activities in the first quarter was $2.3 billion.

IBM's free cash flow in the first quarter was $1.9 billion, an increase of $600 million compared to the same period last year.

In the past 12 months, IBM's net cash flow from operating activities was $14.3 billion, and free cash flow was $11.8 billion.

In the first quarter, IBM returned $1.5 billion in cash to shareholders in the form of dividends.

As of the end of the first quarter of 2024, IBM held $19.3 billion in cash (including marketable securities), an increase of $5.8 billion compared to the end of 2023; total debt was $59.5 billion (including $9.9 billion in debt from the Global Financing Department), an increase of $3 billion compared to the end of 2023.

Performance outlook:

IBM currently expects, excluding the impact of exchange rate changes, the year-on-year growth rate of the company's full-year revenue for the fiscal year 2024 to be in the middle range of 1% to 9%. Based on current exchange rates, it is expected that exchange rate changes will have a negative impact of approximately 1.5 to 2 percentage points on the company's revenue growth rate for the fiscal year 2024.

According to data provided by Yahoo Finance, the average expectation of 18 analysts is that IBM's revenue for the entire fiscal year 2024 will reach $63.59 billion.

In addition, IBM continues to expect that the company's total free cash flow for the fiscal year 2024 will be around $12 billion.

Stock price reaction:

On the day, IBM's stock price rose by $1.91 in regular trading on the New York Stock Exchange, closing at $184.10, an increase of 1.05%. In subsequent after-hours trading until 6:16 PM Eastern Time on the 24th (6:16 AM Beijing Time on the 25th), IBM's stock price fell sharply by $15.11 to $168.99, a decrease of 8.21%. In the past 52 weeks, IBM's highest price was $199.18 and the lowest price was $120.55.