Q4 2024 International Business Machines Corp Earnings Call Transcript
Key Points
- International Business Machines Corp (IBM) reported a strong close to 2024 with a 3% revenue growth and $12.7 billion in free cash flow, marking the highest level of cash flow generation in many years.
- The software segment showed significant momentum, growing by 9% in 2024, with Red Hat achieving double-digit growth.
- IBM's generative AI book of business grew to over $5 billion, with substantial contributions from both software and consulting.
- The company delivered strong and accelerating revenue growth of 11% in the fourth quarter, led by Red Hat's 17% increase.
- IBM's focus on innovation and strategic partnerships, including collaborations with companies like SAP, Amazon, and Microsoft, positions it well for future growth.
- Consulting revenue was down 1% for the year, impacted by a dynamic market environment and clients reprioritizing spending.
- Infrastructure revenue declined by 6%, reflecting product cycle dynamics, particularly in the IBM Z segment.
- Despite strong signings, the consulting segment's growth was below expectations, with a need for acceleration in 2025.
- The macroeconomic environment, including geopolitical tensions and interest rate volatility, poses ongoing challenges.
- IBM's free cash flow growth is offset by cash tax headwinds and higher capital expenditures, impacting overall financial flexibility.
Welcome and thank you for standing by. (Operator Instructions)
Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now I will turn the meeting over to Olympia McNerney, IBM's Global Head of Investor Relations. Olympia, you may begin.
Thank you. I'd like to welcome you to IBM's fourth-quarter 2024 earnings presentation. I'm Olympia McNerney, and I'm here today with Arvind, Krishna, IBM's Chairman, President, and Chief Executive Officer; and Jim Kavanaugh, IBM's Senior Vice President and Chief Financial Officer.
Will post today's prepared remarks on the IBM website within a couple of hours and a replay will be available at this time tomorrow. To provide additional information to our investors, our presentation includes certain non-GAAP measures. For example, all of our references to revenue in signings growth at constant currency. We provided reconciliation charts for these and other non-GAAP financial
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