International Business Machines Corp (IBM, Financial) released its third-quarter earnings report on October 25, 2023. The company reported a revenue of $14.8 billion, marking a 4.6% increase, with software and consulting sectors leading the growth. The software revenue was up by 8%, while consulting revenue increased by 6%. However, the infrastructure revenue saw a decrease of 2%.
Financial Highlights
IBM's gross profit margin for the third quarter was 54.4%, up by 1.7 points. The pre-tax income margin was 12.7%, up by 44.6 points. The company's year to date net cash from operating activities was $9.5 billion, up by $3.0 billion, and the free cash flow was $5.1 billion, up by $1.0 billion.
IBM's senior vice president and chief financial officer, James Kavanaugh, commented on the company's performance, stating,
Our continued focus on the fundamentals of our business is driving solid revenue growth, profit margin expansion, and strong cash generation. That cash generation has enabled us to increase our investment in R&D and acquisitions, strengthening our future AI and hybrid cloud capabilities, while supporting continued shareholder returns through our dividend.”
Segment Results
IBM's software segment reported revenues of $6.3 billion, up by 7.8%. The consulting segment reported revenues of $5.0 billion, up by 5.6%. However, the infrastructure segment reported a decrease in revenues by 2.4%, amounting to $3.3 billion. The financing segment reported revenues of $0.2 billion, up by 6.9%.
Cash Flow and Balance Sheet
In the third quarter, IBM generated net cash from operating activities of $3.1 billion, up by $1.2 billion year to year. The company's free cash flow was $1.7 billion, up by $0.9 billion year to year. IBM ended the third quarter with $11.0 billion of cash and marketable securities, up by $2.2 billion from year-end 2022.
For the first nine months of the year, the company generated net cash from operating activities of $9.5 billion, up by $3.0 billion year to year. IBM's free cash flow was $5.1 billion, up by $1.0 billion year to year.
Looking ahead, IBM continues to expect constant currency revenue growth of three percent to five percent and about $10.5 billion in free cash flow, up more than $1 billion year to year.
Explore the complete 8-K earnings release (here) from International Business Machines Corp for further details.
