Q3 2024 International Business Machines Corp Earnings Call Transcript
Key Points
- International Business Machines Corp (IBM) reported double-digit revenue growth in its software segment, driven by strong performance in Red Hat and transaction processing.
- The company achieved the highest levels of cash generation in the first nine months in many years, indicating strong operational efficiency.
- IBM's AI-related business has grown significantly, with a book of business over $3 billion, highlighting its leadership position in the AI market.
- The software segment profit margin was approximately 30%, reflecting strong profitability in this area.
- IBM's strategic focus on hybrid cloud and AI is paying off, with software now comprising nearly 45% of total revenue, up from the high 20s in 2018.
- Consulting revenue was flat and at the lower end of expectations, impacted by economic uncertainty and a pause in discretionary spending.
- Infrastructure revenue declined by 7%, reflecting product cycle dynamics and challenges in the market.
- The consulting market remains dynamic, with clients reprioritizing spending, which has led to a decline in overall signings for the second consecutive quarter.
- Currency fluctuations are expected to be a headwind, with a 0.5 point impact on revenue growth in the fourth quarter.
- Despite strong software growth, the overall revenue growth for the quarter was only 2% at constant currency, indicating mixed performance across segments.
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 third-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. We'll post today's prepared remarks on the IBM investor website within a couple of hours, and a replay will be available by 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 and signings growth are at constant currency. We provided reconciliation charts for these and other non-GAAP
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