IBM (IBM) Q4 2023 earnings summary

Executive summary

• Q4 revenue grew 3.3% at constant currency (CC), with growth across all segments; FY23 revenue rose 3% at CC to $61.9B.

• Hybrid cloud and AI adoption supported performance; the watsonx and generative AI book of business doubled from Q3 to Q4.

• FY23 free cash flow (FCF) was $11.2B, exceeding the stated objective; FY24 guidance calls for mid-single-digit revenue growth and ~$12B FCF.

Financial highlights

• Q4 revenue was $17.4B, up 4.1% reported and 3.3% at CC; GAAP net income was $3.3B and EPS was $3.54, while operating net income was $3.6B and EPS was $3.87.

• FY23 revenue was $61.9B, up 2% reported and 3% at CC; GAAP net income was $7.5B and EPS was $8.15, while operating net income was $8.9B and EPS was $9.62.

• FY23 net cash from operating activities was $13.9B, up $3.5B YoY; FCF was $11.2B, up $1.9B.

• FY23 operating gross margin was 56.5%, up 1.3 points YoY; operating pre-tax margin was 16.7%, up 0.4 points.

• FY23 operating adjusted EBITDA was $15.5B, versus $14.6B in FY22.

Outlook and guidance

• FY24 CC revenue growth is expected to be consistent with the mid-single-digit model; FX at current rates is expected to be a ~1-point headwind.

• FY24 FCF is expected to be ~$12B.

• Annual run-rate productivity savings target increased to $3B; FY24 operating pre-tax margin is expected to improve ~0.5 points YoY, while GAAP pre-tax margin is expected to be flat.