IBM reported third-quarter 2024 earnings with $15 billion in revenue, a 1% increase (or 2% at constant currency) compared to last year. Software led the growth, climbing 10% with strong performance from Red Hat, which grew 14%. This re-acceleration reflects IBM’s strategic investments in AI and hybrid solutions. Gross profit margin increased by 190 basis points, reaching 56.3% on a GAAP basis, and IBM anticipates further margin expansion as it focuses on software-driven growth and productivity initiatives. Consulting revenue remained stable, while infrastructure revenue declined by 7%, largely due to a drop in IBM Z sales.
IBM’s AI initiatives have gained traction, now boasting a $3 billion generative AI book of business—an increase of over $1 billion from the previous quarter. Year-to-date free cash flow reached $6.6 billion, aligning with IBM’s confidence in delivering over $12 billion in free cash flow for 2024. This quarter’s earnings reflect IBM’s sharpened focus on high-growth areas like hybrid platforms and automation.
• Total Revenue: $15 billion (up 1%, or 2% at constant currency)
• Software Revenue: $6.5 billion (up 10%), including:
• Red Hat: up 14%
• Automation: up 13%
• Data & AI: up 5%
• Consulting Revenue: $5.2 billion (flat), with Business Transformation up 2%
• Infrastructure Revenue: $3 billion (down 7%), including:
• IBM Z: down 19%
• Distributed Infrastructure: down 3%
• Gross Profit Margin: 56.3% GAAP (up 190 basis points)
• Free Cash Flow Year-to-Date: $6.6 billion
“Our third-quarter performance was led by double-digit growth in Software, including a re-acceleration in Red Hat. Heading into the final quarter of 2024, we expect consistent revenue growth with continued strength in Software,” said Arvind Krishna, CEO of IBM.
