IBM Q1 earnings top estimates; Shares jump

By Yasin Ebrahim

Investing.com -- IBM reported Wednesday fourth-quarter earnings that beat analysts’ forecasts, driven by an uptick in margins amid demand in its software business and cost cuts.

International Business Machines (NYSE:IBM) was about 3% higher in after-hours trade following the report.

IBM reported earnings per share of $1.36 on revenue of $14.3 billion. Analysts polled by Investing.com anticipated EPS of $1.27 on revenue of $14.37B.

The company's software business, which includes transaction processing and hybrid platform&solutions, reported revenues of $5.9B, up 2.6%.

Hybrid platform&solutions drove the bulk of growth following an 11% jump in Red Hat.

Consulting, and financing revenue rose 2.8% and 27.3% respectively, while Infrastructure revenue slipped 3.7% in Q1 year-on-year.  

Gross margin climbed to 52.7% from 51.7% in the same period a year earlier, boosting cash flow. Free cash flow climbed $0.1B to $1.3B.

"[W]e again expanded our gross profit margin, improved our underlying profit performance and increased our cash generation," the company said.

For fiscal 2023, the company guided revenue growth of three-to-five percent, with full-year free cash flow expected to be about $10.5B, up $1B from the prior year.