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IBM NYSE· International Business Machines Corp
Earnings report Q3 2023

IBM Reports Strong Revenue Growth in Latest Quarter

Segments of Revenue

  • Financing revenue increased by 6.9% (5% adjusted for currency) compared to the prior year, driven by client financing revenue.
  • Storage Systems revenue decreased by 4.5% (6% adjusted for currency), primarily due to declines in Storage Systems but partially offset by growth in Power Systems.
  • Infrastructure Support revenue decreased by 6.5% (7% adjusted for currency), driven primarily by a decline in IBM logo product support.
  • Infrastructure revenue for the first nine months of 2023 decreased by 7.6% (6% adjusted for currency), driven by declines in Hybrid Infrastructure and Infrastructure Support.
  • Technology Consulting revenue increased by 2.0% (1% adjusted for currency), driven by growth in cloud-based application development and modernization work.
  • Application Operations revenue increased by 7.4% (7% adjusted for currency), driven by cloud application management and platform engineering services.

Strengths

  • IBM reported strong revenue growth in the latest quarter, with a 6.9% increase in total revenue compared to the prior year.
  • The increase in financing revenue indicates that IBM's financing solutions are effectively facilitating clients' acquisition of IBM information technology systems, software, and services.
  • Data and technology transformations, including AI and analytics-focused projects, contributed to revenue growth in certain segments.
  • Finance and supply chain transformations also contributed to revenue growth in the quarter.

Challenges

  • Storage Systems revenue declined, which may indicate challenges in that particular segment.
  • Infrastructure Support revenue decreased, primarily due to a decline in IBM logo product support, suggesting potential challenges in that area.
  • Hybrid Infrastructure revenue declined, driven by the strong launch of the z16 program in the second quarter of 2022, indicating challenges in that specific sub-segment.
  • On-premise application-focused projects experienced declines, which may pose challenges for IBM in that area.

Noteworthy

  • IBM's financing segment generated solid returns on equity while facilitating clients' acquisition of IBM technology solutions.
  • The company introduced innovation across Storage Systems and Power10 in the prior year, which contributed to strong revenue growth during that period.
  • Data and technology transformations, as well as finance and supply chain transformations, played a significant role in driving revenue growth in the latest quarter.

Summary

IBM reported strong revenue growth in the latest quarter, with a 6.9% increase compared to the prior year. The financing segment performed well, generating solid returns on equity and facilitating clients' acquisition of IBM technology solutions. However, challenges were observed in certain segments, such as Storage Systems and Infrastructure Support, which experienced revenue declines. The decline in Hybrid Infrastructure revenue was primarily driven by the strong launch of the z16 program in the previous year. Despite these challenges, data and technology transformations, along with finance and supply chain transformations, contributed to revenue growth in the quarter. Overall, IBM's latest quarter performance demonstrates both strengths and challenges, highlighting the importance of continued innovation and addressing specific segment weaknesses.

Source documents

Form 10-Q  filed on Oct 31, 2023
91 pages scanned

Reference data

Company financials Q3 revenue 17.38B
Analyst estimates Q3 EPS beat by 1.79%
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