IBM Stock Price Edged Higher on Positive Q3 FY23 Earning Results

The IBM Common Stock (NYSE: IBM) stock price edged 0.96% higher after releasing its Q3 earnings results, as the company demonstrated robust revenue growth, with total revenue reaching $14.8 billion, representing a substantial increase of 4.6%. The revenue grew significantly, marking a 3.5% increase at constant currency rates.

Breaking down the revenue by segments, software revenues were up 7.8% to $6.3 billion, while consulting revenues came in at $5.0 billion, up 5.6%, up 5.0% at constant currency. Infrastructure revenues were down 2.4% at $3.3 billion and 3.2% at constant currency. 

Arvind Krishna, IBM’s chairman and CEO, said: “Technology remains a critical source of competitive differentiation and progress for organisations around the world. Clients are increasingly adopting our watsonx AI and data platform along with our hybrid cloud solutions to unlock productivity and operational efficiency. This is helping drive solid growth in our software and consulting businesses. As a result, we remain confident in our revenue and free cash flow growth expectations for the full year.”

The company's profit margins also exhibited notable improvements. Gross Profit Margin, as per GAAP, stood at 54.4%, marking a significant increase of 1.7 points. The Operating (Non-GAAP) Gross Profit Margin also saw a substantial uptick, reaching 55.5%, reflecting a gain of 1.6 points.

IBM’s Pre-Tax Income Margin displayed remarkable growth, with GAAP reporting a 44.6-point increase to 12.7%. The Operating (Non-GAAP) Pre-Tax Income Margin also saw a notable boost, rising to 15.6%, with an increase of 1.7 points. 

The financial report also highlighted the company's sound cash flow management. Year-to-date net cash from operating activities reached an impressive $9.5 billion, reflecting a substantial increase of $3.0 billion. Free cash flow, a key metric for financial strength, also demonstrated positive growth, reaching $5.1 billion, with an increase of $1.0 billion.

James Kavanaugh, IBM senior vice president and CFO, said: “Our continued focus on the fundamentals of our business is driving solid revenue growth, profit margin expansion, and strong cash generation. That cash generation has enabled us to increase our investment in R&D and acquisitions, strengthening our future AI and hybrid cloud capabilities while supporting continued shareholder returns through our dividend.”

IBM stock price. 

The IBM stock price edged 0.96% higher to trade at $138.40 from Wednesday’s closing price of $137.08.