IBM has announced its financial results for the second quarter of 2024, showcasing a strong performance driven by substantial revenue growth and increased free cash flow. The company reported revenue of $15.8 billion for the quarter, reflecting a 2% increase from the previous year, or 4% when adjusted for constant currency.
“We had a strong second quarter, exceeding our expectations, driven by growth in both revenue and free cash flow. We continue to see that clients turn to IBM for our technology and our expertise in enterprise AI, and our book of business for generative AI has grown to more than two billion dollars since the launch of watsonx one year ago,” said Arvind Krishna, IBM chairman and chief executive officer. “Given our first-half results, we are raising our full-year view of free cash flow, which we now expect to be more than $12 billion.”
- The Software segment achieved revenues of $6.7 billion, reflecting a 7.1% increase (8.4% at constant currency). This growth was driven by a 5% rise in Hybrid Platform & Solutions. Revenue from Red Hat, automation and security grew by 7%, 15% and 2% respectively while data and AI revenue went down 3%. Transaction Processing also saw a robust increase of 11%.
- The Consulting segment recorded revenues of $5.2 billion, a slight decrease of 0.9%, but a 1.8% increase at constant currency. Within this segment, Business Transformation grew by 3%, Technology Consulting declined by 3%, and Application Operations decreased by 4%.
- Infrastructure revenues were $3.6 billion, up 0.7% (2.7% at constant currency). The Hybrid Infrastructure sub-segment grew by 4%, with IBM Z up 6% and Distributed Infrastructure up 3%. Infrastructure Support, however, declined by 5%.
- The Financing segment generated revenues of $0.2 billion, down 8.3% (6.6% at constant currency).
Cash flow in Q2 2024
In the second quarter, IBM generated $2.1 billion in net cash from operating activities, down $0.6 billion year-over-year. Free cash flow for the quarter was $2.6 billion, an increase of $0.5 billion year-over-year. The company returned $1.5 billion to shareholders in dividends during this period.
For the first half of the year, net cash from operating activities totaled $6.2 billion, down $0.2 billion from the previous year, while free cash flow was $4.5 billion, up $1.1 billion. Over the last twelve months, IBM generated $13.8 billion in net cash from operating activities and $12.3 billion in free cash flow.
By the end of the second quarter, IBM had $16.0 billion in cash, restricted cash, and marketable securities, an increase of $2.5 billion from the end of 2023. The company’s total debt, including $11.1 billion in IBM Financing debt, remained flat at $56.5 billion year-to-date.
Outlook for 2024
Looking ahead, IBM has revised its full-year forecast, now expecting free cash flow to exceed $12 billion. The company continues to anticipate constant currency revenue growth aligned with its mid-single digit model, though foreign exchange rates may present a slight headwind.
Alphabet also reveals Q2 earnings for 2024
A few days ago, Google parent, Alphabet Inc. reported impressive financial results for Q2 2024, with revenues hitting $85 billion, a 14% year-over-year increase driven by Search and Cloud. Cloud revenues surpassed $10 billion for the first time, achieving $1 billion in operating profit. Operating income was $27.43 billion, and net income reached $23.62 billion.
YouTube ad revenue totaled $8.66 billion, and the “Google subscriptions, platforms, and devices” segment, which includes hardware, Play Store, and non-advertising YouTube revenues, contributed $9.31 billion. Overall, Google services, including Search, generated $73.92 billion.
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