IBM reported better-than-expected fourth quarter results and CEO Arvind Krishna said, "our book of business for watsonx and generative AI roughly doubled from the third to the fourth quarter."
The company reported fourth-quarter revenue of $17.4 billion, up 4% from a year ago. IBM showed revenue growth in software, consulting, and infrastructure. Big Blue delivered fourth-quarter earnings of $3.54 a share and $3.87 a share on a non-GAAP basis.
Wall Street was looking for IBM to report fourth quarter earnings of $3.80 a share on revenue of $17.28 billion. Krishna said IBM expects 2024 revenue growth in the mid-single digit range with about $12 billion in free cash flow.
Krishna's reference to watsonx's book of business highlights the trend of companies talking about future revenue. On a conference call, Krishna said:
"We are confident in achieving our midterm revenue model and the strength of our diversified business model allows us to make progress each quarter. We enter the year intend on enhancing our software portfolio and strengthening our consulting position. We have done both. Mid last year we launched watsonx, our flagship AI and data platform. We are excited by the traction we are seeing."
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Krishna added:
"Last quarter I shared with you that our book of business the third quarter, specifically related to generative AI and watsonx, was in the low hundreds of millions. Since then demand continues to increase. And our book of business in the fourth quarter is roughly double that third quarter. We continue to have thousands of hands on private interactions, including an acceleration and pilots that were completed during the quarter. Software transactional revenue and SaaS ACV was approximately a third of our book of business related generative AI in the fourth quarter two-thirds was consulting signings. There was a balance of both large and small transactions across both segments."
For 2023, IBM reported revenue of $61.9 billion, up 2%, with earnings of $8.15 a share.
By the numbers for the fourth quarter:
- Red Hat revenue was up 8% as software revenue overall was $7.5 billion, up 3.1% from a year ago.
- Consulting revenue was $5 billion, up 5.8% from a year ago.
- Infrastructure revenue was $4.6 billion, up 2.7% from a year ago. IBM zSystems revenue was up 8% in the quarter.
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