After-hours stock price rose more than 8%! IBM's Q4 revenue and EPS exceeded expectations, and the 2024 performance outlook is optimistic.

Zhitong App learned that IBM announced its fourth-quarter performance for 2023 after the U.S. stock market closed on Wednesday. The data showed that the company's fourth-quarter revenue was $17.4 billion, a year-on-year increase of 4.1%, surpassing market expectations of $17.3 billion. The earnings per share, excluding certain items, were $3.87, also exceeding market expectations of $3.76.

The consulting business revenue grew by 6% to $5 billion, slightly lower than analysts' expectations of $5.1 billion. In recent quarters, due to economic uncertainty affecting clients' interest in large projects, investors have been concerned about the weak performance of this business segment.

The software business revenue was $7.5 billion, also slightly lower than analysts' expectations of $7.7 billion. The sales of Red Hat, the software division acquired by IBM in 2019, grew by 8%. For Red Hat, which used to grow by over 20% every quarter, this was a relatively slow quarter.

IBM also announced optimistic expectations for revenue and cash flow in 2024, which is a positive signal for the recovery of corporate technology spending.

IBM expects free cash flow to reach approximately $12 billion in 2024, surpassing market expectations of $10.9 billion. IBM also expects revenue to grow at a "mid-single-digit" rate in 2024, with market expectations of about 3% growth.

In recent years, IBM has been focusing on streamlining its software and services businesses, divesting its managed infrastructure, weather, and healthcare businesses. The company has also launched new products to capitalize on the growing interest in artificial intelligence.

IBM CEO Arvind Krishna stated in a statement, "The demand for artificial intelligence from customers is accelerating. From the third quarter to the fourth quarter, our WatsonX and generative AI businesses have approximately doubled."

IBM also expects a low single-digit percentage reduction in its workforce. Prior to IBM's planned layoffs, major tech companies including Google and Amazon announced similar layoff plans in January of this year. IBM CFO James Kavanaugh stated that the company's restructuring expenses may be similar to last year's $400 million, when IBM laid off approximately 3,900 people. However, Kavanaugh stated that the company will continue to hire for certain positions and expects the number of employees to remain roughly the same by the end of the year. As of the end of 2023, IBM had 288,000 employees.

As of the time of writing, IBM's stock rose 8.27% after hours, reaching $188.32.