(CTN News) – IBM’s Software unit generated a revenue of $6.27 billion during Q3 2023, which represents an 8% increase from Q3 2022. A positive outlook has also been provided by the company for the fourth quarter of the year.
As IBM Corporation (NYSE: IBM) reported its Q3 2023 results on Wednesday, October 25, the stock of the technology company rose by 1%, beating Wall Street expectations for the period.
Based on the official statement released by IBM in response to the company’s quarterly financial results, IBM’s total revenue increased by 4.6% year-over-year in the third quarter, or 3.5% when adjusted for constant currency fluctuations.
During this period, the company generated a net income of $1.70 billion, equivalent to $1.84 per share for the period.
A net loss of $3.20 billion, or $3.54 per share, was reported in the corresponding quarter of last year, which represents a significant improvement over the net loss reported in the corresponding quarter a year ago. A $5.9 billion charge for a pension settlement was primarily responsible for the net loss in the third quarter of the previous year.
This year, IBM’s Software unit generated $6.27 billion in revenue, an increase of about 8% over last year. As a result, this is in line with the consensus estimate of analysts surveyed by StreetAccount, which was $6.27 billion.
On the other hand, IBM’s Consulting division achieved $4.96 billion in revenue in Q3 2023, a growth of around 6%, but it fell short of StreetAccount’s consensus, which had estimated that the company would achieve $5.11 billion in revenue.
In the August quarter of the previous month, Accenture reported a 12% decline in revenue from communications, media, and technology clients as compared to the same quarter in the previous year. In a statement to Kristina Partsinevelos about the development, Jim Kavanaugh, IBM’s chief financial officer, said the following:
According to Kavanaugh, however, clients continue to prioritize cost reduction over discretionary consulting projects, which creates a challenge for discretionary consulting projects. It appears that the consulting results for this project fell short due to the significantly stronger U.S. dollar position compared to 90 days ago.
IBM issues its full-year guidance
Management reaffirmed its full-year guidance, which includes an expectation of revenue growth ranging from 3% to 5% at constant currency, along with free cash flow of $10.5 billion. A total of $5.12 billion in free cash flow has already been generated by the company this year.
Kavanaugh mentioned the following during a conference call with analysts:
It was during the quarter that IBM introduced Granite, a set of generative artificial intelligence models that were developed for the purpose of composing and summarizing texts.
Also, the company announced its support for Hugging Face and completed its acquisition of Apptio, a provider of cloud cost management tools, from Vista Equity Partners for $4.6 billion.
Arvind Krishna, IBM’s CEO, stated, “Our book of business in the third quarter is specifically related to generative artificial intelligence.