Image source: © Bidermann | Megapixl.com

Highlights

  • In Q1 FY24, IBM reported a 73% surge in net profit to USD 1.6 billion
  • The company has increased its regular quarterly cash dividend to USD 1.67 per common share, slated to be paid on 10 June 2024
  • IBM recently collaborated with ServiceNow to expedite the impact of generative AI across the enterprise

International Business Machines Corporation (NYSE: IBM), an American multinational technology firm, operates under four segments; consulting, software, infrastructure, and financing. It has a market capitalization of USD 156.09bn.

In the first quarter of 2024 (Q1 FY24), IBM reported a revenue of USD 14.5 billion and a net profit of USD 1.6 billion, up around 73% compared to the prior corresponding period. The company attributes this growth to increased revenue and increased tax benefits.

The company’s gross profit margin was 53.5 per cent on a GAAP basis (up by 80 basis points), and 54.7 percent on a non-GAAP basis, up 100 basis points. The company generated USD 4.2 bn in net cash from operating activities, a year-over-year increment of USD 0.4 bn.

IBM has marked its 29th consecutive year of increasing its quarterly cash dividend. Recently, the company’s board of directors announced an increment to the regular quarterly cash dividend to USD 1.67 per common share, slated to be paid on 10 June 2024.

Recent business update

IBM has announced its plan to purchase HashiCorp, Inc. at a rate of USD 35 per share in cash, representing an enterprise value of USD 6.4 billion. This acquisition is anticipated to create a holistic end-to-end hybrid cloud platform tailored for the AI era. Pending approval from HashiCorp shareholders, regulatory bodies, and fulfillment of customary closing conditions, the acquisition is expected to be completed by the end of 2024.

On 08 May 2024, IBM announced its collaboration with ServiceNow to expedite the impact of generative AI across the enterprise. It is supposed to help boost productivity for customers and partners.

Company outlook

IBM is expecting constant currency revenue growth in line with its mid-single digit model for the full year 2024. At current foreign exchange rates, the currency is projected to be an obstacle to revenue growth, reducing it by approximately one-and-a-half to two points. Additionally, the company remains confident in its forecast of generating around USD 12 billion in free cash flow for the year.

Top 10 shareholders

The top 10 shareholders of IBM together form ~28.22% of the total stake in the firm. The Vanguard Group, Inc. and State Street Global Advisors (US) are the biggest shareholders, holding the maximum stake at ~9.56% and ~5.93%, respectively.

Stock performance

The stock price of IBM has declined by 9.44% in the last three months whereas it has given a return of 19.42% in the past nine months. The stock is leaning towards the higher end of its 52-week high (USD 199.18) and 52-week low (USD 125.01) range.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 20, 2024. The reference data in this report has been partly sourced from EODHD/Others.