Computing company IBM is witnessing accelerated demand for its artificial intelligence (AI)-based offerings.
This is according to Arvind Krishna, IBM chairman and CEO, in a statement issued yesterday when the company announced its fourth quarter 2023 earnings results.
“In the fourth quarter, we grew revenue in all of our segments, driven by continued adoption of our hybrid cloud and AI offerings,” says Krishna.
“Client demand for AI is accelerating and our book of business for watsonx and generative AI roughly doubled from the third to the fourth quarter. For the year, revenue growth was in line with our expectations, and we exceeded our free cash flow objective.
“Based on the strength of our portfolio and demonstrated track record of innovation, for 2024 we expect revenue performance in line with our mid-single-digit model and about $12 billion in free cash flow.”
Watsonx is IBM’s commercial generative AI and scientific data platform based on cloud computing. It offers a studio, data store and governance toolkit.
The announcement comes as big tech firms are increasingly making investments in AI technologies.
According to a recent report by Goldman Sachs, AI investment is forecast to approach $200 billion globally by 2025.
IBM reported revenue of $17.4 billion, up 4%, while software revenue was up 3%, consulting revenue up 6% and infrastructure revenue was up 3%.
“We again demonstrated the fundamental strengths of our business in the fourth quarter through solid, broad-based revenue growth, continued profit margin expansion, increased productivity gains and strong cash generation,” says James Kavanaugh, IBM senior vice-president and chief financial officer.
“Throughout 2023, those strengths enabled us to increase our investment in R&D [research and development] and talent, and complete nine acquisitions to bolster our hybrid cloud and AI capabilities, all while continuing to return value to shareholders through our dividend.”
In the fourth quarter, the company generated net cash from operating activities of $4.5 billion, up $0.5 billion year-to-year.
Net cash from operating activities, excluding IBM Financing receivables, was $6.3 billion. IBM's free cash flow was $6.1 billion, up $0.9 billion year-to-year. The company returned $1.5 billion to shareholders in dividends in the fourth quarter.
For the year, the company generated net cash from operating activities of $13.9 billion, up $3.5 billion year-to-year.
Net cash from operating activities, excluding IBM Financing receivables, was $12.7 billion. IBM's free cash flow was $11.2 billion, up $1.9 billion year-to-year.
IBM ended the fourth quarter with $13.5 billion of cash and marketable securities, up $4.6 billion from year-end 2022. Debt, including IBM Financing debt of $11.9 billion, totalled $56.5 billion, up $5.6 billion since the end of 2022.