International Business Machines Corp. (NYSE: IBM) reported mixed fiscal 2024 first-quarter results. While earnings exceeded the Street estimates, revenues missed Wall Street expectations. Before announcing the quarterly results, the software giant revealed its plan to acquire cloud software solution provider HashiCorp in an all-cash deal worth $6.40 billion. The stock of IBM ended Thursday’s trading session at $168.91, down 8.25%, or $15.19, from the prior close.
The Armonk, New York-based company reported first-quarter revenues of $14.46 billion, up 1.50% from $14.25 billion in the similar quarter of fiscal 2023.
For the first quarter, which ended March 31, 2024, IBM posted net income of $1.61 billion, or $1.72 per share, an increase from $927 million, or $1.01 per share, in the quarter that ended March 31, 2023.
Excluding items, the company recorded 1Q 2024 non-GAAP earnings of $1.56 billion, or $1.68 per share, compared with $1.25 billion, or $1.36 per share, in 1Q 2023.
Analysts surveyed by LSEG had anticipated IBM to report adjusted earnings of $1.60 per share on revenues of $14.55 billion.
Segment wise:
- Software revenues rose by roughly 6% y-o-y to $5.90 billion, missing StreetAccount forecasts of $5.96 billion.
- Consulting revenue was $5.19 billion, down about 1% from last year. Analysts surveyed by StreetAccount had anticipated the company to post $5.20 billion in consulting revenue.
- Infrastructure revenue inched down 0.70% y-o-y to $3.08 billion but surpassed StreetAccount revenues of $2.94 billion.
As mentioned earlier, before the quarterly earnings release, IBM announced its plan to take over HashiCorp, a multi-cloud framework automation solution provider, for $35 per share in an all-cash deal. This gives HashiCorp, which was established in 2021, a market value of $6.4 billion. The acquisition plan is in line with IBM’s goal of attaining leadership in hybrid cloud and AI.
HashiCorp is renowned for its expertise in infrastructure Lifecycle Management and Security Lifecycle Management, which are essential components for hybrid and multi-cloud environments.
HashiCorp boasts more than 4,400 customers, including huge tech and financial institutions such as JP Morgan Chase, Bloomberg, etc. The firm’s popular software offerings, including Terraform, Boundary, Vault, and Consul, are widely utilized by the developer community. Notably, 85% of Fortune 500 enterprises employ HashiCorp’s services.
HashiCorp posted annual revenue of $583.10 million, up 23% on a y-o-y basis. The GAAP and non-GAAP gross profits were $128.80 million and $133.50 million, respectively. The non-GAAP margin stood at 86%.
The mixed quarterly earnings are expected to keep the stock of IBM range-bound in the near term.
The historical price chart indicates that the stock of IBM is declining after facing resistance at $190. The next major support is anticipated to be only near $165. Additionally, the stock is trading below its 50-day moving average, while the MACD indicator is showing a negative reading. Therefore, we anticipate the stock price of IBM to remain in a downtrend in the near term.
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