IBM Reports Mixed Q1 Earnings, Announces HashiCorp Acquisition; Stock Declines

IBM Reports Q1 2024 Earnings Beat, Plans $6.4 Billion HashiCorp Acquisition; Shares Dip in After-Hours

IBM (NYSE: IBM) has outperformed earnings expectations for the first quarter of 2024 but experienced a slight shortfall in revenue, alongside announcing an acquisition agreement with HashiCorp (NASDAQ: HCP) valued at $6.4 billion. Following the news, IBM shares dropped by more than 5% after-hours.

The tech giant reported an earnings per share (EPS) of $1.68, surpassing the Wall Street consensus of $1.58. However, its revenue for the quarter reached $14.46 billion, slightly below the expected $14.51 billion.

Looking ahead, IBM forecasts its constant currency revenue growth for 2024 to align with its mid-single digit growth target. Nonetheless, the company noted that currency volatility could reduce revenue growth by about 1.5 to 2 percentage points.

IBM reiterated its commitment to generating approximately $12 billion in free cash flow throughout the year. Additionally, IBM has confirmed a definitive deal to acquire HashiCorp Inc., a pioneer in multi-cloud infrastructure automation, for $35 per share in cash, using the company’s existing cash reserves. This acquisition, with a net enterprise value of $6.4 billion, is slated for completion by the end of 2024.

Arvind Krishna, IBM’s chairman and CEO, commented on the acquisition: “As enterprises face rapid expansion of their infrastructure across multiple clouds and on-premises environments, the rise of generative AI is further complicating their technological landscape. HashiCorp’s strong track record in managing these complex infrastructures makes it an ideal addition to IBM. By integrating HashiCorp’s capabilities with IBM’s expertise, we aim to develop a robust hybrid cloud platform that is well-suited for the demands of the AI era.”

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