IBM software sales up 8% as the company beats on top and bottom lines
Arvind Krishna, IBM’s chair and CEO, during an interview in New York on May 1, 2023.
Christopher Goodney | Bloomberg | Getty Images
IBM shares rose 2% in extended trading Wednesday after the technology conglomerate announced third-quarter results that exceeded Wall Street estimates.
Here’s how the company did, compared with the consensus among analysts surveyed by LSEG, formerly known as Refinitiv:
- Earnings per share: $2.20, adjusted vs. $2.13, expected
- Revenue: $14.75 billion vs. $14.73 billion, expected
IBM’s overall revenue grew 4.6% year over year in the quarter, or 3.5% at constant currency, according to a statement. Net income reached $1.70 billion, or $1.84 per share, compared with a net loss of $3.20 billion, or $3.54 per share, in the same quarter one year ago. A $5.9 billion pension settlement charge hurt results in the year-ago quarter.
The company’s Software unit produced $6.27 billion in revenue. That’s up about 8% and in line with the $6.27 billion consensus among analysts polled by StreetAccount.
IBM’s Consulting division generated $4.96 billion in revenue, up around 6% but lower than StreetAccount’s consensus of $5.11 billion. Accenture said last month that revenue from communications, media and technology clients was down 12% in the August quarter.
“We still are executing extremely well from my point of view in consulting,” Jim Kavanaugh, IBM’s finance chief, told CNBC’s Kristina Partsinevelos in an interview. “I mean, if you look at the overall market, I think we’re taking share when you look at it against other consulting providers.”
But clients are still focused on cost reduction, and that’s putting pressure on discretionary consulting projects, Kavanaugh said. “It came in a little bit light because we’re dealing with a much stronger U.S. dollar position than where we were 90 days ago,” Kavanaugh said of the consulting outcome.
Revenue from the Infrastructure division, including IBM’s mainframe computers, totaled $3.27 billion. The tally, while down 2%, is more than the $3.10 billion StreetAccount consensus.
Management reiterated guidance for the full year, including revenue growth at constant currency between 3% and 5% and $10.5 billion in free cash flow. For the first nine months of the year, the company has generated $5.12 billion in free cash flow.
During the quarter IBM released Granite generative artificial-intelligence models for composing and summarizing text. The company also said it was backing AI startup Hugging Face and bought Apptio, a seller of tools for managing cloud costs, from Vista Equity Partners for $4.6 billion.
Excluding the after-hours move, IBM shares are down about 2% this year, trailing the S&P 500 index, which is up around 9% in the same period.
Executives will discuss the results with analysts on a conference call starting at 5 p.m. ET.
This is breaking news. Please check back for updates.
WATCH: IBM CEO: Our first critical AI use case is customer service, second is code productivity
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Dario Amodei, Anthropic CEO, speaking on CNBC’s Squawk Box outside the World Economic Forum in Davos, Switzerland on Jan. 21st, 2025.
Gerry Miller | CNBC
Anthropic on Monday announced Claude for Life Sciences, a new offering for researchers to use the company’s artificial intelligence technology in the advancement of scientific discovery.
Claude for Life Sciences is built around Anthropic’s existing AI models, but supports new connections with other scientific tools that are commonly used in labs during research and development.
It will be able to help researchers through all stages of the discovery process, from carrying out literature reviews to developing hypotheses, analyzing data, drafting regulatory submissions and more, Anthropic said.
The launch of Claude for Life Sciences marks Anthropic’s first formal entry into the sector, and comes just months after the company hired longtime industry executive Eric Kauderer-Abrams as its head of biology and life sciences.
“Now is the threshold moment for us where we’ve decided this is a big investment area,” Kauderer-Abrams told CNBC in an interview. “We want a meaningful percentage of all of the life science work in the world to run on Claude, in the same way that that happens today with coding.”
Anthropic, which is one of the companies at the center of the AI boom, develops a family of large language models called Claude. It was founded in 2021 by a group of former OpenAI executives and researchers, and its valuation has swelled to $183 billion in just four years.
The company launched a new model, Claude Sonnet 4.5, late last month and said it is “significantly better” at life sciences tasks like understanding laboratory protocols.
Kauderer-Abrams said researchers have already been engaging with Anthropic’s models to help with isolated parts of the scientific process, so the company decided to formally build out Claude for Life Sciences as a way to support them from start to finish.
That meant Anthropic had to establish integrations with key players in the life sciences ecosystem, including Benchling, PubMed, 10x Genomics and Synapse.org, among others. Anthropic has also partnered with companies that can help life sciences organizations adopt AI, like Caylent, KPMG, Deloitte, and cloud providers AWS and Google Cloud, the company said.
“We’re willing and enthusiastic about doing that grind to make sure that all the pieces come together,” Kauderer-Abrams said.
In a prerecorded demo, Anthropic showed how a scientist working on preclinical studies could use Claude for Life Sciences to compare two study designs that test different dosing strategies.
The scientist was able to query her lab’s data directly from Benchling, generate a summary and tables of key differences with links back to the original material. After reviewing the results, the scientist generated a study report that could be included in a regulatory submission.
Anthropic said an analysis like this used to require “days” of validating and compiling information, but now, it can be done in minutes.
Kauderer-Abrams said the company believes AI can bring about real efficiency gains for the life sciences sector, but it’s also under “no illusions” that it will magically overcome the physical limitations of conducting scientific research. Clinical trials that take three years are not suddenly going to take one month, he said.
Instead, Anthropic is focused on exploring the time-consuming, expensive parts of the discovery process “piece by piece” to determine where AI could be most useful.
“We’re here to make sure that this transformation happens and that it’s done responsibly,” Kauderer-Abrams said.
WATCH: Anthropic launches Claude Sonnet 4.5, its latest AI model
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