IBM, American Airlines, and ServiceNow have all outperformed analyst expectations in their recent earnings reports for the fourth quarter of 2023. These companies have surprised investors with stronger-than-expected financial results, leading to a surge in their stock prices.
Firstly, IBM reported earnings per share (EPS) of $3.87, exceeding the analyst-expected $3.78. Revenue also surpassed expectations, totaling $17.38 billion compared to the forecasted $17.30 billion. Sales rose 4% from the previous year, and free cash flow for the entire year of 2023 reached $11.20 billion, surpassing management’s guidance of $10.50 billion. IBM’s gross margin for Q4 reached 59.1%, the highest since 1999. The company attributed its strong performance to the growth in software and consulting revenue, as well as the expansion of its AI-related business. IBM expects $12 billion in free cash flow for 2024 and mid-single-digit revenue growth.
Secondly, American Airlines reported better-than-expected Q4 earnings, resulting in an 8% increase in its stock price. The airline achieved earnings per share of 29 cents on revenue of $13.10 billion, beating Wall Street’s forecast of 11 cents on sales of $13 billion. American Airlines also exceeded expectations in terms of its load factor, which measures passenger carrying capacity and was at 83.6% in Q4, surpassing the projected 82.9%. The company provided a bullish outlook for the year ahead, expecting earnings of $2.25 to $3.25 per share for 2024, higher than analysts’ estimate of $2.14 per share.
Lastly, ServiceNow, a software company specializing in workflow management, reported EPS of $3.11, surpassing analyst expectations of $2.78. Quarterly revenue reached $2.437 billion, a 26% year-over-year increase and above Wall Street’s forecast of $2.402 billion. ServiceNow attributed its strong earnings to the rollout of new AI software, with 15 generative AI software products launched for clients to use. The company provided positive guidance, expecting subscription revenue ranging from $2.510 billion to $2.515 billion in the first quarter of 2024, surpassing analysts’ expectations of $2.461 billion. For the entire year, ServiceNow forecasts subscription revenues of $10.555 billion to $10.575 billion, reflecting a 22% year-over-year increase.
Overall, these three companies have surprised investors and analysts alike with their robust financial results for the fourth quarter of 2023. IBM, American Airlines, and ServiceNow’s outperformance has generated significant attention and caused a revision in stock ratings and price targets. As more companies release their Q4 earnings, we can expect further surprises in the coming weeks.
