IBM Stock Drops 8% on Q1 Revenue Miss, Announces a $6.4 Billion Acquisition of HashiCorp

IBM (NYSE:IBM) outperformed earnings forecasts for the first quarter of 2024 but fell short on revenue, and concurrently, announced its acquisition of HashiCorp (NASDAQ:HCP) for $6.4 billion. The news led to a more than 8% drop in IBM’s stock in pre-market today.

The company reported an earnings per share (EPS) of $1.68, surpassing the predicted $1.58. However, its quarterly revenue of $14.46 billion slightly missed the expected $14.51 billion, with consulting revenue also slightly below forecasts at $5.19 billion compared to the anticipated $5.2 billion.

Looking ahead, IBM projects constant currency revenue growth consistent with its mid-single-digit growth model for the entire year of 2024. The company did warn, though, that currency fluctuations might reduce revenue growth by about 1.5 to 2 percentage points. IBM reaffirmed its expectation to generate around $12 billion in free cash flow for the year.

Additionally, IBM disclosed that it has finalized a deal to acquire HashiCorp., a key player in multi-cloud infrastructure automation, at $35 per share in cash. The purchase, with a net enterprise value of $6.4 billion after considering HashiCorp's cash reserves, will be financed using IBM’s existing cash resources.