IBM beats Q4 earnings expectations, stock rises

Cloud software giant ServiceNow delivered better-than-expected Q4 sales and earnings after the close of trading on Wednesday, though the shares slipped in after-hours trading.  

The company reported:

• Revenue of $3.57 billion, higher than the $3.53 billion analyst consensus estimate published by FactSet.

• Adjusted earnings of $0.92 per share vs. the $0.88 analysts expected.

• Subscription revenue of $3.47 billion vs. the $3.42 billion predicted.

• Raised guidance for Q1 subscription revenues of between $3.65 billion and 3.655 billion, compared to the $3.58 billion FactSet consensus estimate.

• Non-GAAP gross margins of 80.5%, a little light compared to the 81.1% FactSet consensus estimate. 

Despite the better-than-expected results, the stock was down after-hours. ServiceNow also announced an expanded AI partnership with Anthropic, in which it will enmesh Anthropic’s Claude models more deeply into its products, alongside its financial results.

Such efforts to more closely associate itself with the AI boom have fizzled so far. ServiceNow shares have plunged 45% over the last year. And investors clearly remain skeptical after the Q4 numbers.

Southwest Airlines posted its fourth-quarter and full-year earnings after the bell on Wednesday. Its shares climbed more than 4% in after-hours trading.

The airline, one of the big four US carriers, guided for revenue per seat mile to climb “at least 9.5%” in the first quarter, and costs per seat mile to rise 3.5%. It forecast a 1% to 2% boost in capacity for Q1.

For the full year ahead, Southwest said it expects adjusted earnings of $4 per share, ahead of Wall Street estimates of $3.22.

The carrier, which flew its last open-seating flight on Tuesday, posted Q4 adjusted earnings of $0.58 per share, slightly above the $0.57 per share expected by Wall Street analysts polled by FactSet. Southwest’s passenger revenue rose 7.6% to $6.79 billion in the fourth quarter, beating estimates of $6.77 billion.

Seagate Technology Holdings soared Wednesday, with a nearly 20% gain shortly after 2 p.m. ET that put the once staid maker of hard disk drives on track for one of its best days of the last decade.

Seagate reported strong earnings results after the close of trading on Tuesday, prompting a parade of positive published comments from Wall Street analysts.

The Street gushed over high sales prices and customer orders for data centers and cloud computing providers stretching out to 2028. Analysts were also heartened by the rollout of Seagate’s next-generation hard disk product, known as heat-assisted magnetic recording (HAMR), which has now been “qualified” or approved for use by major US cloud service providers. Some examples: