IBM, the tech and services provider, has reported better-than-expected fourth-quarter results, exceeding analysts' estimates on both the top and bottom lines. The company also ended 2023 with stronger free cash flow than projected and announced plans to acquire two software assets during the quarter.

According to IBM's statement, the company's revenue for the quarter increased by 4% compared to the previous year. Net income also saw significant growth, rising to $3.29 billion, or $3.55 per share, from $2.71 billion, or $2.96 per share, in the year-ago quarter.

IBM's Chief Financial Officer, James Kavanaugh, acknowledged the challenging and uncertain macroeconomic environment the company faced during the quarter. However, he expressed satisfaction with the strong performance, particularly in the distributed infrastructure category. This category, which includes servers with IBM's Power chips, experienced an impressive 8% growth, compared to a decline of 4% in the previous quarter.

The market responded positively to IBM's strong performance, with shares surging as much as 6% in extended trading after the announcement of the fourth-quarter results. IBM also revealed that its gross margin, at 59.1%, was the widest since 1999.

While IBM's revenue from software and consulting showed steady growth of 3% and 6% respectively, it fell slightly below the consensus among analysts. Software revenue reached $7.51 billion, falling short of the expected $7.67 billion, while consulting revenue stood at $5.05 billion, lower than the anticipated $5.12 billion.

In terms of financial performance, IBM exceeded its own expectations for free cash flow in 2023. The company's free cash flow for the year totaled $11.2 billion, surpassing the management's projection of $10.5 billion. Looking ahead, IBM provided guidance for 2024, anticipating $12 billion in free cash flow and mid-single digit revenue growth at constant currency.

During the quarter, IBM also announced its plans to acquire StreamSets and webMethods, two businesses majority-owned by Software AG. The acquisitions are part of IBM's strategic focus on enterprise artificial intelligence, and the company earmarked $2.32 billion for the purchase.

IBM's strong performance in the fourth quarter has contributed to a 7% increase in its shares so far in 2024, outperforming the S&P 500 U.S. stock index, which has gained 2% over the same period.

IBM executives will discuss the impressive results further during a conference call scheduled for 5 p.m. ET. The company's CEO, Arvind Krishna, has expressed excitement about integrating artificial intelligence into coding, emphasizing the importance of this technology in future ventures.

As breaking news, updates on IBM's growth and acquisitions are expected.