IBM quarterly revenue beats on cloud strength, shares rise

FILE PHOTO: The logo for IBM is seen at the SIBOS banking and financial conference in Toronto
FILE PHOTO: The logo for IBM is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris Helgren/File Photo

July 19, 2021

By Chavi Mehta

(Reuters) -IBM reported second-quarter revenue on Monday that beat analysts’ estimates, as a recovery in client spending powered strong growth in its cloud and consulting businesses.

The company’s shares were up 2% at $140.73 in extended trading.

“With the reopening (of economies) in particular around North America and Western Europe, we’re seeing a nice rebound in travel and transportation, automotive, industrial and consumer sectors overall,” IBM Chief Financial Officer James Kavanaugh told Reuters, adding that more clients spent on digitizing their operations.

After the pandemic battered existing models of business, more enterprises are adopting “hybrid cloud”, a combination of using their own data centers and leased computing resources to manage and process data.

Sales at IBM’s cloud business rose 13% to $7 billion in the reported quarter.

Seeing a $1 trillion market opportunity in “hybrid-cloud”, IBM has been investing aggressively in cloud and artificial intelligence-focused ventures, while also shedding its slow-growing, yet huge, managed infrastructure business.

Since the beginning of the year, the company has spent about $3 billion on eight acquisitions, Kavanaugh said.

IBM’s net income fell to $1.33 billion, or $1.47 per share, in the quarter ended June 30, from $1.36 billion, or $1.52 per share, a year earlier.

Total revenue rose 3% to $18.75 billion, beating estimates of $18.29 billion, according to IBES data from Refinitiv.

(Reporting by Chavi Mehta in Bengaluru; Editing by Shounak Dasgupta)