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IBM surprised its revenue growth, showing that growth returned to levels prior to COVID-19


Stock of International Business Machines Inc.

IBM
IBM,
-0.35%

Stocks, which initially rose nearly 5%, eventually rose 3.3% after a few hours after meeting with analysts. Shares fell 0.4% in normal trading, to close at $ 133.12.

In an analyst call, IBM Chief Financial Officer James Kavanaugh said, “In the near term, we are very confident in a return to pre-pandemic growth in our second quarter.

“By the way, our out of stock for the next 90 days shows that,” added Kavanaugh.

During the call, Kavanaugh said, “the average of analysts’ revenue estimates for the second quarter seemed plausible.” Analysts, on average, expected revenue of $ 18.27 billion for the second quarter, or a 0.8 percent increase, according to FactSet.

IBM said it expected “to increase revenue for the full year 2021 based on the exchange rate between April 2021.” Analysts expect full-year revenue of $ 74.07 billion, or a 0.6% increase over 2020.

Last quarter, I also talked about how last year’s events have increased the need for our customers to accelerate their digital transformation, ”Arvind President and CEO Arvind Krishna said during the call. . “This is continuing and the overall spending environment is improving, while there are some obvious geographic and industry differences.”

The company reported first-quarter net income of $ 955 million, or $ 1.06 per share, compared with $ 1.18 billion, or $ 1.31 a share, for the period. paragraph a year ago. Adjusted earnings, excluding the cost of stock-based compensation and other charges, were $ 1.77 a share, compared with $ 1.84 a share for the prior year period.

Revenue increased to $ 17.73 billion from $ 17.57 billion in the previous quarter, marking a 4-quarter decline in sales.

Analysts estimated $ 1.69 per share and revenue fell to $ 17.32 billion in the first quarter.

Global technology services, or GTS, generated revenue of $ 6.37 billion compared with $ 6.47 billion in the previous quarter and a $ 6.32 billion consensus for Street.

The company reports cloud awareness and software revenue – including the Red Hat unit – to be $ 5.44 billion compared to $ 5.24 billion a year ago, while analysts expect 5 , 48 billion dollars.

Patrick Moorhead, chief analyst at Moor Insights & Strategy, said: “It’s good to see IBM grow again after a year, and even better to see it beat Street in terms of revenue and earnings, ”Patrick Moorhead, principal analyst at Moor Insights & Strategy, said in the email. “What you want, the cloud and the perception, has all gone up and I am delighted to see global business systems and services grow as expected.”

IBM said total cloud revenue, attributable to various business units, grew 21% to $ 6.5 billion from a year ago.

Global business services revenue is $ 4.23 billion, compared with $ 4.14 billion a year ago, and Street forecast is $ 4.03 billion. The revenue of the system was $ 1.43 billion, compared with $ 1.37 billion a year ago, and analysts’ expectations were $ 1.29 billion.

Relates to IBM’s newly named IBM managed infrastructure-services business KyndrylIBM’s Kavanaugh expects the business extension to be completed by the end of this year. Spinoff is announced in October.

“In addition to establishing the name, headquarters location and leadership expansion, we continue to make good progress in implementing the financial, legal, and regulatory milestones required to enable transactions. , ”Said Kavanaugh.

Over the past 12 months, IBM shares have risen 11%. During the same period, the Dow Jones Industrial Index
DJIA,
-0.36%

– of which IBM is a component – rose 41%, the S&P 500 index
SPX,
-0.53%

was up 45% and the tech-heavy Nasdaq Composite Index
COMP,
-0.98%

soared 61%.

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