IBM shows strongest revenue growth in three years

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Wired senior staff writer Cade Metz and Arvind Krishna, IBM CEO and then senior vice president and director at IBM Research, speak onstage at the Wired Business Conference in New York on June 16, 2016.

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IBM shares rose 3% in extended trading on Monday after the enterprise technology and services provider reported second-quarter earnings that came in stronger than analysts had expected.

Here’s how the company did:

Earnings: $2.33 per share, adjusted, vs. $2.29 per share as expected by analysts, according to Refinitiv.
Revenue: $18.75 billion, vs. $18.29 billion as expected by analysts, according to Refinitiv.

Revenue grew 3% year over year in the quarter, according to a statement, the fastest growth in three years, as the company laps a quarter that saw meaningful impact from the coronavirus. In the previous quarter revenue had grown 0.9%. The company reiterated its expectation that revenue will grow, rather than decline, in the full year.

IBM’s Global Technology Services segment, containing managed services, outsourcing and support, delivered $6.34 billion in revenue. That was up slightly and above the $6.23 billion consensus among analysts polled by FactSet.

The Cloud & Cognitive Software business, which includes Red Hat, contributed $6.10 billion in revenue, up 6% and more than the FactSet consensus of $5.93 billion.

The company’s Global Business Services consulting unit had $4.34 billion in revenue, growing almost 12% and higher than the $4.03 billion FactSet consensus.

Systems revenue, including hardware, came out to $1.71 billion, which was down 7%, meeting consensus.

In the quarter IBM said it was acquiring process-mining software company myInvenio, application-management company Turbonomic and Salesforce consulting company Waeg. The company also announced 2-nanometer chip technology, as well as new artificial-intelligence features for its Watson Studio software for building models.

Excluding the after-hours move, IBM shares are up 9% since the start of the year, while the S&P 500 index is up almost 13% over the same period.

Executives will discuss the results on a conference call with analysts starting at 5 p.m. Eastern time.

This is breaking news. Please check back for updates.

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