Shares of International Business Machines Corporation (IBM) were rising Monday after the Big Blue reported first-quarter results that beat analyst estimates.
The Armonk, New York-based company reported first-quarter, non-GAAP earnings of $1.77 per share on revenue of $17.7 billion. According to FactSet, analysts estimated IBM earnings of $1.69 per share on revenue of $17.32 billion.
“Strong performance this quarter in the cloud, driven by increasing client adoption of our hybrid cloud platform, and growth in software and consulting enabled us to get off to a solid start for the year,” said CEO Arvind Krishna.
IBM Earnings Q1 2021: Cloud revenue increases
According to IBM’s first-quarter results, the company grew 1 percent from the same period a year ago to reach $17.7 billion. This was a momentous reversal from the previous four consecutive quarters of year-over-year revenue declines for IBM.
The U.S. computer giant sent ripples across the market with better-than-expected results and a huge uptick in turnover after facing losses for four quarters.
IBM’s stock rose 3.14 percent after the close of the New York Stock Exchange.
The Big Blue’s investments into its hybrid cloud business are now starting to pay off, said Krishna on Monday. Its cloud division drove the overall revenue gains with an impressive 21-percent increase during the quarter, from the first quarter of 2020, to tap $6.5 billion.
During IBM’s earnings call with analysts, Krishna said he knew that the January transformation in IBM’s strategy to invite more ecosystem partners would “take time for results.” The CEO said on multiple occasions during IBM’s earnings call that the company is “confident” it is making the right investments to make its presence known in the $1 trillion hybrid-cloud total addressable markets.
IBM’s global business services unit witnessed a 2.4% rise to $4.2 billion, while global technology services reported revenue of $6.4 billion, down 1.5% year-over-year.
The technology giant expects adjusted free cash flow between $11 billion and $12 billion, excluding about $3 billion of cash impacts from its decision to lay off 10,000 employees in Europe in a bid to slash expenses in its services unit.
IBM’s chief executive Arvind Krishna, who took helms in April, has a herculean task ahead as he streamlines the company’s operations as its clients switch to cloud-based computing.
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