IBM reported better-than-expected revenue for the second quarter of 2021 on Monday and pushed its shares up in after-hours trading.
Big Blue, apparently unimpressed by a multi-week email glitch and still not fully resolved, posted total revenue for the quarter of $ 18.7 billion, a three percent year-over-year increase. It’s the strongest revenue growth for the business in three years. However, net income fell three percent to $ 1.3 billion for the quarter.
That equates to adjusted non-GAAP earnings of $ 2.33 per share, seven percent more than the $ 2.18 reported in the same period in 2020. Analysts were expecting an average of more than $ 18.3 billion and diluted earnings per share of $ 2.29.
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“In the second quarter, customer adoption of our hybrid cloud platform contributed to strong global business services and software performance and improved overall revenue growth,” said Arvind Krishna, chairman and chief executive officer of IBM, in a statement. “At the same time, we continued to support our customers in integrating our AI-based technology offerings into their core business processes.”
The business area results for the quarter were as follows:
- Cloud and cognitive software: $ 6.1 billion, up 6.1 percent
- Global business services: $ 4.3 billion, up 11.6 percent
- Global technology services: $ 6.3 billion, up 0.4 percent
- Systems: $ 1.7 billion, down 7.3 percent
- Global funding: $ 242 million, 8.6 percent less
- Other: $ 5 million, less than $ 50 million year over year
IBM’s Cloud & Cognitive Software group has results for Red Hat that are up 20 percent. Big Blue reported a GAAP gross profit margin of 48.0 percent and a debt reduction of $ 6.4 billion since late 2020.
At the company’s earnings call for investors, Krishna discussed how companies are using IBM technology to reshape their business processes and pursue digital transformations made possible by hybrid cloud environments.
As an example of the type of deals that will drive future sales, he cited an AI-powered customer service assistant that IBM built for CVS Health in just a few weeks to process customer inquiries about COVID-19.
IBM said it spent $ 1.7 billion on acquisitions in the quarter. The company had previously announced plans to acquire business process data mining company myInvenio, app management company Turbonomic and Salesforce consulting company Waeg.
Meanwhile, the IT titan expects to complete the spin-off of its Global Technology Services unit under the name Kyndryl by the end of the year.
On the home front, IBM has managed to restore most of its email servers, although a number of issues remain to be ironed out.
“Users in certain clusters may see a slight delay in delivering external emails and we will be working this week to get delivery times down to normal levels,” the company said in a recent status update from an internal source.
“We will continue to provide daily updates here as we continue to work to monitor and improve the health and stability of the email environment and improve the overall experience.”
The company announcement said that IBM continues to work with email service provider HCL to improve Verse’s webmail experience. ®