IBM reports strong Q2 results, surpassing expectations with increased earnings and revenue growth
IBM shares increased by 5 percent in extended trading on Wednesday after the company reported second-quarter results that exceeded analysts’ predictions, according to CNBC.
IBM’s key financial results are as follows:
- Adjusted earnings per share reached $2.43, surpassing the expected $2.20, according to LSEG.
- Revenue stood at $15.77bn, higher than the anticipated $15.62bn, representing a 1.9 percent increase from $15.48bn a year ago.
- Net income rose to $1.83bn, or $1.96 per share, from $1.58bn, or $1.72 per share, the previous year.
The company, which offers hardware, software, and consulting services, now projects its 2024 free cash flow to exceed $12bn, an increase from the approximately $12bn forecasted in April.
IBM’s business in generative artificial intelligence has grown, now valued at over $2bn, up from more than $1bn in April, as stated by CEO Arvind Krishna. “We remain confident in the positive macro-outlook for technology spending,” Krishna mentioned during a conference call with analysts.
However, he acknowledged ongoing impacts from higher interest rates and inflation.
He noted, “The geopolitical uncertainty has gone longer than most people expected, and that weighs into people’s heads, about what that might happen, and specifically the war in Europe, as well as the war in the Middle East.”
IBM’s software business generated $6.74bn in revenue, a 7 percent increase, exceeding the StreetAccount consensus of $6.49bn. The consulting unit reported $5.18bn in revenue, a 0.9 percent decline, missing the $5.23bn StreetAccount consensus.
The infrastructure segment, including mainframe computers, posted $3.65bn in revenue, up 0.8 percent and above the $3.51bn consensus. IBM’s finance chief, Jim Kavanaugh, highlighted that the revenue performance for the current z16 mainframe computer continues to outperform earlier cycles.
During the quarter, IBM announced its intent to acquire HashiCorp in a deal valued at $6.4bn.
Additionally, Palo Alto Networks agreed to purchase IBM’s QRadar cloud software and migrate customers to the Cortex Xsiam product. IBM also unveiled plans for new data centre infrastructure in Montreal.
Despite Wednesday’s after-hours increase, IBM shares have risen 14 percent year to date, matching the S&P 500's performance.
