RESEARCH TRIANGLE PARK – IBM shares surged more than 4% immediately after the tech giant reported financial results for the second quarter than beat analysts’ expectations for both revenue and earnings.
”The growth we’re seeing is very encouraging,” Chief Financial Officer Jim Kavanaugh told Bloomberg news. “It’s proof our clients are adopting the hybrid-cloud platform.”
Raleigh-based Red Hat delivered 20% year-over-year revenue growth, helping Big Blue report its strongest revenue growth in three years, as noted by CNBC. That’s 3 percentage points higher than reported in the first quarter.
IBM (NYSE: IBM) is counting heavily on Red Hat to be a growth engine as it focuses more on cloud and artificial intelligence sectors.
“In the second quarter client adoption of our hybrid cloud platform contributed to strong performance in Global Business Services and software and drove improved overall revenue growth. At the same time, we continued to help clients infuse our AI-based technology offerings into their core business workflows,” said Arvind Krishna, IBM’s chairman and chief executive officer. “We are pleased with our progress and we remain on track to deliver full-year revenue growth and meet our cash flow objective.”
IBM reported revenue growth accross multiple business segments as the company prepares to spin off its services group into a new company. Income climbed 3% year-over-year.
Financial services firm Zacks estimates that IBM will report $2.25 in earnings, up 3.2% year over year. Big Blue beat that by 8 cents.
Revenues are expected to be slightly higher at $18.2 billion year-over-year. They came in at $18.75 billion.
For the first quarter, IBM revenues had improved just under 1%. Looking ahead, IBM< forecast continued growth.
Earnings for the second quarter would have been even better but IBM noted the looming spinoff of the new company, Kyndryl, cost 15 cents a share.