IBM beats across the board, posts revenue growth after four quarters of declines

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SVP and Director at IBM Research Arvind Krishna speak on stage during the 2016 Wired Business Conference on June 16, 2016 in New York City.Brian Ach | Getty Images

IBM shares rose 4% in extended trading on Monday after the enterprise technology and services maker reported first-quarter earnings that came in better than analysts had expected.

Here’s how the company did:

Earnings: $1.77 per share, adjusted, vs. $1.63 per share as expected by analysts, according to Refinitiv.Revenue: $17.73 billion, vs. $17.35 billion as expected by analysts, according to Refinitiv.

Revenue grew by 0.9% on an annualized basis in the quarter, compared with a 6% decrease in the prior quarter, according to a statement. The company reiterated previous guidance of revenue growth for the full year.

IBM’s Global Technology Services segment, which handles managed services, outsourcing and support, contributed $6.37 billion in revenue. Its revenue was down 1% year over year and more than the FactSet consensus estimate of $6.32 billion. IBM plans to spin off part of the segment as a standalone public company called Kyndryl by the end of the year.

IBM’s Cloud and Cognitive Software division, which includes Red Hat, came up with $5.44 billion in revenue, which was up 4% and above the $5.30 billion FactSet consensus. IBM reported $529 million in capital expenditures in the quarter, down 28%.

Global Business Services, the unit that includes consulting, contributed $4.23 billion in revenue, which was up 2% and higher than the $4.03 billion consensus.

Systems revenue of $1.43 billion, from sales of mainframe computers and other hardware, was up 4% and above the $1.29 billion consensus estimate.

In the quarter IBM announced that it was acquiring 7Summits, a Salesforce consulting firm, from private-equity-firm Sverica Capital Management, and that it was buying Taos, a consulting group that works on cloud migrations. IBM also said it had sold 250 patents to grocery-delivery company Instacart.

Excluding the after-hours move, IBM shares are up around 6% since the start of 2021, while the S&P 500 index has grown nearly 11% over the same period.

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