IBM reported first-quarter earnings late Tuesday that beat estimates on the top and bottom lines as the tech giant continued to make progress on its massive restructuring. IBM stock climbed on the news.
The company reported adjusted earnings of $1.40 a share on revenue of $14.2 billion. Analysts expected IBM to report earnings of $1.38 a share on revenue of $13.85 billion,
IBM stock climbed 2.4% to 132.25, during after-hours trading on the stock market today.
Revenue climbed 8% from the year-ago period, or 11% in constant currency.
Move To A Hybrid-Cloud Platform
IBM continues to undergo a significant, multiyear restructuring. It focuses on an open, hybrid cloud-computing platform, in addition to artificial intelligence.
A hybrid cloud architecture means IBM can provide its customers with both a public cloud and a private cloud. Leaders in the public cloud space include Amazon and Microsoft.
"Demand for hybrid cloud and AI drove growth in both Software and Consulting in the first quarter," IBM Chairman and Chief Executive Arvind Krishna said in written remarks with the IBM earnings release. "Today we're a more focused business and our results reflect the execution of our strategy. We are off to a solid start for the year, and we now see revenue growth for 2022 at the high end of our model."
Hybrid cloud revenue topped $5 billion in the first quarter, up 14%. IBM's software group showed revenue of $5.8 billion, up 12%. Revenue from Red Hat jumped by 18%
The company now expects constant currency revenue growth at the high end of the mid-single digit range, IBM said. It expects an additional 3.5 point contribution from incremental sales to Kyndryl.
IBM Stock Hit By Business Shifts
The major shifts in business operations help to explain why IBM growth in revenue and earnings has been a struggle.
"Having already fallen behind in the public cloud, IBM is betting big on the so-called hybrid cloud," said Daniel Morgan, senior portfolio manager at Synovus Trust, in a note to clients.
"The hybrid cloud opportunity is significantly larger, as legacy enterprises are just starting to shift more of their workloads to the cloud amid internal IT system upgrades," Morgan said.
IBM is committed to $20 billion in mergers and acquisitions through 2024, focusing on software.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
