International Business Machines Corp. (NYSE:IBM) has posted its first quarterly revenue growth since 2018 due to strong demand for its cloud computing services.
IBM’s first revenue increase in 11 consecutive quarters came as sales increased 1% to $17.7 billion U.S. in the three months ended March 31. That beat the $17.3 billion U.S. analysts had expected.
IBM reported first-quarter revenue growth in three of its five business segments, including Cloud and Cognitive Software, the company’s biggest unit, which saw 3.8% growth in sales from a year earlier. The Global Business Services and Systems units, which includes hardware and operating systems software, also posted year-over-year sales increases of 2.4% and 4.3% respectively.
The revenue growth also comes as IBM reorganizes around a hybrid-cloud strategy, which allows customers to store data in private servers and on multiple public clouds, including those of rivals Amazon.com and Microsoft. Total cloud revenue increased 21% to $6.5 billion U.S. in the quarter.
Last October, IBM spun off its managed infrastructure services unit into a separate publicly traded company called "Kyndryl." The division, currently part of IBM’s Global Technology Services division, handles day-to-day infrastructure service operations like managing client data centers and traditional information-technology support for installing, repairing and operating equipment. The unit was one of only two to see revenue decline in the first quarter, with sales down 1.5%. The spinoff is scheduled to be completed by the end of this year.
IBM also said revenue from Red Hat, which it bought in 2019 for $34 billion U.S., gained 17% in the first quarter. Earnings excluding some costs were $1.77 U.S. a share, beating the average analyst estimate of $1.65 U.S. Gross margin was 47.3%, compared with the 47.2% analysts expected.
IBM said it expects to report revenue growth for the full year in 2021.
