International Business Machines Corp. (IBM) reported quarterly earnings that beat Wall Street expectations as demand for its cloud computer offering soars.
Sales at IBM rose 6.5% to $16.7 billion U.S. in the three months ended December 31, the Armonk, New York-based company said in a news release. It was the biggest sales increase in 10 years at Big Blue, as IBM is known.
Earnings per share came in at $3.35 U.S. a share, above the average analyst estimate of $3.23 U.S. The company’s gross margin was 56.9%, beating the 56.1% that analysts had forecast.
Wall Street expected quarterly sales of $16 billion U.S., on average, according to Refinitiv data.
IBM’s software unit grew 8.2% to $7.3 billion U.S. The consulting unit, formerly known as Global Business Services, reported $4.7 billion U.S. in revenue, a 13% increase compared with a year earlier.
Cloud computing revenue grew 16% to $6.2 billion U.S., led by Red Hat sales which increased 19% during the quarter.
The results were the first since IBM completed the spinoff of its legacy infrastructure services unit last November into a new company called “Kyndryl,” which includes service operations like managing client data centres and traditional information-technology support.
IBM forecast mid-single digit revenue growth for 2022, plus a boost from incremental sales to Kyndryl of about 3%.
IBM shares rose as much as 7.5% in after hours trading on news of the earnings beat. Over the last 12 months, IBM stock has gained 14% to $128.82 U.S. per share.
