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IBM is “confident” it can achieve full-year revenue growth, CEO Arvind Krishna said.
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IBM
posted better-than-expected first-quarter financial results and reiterated its forecast that revenue in 2021 will increase from 2020 onwards.
Shares of IBM (ticker: IBM) rose 4.5% to $ 138.92 in off-hours trading.
During the quarter, the business computing giant posted revenue of $ 17.7 billion, up 1% but 2% in constant currency, and ahead of the street, with $ 17.3 billion. Non-GAAP profits were $ 1.77 per share, ahead of the street consensus forecast of $ 1.63 per share. This compares to $ 17.6 billion in revenue and a non-GAAP profit of $ 1.84 per share for the previous year’s quarter. Based on GAAP, the company earned $ 1.06 per share, down from $ 1.31 per share a year ago.
“This quarter’s strong performance in the cloud, driven by the growing adoption of our hybrid cloud platform by the customer, and the growth of software and consulting, have allowed us to get off to a strong start to the year,” he said. said CEO Arvind Krishna in a statement. “While we have more work to do, we are confident that we will be able to achieve year-round revenue growth and achieve the adjusted goal of free cash flow in 2021.”
The company said revenue from its cloud and cognitive software segment amounted to $ 5.4 billion, up 3.8%, or 0.8%, in line with the currency. Global Business Services segment revenue was $ 4.2 billion, up 2.4%, but down 1.4% per currency.
Revenue from global technology services was $ 6.4 billion, 1.5% less, or 5.3% adjusted for the currency. Revenue from the system, which includes hardware, amounted to $ 1.4 billion, up 4.3% or 2.2% depending on the adjusted currency. Global financing income was $ 240 million, 20% less, or 21.9% adjusted for the currency.
Total cloud revenues amounted to $ 6.5 billion, up 21% or 18%, adjusted for currency and leased companies. Red Hat revenue increased 17% or 15% adjusted to the currency.
Gross margin for the first quarter was 47.3% based on non-GAAP, up to 110 basis points, or 46.3% based on GAAP, up to 120 basis points.
IBM said it has paid $ 5.1 billion in debt since the end of 2020, reducing total debt to $ 56.4 billion. IBM has paid off $ 16.6 billion in debt since the closing of the Red Hat acquisition in 2019.
IBM repeated its previous forecast for the full year of 2021 of adjusted free cash flow of between $ 11 billion and $ 12 billion, with revenues above 2020 levels. The company continues to expect sustainable mid-digit growth once completed the pending turn of Kyndryl, its managed services business. The company did not provide any new details about the rotation, but still expects the transaction to be completed by the end of 2021.
Chief Financial Officer James Kavanaugh noted in an interview with De Barron quarterly revenue was approximately $ 400 million higher than street expectations, with a broad base in hardware, software and services. He noted that the company’s cloud business revenue was $ 26 billion over the past twelve months and now accounts for more than a third of IBM’s business.
Kavanaugh said IBM expects to file a Form 10 with the Securities and Exchange Commission in mid-summer to late summer, detailing post-rotation profit and loss statements and in proforma form for both Kyndryl and “stayco.” . He expects the first quarter of profits for Kyndryl as an independent company in the first quarter of 2022. He said he expects Kyndryl to target an investment rating, with an “attractive” dividend and a free cash flow performance.
Asked about the tone of the business given the widespread expectations that business IT spending is recovering, Kavanaugh said that “overall, we are encouraged by the trends we see from a macroeconomic perspective,” although he noted that ” trends are not homogeneous around the world. ” He said there is a correlation between pandemic curves in various markets and customer buying behavior. “We are cautiously optimistic,” he said.
Write to Eric J. Savitz at [email protected]