Arvind Krishna, CEO of IBM, arrives for the Inaugural AI Insight Forum in Russell Building on Capitol Hill, on Wednesday, September 13, 2023.
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IBM shares rose 5% in extended trading on Wednesday, after the company reported second-quarter results that surpassed analysts’ predictions.
Here are the key numbers.
- Earnings per share: $2.43 adjusted vs. $2.20 expected, according to LSEG
- Revenue: $15.77 billion vs. $15.62 billion expected, according to LSEG.
Revenue increased 1.9% from $15.48 billion a year ago, IBM said in a statement. Net income of $1.83 billion, or $1.96 per share, was up from $1.58 billion, or $1.72 per share, a year earlier.
The company, which provides hardware, software and consulting services, now expects 2024 free cash flow to come in above $12 billion. In April, executives were calling for about $12 billion.
The company’s book of business for generative artificial intelligence now stands above $2 billion, CEO Arvind Krishna was quoted as saying in the statement. The number was over $1 billion in April.
“We remain confident in the positive macro outlook for technology spending,” Krishna said on a conference call with analysts.
But he said the company acknowledges continuing impact from higher interest rates and inflation.
“The geopolitical uncertainty has gone longer than most people expected, and that weighs into people’s heads, about what that might happen, and specifically the war in Europe, as well as the war in the Middle East,” Krishna said.
IBM said its software business brought in revenue of $6.74 billion, up 7% and more than the StreetAccount consensus of $6.49 billion.
The consulting unit contributed $5.18 billion in revenue. That was down 0.9% and below the $5.23 billion StreetAccount consensus.
IBM’s infrastructure segment that contains mainframe computers posted $3.65 billion in revenue, up 0.8% and higher than the $3.51 billion consensus. The revenue performance for the current z16 mainframe computer is still outperforming earlier cycles, said IBM’s finance chief, Jim Kavanaugh.
During the quarter, IBM announced its intent to acquire HashiCorp in a deal with a $6.4 billion enterprise value. IBM also said Palo Alto Networks had agreed to buy IBM’s QRadar cloud software and migrate customers to the Cortex Xsiam product. Additionally, IBM announced plans for data center infrastructure in Montreal.
Notwithstanding Wednesday’s after-hours move, IBM shares are up 14% year to date, in line with the S&P 500.
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