‘We continue to see that clients turn to IBM for our technology and our expertise in enterprise AI,’ CEO says
International Business Machines Corp. easily clearly Wall Street’s profit bar on Wednesday, helping to send its shares higher in the aftermarket.
The company recorded second-quarter net income of $1.83 billion, or $1.96 a share, compared with $1.58 billion, or $1.72 a share, in the year-earlier period. After adjustments, IBM
IBM-0.04% logged earnings per share of $2.43, while analysts tracked by FactSet were modeling $2.18.
Revenue rose to $15.77 billion from $15.48 billion a year earlier, whereas the FactSet consensus was for $15.62 billion.
Shares rose 2.9% in Wednesday’s extended session.
The company generated $6.7 billion in revenue from software, up 7% from a year before. Analysts were looking for $6.49 billion from the segment.
Within software, IBM saw 7% growth in its Red Hat business, which provides open-source offerings for the cloud. Revenue from data and artificial intelligence fell 3%. Automation revenue grew 15%.
“We continue to see that clients turn to IBM for our technology and our expertise in enterprise AI, and our book of business for generative AI has grown to more than $2 billion since the launch of Watsonx one year ago,” Chief Executive Arvind Krishna said in a release.
Consulting revenue dropped 1% to $5.2 billion, whereas analysts had been looking for $5.23 billion. IBM’s consulting business houses a business transformation unit, among others.
IBM continues to expect its constant-currency revenue growth for the full year will be “consistent with its mid-single-digit model.” The company expects one or two percentage points of currency headwinds to revenue growth.
The company’s full-year forecast now calls for more than $12 billion in free cash flow, whereas it was previously for roughly $12 billion. IBM reported $2.6 billion of free cash flow in its second quarter.