IBM returns to growth after four quarters of decline
Revenue increase of 0.9% was enough to beat analyst expectations and end a tough year for the tech giant
IBM's first-quarter earnings for 2021 beat analyst expectations with modest revenue growth of 0.9% ending four consecutive quarters of decline.
The company's revenue for the first three months of the year came in at $17.73 billion, still some way off the $21.8 billion it recorded in Q1 of 2020 just before the pandemic spread to Europe and the US.
For the first three months of 2021, IBM's Global Technology Services - the unit that handles managed services and outsourcing - brought in revenues of $6.37 billion. Its Cloud and Cognitive Software Division, which includes Red Hat, was up 4% with revenues $5.44 billion, with Red Hat on its own reporting impressive growth of 17%.
IBM's Global Business Services, which includes consulting, contributed $4.23 billion in revenue, a 2% increase year-on-year. System sales, such as mainframe computers, was also up 4% with revenue coming in at $1.43 billion.
"Strong performance this quarter in cloud, driven by increasing client adoption of our hybrid cloud platform, and growth in software and consulting enabled us to get off to a solid start for the year," said IBM CEO Arvind Krishna.
"While we have more work to do, we are confident we can achieve full-year revenue growth and meet our adjusted free cash flow target in 2021."
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Krishna has now completed a full year at the helm of IBM and this is the company's best quarter under his leadership. While a number of other cloud firms have seen revenues increase throughout the pandemic, IBM turned out to be one of the few that saw consecutive declines. In the fourth quarter of 2020, its revenues dropped 6%, its sharpest fall for five years.
IBM is currently undergoing a major shift by splitting its business in two; IBM is transitioning into a full cloud firm and its infrastructure segments will fall under a new company called Kyndryl. With more and more companies turning to the cloud or accelerating digital transformation plans, IBM hopes its two units will be better placed to capitalise.
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