IBM Q2 revenues beat analyst estimates with cloud boost
Overall revenue is down for the tech giant but its cloud and cognitive division brought in $5.7 billion
IBM's beat analyst expectations with an almost 30% jump in revenue from its cloud and data platforms in the second quarter.
The company reported earnings of $2.18 per share, which was down 31% from the same period in 2019, along with $18.1 billion in revenue during the three months ending 30 June. Wall Street analysts had predicted slightly less - $2.07 per share and $17.7 billion in revenue.
With the coronavirus pandemic forcing businesses to drastically change digital transformation strategies, IBM's cloud business has become its big winner for revenue, with sales from its cloud and cognitive software division rising 3% year-on-year to $5.7 billion. About an hour after it released the report, shares in the company were up around 4%.
"The trend we see in the market is clear. Clients want to modernise apps, move more workloads to the cloud and automate IT tasks," IBM CEO Arvind Krishna said on a post-earnings call with analysts
"Only 20% of the workloads have moved to the cloud. The other 80% are mission-critical workloads that are far more difficult to move. There is a massive opportunity in front of us to capture these workloads."
Krishna took over from Ginni Rometty in April, just as the coronavirus really began to take hold. But, as the former head of its cloud business, he has proved to be a shrewd choice of leader during this time of mass digitisation.
The firm has abandoned some of its legacy business to focus more on its cloud computing services. However, despite the success of its cloud unit, IBM's total revenue fell 5.4% to $18.12 billion.
Sales from IBM's global business services segment fell 7%, for example, while sales from global technology services fell 8%.
In April, the firm withdrew its full-year guidance for 2020 in light of the coronavirus pandemic. At the time the firm reported a 3.4% drop in revenue for the first quarter of the year but, again, revenue for its cloud business was up 19% to $5.4 billion.