IBM Beats Quarter 2 Earnings Expectations
IBM reported its second-quarter earnings, beating analyst expectations, according to CNBC.
Shares of the company rose as much as 6 percent in after-hours trading on Monday.
The company reported:
- Earnings: $2.18 per share, adjusted, vs. $2.07 per share as expected by analysts, according to Refinitiv.
- Revenue: $18.12 billion, vs. $17.72 billion as expected by analysts, according to Refinitiv.
Adjusted earnings per share decreased 31 percent on an annualized basis in the second quarter, while revenue decreased 5 percent. These results mark the second consecutive quarter of declining revenue for the company. Net income was reported at $1.36 billion, down 46 percent. However, the company did improve gross margins in three out of five units. “It’s likely that we see that the economic recovery is looking to be longer and more protracted than we might have hoped for back in March,” CEO Arvind Krishna said.
IBM did not update its full-year guidance during the call. The company withdrew guidance for the full years as it assessed the impact of the pandemic. “While we have adapted quickly to conduct business virtually around the world, as expected, we did have disruptions in transactional performance and volume reductions,” said Jim Kavanaugh, IBM’s chief financial officer. “Many clients continued to delay projects, defer purchases, and favor opex [operating expenditures] over capex [capital expenditures’ spending in this environment. This pause in large purchases and discretionary spending was most evident in our perpetual software licenses and project-oriented services.”
IBM's Global Technology Services revenue beat expectations at $6.32 billion, down almost 8 percent year over year.
IBM's Cloud and Cognitive Software division brought in $5.75 billion in revenue.
IBM's Global Business Services division brought in $3.89 billion in revenue.
“As the pandemic intensified and the macroeconomic climate worsened, clients quickly shifted their focus to operational stability and cash preservation,” Kavanaugh said. “This resulted in a delay in both the existing projects and new commitments especially in projects that are more discretionary or with longer time to value.”