Finance

IBM quarterly revenue beats on cloud strength, shares rise By Reuters

© Reuters. FILE PHOTO: The logo for IBM is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris Helgren/File Photo

By Chavi Mehta

(Reuters) -IBM reported second-quarter revenue on Monday that beat analysts’ estimates, as a recovery in client spending powered strong growth in its cloud and consulting businesses.

The company’s shares were up 2% at $140.73 in extended trading.

“With the reopening (of economies) in particular around North America and Western Europe, we’re seeing a nice rebound in travel and transportation, automotive, industrial and consumer sectors overall,” IBM (NYSE:) Chief Financial Officer James Kavanaugh told Reuters, adding that more clients spent on digitizing their operations.

After the pandemic battered existing models of business, more enterprises are adopting “hybrid cloud”, a combination of using their own data centers and leased computing resources to manage and process data.

Sales at IBM’s cloud business rose 13% to $7 billion in the reported quarter.

Seeing a $1 trillion market opportunity in “hybrid-cloud”, IBM has been investing aggressively in cloud and artificial intelligence-focused ventures, while also shedding its slow-growing, yet huge, managed infrastructure business.

Since the beginning of the year, the company has spent about $3 billion on eight acquisitions, Kavanaugh said.

IBM’s net income fell to $1.33 billion, or $1.47 per share, in the quarter ended June 30, from $1.36 billion, or $1.52 per share, a year earlier.

Total revenue rose 3% to $18.75 billion, beating estimates of $18.29 billion, according to IBES data from Refinitiv.

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