IBM Beats Quarterly Earnings Estimates

In the third quarter of 2022, IBM performed above expectations. Its revenue reached $14.1 billion, above analyst estimates, growing 6%, while profit rose 5% to $7.4 billion.

"IBM delivered strong revenue growth in the quarter, reflecting our continued focus on the execution of our strategy. Globally, clients view technology as an opportunity to enhance their business, which is evident in the results across our portfolio," said Arvind Krishna, IBM chairman, and CEO. "With our year-to-date performance, we now expect full-year revenue growth above our mid-single digit model.

The company’s software segment revenue reached $5.8 billion, up 7.5%, while consulting booked a 5.4% growth to 44.7 billion. The brightest star in the report is the infrastructure segment which grew 14.8% (21% at constant currency) to $3.4 billion. Inside the segment, z Systems was up 88%, hybrid infrastructure grew by 33%, and distributed infrastructure went up by 13%.

"Both our revenue growth and operating profit profile for the first three quarters of the year align to the investment thesis we outlined last fall," said James Kavanaugh, IBM senior vice president, and chief financial officer. "Our portfolio mix, business fundamentals, strong recurring revenue stream, and solid cash generation allow us to invest for continued growth and return value to shareholders through dividends.

For the full year 2022, IBM predicts further revenue growth. The company now expects constant currency revenue growth above its mid-single-digit model. It also counts on an additional contribution of approximately 3.5 points from sales to Kyndryl, concentrated in the first three quarters. At mid-October 2022 foreign exchange rates, the currency is expected to be about a seven-point headwind.