IBM Beats Quarterly Revenue Estimates

IBM has exceeded revenue estimates in the second quarter of 2022. However, their business will be impacted in the second half of the year by the strong US dollar, as the company has sizeable international operations.

"In the quarter we delivered good revenue performance with balanced growth across our geographies, driven by client demand for our hybrid cloud and AI offerings. The IBM team executed our strategy well," said Arvind Krishna, IBM chairman, and CEO. "With our first half results, we continue to expect full-year revenue growth at the high end of our mid-single digit model.

Revenue in the quarter reached $15.5 billion, up 9 percent compared with the same period in 2021. Revenue from software grew 6 percent, 10 percent from consulting, infrastructure revenue was 19 percent up, and hybrid cloud revenue grew 16 percent. Gross profit was up 6 percent at $8.3 billion, while net income rose 81 percent to $1.5 billion.

"We are a faster-growing, focused, disciplined company with sound business fundamentals," said James Kavanaugh, IBM senior vice president, and CFO. "Our recurring revenue stream and solid cash generation position us well to continue to invest in R&D, acquire new companies, and strengthen our talent in every part of the business, while also returning value to shareholders through our dividend.

IBM continues to expect constant currency revenue growth at the high end of its mid-single digit model. The company also expects an additional 3.5-point contribution from incremental sales to Kyndryl. At mid-July 2022 foreign exchange rates, IBM expects a foreign exchange hit to revenue of about 6 percent this year. Second quarter revenue was hurt by about $900 million due to a stronger US dollar.