During the third quarter of 2020, IBM posted solid financial results with significant rise in revenue from cloud services. Revenue in the period was $17.6 billion, down 2.6 percent (3.1 percent adjusting for divested businesses and currency), compared with the same quarter in 2019.
Cloud & Cognitive Software revenue was up 7 percent (6 percent adjusting for currency), while total cloud revenue reached $6.0 billion, up 19 percent. Total cloud revenue over the last 12 months reached $24.4 billion, up 22 percent (25 percent adjusting for divested businesses and currency). Red Hat revenue went up 17 percent (16 percent adjusting for currency), normalized for historical comparability.
“The strong performance of our cloud business, led by Red Hat, underscores the growing client adoption of our open hybrid cloud platform," said Arvind Krishna, IBM CEO. "Separating the managed infrastructure services business creates a market-leading standalone company and further sharpens our focus on IBM's open hybrid cloud platform and AI capabilities. This will accelerate our growth strategy and better position IBM to seize the $1 trillion hybrid cloud opportunity.“
In the third quarter, the company generated net cash from operating activities of $4.3 billion, or $1.9 billion excluding Global Financing receivables. IBM’s free cash flow was $1.1 billion. The company returned $1.5 billion to shareholders in dividends. IBM ended the third quarter with $15.8 billion of cash on hand which includes marketable securities, up $6.7 billion from year-end 2019. Debt, including Global Financing debt of $20.9 billion, totaled $65.4 billion.
Year-to-date results reflect transaction-related impacts associated with the Red Hat acquisition, which closed in July 2019. Consolidated diluted earnings per share was $4.72 compared with $6.45 per diluted share for the 2019 period, a decrease of 27 percent. Consolidated net income was $4.2 billion, down 27 percent year to year. Revenues for the nine-month period ended September 30, 2020 totaled $53.3 billion, a decrease of 4 percent year to year (down 2 percent adjusting for divested businesses and currency) compared with $55.4 billion for the first nine months of 2019. Operating (non-GAAP) diluted earnings per share from continuing operations was $6.60 compared with $8.10 per diluted share for the 2019 period, a decrease of 19 percent. Operating (non-GAAP) net income for the nine months ended September 30, 2020 was $5.9 billion compared with $7.2 billion in the prior-year period, a decrease of 18 percent.
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