IBM reported better-than-expected first quarter earnings and showed revenue growth after posting declines throughout 2020.
The company reported first quarter sales[1] of $17.7 billion, up 1% from a year ago. Earnings were $1.06 a share and non-GAAP earnings per share were $1.77.
Wall Street was expecting IBM to deliver first quarter revenue of $17.34 billion with non-GAAP earnings of $1.63 a share.
IBM said Red Hat revenue was up 17% from a year ago and cloud and cognitive software sales grew 4%. Systems revenue was up 4%.
IBM's first quarter featured a series of moves as the company positions for the future as it built out its quantum computing, named its managing services spin-off Kyndryl[2] and targeted industry-specific cloud offerings.
As for the outlook, IBM is projecting 2021 revenue growth, adjusted free cash flow of $11 billion to $12 billion excluding charges to spin off its managed infrastructure services business.
CEO Arvind Krishna said IBM was seeing increasing adoption of its hybrid cloud platform. "While we have more work to do, we are confident we can achieve full-year revenue growth and meet our adjusted free cash flow target in 2021," he said.
Key items include:
- The cloud and cognitive software unit had revenue of $5.4 billion with cloud and data platforms seeing growth of 13%. IBM said adoption of its Cloud Pak lineup boosted growth. Cognitive applications were led by security applications. Transaction processing platform revenue fell 12% and cloud revenue was up 38% in the first quarter.
- Global business services revenue was $4.2 billion, up 2.4%. IBM saw growth in consulting and global process services and declines in application management sales.
- Global technology services revenue was $6.4 billion.
- Systems revenue was $1.4 billion led by IBM