IBM Reports Impressive First Quarter Earnings Results

Shares of IBM were up 3 percent in Tuesday’s extended trading after the company reported its first-quarter earnings for 2022 which surpassed estimates of analysts.

In the first quarter of 2022, the company reported earnings per share of $1.40, adjusted, and surpassed estimates of $1.38 per share that analysts had forecasted, according to Refinitiv. Revenue for the quarter came in at $14.2 billion compared to an estimate of $13.85 billion that analysts had projected for the quarter, according to Refinitiv.

The company has topped its full-year guidance for 2022 and says it expects to hit the higher end of its mid-single-digit revenue growth forecast for this year. This growth is expected to come from its consulting business.

In a statement issued by IBM, revenue was up 7.7 percent from the previous year adding that this was its first full quarter it operated without its IT-managed infrastructure services business which now operates independently as Kyndryl. According to CEO Arvind Krishna, sales to Kyndryl gave IBM 5 percentage points to its first-quarter revenue growth but Kyndryl won’t be delivering growth after October.

IBM saw net income from continuing operations grow 64 percent from the same period in the previous year to $662 million while overall net income fell by 23 percent.

IBM’s software segment saw revenue of $5.77 billion in the first quarter and is up 12 percent. Analysts had tendered estimates of $5.63 billion, according to a StreetAccounts consensus. Consulting revenue grew by 13 percent in the quarter to $4.83 billion and surpassed the $4.6 billion that analysts had projected for the quarter, according to a consensus from StreetAccount.

The company’s revenue from infrastructure, however, declined 2 percent to $3.22 billion.

IBM’s impressive quarter comes amid pulling out of Russia where it is one of the biggest brands in the country. According to IBM’s Chief Financial Officer James Kavanaugh, the impact of pulling out of Russia equates to less than “half a percent” of the total revenue in 2021. He also added that IBM expects 2022 profit to come in at $200 million.

According to him, “Russia is a very de minimis part of IBM. The country accounts for 0.5% of total revenue and 2% of profit, he said. Management hasn’t witnessed any effects on business in Western Europe as a result of the departure.” IBM shut down its operations in Russia last month in the wake of the Russia-Ukraine conflict.

Companies like Netflix cannot say the same after pulling out of Russia. The streaming giant which reported its earnings on Tuesday said it lost 200,000 subscribers amid increasing competition and password-sharing amongst households.