Shares of American technology company IBM were down 1.3 percent in Monday’s extended trading after the company reported impressive revenue which surpassed the expectations of analysts amid warnings that the hit from foreign exchange for the year could run into $3.5 billion as a result of a strong dollar.
The dollar has seen gains over several other currencies over the last year and this has made companies including Salesforce and Microsoft review their expectations.
IBM’s Chief Financial Officer James Kavanaugh told earnings while on the earnings call that the company’s near-term results have been impacted by currency headwinds and the challenges that were birthed by the Russia-Ukraine; the company halted its operations in Russia. The CFO, however, stated that the company still envisioned hitting the upper end of the mid-single-digit revenue growth at constant currency. He also added that the company had reviewed its foreign exchange hit to revenue to 6 percent for the year. The company had previously forecasted a 3 percent to 4 percent hit to revenue.
The Chief Financial Officer also added that the company’s second-quarter revenue was cut down by $900 million as a result of a stronger dollar, adding that the currency experienced meteoric growth and that they had not expected it.
Adjusted gross profit margin for the second quarter ended June 30th came in at 54.5 percent, below the expectation of 56.6 percent that analysts had expected, according to Refinitiv.
Revenue for the quarter came in at $15.54 billion surpassing the expectation of $15.18 billion that analysts had expected. Strong demand for its consulting and infrastructure business helped the company boost revenue.
The company says it expects revenue to keep growing especially in areas such as Europe and the Asia Pacific irrespective of challenges such as inflation.
The company reported earnings per share of $2.31, surpassing the expectation of $2.27 that analysts had forecasted. In the quarter, IBM saw cloud revenue grow 18 percent to $5.9 billion.
Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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