IBM fourth-quarter revenue beats estimations as its cloud bet pays off

IBM fourth-quarter revenue beats estimations as its cloud bet pays off

by Pranali Mehta

American multinational technology corporation IBM has reportedly pushed past Wall Street estimations for fourth-quarter earnings, as it continues to bank on meeting the surging demand for cloud services which was propelled by the pandemic.

After exiting the declining managed infrastructure business and shifting its focus entirely on the cloud, Big Blue’s first earnings gained traction, with shares peaking to 7% during aftermarket trading before easing to a trade flat. The company is now revising its expectations for mid-single-digit revenue growth in 2022 in comparison to 3.9% in 2021.

In this context, Chief Financial Officer James Kavanaugh expressed that this will be the first quarter where one will see how IBM is becoming a higher revenue growth company. The 110-year-old company has doubled its efforts on software and consulting businesses after letting go of its former managed infrastructure business model in November as the pressure of growth and better margins took a toll.

The IT giant’s consulting business has also grown by 13.1%, whereas its cloud unit saw a 16% jump, clocking at USD 6.2 billion in the fourth quarter. This can be attributed to the company’s shift in focus to what is called "hybrid cloud", where enterprises utilize their own data centers, as well as leased computing resources, to store and process data.

As per Kavanaugh, the company registered revenues in the mid-single digits during the quarter in the U.S., despite the Omicron variant spreading at an alarming rate in the country. Industries that took a major hit early by the pandemic are now bouncing back.

Notably, analysts had expected revenue of USD 15.96 billion with earnings of USD 3.30 per share. However, post adjusting the separation of the managed infrastructure services business, now Kyndryl, IBM's revenue grew 6.5% to USD 16.7 billion and earned USD 3.35 per share.

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Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writ Read more...