International Business Machines Corp. (NYSE:IBM) (IBM) surpassed third-quarter 2022 earnings expectations with demand for the tech giant’s hybrid cloud computing a key driver of the strong results.
Earnings came in at US$1.81 per share, compared to analyst expectations of $1.78 per share. Revenue for the quarter was US$14.11 billion, higher than the expected $13.53 billion.
IBM CEO Arvind Krishna said the company delivered strong revenue growth in the quarter.
“Globally, clients view technology as an opportunity to enhance their business, which is evident in the results across our portfolio. With our year-to-date performance, we now expect full-year revenue growth above our mid-single digit model," Krishna said in a statement.
READ: RemSense Technologies marries virtualplant system with IBM’s asset management portal
Hybrid cloud computing was a key driver, thanks to the rise in software revenue to $5.8 billion. Revenue increased 4.6% from a year earlier. Software revenue was up 7%, consulting revenue was up 5%, and infrastructure revenue was up by 15%.
On a consolidated basis, for the first nine months of the year the company generated net cash from operating activities of $6.5 billion, or $5.4 billion excluding IBM Financing receivables. IBM's free cash flow was $4.1 billion, which includes cash impacts from the company's structural actions initiated at the end of 2020.
IBM CFO James Kavanaugh said the company’s revenue growth and operating profit profile for the first three quarters of the year align to the investment thesis outlined last fall.
"Our portfolio mix, business fundamentals, strong recurring revenue stream and solid cash generation allow us to invest for continued growth and return value to shareholders through dividends," Kavanaugh said.
For full-year 2022, IBM expects constant currency revenue growth, and about $10 billion in consolidated free cash flow.
IBM shares have declined 13.7% over the past year. At the close, shares were trading at US$122.51, down 0.4%, but in after-hours trading, the share price increased by around 5%.
Contact the author at susie@proactiveinvestors.com