With strong performances against both earnings and revenue estimates for first-quarter results, IBM should be proud of their adaptability and success in a rapidly changing economy. The technology behemoth released adjusted earnings per share of $1.60, well above analyst expectations of $1.40. The company announced a record revenue of $14.54 billion, well above the $14.4 billion that was forecast. That’s a small increase of 0.6% over last year’s $14.5 billion for the same quarter.
With the launch of its z17 mainframe during the first quarter, IBM deepens its hold over the high-performance computing space. The news wasn’t as bright for its infrastructure division, which includes mainframe computers that saw a 6% drop in revenue, generating $2.89 billion. Even with this drop in revenue, it was still above the analysts’ consensus of $2.76 billion.
IBM’s net income for the quarter fell to $1.06 billion, or $1.12 per share, down from $1.61 billion, or $1.72 per share in the previous year’s quarter. While this declining revenue speaks to continued headwinds in the tech sector, it has been offset by strong results from all other sectors.
The software segment brought in stellar results. It pulled off a monster 7% revenue beat ($6.34 billion for the quarter), a number that exceeded analysts’ expectations by StreetAccount. Despite increased near-term market uncertainty, IBM’s management is still bullish on their longer-term prospects.
In a statement regarding the company’s outlook, IBM CEO Arvind Krishna emphasized the importance of long-term growth opportunities within technology and the global economy. He stated, “We remain bullish on the long-term growth opportunities for technology and the global economy.” Krishna noted that despite the fluid macroeconomic environment, IBM is maintaining its full-year expectations for revenue growth and free cash flow.
“While the macroeconomic environment is fluid, based on what we know today, we are maintaining our full-year expectations for revenue growth and free cash flow.” – Arvind Krishna
Looking forward, IBM’s management forecasts second-quarter revenue of $16.4 billion to $16.75 billion. They doubled down on their guidance of $13.5 billion in FCF. They further project 5% revenue growth at constant currency in 2025.