Biggish Blue has posted better first-quarter results than Wall Street expected thanks mostly to customer demand for its open hybrid cloud platform and enterprise-focused AI.
First quarter revenues remained relatively flat at $14.3 billion — a rise of 0.4 per cent.
IBM chairman and chief executive officer Arvind Krishna said that IBM’s first quarter results demonstrate that clients continue turning to IBM for its combination of an open hybrid cloud platform, enterprise-focused AI, and business expertise to unlock productivity and drive efficiency in their operations.
“This gives us confidence in our current growth expectations for revenue and free cash flow for the year.”
IBM’s software segment – which includes hybrid cloud, Red Hat, automation, data, artificial intelligence and security – brought in $5.9 billion in revenue, an increase of up 2.6 per cent.
Meanwhile its consulting business saw revenue of $5 billion for the quarter, an 8.2 per cent increase year on year.
IBM executives acknowledged “deceleration” and “weakness” in its consulting arm during first quarter of its 2023 fiscal year, but software demand remained “very steady” as the vendor detailed some of its investments in bringing more AI to enterprises, which could prove an opportunity for partners.
“A lot of our software is running critical systems for our clients,” Krishna said on an earnings call. “And we don’t see those very subject to what we see in the current macroeconomic environment. And so that’s what gives us confidence.”
He added: “The movement toward hybrid cloud and the ability to take advantage of AI for enterprise productivity is perhaps going to be a tailwind as we enter the second half of the year – because I do think that clients are going to do a lot of automation and a lot of lot of cost cutting, which will likely benefit elements of our software portfolio.”
