International Business Machines Inc. shares rallied in the extended session Monday after the tech giant topped Wall Street estimates with a surprise rise in revenue, snapping a four-quarter streak of sales declines.
shares, which had initially surged nearly 5%, were last up 2.5% after hours, following a 0.4% decline in the regular session to close at $133.12.
The company reported first-quarter net income of $955 million, or $1.06 a share, compared with $1.18 billion, or $1.31 a share, in the year-ago period. Revenue rose to $17.73 billion from $17.57 billion in the year-ago quarter. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $1.77 a share, compared with $1.84 a share in the year-ago period.
Analysts had estimated $1.69 a share and a decline in revenue to $17.32 billion for the first quarter.
“Strong performance this quarter in cloud, driven by increasing client adoption of our hybrid cloud platform, and growth in software and consulting enabled us to get off to a solid start for the year,” said Chairman and Chief Executive Arvind Krishna in a statement. “While we have more work to do, we are confident we can achieve full-year revenue growth, and meet our adjusted free cash flow target in 2021.”
Global technology services, or GTS, posted $6.37 billion in revenue compared with $6.47 billion in the year-ago quarter and the $6.32 billion Street consensus.
The company reported cloud- and cognitive-software revenue — which includes its Red Hat unit — of $5.44 billion compared with $5.24 billion a year ago, while analysts had been expecting $5.48 billion.
“It was good to see IBM get back to growth after a year and even better to see the company beat the street on revenue and earnings,” said Patrick Moorhead, principal analyst at Moor Insights & Strategy, in emailed comments. “What you would want to be up, cloud and cognitive, were up and I was thrilled to see systems and global business services growth as it wasn’t expected.”
Total cloud revenue, which draws from various business units, grew 21% to $6.5 billion from a year ago, IBM said.
Global business services revenue was $4.23 billion, compared with $4.14 billion a year ago, and Street forecasts of $4.03 billion. Systems revenue was $1.43 billion, compared with $1.37 billion a year ago and analysts’ expectations of $1.29 billion.
IBM said it expects ” to grow revenue for the full-year 2021 based on mid-April 2021 foreign exchange rates.” Analysts expect full-year revenue of $74.07 billion, or a gain of 0.6% from 2020.
Over the past 12 months, IBM shares have advanced 11%. Over the same period, the Dow Jones Industrial Average
— which counts IBM as a component — has gained 40%, the S&P 500 index
has risen 45% and the tech-heavy Nasdaq Composite Index
has soared 61%.