IBM Corp. has surpassed profit expectations for its most recent quarter, with substantial growth in its crucial areas of Red Hat and data and artificial intelligence (AI).
In the second quarter, IBM achieved a net income of $1.6 billion, or $1.72 per share, compared to $1.4 billion, or $1.53 per share, in the same quarter of the previous year.
On an adjusted basis, IBM earned $2.18 per share, versus $2.31 per share in the prior year. Analysts predicted an average of $2.01 per share.
While IBM's revenue of $15.5 billion remained relatively unchanged from the previous year, the FactSet consensus called for $15.6 billion.
Notably, IBM experienced a 7% increase in software revenue, a 4% rise in consulting revenue, and a 15% decline in infrastructure revenue.
According to Chief Financial Officer James Kavanaugh, the revenue performance was primarily driven by the growth in software and consulting. IBM also improved its gross profit margin due to an enhanced portfolio mix and productivity initiatives.
Within IBM's software business, Red Hat revenue grew by 11%, while revenue from data and AI witnessed a 10% increase.
IBM's CEO, Arvind Krishna, expressed enthusiasm about meeting their clients' demand for reliable enterprise AI solutions. He highlighted the successful launch of the Watsonx AI platform in the earnings release.
Looking ahead, IBM maintains its expectation of a 3% to 5% growth in revenue on a constant-currency basis for the full year. The company also anticipates approximately $10.5 billion in free-cash flow, aligning with its previous forecast.
