By
Godfrey Benjamin
January 22nd, 2024
Commenting on the segment results for Q2 2023, IBM revealed that software was its fastest-growing division.
As IBM (NYSE: IBM) reported better-than-expected earnings in Q2 2023, the company missed on estimated revenue. The adjusted quarterly earnings came in at $2.18, higher than the projected $2.01. Apart from the earnings beat, IBM reported $15.48 billion for its Q2 revenue. Meanwhile, analysts expected the three-month revenue to be $15.58 billion. The announcement caused the company’s shares to drop slightly by 1.02% to $134.10 in the post-market trading session.
IBM Posts Q2 2023 Financial Results
On July 19th, IBM released its Q2 2023 results, noting that its net income for the quarter climbed 13%. According to the technology corporation, the net income rose from $1.4 billion to $1.6 billion or $1.72 per share from the previous year. Notably, the adjusted gross margin of 55.9% was higher than the StreetAccount estimate of 54.7%.
Explaining the segment results for Q2 2023, IBM revealed that software was its fastest-growing division. Revenue generated from the segments surged 7.2% and 7.5% at constant currency to $6.6 billion. CEO Arvind Krishna referred to organizations’ use of the company’s hybrid cloud and AI technology. He added that these establishments also utilize their consulting capabilities for their business operations. The company pulled in $ billion in revenue from its consulting segment. The revenue was up 4.3% or 5.9% at constant currency. UBM senior vice president and chief financial officer James Kavanaugh commented on the Q2 performance:
“In the quarter, revenue performance was led by our growth vectors of software and consulting, and we continued to expand our gross profit margin, driven by our improving portfolio mix and productivity initiatives. This year, we have leveraged our strong cash position to invest for growth, announcing seven acquisitions to bolster our hybrid cloud and AI strategy, while continuing to return value to shareholders through dividends.”
As IBM generated net cash from operating activities of $2.6 billion in Q2, the company recorded $6.4 billion in H1 2023. The Q2 figures rose from the previous year’s $1.3 billion, while the H1 results grew from $1.8 billion YoY. For the full year, IBM expects constant currency revenue growth of 3.5%. Also, it is looking forward to about 10.5 billion in free cash flow, representing over a $1 billion increase year-over-year.
Krishna stated in the Q2 earnings press release that IBM will continue to cater to its clients’ needs. The CEO referred to customers seeking the company’s AI solutions and talked about the market reaction to the new Watsonx AI platform. In conclusion, the chief executive expressed his confidence in the corporation’s revenue and free cash flow growth expectation for 2023.