IBM quarterly sales development highest in more than two years on cloud strength

International Business Machines Corp recorded highest quarterly sales development in more two years and beat Wall Street targets on Monday, helped by its wagers in the high-margin cloud computing business.

Shares of the Dow component, which have acquired almost 6% so far this year, were up over 3% in expanded trading.

Finance chief James Kavanaugh said cloud spending by customers in retail, manufacturing and travel industries in the United States was getting after the initial pandemic-driven droop.

Sales from its cloud computing services bounced 21% to $6.5 billion in the quarter. The 109-year-old firm is planning to part itself into two public organizations, with the namesake firm narrowing its attention on the so-called hybrid cloud, where it sees a $1 trillion market opportunity.

Big Blue recorded a sales decline in global technology services, its biggest unit, yet that was generally offset by an ascent in income in the excess three units, including a surprise growth in the business that hosts mainframe computers.

Mainframe saw strong traction from the financial services industry, where its banking customers looked for greater capacity as trading volumes took off during the retail trading frenzy, CFO Kavanaugh said.

“I am glad to see that strategic projects, which are IBM’s bread and butter, are coming back,” said Patrick Moorhead, analysts at Moor Insights & Strategy, adding that systems and global business services growth was a surprise.

“This is a good start to the year for the company who is all-in on the cloud.”

Total revenue rose almost 1% to $17.73 billion in the quarter, beating investigators’ average estimate of $17.35 billion, as per IBES information from Refinitiv.

Net income fell to $955 million, or $1.06 per share, in the quarter finished March 31, from $1.18 billion, or $1.31 per share, a year earlier.

Excluding items, the organization acquired $1.77 per share, beating market expectation of $1.63.