IBM revenue beats on cloud strength, shares jump

With cloud adoption surging worldwide, the company has shifted its focus to the so-called "hybrid-cloud", where enterprises use a combination of their own data centers and leased computing resources to store and process data. Kavanaugh said U.S. revenue rose in the mid-single digits during the quarter, even as the Omicron variant raged across the country.

IBM beat Wall Street estimates for fourth-quarter revenue on Monday, bolstered by the IT giant's exit from its slow-growing businesses to focus on cloud as enterprises worldwide digitize operations. Shares of Big Blue rose 6.3% in trading after the bell, as the company also reiterated its forecast for mid-single-digit revenue growth in 2022, compared with 3.9% last year.

The 110-year-old company has doubled down on the high-growth software and consulting businesses after shedding its former managed infrastructure unit in November following years of growth and margin pressures. "This will be the first quarter where you'll see what today's IBM looks like, and that is a higher revenue growth company," Chief Financial Officer James Kavanaugh told Reuters in an interview.

IBM's cloud revenue rose 16% to $6.2 billion during the quarter. With cloud adoption surging worldwide, the company has shifted its focus to the so-called "hybrid-cloud", where enterprises use a combination of their own data centers and leased computing resources to store and process data.

Kavanaugh said U.S. revenue rose in the mid-single digits during the quarter, even as the Omicron variant raged across the country. He added that industries that were hit prominently by the pandemic, including travel, transportation and automotive, were bouncing back.

Revenue at IBM's consulting business, a segment where it competes with Accenture Plc and SAP, rose 13.1% to $4.75 billion. During the quarter ended Dec. 31, net income rose to $2.33 billion, or $2.57 per share, from $1.36 billion, or $1.51 per share, a year earlier.

Revenue rose 6.5% to $16.7 billion, adjusted for the separation of the managed infrastructure services business, now Kyndryl. Analysts on average had expected $15.96 billion, according to IBES data from Refinitiv.

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