IBM Sales Growth Hits 10-Year High As Cloud Computing Demand Surges

International Business Machines Corp. (IBM) reported quarterly earnings that beat Wall Street expectations as demand for its cloud computer offering soars.

Sales at IBM rose 6.5% to $16.7 billion U.S. in the three months ended December 31, the Armonk, New York-based company said in a news release. It was the biggest sales increase in 10 years at Big Blue, as IBM is known.

Earnings per share came in at $3.35 U.S. a share, above the average analyst estimate of $3.23 U.S. The company’s gross margin was 56.9%, beating the 56.1% that analysts had forecast.

Wall Street expected quarterly sales of $16 billion U.S., on average, according to Refinitiv data.

IBM’s software unit grew 8.2% to $7.3 billion U.S. The consulting unit, formerly known as Global Business Services, reported $4.7 billion U.S. in revenue, a 13% increase compared with a year earlier.

Cloud computing revenue grew 16% to $6.2 billion U.S., led by Red Hat sales which increased 19% during the quarter.

The results were the first since IBM completed the spinoff of its legacy infrastructure services unit last November into a new company called “Kyndryl,” which includes service operations like managing client data centres and traditional information-technology support.

IBM forecast mid-single digit revenue growth for 2022, plus a boost from incremental sales to Kyndryl of about 3%.

IBM shares rose as much as 7.5% in after hours trading on news of the earnings beat. Over the last 12 months, IBM stock has gained 14% to $128.82 U.S. per share.

Related Stories