IBM beat earnings and revenue estimates last quarter, but has maintained its full year guidance due to economic uncertainty amid the Iran war.
Earnings per share were up 19% year-over-year to US$1.91, above LSEG-compiled estimates of $1.81. Revenue increased 9% to $15.92 billion, surpassing estimates of $15.62 billion.
“The first quarter was a strong start to the year with broad-based revenue growth across our segments. These results reflect the integrated value of our portfolio and the trust clients put in us to improve their operations,” said IBM chair, president, and CEO Arvind Krishna.
“As clients scale use cases, AI continues to be a tailwind for our global business. IBM products and services are helping clients orchestrate, deploy and govern AI across hybrid environments.”
Software revenue climbed 11% to $7.05 billion as its Hybrid Cloud, Automation, and Data sub-segments posted double digit percentage growth. Consulting revenues were also up 4% to $5.27 billion, while Infrastructure revenue increased 15% to $3.33 billion.
Income from continuing operations was $1.22 billion, rising from $1.05 billion one year ago.
The company’s guidance includes constant currency revenue growth of more than 5%, with free cash flow growth of about $1 billion. Its revenue increased 6% on a constant currency basis last quarter, and free cash flow was up $258 million to $2.22 billion.
IBM opted not to raise its guidance amid continuing uncertainty spurred by the Iran war, Krishna told CNBC.
“Is there going to be an issue around oil as inflation goes up? Will that drive people to spend a bit less? If they spend a bit less, it’s not a direct impact on me, but a lot of consumer companies are my clients, like Walmart. If people are buying less at Walmart, they’re going to find a way to control their costs, so then they’ll buy less,” he said.
IBM (NYSE: IBM) shares closed 1.5% lower at $251.86, and fell another 7.1% in after-hours trading. Its market capitalisation is $236.25 billion.
