Global technology giant International Business Machines Corporation (NYSE: IBM), popularly known as IBM, has posted better-than-expected results for the first quarter ended March 31, 2022. The robust results were marked by solid revenue growth.
Following the results, shares of the company rose 1.4% to close at $131.01 in Tuesday’s extended trading session, after gaining 2.4% during the day.
Revenue & Earnings
IBM reported revenues of $14.2 billion, up 7.7% year-over-year. The figure surpassed the consensus estimate of $13.85 billion. Software and Consulting, the primary revenue segments, grew 12% and 13%, respectively, and drove the overall growth in revenues for the company.
Earnings per share (EPS) for the quarter stood at $1.40, up 25% from the same quarter last year. Further, the figure topped the consensus estimate of $1.38 per share.
The company’s gross profit margin dipped from 53.3% in the previous year to 51.7%.
In terms of cash flow metrics for the first quarter, the company generated net cash from operating activities of $3.2 billion and free cash flow of $1.2 billion.
Management Commentary
The CEO of IBM, Arvind Krishna, said, “Demand for hybrid cloud and AI drove growth in both Software and Consulting in the first quarter. Today we’re a more focused business and our results reflect the execution of our strategy. We are off to a solid start for the year, and we now see revenue growth for 2022 at the high end of our model.”
Stock Rating
Consensus among analysts is a Hold based on five Buys, five Holds and two Sells. IBM’s average price target of $143.75 implies upside potential of 11.3% from current levels. Shares have declined 2.1% over the past year.
Conclusion
IBM’s solid quarterly results have exceeded expectations. Further, its robust liquidity position gives it a strong footing to strategically carry out its moves in the future.
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