IBM CEO Arvind Krishna appears at the World Economic Forum in Davos, Switzerland, on Jan. 16, 2024.
IBM shares fell as much as 6% in extended trading on Wednesday after the tech conglomerate issued second-quarter results that topped Wall Street projections.
Here's how the company did in comparison with LSEG consensus:
Earnings per share: $2.80 adjusted vs. $2.64 expected
$2.80 adjusted vs. $2.64 expected Revenue: $16.98 billion vs. $16.59 billion
IBM's revenue increased nearly 8% year over year in the quarter, according to a statement. Growth in the first quarter was below 1%. Net income, which includes costs related to acquisitions, rose to $2.19 billion, or $2.31 per share, from $1.83 billion, or $1.96 per share, a year ago.
"While not a major factor overall, geopolitical tensions are prompting a few clients to move cautiously," CEO Arvind Krishna said on a conference call with analysts. "U.S. federal spending was also somewhat constrained in the first half, but we do not expect it to create long term headwinds."
Software revenue climbed about 10% to $7.39 billion, falling short of the $7.43 billion consensus among analysts surveyed by StreetAccount. Hybrid cloud revenue, including Red Hat, showed 16% growth. The software unit's gross margin of 83.9% was barely narrower than StreetAccount's 84.0% consensus.
"Clients reprioritized their spend to the hardware," Krishna said.
Revenue from consulting rose almost 3% to $5.31 billion, higher than StreetAccount's $5.16 billion consensus.
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