IBM's sales rise on demand for software and cloud
Software and hybrid cloud performance a big factor in vendor’s 6.5 per cent fourth quarter sales leap
Strong demand in hybrid cloud adoption led to IBM's sales to rise in its Q4 results - its first since seperating from its managed infrastructure services business now called Kyndryl.
The company reported sales of $16.7bn for the fourth quarter of 2021, a 6.5 per cent increase year on year, with overall software revenue up eight per cent to $7.3bn and total revenue for hybrid cloud across its different segments of $6.2bn.
Red Hat sales drove IBM's software growth with an increase of 19 per cent, while automation sales also jumped 13 per cent.
"We increased revenue in the fourth quarter with hybrid cloud adoption driving growth in software and consulting," said Arvind Krishna, IBM chairman and chief executive officer.
"Our fourth quarter results give us confidence in our ability to deliver our objectives of sustained mid-single digit revenue growth and strong free cash flow in 2022."
The vendor had an operating non-GAAP pre-tax income of $3.5bn, up 102 percent, which included 92 points "from the impact of fourth-quarter 2020 charge for structural actions".
Diluted non-GAAP earnings per share, meanwhile, stood at $3.35.
IBM also saw strong performances in its consulting division - which includes business transformation, technology consulting and application operations - with revenues of $4.7bn, up 13.1 per cent, with an 18 per cent gain in its business transformation segment.
But infrastructure revenues saw a slight dip of 0.2 per cent down to $4.4bn.
"In 2021, we continued to invest for the future by increasing R&D spending, expanding our ecosystem and acquiring 15 companies to strengthen our hybrid cloud and AI capabilities," said James Kavanaugh, IBM senior vice president and chief financial officer.
"With the separation of Kyndryl we now have taken the next step in the evolution of our strategy, creating value through focus and strengthening our financial profile."
IBM has continued to restructure into more of a cloud and software focused company in recent years - acquiring software company Red Hat for $33bn in 2019 and then separating its managed infrastructure services business into Kyndryl last year.
The company has also recently sold off a large part of Watson Health to private equity firm Francisco Partners for $1bn, signalling a move away from the healthcare sector.