Cloud growth helped IBM beat its Q1 earnings targets

On Monday IBM reported Q1 earnings that beat its previous projections, thanks to double digit growth from its cloud business.

The company's quarterly revenue from its strategic businesses, which includes its cloud and analytics divisions, increased by 14 per cent year over year. Now, 37 per cent of IBM's revenue comes from its strategic businesses. Over the last 12 months, the company's cloud revenue grew by 36 per cent to $10.8bn.

Overall IBM reported a net income of $2.01bn ($2.09 a share) for the first quarter of 2016. The company's non-GAAP revenue was $18.28bn.

IBM expects to have a net income between $11bn - $12bn by the end of 2016. The company also believes that its non-GAAP earnings will be in the area of $13.50 a share but Wall Street is hoping its shares will be even higher at $13.54 a share.

Ginni Rometty, the chairman and CEO of IBM is quite satisfied with the way in which IBM has been able to help its clients apply new cognitive solutions and make use of hybrid cloud platforms.

IBM's infrastructure services and cloud platforms managed to make a revenue of $8.4bn, down 1.5 per cent. However if the numbers are adjusted for the currency fluctuations that have occurred, the loss actually ends up being a gain of 1.9 per cent. Cognitive solutions (which includes software) and system revenues were both down this quarter as well with cognitive solutions down 1.7 per cent to $4bn and system revenues down 21.8 per cent to $1.7bn.

IBM's first quarter of 2016 could have played out quite differently if it did not have its cloud and analytics businesses. It is fortunate that the company - as well as many others in the tech industry - heavily pushed its cloud business.

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