IBM reports 2021 second-quarter results

IBM reported 2021 Second-Quarter Results
IBM HQ

Second Quarter:

Revenue of $18.7 billion, up 3 percent (flat adjusting for divested businesses and currency)
—  Cloud & Cognitive Software up 6 percent (up 2 percent adjusting for currency)
— Global Business Services up 12 percent (up 7 percent adjusting for currency)

Net cash from operating activities of $17.7 billion and adjusted free cash flow of $11.0 billion, over last 12 months

Total cloud revenue over last 12 months of $27.0 billion, up 15 percent (up 13 percent adjusting for divested businesses and currency)

Total cloud revenue in the quarter of $7.0 billion, up 13 percent (up 9 percent adjusting for divested businesses and currency) led by
— Cloud & Cognitive Software cloud revenue up 29 percent (up 25 percent adjusting for currency)
— Global Business Services cloud revenue up 35 percent (up 30 percent adjusting for currency)

Red Hat revenue up 20 percent (up 17 percent adjusting for currency), normalized for historical comparability

GAAP gross profit margin of 48.0 percent, flat; Operating (non-GAAP) gross profit margin of 49.3 percent, up 30 basis points

Debt reduced by $6.4 billion since year-end 2020

“In the second quarter client adoption of our hybrid cloud platform contributed to strong performance in Global Business Services and software and drove improved overall revenue growth.  At the same time, we continued to help clients infuse our AI-based technology offerings into their core business workflows,” said Arvind Krishna, IBM chairman and chief executive officer.

Segment Results for Second Quarter

Cloud & Cognitive Software (includes Cloud & Data Platforms, Cognitive Applications and Transaction Processing Platforms) — revenues of $6.1 billion, up 6.1 percent (up 2.5 percent adjusting for currency).  Cloud & Data Platforms grew 12 percent (up 8 percent adjusting for currency), led by the company’s hybrid cloud platform and Cloud Pak growth.  Cognitive Applications grew 12 percent (up 8 percent adjusting for currency), led by growth in Security and AI applications.  Transaction Processing Platforms declined 7 percent (down 11 percent adjusting for currency).  Cloud revenue up 29 percent (up 25 percent adjusting for currency).

Global Business Services (includes Consulting, Application Management and Global Process Services) — revenues of $4.3 billion, up 11.6 percent (up 7.3 percent adjusting for currency), with growth in Consulting, up 16 percent (up 11 percent adjusting for currency), Application Management up 5 percent (up 1 percent adjusting for currency) and Global Process Services up 28 percent (up 25 percent adjusting for currency).  Cloud revenue up 35 percent (up 30 percent adjusting for currency).  Gross profit margin declined 60 basis points.

Global Technology Services (includes Infrastructure & Cloud Services and Technology Support Services) — revenues of $6.3 billion, up 0.4 percent (down 4.1 percent adjusting for currency).  Both Infrastructure & Cloud Services and Technology Support Services were flat (down 4 percent adjusting for currency).  Cloud revenue down 1 percent (down 5 percent adjusting for currency).  Gross profit margin up 110 basis points.

Systems (includes Systems Hardware and Operating Systems Software) — revenues of $1.7 billion, down 7.3 percent (down 10.2 percent adjusting for currency), driven by declines in IBM Z (down 11 percent; down 13 percent adjusting for currency) and Storage Systems (down 7 percent, down 10 percent adjusting for currency).  Power systems declined 2 percent (down 5 percent adjusting for currency).  Cloud revenue down 16 percent (down 19 percent adjusting for currency).

Global Financing (includes financing and used equipment sales) — revenues of $242 million, down 8.6 percent (down 11.6 percent adjusting for currency).