IBM has reported better-than-expected Q2 2022 results, revealing a 9 percent year-on-year increase in revenue to $15.5bn, but shares fell in extended trading hours after the company cut its 2022 cash forecast.
During the quarter, the company saw a 16 percent rise in hybrid cloud revenue to $21.7bn and a 6 percent increase in software revenue to $6.2bn.
IBM’s consulting revenue totaled $4.8bn, up 10 percent year-on-year, whilst infrastructure revenue was $4.2bn, up 19 percent.
For Q2 2022, IBM’s adjusted earnings per share were $2.31, beating the $2.27 per share expected by analysts.
For the full year 2022, IBM expects constant currency revenue growth at the high end of its mid-single digit model. However, it now anticipates around $10bn in consolidated free cash flow for all of 2022, down from the range of $10 billion to $10.5 billion provided in April.
This cautious forecast likely stems from the current apprehensive mood in big tech. As revealed by ERP Today last week, SAP is slashing costs and freezing hires in light of the “current macroeconomic climate.” Companies like Google and Microsoft are also treading more cautiously than usual.
James Kavanaugh, IBM senior vice president and CFO, remarked in yesterday’s earnings call for IBM that the wind-down of the company’s Russian operations resulted in “incremental charges in the quarter.”
“Together with the year-to-year loss in business due to the wind-down,” he continued, “Russia impacted our profit results by another roughly $100m.”
The CFO also highlighted the effect which the sharply strengthening dollar had been having on IBM’s fortunes.
“We execute hedge programs that cover the majority but not all of the currency exposure. The combination of the rate and velocity of movement this quarter and the fact that we don’t hedge 100 percent results in a currency (caused) impact to our profit and cash flow.”
Regarding the Q2 results, Arvind Krishna, IBM chairman and CEO, said: “In the quarter we delivered good revenue performance with balanced growth across our geographies, driven by client demand for our hybrid cloud and AI offerings. The IBM team executed our strategy well. With our first half results, we continue to expect full-year revenue growth at the high end of our mid-single digit model.”