Shares of IBM were up in after-hours trading on Monday, after the company reported better-than-expected results in its fourth quarter. In its first financial report since spinning off its managed services business Kyndryl, IBM highlighted the double-digit revenue gains of its hybrid cloud business.
Non-GAAP earnings per share came to $3.35 on revenue of $16.7 billion, up 6.5%.
Analysts were expecting earnings of $3.14 per share on revenue of $15.98 billion.
Hybrid cloud revenue in Q4 totaled $6.2 billion, up 16%. Full-year hybrid cloud revenue was $20.2 billion, up 20%.
“We increased revenue in the fourth quarter with hybrid cloud adoption driving growth in software and consulting,” CEO Arvind Krishna said in a statement. “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.”
While IBM shed its managed services business in 2021, it also made a number of investments to strengthen its focus on AI and hybrid cloud.
“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,” IBM SVP and CFO James Kavanaugh said in a statement.
IBM changed its reporting segments in Q4, breaking down results for Software (which includes Hybrid Platform & Solutions and Transaction Processing), Consulting (Business Transformation, Technology Consulting, and Application Operations), Infrastructure (Hybrid Infrastructure, Infrastructure Support), and Financing (client and commercial financing).
Software in Q4 brought in $7.3 billion in revenue, up 8.2%, up 10.1 percent at constant currency (including about 5 points from incremental external sales to Kyndryl). Within Software, Hybrid Platform & Solutions was up 7%. That includes Red Hat(up 19%), Automation (up 13%), Data & AI (up 1%) and Security (down 2%).
Also within Software, Transaction Processing was up 11%. Software segment hybrid cloud revenue was up 22%.
IBM’s Consulting business in Q4 brought in revenues of $4.7 billion, up 13.1%. Within that category, Business Transformation was up 18%. Technology Consulting was up 14%. Application Operations was up 6%. Consulting segment hybrid cloud revenue was up 31%.
Infrastructure revenue in Q4 totaled $4.4 billion, down 0.2%, up 1.7% at constant currency (including about 5 points from incremental external sales to Kyndryl). Within the category, Hybrid Infrastructure was flat — IBM Z sales were down 65, and Distributed Infrastructure was up 5%.
Additionally, Infrastructure Support was down 1%. Infrastructure segment hybrid cloud revenue was down 12%.
The Financing segment in Q4 brought in revenue of $0.2 billion, down 29.4%.
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