IBM Shares Gain 3%, Company Reports Better than Expected Q1 2022 Earnings

International Business Machines Corp (NYSE: IBM) shares closed Tuesday, April 19, 2022, trading at $129.15. IBM shares gained 2.36 percent during the day and added approximately 1.52 percent during the extended period. The gains have been attributed to the IBM Q1 2022 earnings that beat analysts’ expectations.

During the just announced quarter, IBM reported adjusted earnings per share of $1.40, whereas analysts surveyed by Refinitiv expected an adjusted EPS of $1.38.

Additionally the company reported a revenue of $14.2 billion versus $13.8 billion expected by analysts, according to Refinitiv.

“Demand for hybrid cloud and AI drove growth in both Software and Consulting in the first quarter. Today we’re a more focused business and our results reflect the execution of our strategy,” said Arvind Krishna, IBM chairman and chief executive officer. “We are off to a solid start for the year, and we now see revenue growth for 2022 at the high end of our model.”

IBM Q1 2022 Earnings Results

On a consolidated basis, IBM generated net cash from operating activities of $3.2 billion or $1.6 billion excluding IBM Financing receivables during the first quarter. Importantly, the company’s free cash flow has come in at $1.2 billion.

Notably, the company ended the first quarter with $10.8 billion of cash on hand, up $3.2 billion from year-end 2021. As for the Debt, including IBM Financing debt of $12.2 billion, the company recorded a total of $54.2 billion, up $2.5 billion since the end of 2021. The company returned $1.5 billion to shareholders in dividends during the first quarter.

Otherwise, the company’s Software segment that includes Hybrid Platform & Solutions, Transaction Processing reported a revenue of $5.8 billion. The Consulting sector that includes Business Transformation, Technology Consulting and Application Operations reported a revenue of $4.8 billion.

The Infrastructure segment, which includes Hybrid Infrastructure, and Infrastructure Support, reported a revenue of $3.2 billion. And lastly, the Financing segment, which includes client and commercial financing reported revenue of $0.2 billion.

Forward, IBM expects to report a constant currency revenue growth at the high end of the mid-single-digit range. Additionally, the company also expects an additional 3.5 point contribution from incremental sales to Kyndryl.

Side Notes

The company has a market valuation of approximately $113.47 billion. In the past 52 weeks, IBM shares have ranged between $114.56 and $145.99. According to market analytics provided by MarketWatch, IBM shares are trading down approximately 2.13 percent and 3.37 percent in the past year and YTD respectively through Tuesday.

Having been rated 20 times in the recent past, the company’s stock market received an average rating of Hold.

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