International Business Machines Corp edged past Wall Street estimates for quarterly revenue on Monday, bolstered by higher demand for its cloud computing services from companies speeding up their digital shift due to the coronavirus pandemic.
The results come just weeks after Big Blue surprised investors with its announcement of splitting itself into two public companies, placing big bets on cloud computing to drive its future growth.
“We continue to see a very strong pattern in acceleration of our clients’ digital transformation … We are seeing that play out in our Red Hat business,” Chief Financial Officer James Kavanaugh told Reuters.
Kavanaugh said some clients continued to cut or delay spending due to the pandemic, contributing to a 5% sales decline in its global business services unit.
IBM’s total revenue fell 2.6% to $17.56 billion in the reported quarter, but was slightly above analysts’ estimates of $17.54 billion, according to IBES data from Refinitiv. Excluding the impact from currency and business divestitures, sales declined 3.1%.
Revenue from the cloud business, previously headed by IBM’s new boss Arvind Krishna, rose 19% to $6 billion in the third quarter.
Krishna took over as chief executive officer from Ginni Rometty in April. The company’s net income rose to $1.7 billion, or $1.89 per share, in the quarter ended Sept. 30 from $1.67 billion, or $1.87 per share, a year earlier.
Excluding items, the company earned $2.58 per share, which was in line with analysts’ estimates.