IBM tops analysts estimates for earnings and revenue in Q2

Written by: Wajeeh Khan
July 20, 2020
  • IBM tops analysts estimates for earnings and revenue in the fiscal second quarter.
  • The U.S. tech company refrains from updating its annual financial guidance.
  • Shares of the company jumped more than 6% in after-hours trading on Monday.

IBM Corp (NYSE: IBM) published its quarterly financial results on Monday that topped analysts’ estimates for earnings and revenue in the second quarter. The company announced Arvind Krishna as its new CEO on 6th April.

Shares of the company were reported over 6% up in after-hours trading on Monday. At £104.71 per share, IBM is roughly 2.5% down year to date in the stock market after recovering from an even lower £74.85 per share in March. Learn more about stocks and the stock market.

IBM’s Q2 financial results versus analysts’ estimates

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According to Refinitiv, experts had forecast the company to print £14 billion in revenue in the second quarter. Their estimate for earnings per share (EPS) was capped at £1.63. In its report on Monday, IBM topped both estimates posting a higher £14.31 billion in revenue and £1.72 of adjusted earnings per share in Q2. Cadence Design Systems also released its Q2 financial results on Monday.

At £1.07 billion, the U.S. technology company’s net income in the second quarter came in 46% lower on a year over year basis. In terms of total gross profit margin, however, IBM saw an improvement to 48% versus the year-ago figure of 47%. In Q1, its gross profit margin was recorded at 45.1%.

The Armonk-based company withdrew its full-year financial guidance citing the rising Coronavirus uncertainty. As of Monday, IBM has still not updated its annual guidance.

IBM’s Global Technology Services generated total revenue of £4.99 billion in the recent quarter that represents an 8% increase on an annualised basis. According to FactSet, experts had forecast this segment to print £4.93 billion in revenue in Q2.

Red Hat revenue comes in 17% higher in Q2

Revenue from Cloud and Cognitive Software business totalled £4.54 billion in the second quarter that topped the FactSet consensus of £4.53 billion and marked a 3% growth versus the comparable quarter of last year.  

Lastly, the company saw £3.07 billion in revenue from Global Business Services in Q2 that was 7% lower than last year but marginally topped the analysts’ estimates of £3.06 billion. On a normalised basis, revenue from Red Hat came in 17% higher at £860 million.

IBM performed fairly upbeat in the stock market last year with an annual gain of roughly 20%. At the time of writing, the American multinational technology has a market capitalisation of £88.62 billion and a price to earnings ratio of 12.52.