Shares of International Business Machines Corp., better known as IBM, climbed 7% to $138.25 a day after posting results for the first quarter ended 31 March 2022 and saying it expects revenue to reach the high end of earlier Wall Street predictions.
The global technology giant reported revenues of $14.2 billion, up 7.7% year-over-year, surpassing consensus estimates of $13.85 billion.
The primary revenue segments, Software, and Consulting grew 12% and 13%, respectively, while infrastructure revenue lagged revenues with its 2% decline.
With businesses and organizations digitally transforming their operations, (NYSE:IBM) has positioned itself well as a trusted partner. Citing momentum in its software business, which includes hybrid cloud solutions and legacy transaction processing, IBM reported a 14% revenue increase.
IBM said over 4,000 clients used its hybrid cloud platform in the quarter, up from more than 3,800 in the previous quarter.
In addition, the company ended the first quarter with $10.8 billion in cash, up $3.2 billion from the end of 2021. Though IBM doesn't provide earnings guidance, the company continues to expect free cash flow to come in between $10 billion to $10.5 billion in full-year 2022.
Adjusted gross margin for the quarter came in at 52.9%, compared to 54.6% in the same period last year, missing analyst predictions of 54.4%.
"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." - CEO Arvind Krishna of IBM.
As central banks have sought to combat inflation with higher interest rates, the 110-year-old technology company has become more favorable to investors this year.
The recent gains marked IBM's best day since early April 2020, while analysts polled by Refinitiv now see the company growing 6% in 2022, up from under 4% last year.
BofA analyst Wamsi Mohan also raised the price target from $162.00 to $165.00 per share following solid results and robust guidance.
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