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Jun 30, 2021
IBM Q2 2021 Earnings Report
IBM's second quarter results for 2021 were released, showcasing improved revenue growth driven by hybrid cloud platform adoption, consulting, and software.
Key Takeaways
IBM reported a 3% increase in revenue to $18.7 billion, driven by strong performance in Global Business Services and software, reflecting client adoption of the hybrid cloud platform. The company is on track to deliver full-year revenue growth and meet its cash flow objective.
Revenue increased by 3 percent to $18.7 billion, remaining flat when adjusted for divested businesses and currency fluctuations.
Cloud & Cognitive Software revenues saw a 6 percent increase, or 2 percent when adjusted for currency.
Global Business Services revenues increased by 12 percent, or 7 percent when adjusted for currency.
GAAP gross profit margin remained flat at 48.0 percent, while the operating gross profit margin increased by 30 basis points to 49.3 percent.
Forward Guidance
IBM expects to grow revenue for the full year 2021 based on mid-July 2021 foreign exchange rates. The company continues to expect adjusted free cash flow of $11 billion to $12 billion in 2021.
Positive Outlook
- Revenue growth expected for full year 2021.
- Adjusted free cash flow expected between $11 billion and $12 billion.
- Focus on hybrid cloud and AI capabilities.
- Strategic acquisitions to strengthen hybrid cloud and AI.
- Commitment to increasing dividends.
Challenges Ahead
- Downturn in economic environment and client spending budgets.
- Failure of the company’s innovation initiatives.
- Damage to the company’s reputation.
- Impact of local legal, economic, political, health and other conditions.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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