IBM (IBM 158.02, +11.48) has jumped 7.8% after beating quarterly expectations.
The legacy technology company reported above-consensus earnings of $3.30 per share on revenue of $19.15 billion, which declined 0.4% year-over-year, but still exceeded estimates.
Looking to compete with younger companies, IBM has been adjusting its offerings, providing more cloud-based services that allow end users to reduce their spending on hardware. Cloud revenue increased 20.0% year-over-year to $4.10 billion during the third quarter. Over the past 12 months, cloud revenue totaled $15.80 billion. Of that $15.80 billion, $8.80 billion represented software-as-a-service revenue while the remaining $7.00 billion came from sales of hardware, software, and services.
Over the past 12 months, Strategic Imperatives revenue grew 10.0% year-over-year to $34.90 billion. Strategic Imperatives revenue makes up roughly 45.0% of the company's total sales.
Glancing at the company's results by segment, Cognitive solutions revenue grew 4.0% to $4.40 billion. The revenue growth rate was fueled by solutions software, security and analytics, and transaction processing software. Segment gross margin declined to 78.7% from 80.4%.
Global Business Services revenue declined 2.0% to $4.10 billion. However, strategic imperatives revenue within the segment grew 10.0%. Segment gross margin fell to 27.3% from 28.8%.
Technology Services & Cloud Platform revenue declined 3.0% to $8.50 billion, but strategic imperatives revenue increased 12.0% thanks to hybrid cloud services, security services, and mobile services. Segment gross margin contracted to 41.1% from 42.0%.
Systems revenue rose 10.0% to $1.70 billion thanks to growth in z Systems and storage. Segment gross margin improved to 53.6% from 51.1%.
Global financing revenue increased 4.0% to $427 million. Segment gross margin fell to 25.2% from 37.8%.
Total gross margin declined to 45.9% from 46.9% one year ago.
Big Blue reaffirmed its guidance for the full year, expecting earnings of at least $13.80 per share. The company expects that its free cash flow will be unchanged when compared to the previous fiscal year.