IBM released on Wednesday its third-quarter (Q3) revenue report, revealing the hardware company’s rise in cloud unit, faced with a drop in IBM Z Power systems.
The hardware computer mogul reported a non-generally accepted accounting principle (GAAP) of $2.52 earnings per share (EPS) revenue, resulting in $17.6 billion, with a 1 percent rise Year-over-Year (YoY).
Non-GAAP earnings are earnings measured that are not developed using GAAP and are not needed for external reporting or other public disclosures.
In parallel, the company revealed that its cloud and cognitive software sum reached $5.7 billion its Q3 revenue, with a 2.5 percent augmentation.
While IBM witnessed a rise in cloud incomes, its system revenue dropped by 11.9 percent, resulting in $1.1 billion in total revenue. This decline was mostly directed by a drop in IBM Z and Power Systems that was faced with a storage system growth of 11 percent.
On the other hand, IBM’s Global Technology Services (GTS) unveiled a 4.8 percent drop, summing to $6.2 billion, while Global Business revenue rose by 11.6 percent, growing to $4.4 billion.
“We again had solid cash generation for the quarter and over the last year, while maintaining a strong balance sheet and the liquidity to support our hybrid cloud and AI strategy,” IBM senior vice president, and chief financial officer James Kavanaugh said in a statement.
“Our post-separation portfolio mix is shifted toward our growth vectors, with a higher-value recurring revenue stream and strong cash generation, allowing us to continue to invest in the business and provide attractive shareholder returns,” he added.
As for its cash flow and balance sheet, IBM produced $2.7 billion in net cash from Q3’s operating activities. Throughout the past 12 months, the computer hardware giant generated $16.1 billion from operating activities alone compared to 2020’s free cash flow, which accumulated to $9.2 billion for its Q3 revenue.
After excepting cash impacts of $1.8 billion directed at the structural actions and transaction separation costs, IBM altered the cash flow revenue to reach a total of $11.1 billion.
“With the separation of Kyndryl early next month, IBM takes the next step in our evolution as a platform-centric hybrid cloud and AI company,” said IBM chairman and chief executive officer Arvind Krishna.
“We continue to make progress in our software and consulting businesses, which represent our higher growth opportunities. With our increased focus and agility to better serve clients, we are confident in achieving our medium-term objectives of mid-single-digit revenue growth and strong free cash flow generation,” he added.
The hardware firm closed its Q3 with an $8.4 billion cash on hand – accessible balance referring to all cash – which also includes marketable securities. The balance witnessed a $5.9 billion drop from the end of 2020, mirroring a sum of acquisitions of $3.0 billion, in addition to debt reduction payments.