IBM continues down the road to recovery

Rome wasn’t built in a day, and IBM’s readiness for the connected era certainly took some time, but another solid quarter perhaps demonstrates the corner has finally been turned.

Perhaps the watershed moment was six months ago, the company’s first quarter of revenue growth following 23 consecutive periods of decline, but the last two results have proved it wasn’t a fluke. Big Blue is back on the right path.

The last three months appear to be solid, if not spectacular. Total revenues stood at $20 billion, up 2% year-on-year, with the Strategic Imperatives (cloud, security, analytics and mobile) revenues at $10.1 billion, a 13% increase and the first time this segment accounted for more than half of total revenues.

“We delivered strong revenue and profit growth in the quarter, underscoring IBM’s progress and momentum in the emerging, high-value segments of the IT industry,” said Ginni Rometty, IBM CEO.  “More clients are engaging IBM on their journey to the cloud, and deploying IBM Cloud, Watson AI, analytics, blockchain and security solutions.  This demonstrates IBM’s unique leadership in providing innovative technology coupled with deep industry expertise, trust and security.”

The transition to the connected, mobile orientated era was a tricky one for IBM, as while the Strategic Imperatives business was growing healthily, it wasn’t compensating for the rapid decline of IBM’s legacy business. This is a trend which seems to have been reversed, with the Strategic Imperatives accounting for $39 billion over the last twelve months, a 12% increase, representing 48% of total revenues.

Dissecting the Strategic Imperatives, analytics grew 5% to $5.4 billion, while cloud jumped 18% year-on-year to $4.7 billion. Mobile accounted for $1.3 billion, up 3% year-on-year, while security brought in $1 billion, a 79% boost from the same period in 2017. 13% year-on-year growth across the Strategic Imperatives certainly makes for positive reading.

IBM might not be anywhere near as influential a business as it was in a previous era, but the future is starting to look a lot brighter. A 3% boost in share price in afterhours trading indicates the market certainly likes the news and the trends.