IBM Posts Impressive Q1 2023 Performance, Shares Jump 2%
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IBM Posts Impressive Q1 2023 Performance, Shares Jump 2%
American multinational technology corporation IBM (NYSE: IBM) has released its first quarter (Q1) performance update showing the firm beating all odds to stay profitable in comparison to key estimates. According to the earnings report, IBM said its revenue came in at $14.3 billion, up 0.4% from the year-ago period and by 4.4% at constant currency.
The revenue estimated by Refinitiv analysts was pegged at $14.35 billion, however, the company compensated for this slight missed with its earnings. As revealed, the Earnings Per Share (EPS) came in at $1.36 per share, adjusted as against the $1.26 projected by Refinitiv analysts.
The first quarter was a major strain for most companies and though the period was harsher for companies in the banking sector, IBM has had to adjust its books to print the results it posted. The company worked on its cost-cutting measures which have largely helped place it back on the path of growth moving forward.
“In the quarter, we remained focused on the fundamentals of our business, increasing productivity and generating operating leverage,” said James Kavanaugh, IBM senior vice president, and chief financial officer. “As a result, we again expanded our gross profit margin, improved our underlying profit performance, and increased our cash generation. We are well-positioned to continue investing for growth and returning value to shareholders through dividends.”
Per the specifics shared, the company recorded good growth leaps in both its software and consulting segments respectively. While both the software and consulting segments returned a 3% growth in revenue, the infrastructure unit printed a loss with its revenue figures dropping by 4% as flat constant currency.
The performance of IBM in the past quarter has stirred the hearts of investors which has pushed its shares up 2.19% in the pre-market to $129.09.
IBM Performance in AI and Future Guidance
The past months saw growth in the adoption of Artificial Intelligence (AI) and IBM also detailed its performance in this space. According to the company in the quarter, it provided AI-based commentary in the Masters Tournament Golf App. The firm affirmed it has active work ongoing in the generative AI space.
“AI techniques such as foundation models, large language models, and generative AI give businesses the ability to create 100 AI models from a single dataset,” Krishna said. “Early client engagements experience a 70% faster time to value. That is why we are seeing a lot more interest from business in using AI to boost productivity and reduce cost.”
One of the most direct and immediate uses of AI that IBM has cited includes deploying it for auditing and compliance in partnership with Citigroup Inc (NYSE: C).
In terms of performance guidance, IBM said it hopes to maintain positive cash flow for the rest of the year up to $10.5 billion.