IBM Reports 2021 First-Quarter Results with Systems Revenue Growth Led by System Z

IBM announced first-quarter 2021 earnings results. The company announced GAAP EPS from continuing operations of $1.06, Operating (non-GAAP) EPS of $1.77, and revenue of $17.7 billion.

“Strong performance this quarter in cloud, driven by increasing client adoption of our hybrid cloud platform, and growth in software and consulting enabled us to get off to a solid start for the year," said Arvind Krishna, IBM chairman and chief executive officer.  "While we have more work to do, we are confident we can achieve full-year revenue growth and meet our adjusted free cash flow target in 2021.”

“In the first quarter we continued to improve the fundamentals of our business model," said James Kavanaugh, IBM senior vice president and chief financial officer.  "With strong cash generation and disciplined financial management, we increased investments in our hybrid cloud and AI capabilities, while significantly deleveraging in the quarter and supporting our commitment to a secure and growing dividend.” 

Looking at the results per segment, IBM said Systems (including Systems Hardware and Operating Systems Software) had revenues of $1.4 billion, up 4.3% (up 2.2% adjusting for currency), led by IBM Z, while Power and Storage Systems declined. Operating Systems Software declined. Cloud revenue was up 23% (up 21% adjusting for currency). 

In addition:  

  • Cloud & Cognitive Software (includes Cloud & Data Platforms, Cognitive Applications and Transaction Processing Platforms) had revenues of $5.4 billion, up 3.8% (up 0.8% adjusting for currency). Cloud & Data Platforms grew 13% (up 10% adjusting for currency), led by the company’s hybrid cloud platform and Cloud Pak growth. Cognitive Applications grew 4% (up 2% adjusting for currency), led by growth in Security. Transaction Processing Platforms declined 12% (down 15% adjusting for currency). Cloud revenue was up 38% (up 34% adjusting for currency).  
  • Global Business Services (includes Consulting, Application Management and Global Process Services) had revenues of $4.2 billion were up 2.4% (down 1.4% adjusting for currency), with growth in Consulting and Global Process Services. Application Management revenue declined.  Cloud revenue up 33% (up 28% adjusting for currency). 
  • Global Technology Services (includes Infrastructure & Cloud Services and Technology Support Services) had revenues of $6.4 billion, down 1.5% (down 5.3% adjusting for currency). Infrastructure & Cloud Services and Technology Support Services declined. Cloud revenue up 6% (up 2% adjusting for currency). 
  • Global Financing (includes financing and used equipment sales) had revenues of $240 million, down 20.0% (down 21.9% adjusting for currency), driven by lower financing volumes and sale of receivables.

Looking Ahead at Full-Year 2021

The company said it expects to grow revenue for the full year 2021 based on mid-April 2021 foreign exchange rates. The company also expects adjusted free cash flow of $11 billion to $12 billion in 2021. Adjusted free cash flow expectations exclude approximately $3 billion of cash impacts from the company’s structural actions initiated in the fourth quarter of 2020 and the transaction costs associated with the separation of the managed infrastructure services business.