IBM, the tech giant, reported second-quarter results for 2022 after US stocks opened on Monday, July 18, est. IBM's revenue profit beat expectations thanks to its hybrid cloud and artificial intelligence strategy and the Z16 mainframe computer that began selling this quarter, but its shares rose 1.37 per cent in after-hours trading before falling nearly 4 per cent as the company cut its cash flow forecast.

IBM is up 1.54% year-to-date, far outperforming the S & P 500's decline of about 20% over the same period.

Specifically, IBM's core financial indicators for the current quarter:

• Operating EPS in the second quarter was $2.31, higher than analysts' expectations of $2.29.

• Second-quarter revenue was $15.54 billion, higher than analysts' expectations of $15.16 billion and a year-on-year increase of 9 per cent (16 per cent at a fixed exchange rate).

Among them, the distribution of revenue from each business is as follows:

• Software revenue from the cloud and cognitive software business, which includes cloud applications and transaction processing platforms, was $6.2 billion, below expectations of $6.3 billion and up 6 per cent year-on-year (12 per cent at a fixed exchange rate, of which about 7 per cent came from Kyndryl sales).

• Consulting revenue, including consultants, application management and global business process services, and global enterprise services, was $4.81 billion, higher than analysts' expectations of $4.64 billion and up 10 per cent year-on-year (18 per cent at fixed exchange rates)

• Global infrastructure revenue, including infrastructure and cloud services and technical support services, recorded $4.24 billion, higher than analysts' expectations of $3.79 billion and a year-on-year increase of 19 per cent (25 per cent at a fixed exchange rate). Of this total, hybrid infrastructure grew by 34% (41% at a fixed exchange rate, of which 30% came from revenue growth in the hybrid cloud. )

In addition, IBM expects full-year free cash flow of $10 billion, compared with the company's previous estimate of $10-10.5 billion. The IBM also expects the exchange rate to have a 6 per cent impact on full-year earnings, compared with a range of 3-4 per cent in April. In addition, its gross profit margin shrank to 53.4% from 55.2% in the same period last year.

Arvind Krishna, CEO of IBM, expressed satisfaction with the second full quarterly results after IBM spun off Kyndryl:

This quarter, driven by customer demand for our hybrid cloud and artificial intelligence products, we achieved good revenue performance and balanced revenue growth across regions. Through our first-half results, we continue to expect full-year revenue growth at the high end of our median estimate.

Hybrid cloud platform, which is at the core of IBM's transformation, continues to grow rapidly. Wall Street reported that hybrid cloud's revenue rose 14 per cent year-on-year to $5 billion in the first quarter and continued double-digit growth of 24 per cent year-on-year (30 per cent at a fixed exchange rate).

In addition, IBM announced plans to acquire ASM, the leading attack surface management in the Boston area, and Randori, an aggressive network security provider, at RSAC 2022 in the second quarter. Randori helps customers continuously identify external assets visible to attackers, whether on premises or in the cloud, and give priority to exposures that pose the greatest risk. The planned acquisition further advances IBM's hybrid cloud strategy and strengthens its portfolio of artificial intelligence-driven network security products and services.

In fact, Randori is already IBM's fourth acquisition in 2022 to continue to strengthen its hybrid cloud and AI skills and capabilities. Since Arvind Krishna became CEO in April 2020, IBM has acquired more than 20 companies.