IBM revenue grows for the second consecutive quarter, offering investors hope

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IBM is showing signs that it is getting back on track, after reporting that Q2 revenue rose 3% from a year ago. Revenue of $18.75 billion was flat, when adjusted for fluctuations and divestments, but is well ahead of the estimated $18.29 billion.

Adjusted earnings rose 7% from a year ago, to reach $2.33 per share, a slightly better number than analysts’ estimates of $2.31 per share.

This is the second straight quarter of revenue growth for IBM, something that it has not enjoyed lately. Before Q1, IBM had reported that revenue was in decline for four consecutive quarters and 30 of the past 34 quarters.

Red Hat

Revenue for the company’s cloud and cognitive software unit, including Red Hat, grew 6% to hit the $6.1 billion mark, ahead of estimates which projected $5.93 billion.

In the coming quarters, the Red Hat unit will come under scrutiny after IBM President and former Red Hat CEO Jim Whitehurst announced his unexpected departure earlier this July. IBM reported that Red Hat’s revenue rose 17% on an adjusted basis.

Aravind Krishna, the CEO, said the company is focusing on a hybrid cloud powered by the Red Hat unit.

The sun could rise on IBM

Krishna said the hybrid cloud approach is more than a strategy and is now a reality for more than 2,300 customers using IBM’s hybrid cloud platform. That is a fourfold increase since it acquired Red Hat.

The CEO also mentioned the success of Cloud Paks, which are packages of intelligent software, aimed at addressing specialty areas, saying that Cloud Paks have done well in helping customers with complex cloud migration or in the process of modernization, streamline the transition.

The company is investing aggressively in skills, practice delivery, and market resources, growing its workforce by more than 10% in those fields.