CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

IBM share price volatile following Q2 results

We examine the highlights from IBM’s second quarter results.

IBM stock volatile following results release

While the International Business Machines (IBM) share price initially rallied to over US$130 per share, following the release of its Q2 results – the stock has since pulled back, last trading around US$126 per share.

This comes after the tech giant reported second quarter revenues of US$18.1 billion (-1.9%) against Non-GAAP earnings per share (EPS) of US$2.18. Impressively, the company’s gross profit margins increased by 160 basis points to 49.0%.

Those results represented beats on both analysts’ top and bottom-line expectations. Specifically, heading into the Q2 analysts were expecting IBM to report revenues of US$17.62 billion against EPS of US$2.12 per share, according to Bloomberg.

Cloud remains a standout

Though IBM’s revenue continues to decline, the company’s bet on cloud continues to gain traction, with Q2 cloud revenue increasing 30% to US$6.3 billion, while Red Hat revenue increased 17% during the quarter. For reference, over the last twelve months, the tech giant has recorded US$23.5 billion in cloud revenues.

Arvind Krishna, IBM’s Chief Executive, speaking of the catalysts behind this growth, posited that:

‘Our clients see the value of IBM’s hybrid cloud platform, based on open technologies, at a time of unprecedented business disruption.’

‘We are committed to building, with a growing ecosystem of partners, an enduring hybrid cloud platform that will serve as a powerful catalyst for innovation for our clients and the world,’ Mr Krishna finished.

IBM's Systems business segment also saw positive growth during the quarter: revenues rose 6% to US$1.9 billion, while margins expanded 430 basis points, to 57.8%.

In its presentation to the market, and speaking to the solid performance of Systems, said ‘IBM Z and Storage growth reflects client demand for resiliency and offering innovation.’

Mind you, while Cloud and Systems segments grew during the quarter, IBM’s other business arms all saw growth contract amid the global Covid-19 pandemic.

Specifically, Global Business Services recorded revenues of US$3.9 billion (-7%), Global Technology Services brought in revenues of US$6.3 billion (-8%), and IBM's Global Financing segment saw revenues drop 25%, a sharp decline which the company attributed to the 'wind-down of OEM commercial financing.'

The company currently has US$14.3 billion cash on hand, against debt of US$64.7 billion. In spite of that lofty debt position, management noted that ‘We have the financial flexibility to continue to invest in our business and return value to our shareholders through our dividend policy.’

The company made US$1.5 billion worth of dividend payments during the second quarter.

Looking forward, IBM said it has a ‘Strong second half pipeline,’ though noted that ‘results will be influenced by rate and pace of economic recovery.’

Want to take a position in IBM, long or short?

Create an IG trading account or log in to your existing account to get started now.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.