IBM share price down 5% after Q1 results revenue miss

The tech company's stock falls after a worse-than-expected Q1 earnings report.

IBM logo after IBM Q1 earnings Source: Bloomberg

IBM share price is down after a mixed Q1 earnings report. IBM’s Q1 earnings per share were high, but IBM’s Q1 revenue fell below Wall Street expectations.

IBM earnings:key figures

Earnings per share $2.25
Revenue $18.18 billion
Cloud and Cognitive Software Sales $5.04 billion

IBM share price down 5% after missing revenue estimates

IBM’s earnings per share were $2.25, slightly higher than financial experts’ predictions of $2.22. IBM’s Q1 revenue was $18.18 billion, less than the $18.46 billion expected from Wall Street. The corporation’s cloud and cognitive software sales fell by 1% to $5.04 billion, but cloud revenue overall increased 10% each year to its current revenue of $19.5 billion. Chief executive officer, (CEO), Ginni Rometty, touted the success of the company’s cloud services.

‘In the first quarter, our cloud revenue growth accelerated, and we again grew in key, high-value areas in Cloud and Cognitive Software and in consulting. IBM's investments in innovative technologies coupled with our industry expertise and our commitment to trust and security position us well to help clients move to chapter two of their digital reinvention,’ said Rometty.

James Cavanaugh, IBM’s chief financial officer(CFO), also spoke about IBM’s Q1 earnings surpassing estimates.

‘In the first quarter, we significantly expanded profit margins, led by our services businesses. Our focus on prioritizing our investments in the emerging high-value segments of our industry has enabled us to drive higher profitability and strong cash generation, ' said Cavanaugh.

How did IBM’s Q1 earnings compare to other tech stocks?

Compared to software company Adobe, IBM’s Q1 earnings also outperformed and beat estimates. Adobe also had a better-than-expected earnings report.

What is IBM’S 2019 earnings guidance?

IBM offered light guidance for its 2019 earnings. The tech company expects $13.90 earnings per share in 2019 earnings. That figure is slightly less than the $13.91 projected by financial experts.

Will Red Hat help IBM’s earnings in the future?

IBM’s $34 billion acquisition of Red Hat, will be final later in 2019, but financial analysts from Nomura Instinet wrote that the purchase will help IBM’s earnings in future quarters.

‘IBM is winning new, even cloud-native, customers before RHT[ Red Hat]. OpenShift [a Red Hat product] should help IBM win new customers and new workloads as enterprises begin to usher mission-critical applications from on-premise to public or private clouds,’ wrote Nomura Instinet analysts.

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