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Hybrid cloud boosts IBM’s Q1 revenue

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Arvind Krishna, IBM chairman and chief executive officer.
Arvind Krishna, IBM chairman and chief executive officer.

Cloud computing lifted tech giant IBM’s results in the first quarter of 2021.

Yesterday, Big Blue announced financial results for Q1 2021, posting revenue of $17.7 billion, up 1%. The company also reported total cloud revenue of $6.5 billion, up 21%.

“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,” says 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.”

Last year, Krishna said IBM was looking to seize the $1 trillion hybrid cloud opportunity after the company’s $34 billion acquisition of Red Hat in 2019.

ITWeb, in partnership with IBM, recently conducted a local Hybrid Cloud Survey to examine the state of cloud adoption across South African businesses.

According to the survey findings, as many as 85% of respondents use cloud (public or private) for their IT operations, while 12% aren’t currently using cloud but plan to within the next year or two.

“In the first quarter, we continued to improve the fundamentals of our business model,” says 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 [artificial intelligence] capabilities, while significantly deleveraging in the quarter and supporting our commitment to a secure and growing dividend.”

The company generated net cash from operating activities of $4.9 billion, or $2.1 billion excluding global financing receivables.

IBM’s free cash flow was $1.5 billion, which includes $0.6 billion of cash impacts from the structural actions initiated in the fourth quarter of 2020 and the transaction costs associated with the separation of the managed infrastructure services business.

The adjusted free cash flow, excluding these cash impacts, was $2.2 billion, and the company returned $1.5 billion to shareholders in dividends.

Over the last 12 months, it generated net cash from operating activities of $18.6 billion.

IBM’s free cash flow for the last 12 months was $11 billion and the adjusted free cash flow, excluding cash impacts as described above, was $11.6 billion.

However, IBM ended the first quarter with $11.3 billion of cash on hand (includes marketable securities), down $3 billion from year-end 2020.

Debt, including global financing debt of $18.3 billion, totalled $56.4 billion, down $5.1 billion since the end of 2020, and down $16.6 billion since closing the Red Hat acquisition.

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