IBM revenue takes $900m hit by dollar’s rise, posts high sales growth

Bengaluru: IBM CFO Jim Kavanaugh said currency movements impacted the company’s revenue by $900 million in the second quarter of the 2022 fiscal. The velocity of the dollar strengthening, he said, is the sharpest that he has seen in over a decade. “With the significant movement of the US dollar as compared to nearly every currency, at mid-July spot rates, currency translation will now be about a six-point headwind to revenue growth for the year,” he said in the earnings call on Monday.
That, he said, is a degradation of about $1.5 billion from April’s rates, with most of that incremental impact still ahead of the firm in the second half. “Currency is one unique issue we’re dealing with. The other is the impact of exiting our Russia operation. Together, these are putting some pressure on our near-term results,” he said.
In the second quarter, IBM delivered $15.5 billion in revenue, up 9% in constant currency. Kavanaugh said IBM is now a more focused, faster-growing, and higher-value company. “And while there is always more work to do, we are confident in our ability to deliver sustainable growth,” he said.
IBM shares fell the most in almost nine months on Tuesday after the tech company lowered its forecasts for free cash flow this year due to the impact of a strong dollar and the loss of business in Russia. Sales rose 9% to $15.5 billion in the three months ending June 30, the company said Monday in a statement. Analysts were expecting an average of $15.2 billion according to data compiled by Bloomberg.
CEO Arvind Krishna’s goal has been to pivot Big Blue from its traditional business of infrastructure and information-technology services to the fast-growing cloud-computing market. Acquisitions have been a major part of the strategy, with IBM buying more than 25 companies under Krishna’s tenure, largely focused on bolstering the company’s hybrid-cloud offerings. Hybrid-cloud revenue jumped 18% to $5.9 billion in the quarter. Krishna wants IBM to distinguish itself by targeting a so-called hybrid model Software unit revenue increased 6.4% to $6.2 billion, missing estimates. Consulting sales gained 10% to $4.8 billion, beating estimates. (With inputs from agencies)