International Business Machines (IBM) released the earnings results from its first quarter after closing bell tonight, posting adjusted earnings of $2.91 per share, a 9% increase, on revenue of $19.6 billion. Analysts had been expecting earnings of $2.81 per share on revenue of $19.67 billion.

International Business Machines Corp. (IBM) Earnings Top Estimates

Key metrics in IBM’s earnings report

GAAP earnings from continuing operations were $2.44 per share, which was flat with last year. GAAP earnings include 47 cents per share worth of charges. IBM recorded that its gross margin on a non-GAAP basis increased 80 basis points to 49.3%, while its GAAP gross margin rose 50 basis points to 48.2%.

IBM reported that its cloud revenue increased 75% year over year after adjusting for currencies and business divestures. On a reported basis, the company’s cloud revenue increased more than 60%. Revenue from business analytics improved more than 20% after adjusting for currency and business divestures. On a reported basis, the segment’s revenue increased 12% year over year.

IBM’s services revenue declined 12% to $12.2 billion as revenue from the Global Technology Services segment fell 11%. The company reported an estimated services backlog of $121 billion, which was flat year over year.

Software revenue declined 8% year over year to $5.2 billion, while Hardware revenues fell 23% to $1.7 billion during the quarter. Revenues from IBM’s Global Financing business fell 10% to $0.5 billion.

“In the first quarter we had a strong start to the year,” IBM Chairman, President and CEO Ginni Rometty said in a statement. “Our strategic imperatives growth rate accelerated, demonstrating the power of our offerings in these new opportunities and contributing to improved revenue performance. Our focus on higher value through portfolio transformation and investment in key areas of the business drove continued margin expansion.”

IBM maintains previous guidance

Management continues to expect full year non-GAAP earnings of between $15.75 and $16.50 per share and free cash flow that’s flat with last year.

IBM returned $2.3 billion to shareholders during the quarter, including $1.1 billion in dividends and $1.2 billion in share repurchases.