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International Business Machines Corp. (IBM) 3Q 2017 Earnings Send Shares Higher

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IBM 3Q 2017 earnings were released after closing bell, and the company posted non-GAAP earnings of $3.30 per share on $19.2 billion in sales, compared to the consensus estimates of $3.28 per share in adjusted earnings on $18.57 billion in revenue. In the year-ago quarter, the company reported adjusted earnings of $3.29 per share on $19.23 billion in sales.

On a GAAP basis, IBM 3Q 2017 earnings fell 2% year over year to $2.92 per share. The company’s key focus segment is its Strategic Imperatives business, and the segment’s revenue rose 11% year over year to $8.8 billion. Over the trailing 12 months, Strategic Imperatives revenue has grown 10% to $34.9 billion, making up 45% of the company’s total revenue.

Cloud revenues rose 20% year over year to $4.1 billion. IBM’s cloud as-a-service revenues had an annual exit run rate of $9.4 billion. Third-quarter analytics revenue increased 5%, while mobile revenues rose 7% and security revenues grew 51%.

IBM’s Cognitive Solutions revenues rose 4% year over year to $4.4 billion, while Global Business Services revenues fell 2% to $4.1 billion. Technology Services & Cloud Platforms revenues fell 3% to $8.5 billion, while Systems revenues grew 10% to $1.7 billion. Global Financing revenues rose 4% to $427 million.

“During the first three quarters of the year, our strong free cash flow has enabled us to maintain our R&D investments and to expand IBM’s cloud and cognitive capabilities through capital investments,” SVP and Chief Financial Officer Martin Schroeter said in a statement with the IBM 3Q 2017 earnings release. “In addition, we have returned nearly $8 billion to shareholders through dividends and share repurchases.”

For the full year, IBM still expects non-GAAP earnings of at least $13.80 per share and GAAP earnings of at least $11.95 per share. Analysts had been expecting IBM’s guidance for full-year earnings to be at $13.75 per share on an adjusted basis.

Following the IBM 3Q 2017 earnings release, the company’s stock surged in after-hours trades, climbing by as much as 3.59% to $151.80.

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