IBM forecasts upbeat 2022 revenue on cloud strength; flags Russia hit

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IBM said on Tuesday it expects to hit the top end of its revenue growth forecast for 2022 even as it accounted for a hit of a “few hundred million dollars” from the suspension of its business in Russia.

IBM expects the impact from Russia to be less than “half a percent” of total revenue last year, or a little over $200 million, Chief Financial Officer James Kavanaugh told Reuters.

Servers from IBM, Dell Technologies Inc and Hewlett Packard Enterprise Co top the market in Russia.

IBM had generated “a couple hundred million dollars” in profit from the region last year, Kavanaugh said.

The century-old company said it expects to hit the higher end of its mid-single-digit revenue growth forecast for this year, after it trounced first-quarter estimates for revenue and profit, energized by its focus on cloud services amid higher global spending on technology.

Kavanaugh said the growth indicated in the new forecast is expected from its consulting business, where IBM is seeing a strong demand as clients are pushing to digitize operations, including in Europe despite the Ukraine crisis.

IBM’s revenue grew 3.9% in 2021.

Analysts on average expect annual revenue of $60.69 billion, which implies a 5.8% rise from last year, according to IBES data from Refinitiv.

Shares of the company rose 3% in extended trading.

Having shed its large and laggard IT managed infrastructure business last year, IBM has placed its bets on high-growth software and consulting businesses with a focus on the so-called “hybrid cloud”, to put an end to its years of stagnating revenue growth.

IBM’s cloud revenue grew 14% to $5 billion during the quarter ended March 31.

Total revenue rose 8% to $14.20 billion during the quarter, beating estimates of $13.85 billion.

Adjusted profit was $1.38 per share, which also beat estimates.