• IBM reported second quarter non-GAAP earnings of $2.18 per share
  • Second quarter revenues of $18.12 billion beat expectations
  • Overall revenues dropped for the second straight quarter.

International Business Machines Corp. (IBM) reported second quarter non-GAAP earnings of $2.18 per share, which beat analysts’ estimates, but dropped from $3.17 per share in the year-ago quarter.

Analysts expected earnings of $2.07 per share for the current quarter.

Second quarter revenues of $18.12 billion at Big Blue also beat analysts’ expectations, but declined by 5.4% from $19.2 billion on a year-over-year basis.

Overall revenues dropped for the second straight quarter.

But total cloud revenues jumped by 30% to $6.3 billion in the quarter from about $4.4 billion in the year-ago period.

Moreover, under new chief executive officer Arvind Krishna – who took over in April -- gross margins improved in three of the company’s five units. IBM’s total gross profit margin amounted to 48%, up from 45.1% in the first quarter and up from 47% in the year-ago period.

“It’s likely that we see that the economic recovery is looking to be longer and more protracted than we might have hoped for back in March,” Krishna said on Monday.

Jim Kavanaugh, IBM’s chief financial officer, said the company saw some weaknesses in the quarter partly due to the pandemic.

“While we have adapted quickly to conduct business virtually around the world, as expected, we did have disruptions in transactional performance and volume reductions,” Kavanaugh said. “Many clients continued to delay projects, defer purchases, and favor [operating expenditures] over [capital expenditure] spending in this environment. This pause in large purchases and discretionary spending was most evident in our perpetual software licenses and project-oriented services.”

Kavanaugh added: “As the pandemic intensified and the macroeconomic climate worsened, clients quickly shifted their focus to operational stability and cash preservation. This resulted in a delay in both the existing projects and new commitments especially in projects that are more discretionary or with longer time to value.”

As of 10:40 a.m. EDT, IBM shares were up 1.62%.