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Line goes up—at least it does if you’re IBM’s software division, which has seen an increase in revenue as AI and cloud capabilities continue to lead the tech industry’s earnings.
“Software grew by 8% with solid growth across hybrid platform[s] and solutions and transaction processing and strong transactional performance,” SVP and CFO James Kavanaugh told investors during an earnings call on July 24.
Doing the math. The company’s Q2 revenue increased 2% year over year, reaching $15.8 billion. IBM has invested heavily in AI and cloud computing in the past year, acquiring companies like Apptio, StreamSets, HashiCorp, and webMethods.
In Q2, the company invested in AI, hybrid cloud, and infrastructure, Kavanaugh told investors.
“Our results this quarter reflect broad-based growth and the strength in the fundamentals of our business with revenue up about $300 million, operating pre-tax income up about $400 million, adjusted EBITDA up more than $350 million and free cash flow up about $500 million,” Kavanaugh said. “For the first half, we generated $4.5 billion of free cash flow, up $1.1 billion year over year.”
Doing the math. As IT Brew has reported, AI continues to fuel a 2024 explosion in the tech industry that some analysts—like Wedbush’s Dan Ives—think is in no danger of abating. Ives told IT Brew earlier this month that the party is far from over. “I think it’s the fourth industrial revolution playing out.”
“At the end of the day, that’s the key. The spending is real,” Ives said. “I think investors are waking up to that.”
That spending is coming to software, and it’s no surprise. Gartner analyst Philip Walsh told IT Brew that AI’s applicability to assist in software development makes it likely that the technology will continue to drive innovation and investment.
“In the next year or two…we’ll move toward the plateau of productivity, where we have realistic expectations, and we’ll figure out actual, practical ways to make this work,” Walsh said.