IBM Q1 earnings top estimates

Yahoo Finance Jared Blikre joined Yahoo Finance Live to break down IBM's Q1 earnings report.

Video Transcript

ADAM SHAPIRO: Welcome back to Yahoo Finance Live. We've got IBM earnings. And Jared Blikre is telling us what they're reporting. It's all about the cloud, right?

JARED BLIKRE: Oh, it's always about the cloud, Adam. Stock is up 4 and 1/2% in after hours trading here. That's because we got beats on all the key numbers. And I'll go through those right now. For the first quarter, revenue came in at $17.73 billion. And guess what? That is up year over year nearly 1%. And the Street was not expecting that.

We know the historical issues that have been the headwinds that revenue have been for IBM as it implements its turnaround strategy now. But if you go down all the segments, nice beats on all of those. Not big ones, but just small enough that we really didn't see any weak places. You know, we got cloud and cognitive software revenue. That's up about 5 points-- that was came in-- come in-- excuse me-- that came in at 5.44 billion. Estimate was for slightly lower, 5.39 billion.

I'm not going to go through all of these segments, but global technology services, that [INAUDIBLE] was pretty strong at 6.37 billion. Estimate was for lower at 6.23 billion. And when you look at adjusted gross margins, that beat by just about 10 basis points, coming in at 47.3%. Total cloud revenue-- get this, Adam-- up 20%, 21% year over year, to 6 and 1/2 billion. RedHat accounting for 17% gains in revenue year over year. Your forecast, they're standing pat on it, but hey, we'll take it. They expect to grow revenue based on mid April 2021 foreign exchange rates. And they're still seeing adjusted free cash flow of $11 to $12 billion.

And here is a quote from their CEO Arvind Krishna, saying strong performance this quarter in cloud, driven by increasing client adoption of our hybrid cloud platform and growth in software and consulting. Those enabled us to get off to a solid start for the year. And while we have more work to do, we're confident we can achieve full year revenue growth and meet our adjusted free cash flow target in 2021.

So, just looking at the stock here, it's still up about 4 and 1/2%. I just want to show everyone a one-year chart because this is about as sideways as it gets. Now if you go to 10 years, it looks a little bit different. Something I want to point out here-- still got some work to do to break out of this downtrend. You've got to get up around 150, but this is a step in the right direction. Guys.