Dive Brief:
- IBM saw software sales soar as enterprise technology spending remained robust during the three-month period ending June 30, the company’s Chairman and CEO Arvind Krishna said during a Q2 2024 earnings call Thursday.
- Software revenues increased 7% year over year, to $6.7 billion, as IBM’s total revenues inched up 2%, to $15.8 billion. The company raised its growth forecast for software to the high single digits on the year as a result of the quarterly gains, SVP and CFO James Kavanaugh said.
- Krishna attributed the strong showing in software to robust enterprise appetite for technology. Embedded AI capabilities and recent acquisitions of cloud cost management platform Apptio and Software AG integration solutions StreamSets and webMethods also contributed to the segment growth, Kavanaugh added.
Dive Insight:
M&A has played a central role furthering IBM’s hybrid cloud capabilities, as well as supporting its software division.
The company expanded its software division with the addition of Red Hat’s broad suite of Linux-based enterprise solutions in 2019 and has continued to pursue acquisitions that span the gap between on-prem and cloud. On the heels of the December Software AG deal, the company announced the purchase of Advanced’s mainframe modernization division in January and acquired hybrid cloud software provider Hashicorp in April.
“The software revenue growth drivers for the year include Red Hat growth, the combination of innovation, recurring revenue and transaction processing, as well as acquisitions,” Kavanaugh said.
IBM also reported a healthy year-over-year 6% uptick in mainframe revenue, driven primarily by demand for the newest Z systems line.
“We're now more than two years into the z16 cycle and the revenue performance continues to outperform prior cycles,” Kavanaugh said. “Our clients are facing increasing demands for workloads given rapid business expansion, the complex regulatory environment and increasing cybersecurity threats and attacks.”
