Buoyed by Red Hat acquisition, IBM sees strong growth in cloud based revenues

IBM recorded strong growth in the fourth quarter of 2019, particularly in its cloud services segment
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IBM has posted a strong set of financials for the fourth quarter of 2019, seeing a 21 per cent jump in cloud based revenues to $6.8 billion.

Last year, IBM acquired cloud service specialist firm, Red Hat, for a reported $34 billion and has subsequently seen a sharp rise in revenues generated by its cloud services department.

“We ended 2019 on a strong note, returning to overall revenue growth in the quarter, led by accelerated cloud performance," said Ginni Rometty, IBM chairman, president and chief executive officer.

"Looking ahead, this positions us for sustained revenue growth in 2020 as we continue to help our clients shift their mission-critical workloads to the hybrid cloud and scale their efforts to become a cognitive enterprise.”

Red Hat revenue increased by 24 per cent in the period, driving strong growth across IBM’s cloud services portfolio.

Overall, IBM’S total revenues across the whole business increased by 0.1 per cent, settling at $21.8 billion for the quarter. IBM has also successfully reduced its debt pile by $10 billion since closing the Red Hat acquisition.

“In 2019, we continued to invest in the higher-value growth areas of the industry and took bold actions — including several divestitures and a major acquisition — to position our business, which are reflected in our strong gross margin performance," said James Kavanaugh, IBM senior vice president and chief financial officer.

"After completing the acquisition of Red Hat, and with strong free cash flow and disciplined financial management, we significantly deleveraged in the second half.”

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