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Investing.com – IBM (NYSE:IBM) shares were up 2.5% in Tuesday’s premarket as increasing take-up of its higher-margin hybrid cloud model and AI guided it to its highest quarterly sales growth in more than two years.
Hybrid cloud combines and unifies public cloud and private cloud services from multiple cloud vendors to create a single and flexible IT infrastructure that is cheaper than a single-cloud, single-vendor approach. IBM is a relatively late entrant to the booming cloud business, dominated by the likes of Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT).
Reporting its first quarter earnings today, the company said its total cloud revenue rose 21% while revenue rose just 1% to $17.7 billion.
Revenue from cloud services rose 21% to $6.5 billion. GAAP gross profit margin was up 120 basis points to 46.3%.
Renewal rates by clients for the company’s software drove its total deferred income to over $18 billion, which is an all-time high.
Reiterating the outlook for 2021 given in January, the company said it expects adjusted free cash flow of $11 billion to $12 billion in 2021.
