(Bloomberg) -- International Business Machines Corp. reported a jump in bookings for its artificial intelligence business as customers work to implement the latest technology.
Bookings for AI consulting and software have exceeded US$2 billion since mid-2023, the company said Wednesday in a statement. That is double the $1 billion book-of-business IBM disclosed during its last quarterly earnings report in April.
About three-fourths of the AI bookings are made up of consulting, with the rest from software, Chief Executive Officer Arvind Krishna said in an interview. Over time, the revenue share from software is likely to increase, he added.
Second-quarter sales increased 2% to $15.8 billion, slightly ahead of the $15.6 billion average estimate from analysts. IBM’s software unit revenue increased 7% to $6.7 billion, ahead of analysts’ estimates, according to data compiled by Bloomberg.
In recent years, Big Blue has worked to transform itself from a legacy hardware company into one focused on high-growth software and services. It has made moves to expand the company’s offerings with its proposed takeover of Hashicorp Inc., announced in April, and last year’s purchase of Apptio for $4.6 billion.
Red Hat posted growth of 7%, another relatively slow quarter for the acquired software business that once regularly grew at about 20% a quarter. Bookings for Red Hat are up, a good signal for the second half of the year, Krishna said.
Still, IBM’s consulting segment continued to experience weakness. Unit revenue declined 1% to $5.2 billion, missing estimates.
Shares gained about 4% in extended trading after closing at $184.02 in New York. The stock has gained almost 13% this year.
Profit, excluding some items, was $2.43 a share in the period ended June 30. Analysts, on average, projected $2.20. For the full year, IBM said free cash flow will be more than $12 billion. That represents a slight increase from a previous full-year guidance of “about” $12 billion.
Last week, Hashicorp said that regulators have requested additional information about its planned acquisition by IBM, suggesting increased scrutiny might delay the approval process. Krishna said he is “still quite confident” the deal will close before the end of the year.
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