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IBM’s cloud revenue hits $7bn in 2014, but still plenty of work to do

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IBM has released its Q4 and full year financial figures for 2014, showing net income at $15.8bn down 7% year on year, revenue from continuing operations down 6%, but total cloud revenue of $7bn in 2014, up 60%.

It’s a not unexpected result given, like SAP, IBM is aiming to shift its revenues more towards the cloud as opposed to legacy on-premises software, but at the expense of its overall profits.

Martin Schroeter, chief financial officer and SVP IBM UK, said in prepared remarks: “We once again had strong performance in our strategic imperatives that address the market shifts in data, cloud, and engagement. We’re continuing to shift our investments and resources to our strategic imperatives and solutions that address our clients’ most critical issues.”

For the fourth quarter, pre-tax income from continuing operations was flat compared to Q413, while net income was at $5.5bn, down 11, and revenue was at $24.1bn, down 12% overall but down only 2% adjusting for divested businesses and currency.

Looking at software specifically, security software grew at a double digit rate, with IBM bringing its analytics, big data, mobile and cloud capabilities in line with security to address the market opportunity of cyberthreats. Software as a service (SaaS) offerings were up nearly 50%.

2014 was a major year for IBM in terms of bolstering its cloud play – and, by delivering a $7bn cloud business by 2015, it’s succeeded so far in that. Back in March, the Armonk firm announced it had moved $1bn of resources and investments into cloud. In July, IBM celebrated the first year of its acquisition of SoftLayer by offering a series of features linking up the IaaS provider with Watson.

Alongside that there is BlueMix, which Ovum analyst Gary Barnett described as “the next step in the transformation of IBM’s cloud offering”, as well as a partnership with SAP towards the end of last year bringing together IBM’s cloud with SAP’s HANA database.

“Our strategic direction is clear and compelling, and we have made a lot of progress,” Schroeter said. “We have been successful in shifting to the higher value areas of enterprise IT. The strong revenue growth in our strategic imperatives confirms that, as does the overall profitability of our business.

“We expect the industry to continue to shift,” he added.