IBM has reported strong revenue growth in its fourth-quarter earnings results, marking a good start to the company’s new outlook after it completed the spinning-off of its IT infrastructure businesses Kyndryl in November.

The 110-year old technology giant reported $16.7bn in revenue, up 6.5pc from last year and well within its expectation of mid-single digit revenue growth after the spin-out. It is also higher than analyst expectations of $16bn, leading to a jump in stock prices yesterday (24 January).

Arvind Krishna, chair and chief executive of IBM, said that the revenue growth was driven by hybrid cloud adoption increasing sales in software and consulting. According to Bloomberg, IBM sales this year were the highest on record in at least 10 years.

“Our fourth-quarter results give us confidence in our ability to deliver our objectives of sustained mid-single digit revenue growth and strong free cash flow in 2022,” he said.

Software revenue was up 8pc while consulting revenue went up by 13pc. Infrastructure revenue saw no growth, but hybrid cloud boasted a 16pc growth in revenue to $6.2bn. In the full year, IBM made more than $20bn in hybrid cloud sales – an increase of 20pc over the previous year.

The impressive growth figures means that the company’s decision to separate its Kyndryl business is bearing fruit in the new year and potentially marks a new direction of stable growth and relevance for a company that saw negative or low revenue growth for almost a decade.

James Kavanaugh, IBM senior vice-president and chief financial officer, said that with the separation of Kyndryl “we now have taken the next step in the evolution of our strategy, creating value through focus and strengthening our financial profile”.

“In 2021, we continued to invest for the future by increasing R&D spending, expanding our ecosystem and acquiring 15 companies to strengthen our hybrid cloud and AI capabilities,” he added.

Within the software segment, Red Hat (which it acquired for $34bn in 2018) showed the most impressive results, with revenue up 19pc for its open source software services. Automation was up 13pc, data and AI were up by 1pc, while security was down 2pc.

According to CRN, Krishna told analysts on the earnings call yesterday that they should not expect any more divestures any time soon the size of Kyndryl – for which IBM is still on the hook for $500m in costs.

“We have the correct portfolio to be able to grow where our clients have got demand and where the market has demand,” Krishna said. “We are now approximately a 30pc consulting company, a 70pc technology company. It‘s about a little bit under half in software.”

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