IBM, Atos and SAP report cloud growth in 1Q20 despite COVID-19 pandemic

As companies begin releasing 1Q20 earnings, TBR is analyzing the impact of the COVID-19 pandemic on the latter half of the quarter. Our findings from earnings this week show:

  • IBM’s cloud business prospered despite the negative impact of COVID-19 on overall revenue as synergies with Red Hat drove subscription sales, which is a testament to IBM’s hybrid cloud ambitions under new leadership.
  • As cloud-based solutions and other key technologies enable rapid changes in people’s work and personal lives brought about by COIVD-19, Atos’ technology-led value proposition will help the company capture cloud growth opportunities in the dynamic market.
  • Despite a turbulent macroeconomic environment, sustained cloud growth and services and driving SAP’s corporate growth. TBR expects revenue and margins will remain pressured in 2Q20, but will begin to normalize in 2H20.

Additional reports recently published by TBR’s analyst teams

1Q20 Infosys Initial Response

Infosys enters FY21 with a healthy pipeline, but COVID-19 will test the durability of its Navigate Your Next strategy as the company mobilizes its technology heritage to withstand headwinds.

1Q20 Telecom IoT Market Landscape

CSP IoT revenue growth will gradually accelerate through 2024 as more 5G use cases become commercially available. Supporting these next-generation use cases will be contingent on network deployments, including edge compute build-outs and 5G standalone infrastructure.

1Q20 IBM Services Initial Response

Sustaining signings growth will improve IBM Services’ ability to alleviate revenue growth pressures in 2Q20 from macroeconomic uncertainty tied to the COVID-19 pandemic.

1Q20 Atos Initial Response

The COVID-19 pandemic will inevitably challenge Atos’ performance during 2020; however, offerings around digital workplace, cloud, cybersecurity, and unified communication and collaboration will mitigate the negative effect on revenues.

1Q20 AT&T Initial Response

Revenue declines associated with COVID-19, including lower WarnerMedia advertising revenue and decreased wireless equipment sales, will cause AT&T to increase focus on aggressive cost-cutting measures to strengthen its financial position.

1Q20 Ericsson Initial Response

Ericsson sustained revenue growth and high margins in 1Q20 as 5G RAN deployments surged in the U.S., but the company has yet to feel the full impact of the COVID-19 pandemic, which could affect supply chains and demand going forward.

4Q19 Commercial IoT Benchmark

The commercial IoT market continued to show moderate revenue growth in 4Q19, as IoT projects are smaller in scale and IoT is getting baked into other strategic projects. While the COVID-19 outbreak will negatively impact the IoT market in 2020, TBR expects commercial IoT will maintain long-term growth as organizations continue to utilize AI and IoT solutions to lower operating expenses.

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