It’s been a great quarter for IBM’s Watson (a Cloud based big data analytics tool by IBM) with respect to increased patronage so far in 2016. There is no better way of explaining the impact than their third quarter earnings report. In the third quarter, earnings stood at $2.9b while revenue was $19.2b at $2.98 per share. Non-GAAP (Generally Accepted Accounting Principles) earnings stood at $3.29 per share and the report beats Wall Street expectations which was expecting earnings of $3.23 non-GAAP and revenue of $19b.
Ginni Rometty, IBM chairman, president and chief executive officer of IBM said “IBM’s third-quarter performance, led by continued double-digit growth in our strategic imperatives, is a testament to our leadership in cognitive solutions and cloud…Our ability to apply deep expertise and breakthrough technology, led by Watson and the IBM Cloud, to massive amounts of data is enabling us to build new markets and transform industries”
In a separate analysis by the New York Times, it says IBM does not report financial results for Watson separately. But the securities research arm of the Swiss bank UBS estimates that Watson may generate $500 million in revenue this year and could grow rapidly in the years ahead, possibly hitting nearly $6 billion by 2020 and almost $17 billion by 2022.
IBM’s cloud as a service revenue run rate currently stands at $7.5 billion and while this may be so revenue from Watson, analytics and Internet of Things stands at $8b. Other notable points to note from the report are Global business service revenue was $4.2b which is down 2 percent, software revenue stood at $5.7b which is up 3 percent.
Awareness around Watson has been uptick as its applications continues to expand. From detection and treatment of cancer to education, Watson is sure taking its place in the big data analytics space and has the potential to become one of IBM’s major sources of revenue by the 2020s.
|THIRD QUARTER 2016|
|Diluted EPS||Net Income||Margin|
|GAAP from Continuing Operations||$2.98||$2.9B||46.9%|
|As reported (US$)||$19.2B||$8.0B||$3.4B|
|Year/Year adjusting for currency||-1%||15%||42%|