IBM today announced third-quarter 2020 earnings results. Although overall revenue was slightly down again cloud revenue was up big.

“The strong performance of our cloud business, led by Red Hat, underscores the growing client adoption of our open hybrid cloud platform,” said Arvind Krishna, IBM chief executive officer. “Separating the managed infrastructure services business creates a market-leading standalone company and further sharpens our focus on IBM’s open hybrid cloud platform and AI capabilities. This will accelerate our growth strategy and better position IBM to seize the $1 trillion hybrid-cloud opportunity.”

Highlights for the third quarter include:

• GAAP EPS from continuing operations of $1.89
• Operating (non-GAAP) EPS of $2.58
• Revenue of $17.6 billion, down 2.6 percent (down 3.1 percent adjusting for divested businesses and currency)
  — Cloud & Cognitive Software revenue up 7 percent (up 6 percent adjusting for currency)
• Total cloud revenue of $6.0 billion, up 19 percent
  — Total cloud revenue of $24.4 billion over the last 12 months, up 22 percent (up 25 percent adjusting for divested businesses and currency)
• Red Hat revenue up 17 percent (up 16 percent adjusting for currency), normalized for historical comparability
• GAAP gross profit margin of 48 percent, up 180 basis points; Operating (non-GAAP) gross profit margin of 49 percent, up 160 basis points
• Net cash from operating activities of $15.8 billion and free cash flow of $10.8 billion, over the last 12 months

“In the third quarter we continued to deliver strong gross profit margin expansion, generated solid free cash flow and maintained a sound capital structure with ample liquidity,” said James Kavanaugh, IBM senior vice president and chief financial officer. “We have the necessary financial flexibility to increase our investments in hybrid cloud and AI technology innovation and skills, while remaining committed to our long-standing dividend policy.”