International Business Machines Corporation (NYSE: IBM) is gaining market share in Europe and North America with its enterprising cloud solutions. On July 23rd, Canada’s property and casualty insurance company, Economical Insurance, selected IBM Cloud to simplify its business process and improve efficiency. On the same day, Digital Realty, (NYSE: DLR), a data center provider, announced that it plans to broaden dedicated and private access to the IBM Cloud in 15 important metropolitan centers across the globe. Finally, last week, Novis, a Slovakia-based insurance company, decided to adopt IBM Cloud to scale its operations beyond Europe.
Novis
Adopting IBM Cloud will enable Novis to expand its range of offerings. Specifically, Novis is expected to gain from the new omni-channel and digital offerings. Notably Novis has shifted its business to IBM Cloud with VMW virtualization in an effort to offer clients flexible, secure, and reliable cloud architecture. With IBM Cloud adoption, Novis aims to make its business processes simple, while improving operations efficiencies. IBM Cloud provides support to Novis IT systems across all its branches in ten European countries.
Novis offers innovative insurance products in five broad categories, under the “Novis Pentagon of Innovations.” Zacks analysts expect the adoption of IBM Cloud to improve the company’s top-line growth.
IBM’s effort to increase presence in Europe
One of the greatest advantages of IBM is its strength in implementing and managing its Cloud platform. This acts as a tailwind to its business, leading to noteworthy adoption across European enterprises.
Recently, IBM has set up 18 new availability zones across Europe, North America and Asia. The company has also received Germany’s C5 license. Companies across the world are laying more emphasis on data security, considering various stringent data related regulatory framework implemented across the world, and the recent introduction of GDPR to the EU.
Another feature, which attracts clients to IBM is its EU-based client support facility. Access to this data is available only to EU-based employees of IBM, acting as an additional layer of data security.
IBM Cloud
The genuine effort put forth by IBM seems to be bearing fruit, and the company recorded its strongest growth in Europe, Africa, and Middle-east in 2Q18. The top line grew 4% from the prior-year quarter, mainly due to strong business performance in Germany, UK, Spain, and France.
Looking ahead, the impressive adoption of IBM Cloud is anticipated to improve IBM’s overall performance. A report published by Synergy Research at the end of the second-quarter indicates that IBM’s market share remains almost stable at 8% in 2018, mainly due to its strength in private cloud offerings.
During 2Q18, IBM reported an 18% y-o-y jump in cloud revenues to $4.7 billion. Furthermore, the yearly run rate for cloud-as-a-service recorded a growth rate of 24% y-o-y to $11.1 billion. On a TTM (trailing twelve months) basis, cloud revenues of $18.5 billion represent 23% of IBM’s total revenues.
Potential impact on stock
The contract received from Novis is expected to assist IBM in further cementing its leadership in cloud-related business. This news is fundamentally positive for the stock, which is reported to be trading above its 50-day moving average. Furthermore, the MACD indicator is in the positive region, and as a result, bullishness is expected to continue for IBM.
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