IBM reported better-than-expected third-quarter results, with revenue growth driven by software and AI consulting, and raised its free cash flow forecast.
01Summary
- 01IBM shares rose in extended trading after Q3 revenue hit $14.97 billion vs. $14.91 billion consensus, and adjusted earnings per share were $2.30 vs. $2.22 expected.
- 02Software revenue grew 8% to $7.80 billion, topping the $7.66 billion consensus, while consulting revenue was flat at $5.34 billion, just below the $5.37 billion estimate.
- 03CEO Arvind Krishna said clients are deploying 'Super Intelligence' to transform operating models; CFO Jim Kavanaugh noted AI represented about 30% of consulting revenue and 35% of the backlog in Q3.
- 04IBM raised its full-year free cash flow outlook to an increase of more than $1 billion, and reiterated 2026 constant-currency revenue growth of 4%–5%.
- 05Infrastructure revenue rose 4% to $3.70 billion, beating the $3.57 billion consensus, and IBM agreed to buy HRL Laboratories for an undisclosed sum.
02Why it matters
IBM’s earnings beat and upbeat AI commentary suggest growing adoption of its technology in enterprise transformations, which could influence investor sentiment and client spending on AI and cloud services.
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