Key facts
- IBM now expects annual software revenue growth of 7%-8%, up from 6%-8%.
- Third-quarter revenue increased 4.7% to $17.10 billion.
- Adjusted profit was $2.95 per share, beating estimates of $2.86.
- Software revenue grew 8.3% to $7.80 billion.
- Hybrid cloud unit sales increased 11%, and transaction processing software revenue rose 9%.
IBM on Wednesday lifted its annual software revenue outlook, signaling that delayed deals that had concerned investors in the previous quarter were starting to close. The company also reported better-than-expected third-quarter earnings. Finance chief James Kavanaugh said IBM now anticipates annual software revenue growth of approximately 7% to 8%, an upward revision from the prior forecast of 6% to 8%. In the third quarter, IBM's overall revenue rose 4.7% to $17.10 billion, surpassing analysts' average estimate of $16.82 billion. Adjusted profit per share was $2.95, exceeding the $2.86 expected by analysts. Software revenue specifically increased by 8.3% to $7.80 billion, outperforming estimates of $7.62 billion. Within the software segment, the hybrid cloud unit saw an 11% growth in sales, and transaction processing software revenue rebounded with a 9% increase. Kavanaugh noted that about 25% of the transaction processing revenue stemmed from deals deferred from the second quarter, with the remaining 75% being net new business. Infrastructure revenue grew 4.2% to $3.71 billion, driven by a 31% increase in distributed infrastructure, which helped to offset a decline in the Z mainframe business.