IBM growth picks up as software lifts revenue to $17.1 billion
The IT group beat expectations in the third quarter and raised its free cash flow outlook. Its mainframe business, however, shrank sharply.
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IBM posted third-quarter 2026 revenue of $17.1 billion, up 5% from a year earlier, or 6% at constant currency, the company said on Wednesday. Adjusted earnings per share came in at $2.95, above the analyst consensus of $2.86, according to Investing.com. Net income was $2.2 billion.
Growth was driven by the software segment, where revenue rose 8% to $7.8 billion; the Red Hat-based hybrid cloud business grew 11%. Infrastructure revenue rose 4% to $3.7 billion even though sales of IBM Z mainframes fell 20%. Consulting was flat at $5.3 billion.
For the full year, IBM reaffirmed constant-currency revenue growth of 4% to 5% and now expects free cash flow to rise by more than $1 billion year over year. On the earnings call, Chief Executive Arvind Krishna said that "quantum remains a strategic area of differentiation for IBM and a significant long-term opportunity." He announced a Quantum Day for December 10. The shares fell 3.66% in after-hours trading, according to Investing.com.