IBM reported stronger-than-expected third-quarter results on Wednesday, with earnings and revenue surpassing analyst estimates. The company posted adjusted earnings of $2.95 per share, beating the $2.86 consensus, and revenue of $17.10 billion, exceeding the $16.82 billion forecast. Year-over-year revenue growth was about 5%, while net income rose to $2.19 billion from $1.74 billion a year ago.
IBM CEO Arvind Krishna highlighted the company's progress with 'Super Intelligence,' stating that clients are now using it to transform entire operating models rather than just addressing narrow issues. The company also raised its full-year free cash flow guidance, expecting an increase of more than $1 billion, up from the previous forecast of approximately $1 billion. IBM maintained its 2026 constant-currency revenue growth outlook between 4% and 5%.
Software revenue grew 8% to $7.80 billion, topping the $7.66 billion consensus. Consulting revenue, however, was flat at $5.34 billion, slightly below the $5.37 billion expected. Jim Kavanaugh, IBM's finance chief, noted that AI now represents about 30% of consulting revenue and 35% of the backlog. Infrastructure revenue increased 4% to $3.70 billion, surpassing the $3.57 billion consensus.
During the quarter, IBM agreed to acquire Boeing and General Motors' HRL Laboratories for an undisclosed sum. Despite the positive results, IBM shares slipped in extended trading. As of Wednesday's close, IBM stock has declined 15%, while the S&P 500 index has gained 13%. Kavanaugh expressed confidence in the company's revenue target of $32 billion for the year.