IBM reported third-quarter revenue of $17.1 billion, exceeding the analyst consensus of $16.82 billion. The company posted adjusted earnings of $2.95 per share, surpassing the expected $2.86 per share. Net income reached $2.19 billion, compared to $1.74 billion in the same period last year.
Software revenue grew 8% to $7.8 billion, while infrastructure revenue rose 4% to $3.71 billion. Consulting revenue remained flat at $5.34 billion. Artificial intelligence now represents approximately 30% of consulting revenue and 35% of the total order backlog, though the unit's gross margin declined from 28.9% to 27.4%.
The company reaffirmed its annual revenue growth guidance of 4% to 5%. IBM increased its full-year free cash flow forecast, now expecting an increase of over $1 billion compared to the previous estimate. More than two-thirds of the delayed mainframe deals that impacted second-quarter results were closed during the third quarter.
In the quantum computing sector, IBM acquired the processor design startup HRL Laboratories LLC. The company is developing the Quantum Starling system, scheduled for launch in three years, which aims to perform 20,000 times more calculations than current systems. IBM also reached the final phase of a federal quantum benchmarking initiative.
