IBM reported third-quarter revenue of $17.1 billion, an increase of 5% on a reported basis and 6% at constant currency, supported by growth in software and infrastructure. The company maintained its full-year revenue outlook and raised its expectation for free-cash-flow growth.
Software revenue rose 8% to $7.8 billion, or 9% at constant currency. Revenue from IBM’s data portfolio increased 19%, transaction-processing revenue grew 9% and Red Hat-led hybrid-cloud revenue advanced 11%. Automation revenue declined 3%, creating a mixed performance within the broader software division.
Consulting generated $5.3 billion of revenue, remaining flat on a reported basis and increasing 2% at constant currency. Strategy and technology consulting grew 2%, while intelligent-operations revenue declined by the same percentage.
Infrastructure revenue increased 4% to $3.7 billion. Distributed infrastructure expanded 31%, while IBM Z revenue fell 20% and infrastructure-support revenue declined 3%. Hybrid infrastructure as a whole grew 8%.
IBM recorded GAAP net income from continuing operations of approximately $2.2 billion, an increase of 26%, with diluted earnings of $2.31 per share. Operating non-GAAP net income was $2.8 billion, or $2.95 per diluted share. The company’s GAAP gross margin was 56.8%, while its operating non-GAAP gross margin reached 58.5%.
Operating cash flow for the quarter increased by $900 million to $4 billion. Free cash flow rose by $700 million to $3 billion. Across the first nine months of the year, IBM generated $11.8 billion in operating cash flow and $7.8 billion in free cash flow.
IBM now expects full-year free cash flow to increase by more than $1 billion from the previous year. It retained its forecast for constant-currency revenue growth of between 4% and 5%. The company ended the quarter with $11.1 billion in cash, restricted cash and marketable securities after investing $11.4 billion in acquisitions during the year.
Its board also approved a quarterly dividend of $1.69 per share, maintaining a sequence of quarterly dividend payments extending to 1916.
