IBM lifts software revenue outlook as delayed deals start closing

James Kavanaugh, IBM's chief financial officer, said that the software agreements delayed earlier in the year are now closing, allowing the firm to upgrade its revenue outlook. IBM now expects software revenue to increase roughly 7% to 8% over the year, compared with the earlier 6% to 8% guidance. Third-quarter revenue rose 4.7% to $17.10 billion, surpassing analysts' average estimate of $16.82 billion, while adjusted profit reached $2.95 per share, beating the $2.86 consensus.

Software sales climbed 8.3% to $7.80 billion, driven by an 11% rise in hybrid cloud and a 9% rebound in transaction-processing software, much of which stemmed from previously deferred deals. Infrastructure revenue grew 4.2% to $3.71 billion, helped by a 31% jump in distributed infrastructure, offsetting weakness in the mainframe segment. Shares gained about 4% in after-hours trading.