International Business Machines Corp. (IBM) reported $17.1 billion in third-quarter revenue, up 5% year over year, as gains in software and distributed infrastructure offset a 20% drop in IBM Z revenue.
Software revenue increased 8% to $7.8 billion, while consulting was essentially flat at $5.3 billion. Infrastructure generated $3.7 billion, up 4%. Within that segment, distributed infrastructure grew 31% as IBM Z revenue declined.
Bloomberg reported that about two-thirds of mainframe and related software deals delayed earlier in the year had been signed. Dow Jones Newswires separately reported that a similar share of delayed mainframe deals closed during the quarter. IBM’s release did not state how many deals were involved or give their status. Chief Financial Officer James Kavanaugh told Reuters that deals deferred from the second quarter made up about 25% of third-quarter transaction-processing revenue, with new business accounting for the rest.
Infrastructure revenue fell 7% in the second quarter, while IBM Z revenue dropped 42%. In a July 14 letter to investors, IBM Chairman, President and CEO Arvind Krishna said some customers accelerated purchases of servers, storage and memory near June’s end to secure limited supplies ahead of expected price increases. He said IBM had underestimated the scale of that spending shift and that cybersecurity concerns also distracted customers.
IBM kept its 2026 revenue-growth forecast at 4% to 5% on a constant-currency basis and raised its free-cash-flow outlook to more than $1 billion in year-over-year growth. The company generated $3.0 billion in free cash flow during the quarter, a $0.7 billion gain from a year earlier. IBM approved a quarterly dividend of $1.69 per share, payable Dec. 10 to shareholders of record Nov. 10.
