IBM Q3 Beats Estimates, Raises Software Outlook; Shares Slip After Hours

IBM shares fell about 4% after hours Wednesday despite third-quarter results that beat Wall Street estimates, as investors weighed the company's turnaround against persistent growth concerns. Adjusted earnings per share came in at $2.95 versus the $2.85 analysts expected, according to LSEG. Revenue rose 4.7% year over year to $17.1 billion, topping the $16.8 billion consensus. Software revenue grew 8% to $7.8 billion, infrastructure rose 4% to $3.71 billion, and consulting was roughly flat at $5.34 billion. CEO Arvind Krishna told Reuters the company now expects full-year software revenue growth of about 7% to 8%, up from a prior 6% to 8% range. IBM reiterated its 4% to 5% total revenue growth forecast and said it expects free cash flow to rise more than $1 billion year over year on strong quarterly cash generation. The report follows a difficult stretch: IBM pre-announced weak second-quarter results on July 14, sending shares down 25% in their worst single-day performance, and the stock remains more than 13% below its July 13 close. About two-thirds of previously delayed transactions closed in the third quarter, IBM said.