IBM beats third-quarter expectations and raises its full-year cash-flow outlook

International Business Machines (IBM) reported third-quarter results on October 21, 2026. Revenue rose 5% from a year earlier to $17.1 billion, and adjusted earnings reached $2.95 per share; both exceeded analyst expectations.^[1][2][3]

IBM raised its full-year outlook for software revenue and free cash flow—the cash left from operations after capital spending. Faster growth in software and infrastructure supported the quarter's results.^[4][1]

CFO James Kavanaugh said some software deals delayed in the previous quarter were beginning to close. Customers moving from postponement to completed purchases lets suppliers turn waiting demand into revenue and reduces concern that the spending will be canceled.^[4]

However, roughly half of the software business's 9% growth came from the Confluent acquisition. Growth therefore reflects both existing operations and the addition of an acquired business; those components matter when judging how much customers are increasing spending. Coverage also noted that management's outlook implies slower fourth-quarter growth.^[5]

The CEO's caution about AI spending adds uncertainty to that recovery. If customers remain cautious about approving AI projects, software vendors and consulting firms will find it harder to turn customer interest quickly into contracts and cash receipts.^[6]

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