# IBM software segment and financial performance > Live situation record from CLSTR: https://clstr.news/situations/ibm-software-segment-and-financial-performance > Updated: 2026-10-21T20:43:56.000Z. Sources: 41. Developments: 4. Ahead of its third-quarter 2026 earnings report, investor attention focused on IBM’s software segment due to a recent slowdown in organic growth. While software revenue grew 5% year-over-year in the second quarter, this was a decrease from previous quarters, with growth largely supported by acquisitions rather than organic expansion. On October 21, 2026, IBM reported third-quarter results showing total revenue of $17.1 billion, a 5% increase that exceeded analyst expectations of $16.82 billion. The software segment drove this growth with an 8% increase to $7.8 billion. Net income rose 26% year-over-year to approximately $2.2 billion, up from $1.74 billion the previous year. Infrastructure revenue also saw a 4% increase to $3.7 billion. CEO Arvind Krishna noted that clients are utilizing ‘Super Intelligence’ to transform operational models. Specific segment highlights included an 11% growth in Red Hat revenue and a 19% increase in data revenue. Additionally, the company noted a sales pipeline approaching $700 million for its open-source security tool, Lightwell. Earlier reports indicated that while the software division's 8.3% growth was supported by hybrid cloud and data segments, IBM’s gross margin slightly missed analyst estimates, contributing to volatility in its share price. Following the strong third-quarter performance, IBM raised its full-year free cash flow outlook by more than $1 billion. ## Claims - Third-quarter revenues increased 9 percent to a record 7.25 billion euros. (corroborated by 3 sources) - Third-quarter operating profit rose 37 percent to approximately 1 billion euros. (corroborated by 3 sources) - The company received approximately 200 million euros in US tariff refunds. (corroborated by 3 sources) - Full-year 2026 operating profit is now projected to reach approximately 2.5 billion euros. (corroborated by 3 sources) - The company plans to reinvest 100 million euros in the fourth quarter. (corroborated by 3 sources) - IBM reported third-quarter 2026 revenue of $17.1 billion. (corroborated by 3 sources) - Revenue grew 5% year-over-year, or 6% at constant currency. (corroborated by 3 sources) - Software revenue increased by 8% to $7.8 billion. (corroborated by 2 sources) - Net income rose 26% to $2.2 billion. (corroborated by 2 sources) - Infrastructure revenue increased by 4%. (corroborated by 2 sources) - Demand for apparel is strong, driving the lifestyle business. (single source) - IBM raised its full-year free cash flow outlook to an increase of more than $1 billion year-over-year. (single source) ## Timeline ### 2026-10-21: IBM and Hermes report third-quarter financial results IBM exceeded revenue and profit expectations driven by software and AI, while Hermes saw 5.5% revenue growth led by Asia-Pacific despite missing market targets. 5 sources. https://clstr.news/cluster/ibm-and-hermes-report-third-quarter-financial-results ### 2026-10-21: IBM reports Q3 2026 revenue growth of 6% led by software IBM reported Q3 2026 revenue of $17.1 billion, a 5% increase driven by software growth. Net income rose 26% to $2.2 billion, and the company raised its full-year free cash flow guidance. 3 sources. https://clstr.news/cluster/ibm-reports-q3-2026-revenue-growth-of-6-led-by-software ### 2026-10-20: IBM and Adidas report record third-quarter financial results IBM and Adidas reported record third-quarter results, with IBM seeing growth in AI-driven software and Adidas benefiting from tariff refunds and strong sales. 31 sources. https://clstr.news/cluster/adidas-raises-2026-profit-forecast-after-record-third-quarter ### 2026-10-19: IBM software segment performance draws investor focus ahead of earnings IBM faces scrutiny over slowing organic software growth ahead of its third-quarter earnings, despite strong performance in hybrid cloud and data software segments. 3 sources. https://clstr.news/cluster/ibm-software-segment-performance-draws-investor-focus-ahead-of-earnings --- Cite as: IBM software segment and financial performance. CLSTR, https://clstr.news/situations/ibm-software-segment-and-financial-performance