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IBM software segment and financial performance

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2026-10-22 09:07 UTC → 2026-10-22 11:51 UTC · added ~~removed~~

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.

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