IBM software sales up 8% as the company beats on top and bottom lines
Arvind Krishna, IBM’s chair and CEO, during an interview in New York on May 1, 2023.
Christopher Goodney | Bloomberg | Getty Images
IBM shares rose 2% in extended trading Wednesday after the technology conglomerate announced third-quarter results that exceeded Wall Street estimates.
Here’s how the company did, compared with the consensus among analysts surveyed by LSEG, formerly known as Refinitiv:
- Earnings per share: $2.20, adjusted vs. $2.13, expected
- Revenue: $14.75 billion vs. $14.73 billion, expected
IBM’s overall revenue grew 4.6% year over year in the quarter, or 3.5% at constant currency, according to a statement. Net income reached $1.70 billion, or $1.84 per share, compared with a net loss of $3.20 billion, or $3.54 per share, in the same quarter one year ago. A $5.9 billion pension settlement charge hurt results in the year-ago quarter.
The company’s Software unit produced $6.27 billion in revenue. That’s up about 8% and in line with the $6.27 billion consensus among analysts polled by StreetAccount.
IBM’s Consulting division generated $4.96 billion in revenue, up around 6% but lower than StreetAccount’s consensus of $5.11 billion. Accenture said last month that revenue from communications, media and technology clients was down 12% in the August quarter.
“We still are executing extremely well from my point of view in consulting,” Jim Kavanaugh, IBM’s finance chief, told CNBC’s Kristina Partsinevelos in an interview. “I mean, if you look at the overall market, I think we’re taking share when you look at it against other consulting providers.”
But clients are still focused on cost reduction, and that’s putting pressure on discretionary consulting projects, Kavanaugh said. “It came in a little bit light because we’re dealing with a much stronger U.S. dollar position than where we were 90 days ago,” Kavanaugh said of the consulting outcome.
Revenue from the Infrastructure division, including IBM’s mainframe computers, totaled $3.27 billion. The tally, while down 2%, is more than the $3.10 billion StreetAccount consensus.
Management reiterated guidance for the full year, including revenue growth at constant currency between 3% and 5% and $10.5 billion in free cash flow. For the first nine months of the year, the company has generated $5.12 billion in free cash flow.
During the quarter IBM released Granite generative artificial-intelligence models for composing and summarizing text. The company also said it was backing AI startup Hugging Face and bought Apptio, a seller of tools for managing cloud costs, from Vista Equity Partners for $4.6 billion.
Excluding the after-hours move, IBM shares are down about 2% this year, trailing the S&P 500 index, which is up around 9% in the same period.
Executives will discuss the results with analysts on a conference call starting at 5 p.m. ET.
This is breaking news. Please check back for updates.
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Oracle CEO Clay Magouyrk appears on a media tour of the Stargate AI data center in Abilene, Texas, on Sept. 23, 2025.
Kyle Grillot | Bloomberg | Getty Images
Oracle on Friday pushed back against a report that said the company will complete data centers for OpenAI, one of its major customers, in 2028, rather than 2027.
The delay is due to a shortage of labor and materials, according to the Friday report from Bloomberg, which cited unnamed people. Oracle shares fell to a session low of $185.98, down 6.5% from Thursday’s close.
“Site selection and delivery timelines were established in close coordination with OpenAI following execution of the agreement and were jointly agreed,” an Oracle spokesperson said in an email to CNBC. “There have been no delays to any sites required to meet our contractual commitments, and all milestones remain on track.”
The Oracle spokesperson did not specify a timeline for turning on cloud computing infrastructure for OpenAI. In September, OpenAI said it had a partnership with Oracle worth more than $300 billion over the next five years.
“We have a good relationship with OpenAI,” Clay Magouyrk, one of Oracle’s two newly appointed CEOs, said at an October analyst meeting.
Doing business with OpenAI is relatively new to 48-year-old Oracle. Historically, Oracle grew through sales of its database software and business applications. Its cloud infrastructure business now contributes over one-fourth of revenue, although Oracle remains a smaller hyperscaler than Amazon, Microsoft and Google.
OpenAI has also made commitments to other companies as it looks to meet expected capacity needs.
In September, Nvidia said it had signed a letter of intent with OpenAI to deploy at least 10 gigawatts of Nvidia equipment for the San Francisco artificial intelligence startup. The first phase of that project is expected in the second half of 2026.
Nvidia and OpenAI said in a September statement that they “look forward to finalizing the details of this new phase of strategic partnership in the coming weeks.”
But no announcement has come yet.
In a November filing, Nvidia said “there is no assurance that we will enter into definitive agreements with respect to the OpenAI opportunity.”
OpenAI has historically relied on Nvidia graphics processing units to operate ChatGPT and other products, and now it’s also looking at designing custom chips in a collaboration with Broadcom.
On Thursday, Broadcom CEO Hock Tan laid out a timeline for the OpenAI work, which was announced in October. Broadcom and OpenAI said they had signed a term sheet.
“It’s more like 2027, 2028, 2029, 10 gigawatts, that was the OpenAI discussion,” Tan said on Broadcom’s earnings call. “And that’s, I call it, an agreement, an alignment of where we’re headed with respect to a very respected and valued customer, OpenAI. But we do not expect much in 2026.”
OpenAI declined to comment.
WATCH: Oracle says there have been ‘no delays’ in OpenAI arrangement after stock slide
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