IBM reported on Oct. 21, 2026, that third-quarter revenue increased 5% to $17.1 billion, with software growing faster than its consulting and infrastructure businesses. The company raised its annual free cash flow outlook but left its revenue growth forecast unchanged.
Software growth masks uneven demand
In its earnings release, IBM said software revenue rose 8% to $7.8 billion. Consulting revenue was flat at $5.3 billion, while infrastructure revenue increased 4% to $3.7 billion. Those are reported growth rates, not currency-adjusted comparisons.
The infrastructure total contained sharply different trends: IBM Z revenue fell 20%, while distributed infrastructure grew 31%. A gain across the segment therefore does not mean demand increased across every hardware business.
SiliconANGLE reported that revenue exceeded analysts’ $16.82 billion expectation and adjusted earnings of $2.95 a share topped their $2.86 forecast. Those adjusted earnings are a non-GAAP measure.
Cash flow outlook improves
IBM now expects full-year free cash flow to rise by more than $1 billion from a year earlier. It continues to forecast annual revenue growth of 4% to 5% at constant currency. These remain management projections rather than completed results.
For enterprise leaders, the distinction is between the overall vendor picture and the specific systems they buy. Growth in software and distributed infrastructure can coexist with weaker mainframe sales and a consulting business that is not expanding on a reported basis.
The results provide a current demand signal, not evidence that any individual customer has achieved a return on an AI or modernization project.