IBM Shares Drop 6% Despite Beating Q3 Earnings Expectations

International Business Machines (NYSE:IBM) reported third-quarter earnings that surpassed analyst expectations, but a slight revenue miss sent its shares down more than 6% intra-day today.

The tech giant posted adjusted earnings per share of $2.30, beating the Street estimate of $2.22. However, revenue reached $15 billion, just shy of the anticipated $15.04 billion. This represented a modest 1% increase year-over-year, or 2% when adjusted for constant currency.

IBM's Software segment was a standout performer, with revenue rising 9.7% to $6.5 billion, driven by a strong 14% growth in its Red Hat business. In contrast, the Infrastructure segment struggled, with revenue declining 7% to $3 billion.

Despite the revenue shortfall, IBM reaffirmed its full-year 2024 outlook, projecting constant currency revenue growth in line with its mid-single-digit model. The company also boosted its free cash flow guidance, expecting it to exceed $12 billion for the year.