06:36 AM EDT, 10/23/2025 (MT Newswires) -- International Business Machines ( IBM ) lifted its full-year revenue growth outlook and reported better-than-expected third-quarter results, but annual growth in the technology giant's hybrid cloud business was lower versus the previous three-month period, sending its shares down early Thursday.

Revenue is now anticipated to rise by more than 5% in constant currency terms for 2025, the computer and software firm said late Wednesday, compared with its previous projections for growth of at least 5%. Foreign exchange is still pegged to be a one-and-a-half-point tailwind for revenue during the year.

"The strength and diversity of our portfolio, disciplined capital allocation, and relentless focus on productivity continue to drive the durability of our revenue and free cash flow performance," Chief Financial Officer James Kavanaugh said during an earnings call, according to a FactSet transcript. "Given the strength of this performance, we are raising our expectations for revenue."

The company continues to expect double-digit software revenue gains for the full year, as well as mid-teens revenue growth for its Red Hat software firm unit, but at the low end, according to Kavanaugh.

For the September quarter, IBM's ( IBM ) adjusted earnings advanced to $2.65 per share from $2.30 the year before, topping the Street's view for $2.45. Revenue climbed 9% to $16.33 billion, exceeding the average analyst estimate on FactSet of $16.09 billion.

Revenue for the software segment advanced 10% to $7.21 billion, including a 14% increase in the hybrid cloud business, although this growth was smaller than the 16% year-over-year gain recorded in the second quarter. "Demand for our hybrid cloud products remains strong, and all three of our major subscription offerings gained market share again this quarter," Kavanaugh told analysts.

IBM's ( IBM ) stock dropped 6.8% in the most recent premarket activity.

"We continue to believe IBM ( IBM ) is well positioned to capitalize on the current demand wave for hybrid cloud and (artificial intelligence) applications as more enterprises are looking to leverage these capabilities across organizational workflows," Wedbush Securities said in a Wednesday client note. "We would be buyers of any modest knee jerk weakness in the stock."

Consulting revenue inclined 3% to $5.32 billion while sales in the infrastructure segment climbed 17% to $3.56 billion. Financing revenue improved to $200 million from $181 million.