Here are the key numbers:
Earnings: $3.17 per share, excluding certain items, vs. $3.07 per share as expected by analysts, according to Refinitiv.
Revenue: $19.16 billion, vs. $19.16 billion as expected by analysts, according to Refinitiv.
IBMs revenue fell 4% from a year earlier even as earnings grew 3%, the company said in a statement. Year-over-year revenue has now declined for the fourth quarter in a row.
IBMs biggest business segment, Global Technology Services — which includes technology support services as well as infrastructure and cloud services — produced $6.84 billion in revenue, down almost 7% and below the $7 billion consensus estimate among analysts surveyed by FactSet.
The GTS business is "declining ~3% as the company repositions this portfolio for higher profitability and growth," Stifel analysts led by David Grossman wrote in a note on July 9. "Declines are likely to remain at these levels through most of this year as the company exits lower margin capital intensive business and culls low growth/margin relationships from the portfolio."
The Cloud and Cognitive Software unit — including cloud and data platforms, cognitive applications and transaction processing platforms — contributed $5.65 billion in revenue, above the FactSet consensus estimate of $5.55 billion.
IBMs Global Business Services segment, which includes application management, consulting and global process services, had revenue of $4.16 billion, just under the $4.17 billion FactSet estimate.
Systems revenue totaled $1.75 billion, down almost 20% and shy of the $1.82 billion mean FactSet estimate. IBM said growth from Power product line more than offset impact from "product cycle dynamics" in the companys storage and Z mainframe-computer products. The Z line in past quarters helped to lift IBMs revenue as businesses made upgrades, but now it making for tougher comparisons.
In the second quarter, IBM announced a partnership with Cloudera and the sale of commerce and marketing software properties to funds advised by affiliates of Centerbridge Partners. The company also announced layoffs.
IBM closed its $34 billion acquisition of Red Hat earlier this month.
"Earlier in July, we reduced our EPS estimates while noting the risk that management might need to walk back its EPS expectations," Argus Research analyst Jim Kelleher wrote in a note distributed to clients on Thursday. "Even with the Red Hat acquisition, we remain concerned that IBM may have lost momentum in its strategic transformation." Kelleher has a hold rating on the stock.
IBM reiterated full-year guidance of at least $13.90 in earnings per share, excluding certain items like Red Hat. Thats inline with analyst estimates, according to Refinitiv.
The company said it will provide information on the impact of Red Hat on August 2.
IBM shares are up about 26% since the beginning of 2019.
This is breaking news. Please check back for updates.
WATCH: CEO Ginni Rometty: Red Hat is a play that helps all of IBM