International Business Machines Corp. reported revenue that beat analysts' estimates, buoyed by strong demand in the software unit, which includes its hybrid cloud offering, signaling that the company's efforts to transform the tech giant 110 years are bearing fruit.

Sales rose 6.5% to $16.7 billion in the three months ended Dec. 31, the Armonk, New York-based technology company said in a statement Monday. This was the largest increase in at least 10 years. For their part, analysts expected an average of US$16 billion. The stock was up about 5% in extended trading.

“This is the beginning of the new IBM and the prospect of what we look forward to in the future,” Chief Financial Officer Jim Kavanaugh said in an interview. "We saw a very healthy acceleration in cloud and consulting, both of which are key growth areas."

IBM's software unit, the largest business group, grew 8.2% to $7.3 billion. The consulting unit, formerly known as Global Business Services, reported revenue of $4.7 billion, up 13% from a year earlier.

The results were the first since IBM completed in November the spin-off of a large part of its infrastructure services unit into a new company called Kyndryl, which includes service operations such as customer data center management and information technology support. traditional information.

The divestiture marked IBM's fourth major transformation and a significant step in CEO Arvind Krishna's plan to drive Big Blue in cloud and AI.

Hybrid cloud revenue grew 16% to $6.2 billion, led by Red Hat sales, which increased 19% during the quarter.

Krishna's strategy of bringing IBM, which has traditionally focused on mainframe computers and information technology services, into the fast-growing cloud computing market helped revive sales after years of stagnant revenue.

Yet even as companies move more of their operations online, IBM faces competition in cloud services from giants like Microsoft Corp. and Amazon.com Inc. IBM is seeking to distinguish itself from its biggest rivals in the cloud by offering a hybrid model, helping customers store and compute data on local infrastructure, private cloud services, and servers managed by public providers.

"In the past, IBM benefited from systems not being able to integrate easily, but the cloud has changed that," the Morningstar analyst said. Julie Bhusal Sharma. “The pandemic prompted businesses to start migrating workloads to the cloud, and since they are making the switch anyway, they will look to best-in-class providers.”

Even before taking over as CEO during the height of the pandemic, Krishna played a key role in developing IBM's hybrid cloud strategy, overseeing the $33 billion acquisition of Red Hat.