IBM said its total revenue fell 3.9 percent to $18.03 billion during the third quarter of 2019.
IBM said global technology services unit reported a 5.6 percent drop in revenue to $6.70 billion in Q3 2019.
Sales from global technology services, IBM’s biggest unit that caters to some of the world’s largest data centers, were weighed down by lower client business volumes, mainly in the UK and Germany, IBM’s chief financial officer James Kavanaugh said.
Revenue from IBM’s cloud services rose 11 percent to $5 billion, helping the company beat profit expectations for the quarter.
IBM, which completed its acquisition of Linux maker Red Hat earlier this year, faced drop in revenue amid its shift to the cloud from its traditional businesses, including mainframe servers.
IBM CEO Ginni Rometty, who has led IBM for more than seven years, is betting on subscription-based software offerings with the Red Hat deal, the company’s biggest acquisition so far.
IBM said that it would report only a portion of Red Hat’s actual revenue for some quarters, while recording all its expenses as required by U.S. accounting standards.
The cloud and cognitive software unit, which includes Red Hat, reported a 6.4 percent rise in revenue to $5.28 billion for the third quarter ended Sept. 30.
Net income fell to $1.67 billion, or $1.87 per share, from $2.69 billion, or $2.94 per share, a year earlier.