Big Blue reported adjusted earnings of $2.68 a share versus the FactSet-derived consensus analyst estimate of $2.67. Revenue totaled $18.03 billion compared with the estimate of $18.23 billion.
The company posted a 14% increase in cloud revenue to $5 billion while its global business services segment brought in $4.1 billion.
Systems revenue totaled $1.5 billion in the quarter, a decline of nearly 15% from the year prior.
"Our results demonstrate that clients see IBM and Red Hat as a powerful combination and they trust us to provide them with the open hybrid cloud technology, innovation and industry expertise to help them shift their mission-critical workloads to the cloud," IBM CEO Ginni Rometty said in a statement.
For the full year, the company expects earnings of at least $12.80 a share. Analysts polled by FactSet are expecting earnings of $12.81 for the year.
IBM shares fell $8, or 5.6%, to $134.10 in after-hours trading.