International Business Machines' shift to newer businesses such as cloud and security services helped it beat analysts' quarterly revenue estimates.
The technology giant also hinted last night at sales growth after nearly six years of declines.
IBM has been focusing on cloud, cybersecurity and data analytics, or what the company calls its "strategic imperatives", to counter a slowdown in its legacy hardware and software businesses.
Revenue from these businesses climbed 11% to $8.8 billion in the third quarter ended September 30, accounting for about 46% of the company's total revenue.
Revenue from the cognitive solutions business, which includes the AI-powered supercomputer Watson, rose nearly 4% to $4.40 billion, after falling 2.5% in the previous quarter.
Analysts on average expected revenue of $4.17 billion, according to financial data and analytics firm FactSet.
IBM said it expected revenue to grow $2.8 billion to $2.9 billion in fourth quarter from the third quarter.
This implies fourth-quarter revenue in the range of $22 billion to $22.1 billion, a year-on-year growth of about 1.4% at the high end.
A part of the rise in revenue is expected to come from the mainframe business, which got a boost from the launch of Z14.
Revenue in mainframe business jumped 60% in the third quarter, IBM's chief financial officer Martin Schroeter said, adding that the business gained from Z14, which began shipping in mid-September.