IBM reported second-quarter revenue on Monday that beat analysts' estimates, as a recovery in client spending powered strong growth in its cloud and consulting businesses.
The company's shares were up 2 percent at US$140.73 in extended trading.
"With the reopening (of economies) in particular around North America and Western Europe, we're seeing a nice rebound in travel and transportation, automotive, industrial and consumer sectors overall," IBM Chief Financial Officer James Kavanaugh told Reuters, adding that more clients spent on digitizing their operations.
After the pandemic battered existing models of business, more enterprises are adopting "hybrid cloud", a combination of using their own data centers and leased computing resources to manage and process data.
Sales at IBM's cloud business rose 13 percent to US$7 billion in the reported quarter.
Seeing a US$1 trillion market opportunity in "hybrid-cloud", IBM has been investing aggressively in cloud and artificial intelligence-focused ventures, while also shedding its slow-growing, yet huge, managed infrastructure business.
Since the beginning of the year, the company has spent about US$3 billion on eight acquisitions, Kavanaugh said.
IBM's net income fell to US$1.33 billion, or US$1.47 per share, in the quarter ended June 30, from US$1.36 billion, or US$1.52 per share, a year earlier.
Total revenue rose 3 percent to US$18.75 billion, beating estimates of US$18.29 billion, according to IBES data from Refinitiv.
(Reporting by Chavi Mehta in Bengaluru; Editing by Shounak Dasgupta)