IBM beat analyst expectations after reporting that revenues increased by 3% year-on-year revenue growth in the second quarter of 2021 to $18.7 billion, its fastest increase for three years.

The tech giant also reiterated that its revenues will continue to grow across the full year.   

IBM CEO Arvind Krishna attributed the increase to “strong performance” in the company’s Global Business Services and software segments, but its revenues for cloud services and Red Hat also saw significant increases. 

“At the same time, we continued to help clients infuse our AI-based technology offerings into their core business workflows,” said Krishna. “We are pleased with our progress and we remain on track to deliver full-year revenue growth and meet our cash flow objective.”

The Cloud and Cognitive Software unit, which includes Red Hat, brought in $6.1 billion in revenue, a 6% increase compared to 2020, while revenues from IBM’s Global Business Services increased by 12%. System revenues, which includes hardware, contributed $1.71 billion, which was a 7% decline year-on-year.

The company is preparing to split its business in two with an infrastructure-focused unit called Kyndryl launching later in the year. This will include IBM’s Global Technology Services unit, which includes as outsourcing and support which brought in $6.34 billion in the second quarter.

“While our performance with existing clients remains strong, as we would expect, the sales cycles for new logo clients is elongating as they await further information related to Kyndryl,” said Jim Kavanaugh, IBM’s finance chief.

The second quarter also saw IBM spend $1.75 billion spent on acquisitions, the most in a single quarter since it splashed $34 billion on Red Hat in Q3 of 2019. It is currently working on a deal for process-mining software company myInvenio, application management firm Turbonomic and a Salesforce consulting spin-off called Waeg. 

This was in addition to the unveiling of its “breakthrough” 2-nanometer chip technology, which IBM claims will vastly improve energy efficiency and performance of various kinds of devices.