International Business Machines Corp. reported revenue that beat analysts’ estimates, buoyed by strong demand in the software space, which includes IBM’s hybrid cloud offering, suggesting the company’s efforts to transform the 110-year-old tech giant are bearing fruit carry.

Revenue rose 6.5% to $16.7 billion in the three months ended December 31, the Armonk, New York-based tech company said in a statement Monday. It was the biggest increase in at least 10 years. According to data from Bloomberg, analysts had expected an average of $16 billion. The stock rose as much as 7.5% in extended trading before shedding much of the gains.

“This is the launch of the new IBM and a glimpse of what we’re going to look like going forward,” Chief Financial Officer Jim Kavanaugh said in an interview.

IBM’s software unit that…

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