“We expect strong free cash flow performance in the fourth quarter, while we continue to face some external headwinds, including appreciation of the U.S. dollar and exit of our Russia operations.”

In context

“ow see constant currency revenue growth above our mid-single digit model for the year. On top of that, Kyndryl sales add about 3.5 points of growth, primarily in the first three quarters of the year so it’s essentially behind us. U.S. dollar continues to strengthen. And at mid-October spot rates, currency translation will now be about a 7-point headwind to growth for the year. As I mentioned earlier, this impacts profit and free cash flow as well. Looking at free cash flow, our other key metric, we continue to expect to generate about $10 billion for the year. That’s up over $3 billion from last year. A large part of that growth comes from the wrap on the Kyndryl spin-related and structural payments. But we’re also driving working capital efficiency and improving operating profit profile. We expect strong free cash flow performance in the fourth quarter, while we continue to face some external headwinds, including appreciation of the U.S. dollar and exit of our Russia operations. In terms of segment performance for 2022, our view of software has been consistent all year. We continue to expect revenue growth in line with our mid-single digit model range, plus 5 to 6 points from sales to Kyndryl. And we still see software pre-tax margin in the mid-20s range for 2022. Our IBM Consulting revenue growth has been great, and we’re taking our view up to a mid-teens revenue growth rate for the year. While we’re still operating in a competitive labor environment, we see some encouraging signs in our Consulting margin profile exiting the third quarter. We now expect a Consulting pre-tax margin for the year at the low end of our previous 9% to 10% range, which is up about a point year-to-year. Our Infrastructure revenue performance, as always, reflects product cycle dynamics.”