IBM stock slid 3% after hours on Tuesday, when it reported earnings that were short of Wall Street’s expectations.

This past quarter, IBM reported a revenue of $18.2 billion, down 4.7% from this time last year.

IBM Shares of IBM have increased 27% so far this year, as the company sheds underperforming businesses. But there are big questions about its planned $34 billion acquisition of Red Hat.

“In the first quarter, our cloud revenue growth accelerated, and we again grew in key, high- value areas in Cloud and Cognitive Software and in consulting,” IBM CEO Ginni Rometty said in a statement. “IBM’s investments in innovative technologies coupled with our industry expertise and our commitment to trust and security position us well to help clients move to chapter two of their digital reinvention.”

Here's what it reported:

  • Revenue: $18.18 billion, vs. $18.51 billion, according to analyst expectations.
  • EPS (adjusted): $2.25, vs. $2.22, according to analyst expectations.

IBM's cloud saw stronger growth, generating a revenue of $19.5 billion. This was up 10% from this time last year.

"Our results reflect the fundamental changes we have made to our business, allowing us to generate greater operating leverage. In the first quarter, we significantly expanded profit margins, led by our services businesses," IBM CFO James Kavanaugh said in a statement. "Our focus on prioritizing our investments in the emerging high-value segments of our industry has enabled us to drive higher profitability and strong cash generation."

Last quarter, IBM announced that it showed annual revenue growth for the first time since 2011.