IBM Third-Quarter Revenue Rises 5% to $17.1 Billion as Software Grows 8%: Company Raises Full-Year Free Cash Flow Outlook

ARMONK, N.Y. — IBM announced third-quarter 2026 results on Wednesday, October 21. Revenue was $17.1 billion ($17,103 million), up 5 percent, or 6 percent at constant currency. GAAP net income was $2.2 billion, with diluted earnings per share of $2.31 from continuing operations, up 26 percent year to year; on an operating (non-GAAP) basis, net income was $2.8 billion and earnings per share were $2.95, up 12 percent and 11 percent respectively. The GAAP gross profit margin was 56.8 percent, down 50 basis points, and the operating margin was 58.5 percent, down 20 basis points; the GAAP pre-tax income margin was 14.6 percent, down 30 basis points, while the operating pre-tax margin rose 70 basis points to 19.3 percent.

Software revenue was $7.8 billion, up 8 percent (9 percent at constant currency), with Hybrid Cloud (Red Hat) up 11 percent, Data up 19 percent (20 percent at constant currency) and Transaction Processing up 9 percent (10 percent at constant currency), partly offset by a 3 percent decline in Automation. Consulting revenue was $5.3 billion, flat (up 2 percent at constant currency). Infrastructure revenue was $3.7 billion, up 4 percent (5 percent at constant currency), as Distributed Infrastructure rose 31 percent and Hybrid Infrastructure rose 8 percent, while IBM Z fell 20 percent and Infrastructure Support fell 3 percent. Financing revenue was $0.2 billion, down 4 percent.

In the third quarter, net cash from operating activities was $4.0 billion, up $0.9 billion year to year, and free cash flow was $3.0 billion, up $0.7 billion; the company returned $1.6 billion to shareholders in dividends. For the first nine months, operating cash flow was $11.8 billion and free cash flow was $7.8 billion. IBM ended the quarter with $11.1 billion in cash, restricted cash and marketable securities, having invested $11.4 billion in acquisitions this year; total debt, including IBM Financing debt of $12.7 billion, was $63.8 billion.

"Disciplined execution throughout the quarter drove accelerated revenue growth and strong free cash flow," said chairman, president and chief executive officer Arvind Krishna. For the full year, the company continues to expect constant-currency revenue growth of four to five percent and now expects free cash flow to increase by more than $1 billion year over year. The board approved a regular quarterly cash dividend of $1.69 per common share, payable December 10, 2026, to stockholders of record on November 10, 2026; with that payment, IBM will have paid consecutive quarterly dividends every year since 1916.

Published by GSM · USA (original Chinese edition)

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