OpenNashEarnings

IBM (IBM) · Software

IBM Q3 2026 earnings: summary, key numbers & outlook

Results filed 21 Oct 2026 · Quarter ended 30 Sep 2026

Official transcript (PDF) ↗Press release ↗Investor relations ↗

Summaries and transcripts are machine-generated and can contain errors.

In brief

IBM reported third-quarter 2026 revenue of $17.1 billion, up 5 percent (up 6 percent at constant currency), with Software revenue up 8 percent and free cash flow of $3.0 billion, and raised its full-year free cash flow outlook.

IBM's third-quarter revenue was $17.1 billion, up 5 percent from a year ago and up 6 percent at constant currency. Software led with revenue of $7.8 billion, up 8 percent, helped by Data (up 19 percent) and Red Hat (up 11 percent). Infrastructure rose 4 percent, while Consulting was flat. GAAP diluted earnings per share from continuing operations were $2.31, and operating (non-GAAP) EPS was $2.95. Free cash flow was $3.0 billion, up $0.7 billion.

IBM kept its full-year outlook for constant currency revenue growth of four-to-five percent and now expects free cash flow to rise by more than $1 billion year over year. The main tension is mix and margin: IBM Z fell 20 percent, Consulting gross margin slipped to 27.4% from 29.3%, and R&D and acquisition-related costs are rising. Debt also totaled $63.8 billion after $11.4 billion spent on acquisitions this year.

Key numbers

Revenue · GAAP
$17.1 billion

up 5 percent, up 6 percent at constant currency

Net income · GAAP
$2.2B

up from $1,744 a year ago

Diluted EPS from continuing operations · GAAP
$2.31

up 26% from a year ago

Operating (non-GAAP) diluted EPS · non-GAAP
$2.95

up 11% from a year ago

Gross profit margin (GAAP) · GAAP
56.8 percent

down 50 basis points

Gross profit margin (operating) · non-GAAP
58.5 percent

down 20 basis points

Net cash from operating activities · GAAP
$4.0 billion

up $0.9 billion year to year

Free cash flow · non-GAAP
$3.0 billion

up $0.7 billion year to year

Segment or metricValueChange
Hybrid Cloud (Red Hat)up 11 percent
Dataup 19 percentup 20 percent at constant currency
IBM Zdown 20 percentdown 19 percent at constant currency
Distributed Infrastructureup 31 percentup 32 percent at constant currency
Where each number comes from
  • Revenue: “Revenue of $17.1 billion, up 5 percent, up 6 percent at constant currency –Software revenue up 8 percent, up 9 percent at constant currency”
  • Net income: “NET INCOME | $2,190 | $1,744 | $5,571 | $4,993 EARNINGS PER SHARE OF COMMON STOCK Assuming dilution Continuing operations | $2.31 | $1.84”
  • Diluted EPS from continuing operations: “GAAP from Continuing Operations | $17.1B | $9.7B | 56.8% | $2.5B | 14.6% | $2.2B | $2.31 Year/Year | 5 | % (1) | 4% | (0.5) | Pts | 3% | (0.3) | Pts | 26% | 26%”
  • Operating (non-GAAP) diluted EPS: “Diluted earnings per share: continuing operations | $2.31 | $0.57 | $0.07 | $— | $2.95 Three Months Ended September 30, 2025”
  • Gross profit margin (GAAP): “Gross Profit Margin: GAAP: 56.8 percent, down 50 basis points; Operating (Non-GAAP): 58.5 percent, down 20 basis points”
  • Gross profit margin (operating): “Gross Profit Margin: GAAP: 56.8 percent, down 50 basis points; Operating (Non-GAAP): 58.5 percent, down 20 basis points”
  • Net cash from operating activities: “the company generated net cash from operating activities of $4.0 billion, up $0.9 billion year to year.”
  • Free cash flow: “IBM’s free cash flow was $3.0 billion, up $0.7 billion year to year.”
  • Hybrid Cloud (Red Hat): “–Hybrid Cloud (Red Hat) up 11 percent –Automation down 3 percent –Data up 19 percent, up 20 percent at constant currency”
  • Data: “–Automation down 3 percent –Data up 19 percent, up 20 percent at constant currency –Transaction Processing up 9 percent”
  • IBM Z: “•IBM Z down 20 percent, down 19 percent at constant currency •Distributed Infrastructure up 31 percent, up 32 percent at constant currency”
  • Distributed Infrastructure: “•IBM Z down 20 percent, down 19 percent at constant currency •Distributed Infrastructure up 31 percent, up 32 percent at constant currency”

Copied from the press release ↗ and other documents in the SEC filing ↗. A figure is published only if its sentence is in the filing.

From the filingQ3 2026vs year agovs last quarter
Revenue$17.1B+4.7%−0.3%
Net income$2.2B+25.6%+1.2%
Diluted EPS$2.30+25.0%+1.3%
Free cash flow$3.7B+30.6%+56.0%
Gross margin56.8%−0.5 pts−0.9 pts

Calculated by code from XBRL, not by the model.

Outlook

MetricPeriodOutlook
Free cash flow increase year over yearfull-year 2026more than $1 billion

Key takeaways

  1. Revenue growth accelerated, led by Software

    Revenue of $17.1 billion rose 5 percent, or 6 percent at constant currency. Software revenue was up 8 percent.

  2. Free cash flow outlook raised above $1 billion

    IBM now expects full-year free cash flow to increase by more than $1 billion year-over-year. Year to date free cash flow is $7.8 billion, up $0.6 billion.

  3. IBM Z fell 20 percent while distributed rose

    IBM Z was down 20 percent, while Distributed Infrastructure was up 31 percent. Hybrid Infrastructure overall rose 8 percent.

  4. Consulting remains flat with thinner margins

    Consulting revenue was flat, up 2 percent at constant currency. Its gross profit margin fell to 27.4% from 29.3%.

  5. Acquisitions lifted debt to $63.8 billion

    IBM invested $11.4 billion in acquisitions this year, and debt totaled $63.8 billion, up $2.6 billion year to date. Cash, restricted cash and marketable securities were $11.1 billion.

Charts

Revenue$17.1B+4.7% y/yQ3 2026
Q4 2024: $17.6B (worked out from the annual figure)Q4 ’24$17.6BQ1 2025: $14.5BQ1 ’25$14.5BQ2 2025: $17.0BQ2 ’25$17.0BQ3 2025: $16.3BQ3 ’25$16.3BQ4 2025: $19.7B (worked out from the annual figure)Q4 ’25$19.7BQ1 2026: $15.9BQ1 ’26$15.9BQ2 2026: $17.2BQ2 ’26$17.2BQ3 2026: $17.1BQ3 ’26$17.1B

Fourth quarter worked out from the annual figure.

Data
Q4 2024$17.6B *
Q1 2025$14.5B
Q2 2025$17.0B
Q3 2025$16.3B
Q4 2025$19.7B *
Q1 2026$15.9B
Q2 2026$17.2B
Q3 2026$17.1B
Diluted EPS (GAAP)$2.30+25.0% y/yQ3 2026
Q1 2025: $1.12Q1 ’25$1.12Q2 2025: $2.31Q2 ’25$2.31Q3 2025: $1.84Q3 ’25$1.84Q1 2026: $1.28Q1 ’26$1.28Q2 2026: $2.27Q2 ’26$2.27Q3 2026: $2.30Q3 ’26$2.30
Data
Q1 2025$1.12
Q2 2025$2.31
Q3 2025$1.84
Q1 2026$1.28
Q2 2026$2.27
Q3 2026$2.30

Fourth-quarter EPS appears once the press release is read; filings report it only for the full year.

Free cash flow$3.7B+30.6% y/yQ3 2026
Q4 2024: $4.0BQ4 ’24$4.0BQ1 2025: $4.1BQ1 ’25$4.1BQ2 2025: $1.5BQ2 ’25$1.5BQ3 2025: $2.8BQ3 ’25$2.8BQ4 2025: $3.7BQ4 ’25$3.7BQ1 2026: $4.9BQ1 ’26$4.9BQ2 2026: $2.4BQ2 ’26$2.4BQ3 2026: $3.7BQ3 ’26$3.7B
Data
Q4 2024$4.0B
Q1 2025$4.1B
Q2 2025$1.5B
Q3 2025$2.8B
Q4 2025$3.7B
Q1 2026$4.9B
Q2 2026$2.4B
Q3 2026$3.7B

Operating cash flow minus capital expenditure, from cash flow statements.

Questions

What were IBM's third-quarter 2026 revenue and EPS?

Revenue was $17.1 billion, up 5 percent and up 6 percent at constant currency. GAAP diluted EPS from continuing operations was $2.31 and operating (non-GAAP) EPS was $2.95.

Which IBM segments drove growth?

Software revenue rose 8 percent to $7.8 billion, with Data up 19 percent and Red Hat up 11 percent. Infrastructure rose 4 percent, while Consulting was flat.

Did IBM change its full-year 2026 outlook?

IBM kept its constant currency revenue growth outlook of four-to-five percent. It raised free cash flow guidance to an increase of more than $1 billion year over year.

How much free cash flow did IBM generate?

Third-quarter free cash flow was $3.0 billion, up $0.7 billion from a year ago. Year to date it was $7.8 billion, up $0.6 billion.

What is IBM's dividend and balance sheet position?

The board approved a quarterly dividend of $1.69 per share. Debt totaled $63.8 billion, and IBM ended the quarter with $11.1 billion of cash, restricted cash and marketable securities.

Documents

SEC filing

Call recording

Listen to the official recording ↗

Read IBM's official transcript ↗.