# IBM (IBM) Q3 2026 earnings

Results filed 2026-10-21 for the quarter ended 2026-09-30. Source page: https://earnings.opennash.com/companies/ibm/2026-q3/
Press release and exhibits: https://www.sec.gov/Archives/edgar/data/51143/000005114326000093/0000051143-26-000093-index.htm
> 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

| Metric | Value | Change | Basis |
| --- | --- | --- | --- |
| Revenue | $17.1 billion | up 5 percent, up 6 percent at constant currency | GAAP |
| Net income | $2,190 | up from $1,744 a year ago | GAAP |
| Diluted EPS from continuing operations | $2.31 | up 26% from a year ago | GAAP |
| Operating (non-GAAP) diluted EPS | $2.95 | up 11% from a year ago | non-GAAP |
| Gross profit margin (GAAP) | 56.8 percent | down 50 basis points | GAAP |
| Gross profit margin (operating) | 58.5 percent | down 20 basis points | non-GAAP |
| Net cash from operating activities | $4.0 billion | up $0.9 billion year to year | GAAP |
| Free cash flow | $3.0 billion | up $0.7 billion year to year | non-GAAP |
| Adjusted EBITDA margin | 28.7% | up 0.6pts | non-GAAP |

## Segments and operating metrics

| Name | Value | Change |
| --- | --- | --- |
| Hybrid Cloud (Red Hat) | up 11 percent |  |
| Data | up 19 percent | up 20 percent at constant currency |
| IBM Z | down 20 percent | down 19 percent at constant currency |
| Distributed Infrastructure | up 31 percent | up 32 percent at constant currency |

## Outlook

| Metric | Period | Outlook |
| --- | --- | --- |
| Free cash flow increase year over year | full-year 2026 | more 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.

## 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.