IBM (IBM.US) Q3 revenue increased 5% year over year to US$17.1 billion, raising full-year free cash flow forecast

The Zhitong Finance App learned that after the US stock market closed on Wednesday, IBM (IBM.US) announced financial results for the third quarter of 2026. According to the data, the company's revenue for the quarter was US$17.103 billion, up 5% year on year, up 6% year on year; GAAP net profit from continuing operations was US$2.99 billion, up 26% year on year, and diluted earnings per share was US$2.31, up 26% year on year. Non-GAAP adjusted net profit from continuing operations was $2,812 million, up 12% year over year, and adjusted earnings per share were $2.95, up 11% year over year. IBM shares rose more than 2% after the market.

In terms of profitability, IBM's GAAP gross margin for the third quarter was 56.8%, down 0.5 percentage points year on year; non-GAAP adjusted gross margin was 58.5%, down 0.2 percentage points year on year. The adjusted profit before tax was US$3.295 billion, up about 9% year on year. The adjusted profit margin before tax was 19.3%, up 0.7 percentage points year on year.

By business, the software division's revenue increased 8% year over year to 7.804 billion US dollars. Among them, Red Hat's hybrid cloud business grew 11%, data business grew 19%, transaction processing business increased 9%, but automation business revenue fell 3%. Consulting business revenue was US$5.335 billion, which is basically the same as the same period last year; infrastructure business revenue increased 4% year over year to US$3.707 billion, of which distributed infrastructure business increased 31%, while IBM Z mainframe business declined 20%.

In terms of cash flow, IBM's cash flow from operating activities in the third quarter was US$4,025 million, an increase of about US$900 million over the previous year; free cash flow was US$3,027 billion, an increase of about US$700 million over the previous year. In the first nine months of this year, the company's cumulative free cash flow reached US$7.787 billion. By the end of the third quarter, IBM held $11.1 billion in cash, restricted cash and marketable securities, with total debt of $63.8 billion.

Looking ahead to the full year of 2026, IBM maintains the forecast of 4% to 5% revenue growth at a fixed exchange rate, and the impact of the exchange rate on the annual revenue growth rate is basically neutral. At the same time, the company raised its free cash flow forecast, and it is expected that the full year's free cash flow will increase by more than 1 billion US dollars compared to 2025.

IBM Chairman and CEO Arvind Krishna said that customers are gradually applying super-intelligent technology to transform the overall operating model of the enterprise, rather than just to solve a single problem. The company will continue to help customers improve operational efficiency and business growth through technical and professional services.