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

According to Jinse Finance APP, after the US stock market closed on Wednesday, IBM (IBM.US) released its financial report for the third quarter of 2026. The data shows that the company's revenue for the quarter was $17.103 billion, a year-on-year increase of 5%, and up 6% at constant currency; GAAP net profit from continuing operations was $2.199 billion, up 26% year-on-year, with diluted earnings per share of $2.31, also up 26% year-on-year. Non-GAAP adjusted net profit from continuing operations was $2.812 billion, up 12% year-on-year, and adjusted earnings per share were $2.95, increasing 11% year-on-year. IBM's after-hours share price rose more than 2%.

In terms of profitability, IBM's third-quarter GAAP gross margin was 56.8%, a decrease of 0.5 percentage points year-on-year; non-GAAP adjusted gross margin was 58.5%, down 0.2 percentage points year-on-year. Adjusted pre-tax profit was $3.295 billion, up about 9% year-on-year, and the adjusted pre-tax profit margin was 19.3%, an increase of 0.7 percentage points year-on-year.

By business segment, software revenue increased by 8% year-on-year to $7.804 billion. Within this, Red Hat hybrid cloud business grew by 11%, data business rose by 19%, and transaction processing business grew by 9%, while automation business revenue declined by 3%. Consulting revenue was $5.335 billion, remaining roughly flat compared to the same period last year; infrastructure revenue rose 4% year-on-year to $3.707 billion, with distributed infrastructure business up 31%, while IBM Z mainframe business fell by 20%.

In terms of cash flow, IBM's third-quarter operating cash flow was $4.025 billion, up about $900 million year-on-year; free cash flow was $3.027 billion, up about $700 million year-on-year. In the first nine months of this year, the company's cumulative free cash flow reached $7.787 billion. As of the end of the third quarter, IBM held $11.1 billion in cash, restricted cash, and marketable securities, with total debt at $63.8 billion.

Looking ahead to the full year 2026, IBM maintains its expectation of revenue growth of 4% to 5% at constant currency and expects the impact of currency exchange rates on full-year revenue growth to be generally neutral. At the same time, the company has raised its free cash flow outlook, now expecting full-year free cash flow to increase by more than $1 billion over 2025.

IBM chairman and CEO Arvind Krishna stated that customers are gradually applying superintelligent technologies to transform their overall enterprise operating models, rather than just to address individual problems. The company will continue to help customers improve operational efficiency and business growth through technology and professional services.