IBM reports 5% third-quarter revenue growth, raises cash-flow outlook

IBM reported $17.103 billion in third-quarter 2026 revenue, up 4.7% from a year earlier, and raised its outlook for full-year free-cash-flow growth. The company rounded the revenue increase to 5%; revenue was $16.331 billion in the year-earlier period.

The results cover the quarter ended September 30. IBM said revenue grew 5.6% after adjusting for currency, which it presented as 6% on a rounded basis.

Software revenue reached $7.804 billion, an 8.2% reported increase and an 8.7% increase adjusted for currency, according to IBM’s quarterly filing. Within Software, Hybrid Cloud revenue rose 10.6%, Data increased 19.1% and Transaction Processing gained 9.3%, while Automation declined 3.3%.

Infrastructure revenue increased 4.2% to $3.707 billion, or 4.9% after adjusting for currency. Distributed Infrastructure revenue rose 31.3% and Hybrid Infrastructure increased 8.3%, while IBM Z revenue declined 19.6% and Infrastructure Support fell 3.1%.

IBM reported $2.199 billion in GAAP income from continuing operations, equal to $2.31 per diluted share. GAAP gross margin was 56.8%, down 0.5 percentage points from a year earlier, and GAAP pre-tax margin was 14.6%, down 0.3 points.

For the first nine months of 2026, IBM reported $11.791 billion in GAAP net cash from operating activities and $7.787 billion in free cash flow. The company treats free cash flow as a non-GAAP measure. Its reconciliation subtracts a $2.805 billion change in IBM Financing receivables and $1.200 billion in net capital expenditures from operating cash flow. Free cash flow increased by $606 million from the year-earlier period, while operating cash flow rose by $2.639 billion.

IBM now expects full-year free cash flow to grow by more than $1 billion from 2025, compared with its previous forecast of about $1 billion. The forecast is company guidance, and IBM did not state a more precise absolute full-year target in the third-quarter release.

Chief Executive Arvind Krishna said clients were deploying what IBM calls “Super Intelligence” across entire operating models. That is an IBM claim; the released results and SEC-filed earnings exhibit did not identify customer deployments or quantify their results. IBM maintained its forecast for full-year constant-currency revenue growth of 4% to 5% and said currency would have a neutral effect on full-year growth at then-current exchange rates.