IBM Q3 Revenue Up 5% to $17.1B, Raises Full-Year Free Cash Flow Outlook
IBM sits 32% above its 52-week low of $199.19.
Summary
IBM grew Q3 revenue 5% to $17.1 billion and operating EPS 11% to $2.95, led by Software, and raised its full-year free cash flow growth outlook to more than $1 billion while keeping revenue guidance at 4-5%.
Updates
· Seeking Alpha — IBM shares rose 4.5% in early post-market trading after Q3 revenue of $17.1B beat the $16.84B estimate and adjusted EPS of $2.95 topped the $2.87 consensus.
- Earnings Results — GAAP EPS was $2.30 versus a $2.45 consensus estimate, and adjusted gross margin was 58.5% versus a 59.3% estimate.
- Segment Revenue — Software revenue rose 8.3% to $7.8B versus a $7.6B estimate, Infrastructure revenue climbed 4.2% to $3.7B, and Financing segment revenue declined 4% to $192M.
- Full-Year Outlook — Full-year revenue is expected to increase at a midpoint of 4.5%, above a 4.1% estimate.
All 6 details
- GAAP EPS $2.30 versus $2.45 consensus estimate
- Adjusted gross margin 58.5% versus 59.3% estimate
- Software revenue rose 8.3% to $7.8B versus $7.6B estimate
- Infrastructure revenue climbed 4.2% to $3.7B
- Financing segment revenue declined 4% to $192M
- Full-year revenue expected to increase at midpoint of 4.5%, above 4.1% estimate
Key Events · Earnings and Guidance · IBM
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Q3 Revenue Beats at $17.1B
Revenue rose 5% year over year, or 6% at constant currency, to $17.1 billion. Software grew 8% to $7.8 billion and Infrastructure 4% to $3.7 billion, while Consulting was flat at $5.3 billion.
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Operating EPS Up 11% to $2.95
GAAP diluted EPS was $2.30 versus $1.84 a year ago; operating (non-GAAP) EPS rose 11% to $2.95. Operating pre-tax margin expanded 0.7 points to 19.3%.
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Free Cash Flow Outlook Raised
Free cash flow was $3.0 billion in the quarter and $7.8 billion year to date. Full-year free cash flow is now expected to increase more than $1 billion year over year; constant-currency revenue growth guidance held at 4-5%.
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Dividend of $1.69 Declared
The board approved a quarterly dividend of $1.69 per share, payable December 10, 2026 to holders of record November 10, 2026.
Analysis · IBM · Technology
The top line beat: revenue of $17.1 billion, up 5% (6% at constant currency), and operating EPS grew 11% to $2.95. Software did the heavy lifting at $7.8 billion, up 8%, with Data up 19% and Red Hat up 11%, while Consulting stayed flat and IBM Z fell 20% as expected in the mainframe cycle. The concrete change to the outlook is cash: management now expects full-year free cash flow to rise more than $1 billion year-over-year, against $7.8 billion already generated through nine months. Revenue guidance was left at 4-5% constant currency, so the raise is about profitability and cash conversion rather than faster growth. The company also spent $11.4 billion on acquisitions this year, which lifted goodwill to $74.9 billion and debt to $63.8 billion — the trade-off behind the higher cash target.
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At the time of this filing, IBM was trading at $263.40 on NYSE in the Technology sector, with a market capitalization of approximately $236.9B. The 52-week trading range was $199.19 to $332.46. This filing was assessed with positive market sentiment and an importance score of 8 out of 10.