IBM posts strong revenue growth and raises full-year outlook

by MarketNewsData

Key Points

  • Revenue: $16.3B (+9% YoY; +7% cc).
  • Gross margin (GAAP/Operating): 57.3% / 58.7%.
  • Pre-tax margin (GAAP/Operating): 14.9% / 18.6%.
  • Diluted EPS: GAAP $1.84 (includes one-time tax charge); Operating (non-GAAP) $2.65.
  • YTD Cash from ops / FCF: $9.2B / $7.2B.
  • “Generative-AI book of business”: >$9.5B (inception-to-date).
  • Outlook raised: FY25 cc revenue growth “more than 5%”; FY25 FCF ~$14B.

Quarter Highlights

  • Software ($7.2B, +10% YoY, +9% cc): Hybrid Cloud (Red Hat) +14% (+12% cc); Automation +24% (+22% cc); Data +8% (+7% cc); Transaction Processing −1% (−3% cc).
  • Consulting ($5.3B, +3% YoY, +2% cc): Strategy & Technology +2% (flat cc); Intelligent Operations +5% (+4% cc).
  • Infrastructure ($3.6B, +17% YoY, +15% cc): Hybrid Infrastructure +28% (+26% cc), including IBM Z +61% (+59% cc); Distributed Infrastructure +10% (+8% cc); Infrastructure Support +1% (flat cc).
  • Financing ($0.2B, +10% YoY, +8% cc).

CEO Statement and Outlook

Management said performance accelerated across all segments and cited growing client adoption of AI. IBM raised FY25 guidance to more than 5% constant-currency revenue growth and ~$14B free cash flow. Currency is expected to be a ~1.5-point tailwind to full-year growth at current FX rates.

Financial Summary (selected)

  • Revenue: $16.3B
  • Gross profit: $9.4B (57.3% GAAP); 58.7% operating (non-GAAP)
  • Pre-tax income (GAAP/Operating): $2.4B / $3.0B
  • Net income (GAAP): $1.7B
  • Diluted EPS (GAAP/Operating): $1.84 / $2.65
  • Q3 Cash from ops / FCF: $3.1B / $2.4B
  • Balance sheet: Cash & marketable securities $14.9B; Total debt $63.1B (incl. IBM Financing)

Capital Return

  • Dividend: Board approved a quarterly cash dividend of $1.68 per common share (record date Nov 10, 2025; payment Dec 10, 2025).

About IBM

IBM provides hybrid-cloud software, consulting, and infrastructure solutions to enterprise clients worldwide, with a growing focus on AI-enabled offerings.

Key Takeaways

  • Broad-based growth with notable strength in IBM Z and Automation lifted revenue and margins.
  • Operating metrics improved while the press release notes a one-time tax charge in GAAP EPS.
  • Guidance raised on both revenue (cc) and free cash flow, backed by stronger segment profit and cash generation.
  • The >$9.5B AI “book of business” signals sustained enterprise demand, though legacy Transaction Processing remains a drag.

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