IBM RELEASES THIRD-QUARTER RESULTS
Exceeded expectations with accelerated revenue growth led by Software and Infrastructure; Raises outlook for full-year free cash flow ARMONK, N.Y., October 21, 2026 . . . IBM (NYSE: IBM) today announced third- quarter 2026 earnings results.
“Disciplined execution throughout the quarter drove accelerated revenue growth and strong free cash flow. Our clients are now deploying Super Intelligence in ways that transform entire operating models, instead of simply addressing narrow or novel problems. IBM's technology and expertise are helping organizations drive growth and serve customers with greater speed, precision and efficiency than ever before," said Arvind Krishna, IBM chairman, president and chief executive officer. "For the full year, we continue to expect constant currency revenue growth in the range of four-to-five percent, and we now expect free cash flow to increase by more than $1 billion year-over-year.”
– Gross Profit Margin: GAAP: 56.8 percent, down 50 basis points; Operating (Non- GAAP): 58.5 percent, down 20 basis points
– Pre-Tax Income Margin: GAAP: 14.6 percent, down 30 basis points; Operating (Non-GAAP): 19.3 percent, up 70 basis points
– Year to date, net cash from operating activities of $11.8 billion; free cash flow of $7.8 billion
“Demand across our portfolio combined with strong operational execution led to accelerated growth and solid operating pre-tax margin expansion in the quarter," said James Kavanaugh, IBM senior vice president and chief financial officer. "Just as we are helping clients extract value from their operations with Super Intelligence, we are driving tangible returns through our productivity initiatives inside IBM. This approach fuels profit and free cash flow growth and enables us to continue to invest in our business while returning value to shareholders through our dividend.”
• Software — revenues of $7.8 billion, up 8 percent, up 9 percent at constant currency
• Consulting — revenues of $5.3 billion, flat, up 2 percent at constant currency
• Infrastructure — revenues of $3.7 billion, up 4 percent, up 5 percent at constant currency
• Financing — revenues of $0.2 billion, down 4 percent, down 3 percent at constant currency
In the third quarter, the company generated net cash from operating activities of $4.0 billion, up $0.9 billion year to year. IBM’s free cash flow was $3.0 billion, up $0.7 billion year to year. The company returned $1.6 billion to shareholders in dividends in the third quarter.
For the first nine months of the year, the company generated net cash from operating activities of $11.8 billion, up $2.6 billion year to year. IBM's free cash flow was $7.8 billion, up $0.6 billion year to year.
IBM ended the third quarter with $11.1 billion of cash, restricted cash and marketable securities, down $3.4 billion from year-end 2025. The company invested $11.4 billion in acquisitions this year. Debt, including IBM Financing debt of $12.7 billion, totaled $63.8 billion, up $2.6 billion year to date.
• Revenue: The company continues to expect full-year constant currency revenue growth in the range of four-to-five percent. At current foreign exchange rates, currency is expected to be neutral to growth for the year
• Free cash flow: The company now expects full-year free cash flow to increase by more than $1 billion year-over-year
The IBM board of directors approved a regular quarterly cash dividend of $1.69 per common share, to stockholders of record on November 10, 2026. With payment of the December 10, 2026 dividend, IBM will have paid consecutive quarterly dividends every year since 1916.
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company’s current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company’s innovation initiatives; damage to the company’s reputation; risks from investing in growth opportunities; failure of the company’s intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company’s ability to successfully manage acquisitions, alliances and divestitures, including integration challenges, failure to achieve objectives, the assumption or retention of liabilities and higher debt levels; fluctuations in financial results; impact of local
legal, economic, political, health and other conditions; the company’s failure to meet growth and productivity objectives; ineffective internal controls; the company’s use of accounting estimates; impairment of the company’s goodwill or amortizable intangible assets; the company’s ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product and service quality issues; the development and use of AI, including the company's increased AI solutions and use of AI technologies; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity and data protection considerations; adverse effects related to climate change and other environmental matters; tax matters; legal proceedings and investigatory risks; the company’s pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company’s Form 10-Qs, Form 10-K and in the company’s other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference.
Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.
In an effort to provide investors with additional information regarding the company’s results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non- GAAP information, which management believes provides useful information to investors:
• presenting operating (non-GAAP) earnings per share amounts and related income statement items;
The rationale for management’s use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.
IBM’s regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. ET, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-3q26. Presentation charts will be available shortly before the Webcast.
(certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).
Contact: IBM Tim Davidson, 914-844-7847 tfdavids@us.ibm.com Erin McElwee, 347-920-6825 erin.mcelwee@ibm.com
At September 30, At December 31, ($ in millions) 2026 2025 ────────────────────────────────────────────────────────────────────────────── ASSETS: Current assets: Cash and cash $ 9,233 $ 13,587 equivalents Restricted cash 48 54 Marketable 1,825 830 securities Notes and accounts receivable - 5,794 8,112 trade, net Short-term financing receivables Held for 5,638 7,344 investment, net Held for sale 774 1,131 Other accounts 1,673 1,052 receivable, net Inventories 1,945 1,220 Deferred costs 1,177 1,084 Prepaid expenses and other 3,083 2,530 current assets Total current 31,192 36,944 assets Property, plant and equipment, 6,043 5,899 net Operating right-of-use 3,114 3,129 assets, net Long-term financing 6,844 7,708 receivables, net Prepaid pension 7,715 7,544 assets Deferred costs 808 825 Deferred taxes 8,827 8,610 Goodwill 74,916 67,717 Intangibles, net 13,603 11,391 Investments and 1,950 2,112 sundry assets Total assets $ 155,011 $ 151,880 LIABILITIES: Current Liabilities: Taxes $ 1,867 $ 2,347 Short-term debt 7,013 6,424 Accounts payable 4,491 4,756 Compensation and 3,668 4,114 benefits Deferred income 15,164 16,101 Operating lease 749 800 liabilities Other 3,534 4,116 liabilities Total current 36,485 38,658 liabilities Long-term debt 56,804 54,836 Retirement-rela… 8,452 9,018 obligations Deferred income 4,318 4,271 Operating lease 2,574 2,547 liabilities Other 10,172 9,810 liabilities Total 118,805 119,139 liabilities EQUITY: IBM stockholders’ equity: Common stock 65,137 63,318 Retained 156,576 155,648 earnings Treasury stock - -171,191 -170,605 at cost Accumulated other -14,985 -15,713 comprehensive income/(loss) Total IBM stockholders’ 35,537 32,648 equity Noncontrolling 669 93 interests Total equity 36,206 32,740 Total liabilities and $ 155,011 $ 151,880 equity
(1) Reclassified to align with the Consolidated Statement of Cash Flows presentation.
(3) Prior-year amounts have been reclassified to conform to the change in 2026 presentation.
(2) Primarily consists of unique corporate actions such as gains on divestitures and asset sales.
(1) Includes amortization of acquired intangible assets and acquisition-related charges such as in-process research and development, transaction costs, applicable retention, restructuring and related expenses, tax charges related to acquisition integration, and pre-closing charges, such as financing costs.
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements and pension insolvency costs and other costs.
(3) The tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the GAAP pre-tax income.
(1) Includes amortization of acquired intangible assets, and acquisition-related charges such as in-process research and development, transaction costs, applicable retention, restructuring and related expenses, tax charges related to acquisition integration, and pre-closing charges, such as financing costs.
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements and pension insolvency costs and other costs.
(3) The tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the GAAP pre-tax income.
(1) Reclassified to align with the presentation of similar line items in the Statement of Cash Flows.
(2) Mainly consists of Changes in operating assets and liabilities, net of acquisitions/divestitures in the Statement of Cash Flows chart, workforce rebalancing charges, non-operating impacts, and corporate (gains) and charges, less the change in Financing receivables.
Full text with the tables
Exhibit 99.1
IBM RELEASES THIRD-QUARTER RESULTS
Exceeded expectations with accelerated revenue growth led by Software and
Infrastructure; Raises outlook for full-year free cash flow
ARMONK, N.Y., October 21, 2026 . . . IBM (NYSE: IBM) today announced third-
quarter 2026 earnings results.
“Disciplined execution throughout the quarter drove accelerated revenue growth
and strong free cash flow. Our clients are now deploying Super Intelligence in
ways that transform entire operating models, instead of simply addressing narrow
or novel problems. IBM's technology and expertise are helping organizations
drive growth and serve customers with greater speed, precision and efficiency
than ever before," said Arvind Krishna, IBM chairman, president and chief
executive officer. "For the full year, we continue to expect constant currency
revenue growth in the range of four-to-five percent, and we now expect free cash
flow to increase by more than $1 billion year-over-year.”
Third-Quarter Highlights
• Revenue
– Revenue of $17.1 billion, up 5 percent, up 6 percent at constant currency
– Software revenue up 8 percent, up 9 percent at constant currency
– Consulting revenue flat, up 2 percent at constant currency
– Infrastructure revenue up 4 percent, up 5 percent at constant currency
• Profit
– Gross Profit Margin: GAAP: 56.8 percent, down 50 basis points; Operating (Non-
GAAP): 58.5 percent, down 20 basis points
– Pre-Tax Income Margin: GAAP: 14.6 percent, down 30 basis points; Operating
(Non-GAAP): 19.3 percent, up 70 basis points
• Cash Flow
– Year to date, net cash from operating activities of $11.8 billion; free cash
flow of $7.8 billion
… …
… …
──────────────────────────────────────────────────────────────────────────────
… $ … $ …
… % … % …
… $ … $ …
… % … % …
(1) 6% at constant currency.
“Demand across our portfolio combined with strong operational execution led to
accelerated growth and solid operating pre-tax margin expansion in the quarter,"
said James Kavanaugh, IBM senior vice president and chief financial officer.
"Just as we are helping clients extract value from their operations with Super
Intelligence, we are driving tangible returns through our productivity
initiatives inside IBM. This approach fuels profit and free cash flow growth and
enables us to continue to invest in our business while returning value to
shareholders through our dividend.”
Segment Results for Third Quarter
• Software — revenues of $7.8 billion, up 8 percent, up 9 percent at constant
currency
– Hybrid Cloud (Red Hat) up 11 percent
– Automation down 3 percent
– Data up 19 percent, up 20 percent at constant currency
– Transaction Processing up 9 percent, up 10 percent at constant currency
• Consulting — revenues of $5.3 billion, flat, up 2 percent at constant currency
– Strategy and Technology up 2 percent, up 4 percent at constant currency
– Intelligent Operations down 2 percent, flat at constant currency
• Infrastructure — revenues of $3.7 billion, up 4 percent, up 5 percent at
constant currency
– Hybrid Infrastructure up 8 percent, up 9 percent at constant currency
• IBM Z down 20 percent, down 19 percent at constant currency
• Distributed Infrastructure up 31 percent, up 32 percent at constant currency
– Infrastructure Support down 3 percent, down 2 percent at constant currency
• Financing — revenues of $0.2 billion, down 4 percent, down 3 percent at
constant currency
Cash Flow and Balance Sheet
In the third quarter, the company generated net cash from operating activities
of $4.0 billion, up $0.9 billion year to year. IBM’s free cash flow was $3.0
billion, up $0.7 billion year to year. The company returned $1.6 billion to
shareholders in dividends in the third quarter.
For the first nine months of the year, the company generated net cash from
operating activities of $11.8 billion, up $2.6 billion year to year. IBM's free
cash flow was $7.8 billion, up $0.6 billion year to year.
IBM ended the third quarter with $11.1 billion of cash, restricted cash and
marketable securities, down $3.4 billion from year-end 2025. The company
invested $11.4 billion in acquisitions this year. Debt, including IBM Financing
debt of $12.7 billion, totaled $63.8 billion, up $2.6 billion year to date.
Full-Year 2026 Expectations
• Revenue: The company continues to expect full-year constant currency revenue
growth in the range of four-to-five percent. At current foreign exchange rates,
currency is expected to be neutral to growth for the year
• Free cash flow: The company now expects full-year free cash flow to increase
by more than $1 billion year-over-year
Dividend Declaration
The IBM board of directors approved a regular quarterly cash dividend of $1.69
per common share, to stockholders of record on November 10, 2026. With payment
of the December 10, 2026 dividend, IBM will have paid consecutive quarterly
dividends every year since 1916.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein,
statements contained in this release may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on the company’s current assumptions
regarding future business and financial performance. These statements involve a
number of risks, uncertainties and other factors that could cause actual results
to differ materially, including, but not limited to, the following: a downturn
in economic environment and client spending budgets; a failure of the company’s
innovation initiatives; damage to the company’s reputation; risks from investing
in growth opportunities; failure of the company’s intellectual property
portfolio to prevent competitive offerings and the failure of the company to
obtain necessary licenses; the company’s ability to successfully manage
acquisitions, alliances and divestitures, including integration challenges,
failure to achieve objectives, the assumption or retention of liabilities and
higher debt levels; fluctuations in financial results; impact of local
legal, economic, political, health and other conditions; the company’s failure
to meet growth and productivity objectives; ineffective internal controls; the
company’s use of accounting estimates; impairment of the company’s goodwill or
amortizable intangible assets; the company’s ability to attract and retain key
employees and its reliance on critical skills; impacts of relationships with
critical suppliers; product and service quality issues; the development and use
of AI, including the company's increased AI solutions and use of AI
technologies; impacts of business with government clients; reliance on third
party distribution channels and ecosystems; cybersecurity and data protection
considerations; adverse effects related to climate change and other
environmental matters; tax matters; legal proceedings and investigatory risks;
the company’s pension plans; currency fluctuations and customer financing risks;
impact of changes in market liquidity conditions and customer credit risk on
receivables; risk factors related to IBM securities; and other risks,
uncertainties and factors discussed in the company’s Form 10-Qs, Form 10-K and
in the company’s other filings with the U.S. Securities and Exchange Commission
or in materials incorporated therein by reference.
Any forward-looking statement in this release speaks only as of the date on
which it is made. Except as required by law, the company assumes no obligation
to update or revise any forward-looking statements.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the
company’s results as determined by generally accepted accounting principles
(GAAP), the company has also disclosed in this press release the following non-
GAAP information, which management believes provides useful information to
investors:
• adjusting for currency (i.e., at constant currency);
• presenting operating (non-GAAP) earnings per share amounts and related income
statement items;
• free cash flow;
• net cash from operating activities excluding IBM Financing receivables;
• adjusted EBITDA;
• adjusted EBITDA margin.
The rationale for management’s use of these non-GAAP measures is included in
Exhibit 99.2 in the Form 8-K that includes this press release and is being
submitted today to the SEC.
Conference Call and Webcast
IBM’s regular quarterly earnings conference call is scheduled to begin at 5:00
p.m. ET, today. The Webcast may be accessed via a link at
https://www.ibm.com/investor/events/earnings-3q26. Presentation charts will be
available shortly before the Webcast.
Financial Results Below
(certain amounts may not add due to use of rounded numbers; percentages
presented are calculated from the underlying whole-dollar amounts).
Contact: IBM
Tim Davidson, 914-844-7847
tfdavids@us.ibm.com
Erin McElwee, 347-920-6825
erin.mcelwee@ibm.com
INTERNATIONAL BUSINESS MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Unaudited; $ in millions except per share amounts)
T… N…
M… M…
E… E…
R… S… S…
BY 3… 3…
S… 2… 20… 2… 20…
──────────────────────────────────────────────────────────────────────────────
S… $ 7,… $ 7… $ 22… $ 2…
C… 5,… 5… 15… 1…
I… 3,… 3… 10… 1…
F… 192 2… 598 5…
O… 66 38 165 68
T… 17… 1… 50… 4…
R…
G… 9,… 9… 28… 2…
P…
G…
P…
M…
S… 82… % 8… % 82… % 8… %
C… 27… % 2… % 27… % 2… %
I… 56… % 5… % 57… % 5… %
F… 40… % 4… % 42… % 4… %
T…
G… 56… % 5… % 56… % 5… %
P…
M…
E…
A…
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I…
S… 4,… 4… 14… 1…
R… 2,… 2… 6,… 6…
I…
p…
a… -1… -… -5… -…
c…
d…
i…
O…
(… -1… -… -2… -…
a…
e…
I… 491 4… 1,… 1…
e…
T…
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A… 7,… 6… 22… 2…
O…
I…
I…
F…
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B…
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i… 14… % 1… % 12… % 1… %
m…
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f…
f… 298 6… 782 1…
i…
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r…
I…
F… $ 2,… $ 1… $ 5,… $ 4…
C…
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f…
d…
o… -10 0 -10 1
n…
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t…
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I…
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OF
C…
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o…
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o…
T… $ 2.… $ 1… $ 5.… $ 5…
B…
C… $ 2.… $ 1… $ 5.… $ 5…
o…
D… $ -0… $ 0… $ -0… $ 0…
o…
T… $ 2.… $ 1… $ 5.… $ 5…
W…
N…
OF
C…
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(…
A… 9… 94… 9… 94…
d…
B… 9… 93… 9… 93…
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
At September 30, At December 31,
($ in millions) 2026 2025
──────────────────────────────────────────────────────────────────────────────
ASSETS:
Current assets:
Cash and cash $ 9,233 $ 13,587
equivalents
Restricted cash 48 54
Marketable 1,825 830
securities
Notes and
accounts
receivable - 5,794 8,112
trade,
net
Short-term
financing
receivables
Held for 5,638 7,344
investment, net
Held for sale 774 1,131
Other accounts 1,673 1,052
receivable, net
Inventories 1,945 1,220
Deferred costs 1,177 1,084
Prepaid expenses
and other 3,083 2,530
current
assets
Total current 31,192 36,944
assets
Property, plant
and equipment, 6,043 5,899
net
Operating
right-of-use 3,114 3,129
assets, net
Long-term
financing 6,844 7,708
receivables, net
Prepaid pension 7,715 7,544
assets
Deferred costs 808 825
Deferred taxes 8,827 8,610
Goodwill 74,916 67,717
Intangibles, net 13,603 11,391
Investments and 1,950 2,112
sundry assets
Total assets $ 155,011 $ 151,880
LIABILITIES:
Current
Liabilities:
Taxes $ 1,867 $ 2,347
Short-term debt 7,013 6,424
Accounts payable 4,491 4,756
Compensation and 3,668 4,114
benefits
Deferred income 15,164 16,101
Operating lease 749 800
liabilities
Other 3,534 4,116
liabilities
Total current 36,485 38,658
liabilities
Long-term debt 56,804 54,836
Retirement-rela… 8,452 9,018
obligations
Deferred income 4,318 4,271
Operating lease 2,574 2,547
liabilities
Other 10,172 9,810
liabilities
Total 118,805 119,139
liabilities
EQUITY:
IBM
stockholders’
equity:
Common stock 65,137 63,318
Retained 156,576 155,648
earnings
Treasury stock - -171,191 -170,605
at cost
Accumulated
other -14,985 -15,713
comprehensive
income/(loss)
Total IBM
stockholders’ 35,537 32,648
equity
Noncontrolling 669 93
interests
Total equity 36,206 32,740
Total
liabilities and $ 155,011 $ 151,880
equity
INTERNATIONAL BUSINESS MACHINES CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
($ in
mill… Three Nine
Cash Months Months
flows Ended Ended
from Septe… Septe…
oper… 30, 30,
acti… 2026 2025(… 2026 2025(…
──────────────────────────────────────────────────────────────────────────────
Net $ 2,190 $ 1,744 $ 5,571 $ 4,993
inco…
Adju…
to
reco…
net
inco…
to
cash
prov…
by
oper…
acti…
Depr… 550 583 1,638 1,698
Amor…
of
capi…
soft… 828 699 2,363 2,027
and
acqu…
inta…
asse…
Stoc… 535 444 1,539 1,285
comp…
Net
(gai…
on
dive… -47 -6 -124 -46
asset
sales
and
other
Chan…
in
oper…
asse…
and -31 -383 804 -804
liab…
net
of
acqu…
Net
cash
prov… 4,025 3,081 11,791 9,153
by
oper…
acti…
Cash
flows
from
inve…
acti…
Paym…
for
prop… -332 -255 -793 -709
plant
and
equi…
Proc…
from
disp…
of 29 7 60 118
prop…
plant
and
equi…
Inve…
in -154 -162 -467 -476
soft…
Purc…
of
mark…
secu… -1,898 -1,169 -4,769 -8,9…
and
other
inve…
Proc…
from
disp…
of
mark… 640 1,199 3,763 6,162
secu…
and
other
inve…
Acqu…
of
busi…
net -884 -58 -11,3… -7,9…
of
cash
acqu…
Dive…
of
busi…
net 28 - 30 -1
of
cash
tran…
Net
cash
prov…
by/(… -2,570 -437 -13,5… -11,…
in)
inve…
acti…
Cash
flows
from
fina…
acti…
Proc…
from 1,978 6 9,415 8,391
new
debt
Paym…
to -120 -1,114 -7,261 -3,6…
sett…
debt
Shor…
borr…
less
than 2 0 3 -29
90
days
- net
Comm…
stock
repu… -352 -414 -817 -851
for
tax
with…
Proc…
from
issu… 143 134 562 535
of
shar…
Nonc…
inte… 575 - 557 -15
tran…
Fina…
- -24 -54 -98 -93
othe…
Cash
divi… -1,596 -1,569 -4,762 -4,6…
paid
Net
cash
prov…
by/(… 607 -3,012 -2,402 -423
in)
fina…
acti…
Effe…
of
exch…
rate
chan…
on 3 -59 -209 429
cash,
cash
equi…
and
rest…
cash
Net
chan…
in
cash,
cash 2,064 -426 -4,359 -2,5…
equi…
and
rest…
cash
Cash,
cash
equi…
and
rest…
cash 7,217 12,026 13,640 14,1…
at
the
begi…
of
the
peri…
Cash,
cash
equi…
and
rest…
cash $ 9,282 $ 11,600 $ 9,282 $ 11,6…
at
the
end
of
the
peri…
(1) Reclassified to align with the Consolidated Statement of Cash Flows
presentation.
(2) Includes operating lease right-of-use assets amortization.
(3) Prior-year amounts have been reclassified to conform to the change in 2026
presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
T… N…
M… M…
… E… E…
… S… S…
… 2… 3… 2… Y… 2… 3… 20… Yr…
──────────────────────────────────────────────────────────────────────────────
…
…
… $ 2… $ 1… $ 0… $ 5… $ 5… $ 0…
…
…
…
…
…
… 0… 0… 0… 0… 0… 0…
…
…
…
…
…
… 2… 1… 0… 5… 5… 0…
…
…
…
…
…
… 0… 0… -… 0… 1… -…
…
…
…
…
…
…
… 2… 2… 0… 6… 6… 0…
…
…
…
…
…
…
…
… 0… 0… 0… 2… 1… 0…
…
…
… 0… 0… 0… 0… 0… 0…
…
…
…
…
… 3… 3… 0… 8… 8… 0…
…
…
…
…
… 0… 0… 0… 1… 0… 0…
…
…
…
… 0… 0… 0… 2… 2… 0…
…
…
… 0… 0… 0… 1… 1… 0…
…
…
… 0… 0… 0… 0… 0… 0…
…
…
… 0… 0… 0… -… 0… -…
…
…
… $ 4… $ 4… $ 0… $ 1… $ 1… $ 1…
…
… $ 1… $ 1… 5 % $ 5… $ 4… 5 %
…
… 1… % 1… % 2… 1… % 1… % 0.…
…
…
…
… 2… % 2… % 0… 2… % 2… % 0.…
…
(1) Primarily consists of amortization of acquired intangible assets.
(2) Primarily consists of unique corporate actions such as gains on divestitures
and asset sales.
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
Thr…
Mon…
End…
Sep…
30,
2026
──────────────────────────────────────────────────────────────────────────────
($
in Sof… Con… Inf… Fin…
mi…
Re… $ 7,8… $ 5,… $ 3,… $ 192
Se… $ 2,7… $ 653 $ 715 $ 108
pr…
Se…
pr… 35.0 % 12… % 19… % 56… %
ma…
Ch…
YTY 8.2 % 0.2 % 4.2 % -3… %
re…
Ch…
YTY
re… 8.7 % 1.8 % 4.9 % -3… %
-
co…
cu…
Thr…
Mon…
End…
Sep…
30,
2025
──────────────────────────────────────────────────────────────────────────────
($
in Sof… Con… Inf… Fin…
mi…
Re… $ 7,2… $ 5,… $ 3,… $ 200
Se… $ 2,3… $ 686 $ 644 $ 123
pr…
Se…
pr… 32.9 % 12… % 18… % 61… %
ma…
Nine
Mon…
End…
Sep…
30,
2026
──────────────────────────────────────────────────────────────────────────────
($
in Sof… Con… Inf… Fin…
mi…
Re… $ 22,… $ 15… $ 10… $ 598
Se… $ 7,3… $ 1,… $ 2,… $ 334
Pr…
Se…
Pr… 32.4 % 11… % 19… % 55… %
Ma…
Ch…
YTY 8.1 % 1.5 % 2.7 % 7.3 %
Re…
Ch…
YTY
Re… 7.0 % 1.2 % 1.9 % 5.7 %
-
Co…
Cu…
Nine
Mon…
End…
Sep…
30,
2025
──────────────────────────────────────────────────────────────────────────────
($
in Sof… Con… Inf… Fin…
mi…
Re… $ 20,… $ 15… $ 10… $ 557
Se… $ 6,5… $ 1,… $ 1,… $ 371
Pr…
Se…
Pr… 31.1 % 11… % 17… % 66… %
Ma…
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; $ in millions except per share amounts)
T…
M…
E…
S…
3…
2…
──────────────────────────────────────────────────────────────────────────────
C…
O…
A… R… … …
G… R… R… … …
A… A… …
… $ 9… $ 2… $ — $ — $ 1…
…
…
… 5… % 1… p… — p… — p… 5… %
…
… $ 4… $ -… $ — $ — $ 4…
…
… -… 0 -… — -…
&
…
…
…
& 7… -… -… — 6…
…
…
…
…
… 2… 7… 91 — 3…
…
…
…
…
… 1… % 4… p… 0… p… — p… 1… %
…
…
…
…
… $ 2… $ 1… $ 20 — $ 4…
…
…
…
… 1… % 2… p… 0… p… — p… 1… %
…
…
… $ 2… $ 5… $ 71 $ — $ 2…
…
…
…
…
… 1… % 3… p… 0… p… — p… 1… %
…
…
…
…
… $ 2… $ 0… $ 0… $ — $ 2…
…
…
…
T…
M…
E…
S…
3…
2…
──────────────────────────────────────────────────────────────────────────────
C…
O…
A… R… T… …
G… R… R… R… …
A… A… I…
… $ 9… $ 2… $ — $ — $ 9…
…
…
… 5… % 1… p… — … — p… 5… %
…
… $ 4… $ -… $ — $ — $ 4…
…
… -… -6 -… — -…
&
…
…
…
& 6… -… -… — 6…
…
…
…
…
… 2… 5… 13 — 3…
…
…
…
…
… 1… % 3… p… 0… … — p… 1… %
…
…
…
…
… $ 6… $ 1… $ 3 $ … $ 5…
…
…
…
… 2… % -… p… 0… … … p… 1… %
…
…
… $ 1… $ 4… $ 10 $ … $ 2…
…
…
…
…
… 1… % 2… p… 0… … … p… 1… %
…
…
…
…
… $ 1… $ 0… $ 0… $ … $ 2…
…
…
…
(1) Includes amortization of acquired intangible assets and acquisition-related
charges such as in-process research and development, transaction costs,
applicable retention, restructuring and related expenses, tax charges related to
acquisition integration, and pre-closing charges, such as financing costs.
(2) Includes amortization of prior service costs, interest cost, expected return
on plan assets, amortized actuarial gains/losses, the impacts of any plan
curtailments/settlements and pension insolvency costs and other costs.
(3) The tax impact on operating (non-GAAP) pre-tax income from continuing
operations is calculated under the same accounting principles applied to the
GAAP pre-tax income.
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; $ in millions except per share amounts)
N…
M…
E…
S…
3…
2…
──────────────────────────────────────────────────────────────────────────────
C…
O…
A… R… T… …
G… R… R… R… …
A… A… I…
… $ 2… $ 8… $ — $ — $ 2…
…
…
… 5… % 1… p… — … — p… 5… %
…
… $ 1… $ -… $ — $ — $ 1…
…
… -… 1 -… — -…
&
…
…
…
& 2… -… -… — 2…
…
…
…
…
… 6… 2… 2… — 8…
…
…
…
…
… 1… % 4… p… 0… … — p… 1… %
…
…
…
…
… $ 7… $ 4… $ 43 $ … $ 1…
…
…
…
… 1… % 2… p… 0… … … p… 1… %
…
…
… $ 5… $ 1… $ 2… $ 6 $ 7…
…
…
…
…
… 1… % 3… p… 0… … … p… 1… %
…
…
…
…
… $ 5… $ 1… $ 0… $ … $ 7…
…
…
…
N…
M…
E…
S…
3…
2…
──────────────────────────────────────────────────────────────────────────────
C…
O…
A… R… T… …
G… R… R… R… …
A… A… I…
… $ 2… $ 6… $ — $ — $ 2…
…
…
… 5… % 1… p… — … — p… 5… %
…
… $ 1… $ -… $ — $ — $ 1…
…
… -… -7 -… — -…
&
…
…
…
& 2… -… -… — 2…
…
…
…
…
… 6… 1… 61 — 7…
…
…
…
…
… 1… % 3… p… 0… … — p… 1… %
…
…
…
…
… $ 1… $ 3… $ 0 $ … $ 1…
…
…
…
… 1… % 0… p… -… … … p… 1… %
…
…
… $ 4… $ 1… $ 61 $ … $ 6…
…
…
…
…
… 1… % 2… p… 0… … … p… 1… %
…
…
…
…
… $ 5… $ 1… $ 0… $ … $ 7…
…
…
…
(1) Includes amortization of acquired intangible assets, and acquisition-related
charges such as in-process research and development, transaction costs,
applicable retention, restructuring and related expenses, tax charges related to
acquisition integration, and pre-closing charges, such as financing costs.
(2) Includes amortization of prior service costs, interest cost, expected return
on plan assets, amortized actuarial gains/losses, the impacts of any plan
curtailments/settlements and pension insolvency costs and other costs.
(3) The tax impact on operating (non-GAAP) pre-tax income from continuing
operations is calculated under the same accounting principles applied to the
GAAP pre-tax income.
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP OPERATING CASH FLOW TO FREE CASH FLOW RECONCILIATION
(Unaudited)
Three Nine
Months Months
Ended Ended
($ in September Septemb…
million… 2026 30, 2025 2026 30, 2025
──────────────────────────────────────────────────────────────────────────────
Net cash
provided
by $ 4,025 $ 3,081 $ 11,791 $ 9,153
operati…
activit…
per GAAP
Less:
change
in IBM 541 298 2,805 905
Financi…
receiva…
Net cash
from
operati…
activit… 3,484 2,783 8,986 8,248
excl.
IBM
Financi…
receiva…
Capital
expendi… -457 -410 -1,200 -1,067
net
Free
cash $ 3,027 $ 2,373 $ 7,787 $ 7,181
flow
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP OPERATING CASH FLOW TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
Three Nine
Mont… Months
Ended Ended
($ in Sept… Septe…
bill… 2026 30, 2025 2026 30, 2025
──────────────────────────────────────────────────────────────────────────────
Net
cash
prov… $ 4.0 $ 3.1 $ 11.8 $ 9.2
by
oper…
acti…
Add:
Net
inte… 0.4 0.3 1.1 0.9
expe…
Prov…
for/…
from)
inco… 0.3 0.7 0.8 1.2
taxes
from
cont…
oper…
Less
chan…
in:
Fina… 0.5 0.3 2.8 0.9
rece…
Net
(gai…
on
dive… 0.0 0.0 -0.1 0.0
asse…
sales
and
othe…
Other
asse…
and -0.7 -0.8 -2.6 -2.2
liab…
net(…
Adju… $ 4.9 $ 4.6 $ 13.7 $ 12.7
EBIT…
Reve… $ 17.1 $ 16.3 $ 50.2 $ 47.8
Net
cash
prov…
by 23.5 % 18.9 % 23.5 % 19.1 %
oper…
acti…
marg…
Adju…
EBIT… 28.7 % 28.0 % 27.2 % 26.5 %
marg…
(1) Reclassified to align with the presentation of similar line items in the
Statement of Cash Flows.
(2) Mainly consists of Changes in operating assets and liabilities, net of
acquisitions/divestitures in the Statement of Cash Flows chart, workforce
rebalancing charges, non-operating impacts, and corporate (gains) and charges,
less the change in Financing receivables.