Double-digit Software and Infrastructure revenue growth; Strong margin expansion and double-digit profit and free cash flow growth
Apr 22, 2026
ARMONK, N.Y., April 22, 2026 /PRNewswire/ — IBM (NYSE: IBM) today announced first-quarter 2026 earnings results.
“The first quarter was a strong start to the year with broad-based revenue growth across our segments. These results reflect the integrated value of our portfolio and the trust clients put in us to improve their operations. As clients scale use cases, AI continues to be a tailwind for our global business. IBM products and services are helping clients orchestrate, deploy and govern AI across hybrid environments,” said Arvind Krishna, IBM chairman, president and chief executive officer. “Given this strong start, we continue to expect more than 5 percent constant currency revenue growth and an increase of about $1 billion in year-over-year free cash flow in 2026.”
First-Quarter Highlights
Revenue
– Revenue of $15.9 billion, up 9 percent, up 6 percent at constant currency
– Software revenue up 11 percent, up 8 percent at constant currency
– Consulting revenue up 4 percent, up 1 percent at constant currency
– Infrastructure revenue up 15 percent, up 12 percent at constant currency
Profit
– Gross Profit Margin: GAAP: 56.2 percent, up 100 basis points; Operating (Non-GAAP):
57.7 percent, up 110 basis points
– Pre-Tax Income Margin: GAAP: 8.7 percent, up 80 basis points; Operating (Non-GAAP):
13.4 percent, up 140 basis points
Cash Flow
– Year to date, net cash from operating activities of $5.2 billion; free cash flow of $2.2 billion
FIRST-QUARTER 2026 INCOME STATEMENT SUMMARY
Revenue
Gross
Profit
Gross
Profit
Margin
Pre-tax
Income
Pre-tax
Income
Margin
Net
Income
Diluted
Earnings
Per Share
GAAP from
Continuing
Operations
$ 15.9 B
$ 8.9 B
56.2
%
$ 1.4 B
8.7
%
$ 1.2 B
$ 1.28
Year/Year
9
% (1)
11
%
1.0
Pts
20
%
0.8
Pts
15
%
14
%
Operating
(Non-GAAP)
$ 9.2 B
57.7
%
$ 2.1 B
13.4
%
$ 1.8 B
$ 1.91
Year/Year
12
%
1.1
Pts
23
%
1.4
Pts
20
%
19
%
(1) 6% at constant currency.
“Our solid revenue growth, portfolio mix and productivity initiatives drove double-digit profit and free cash flow growth in the quarter,” said James Kavanaugh, IBM senior vice president and chief financial officer. “The durability of our portfolio combined with our disciplined execution continues to give us the financial flexibility needed to both invest in our business and return value to shareholders through our dividend.”
Segment Results for First Quarter
Software — revenues of $7.1 billion, up 11 percent, up 8 percent at constant currency:
– Hybrid Cloud (Red Hat) up 13 percent, up 10 percent at constant currency
– Automation up 10 percent, up 7 percent at constant currency
– Data up 19 percent, up 16 percent at constant currency
– Transaction Processing up 6 percent, up 2 percent at constant currency
Consulting — revenues of $5.3 billion, up 4 percent, up 1 percent at constant currency:
– Strategy and Technology up 4 percent, up 1 percent at constant currency
– Intelligent Operations up 4 percent, up 1 percent at constant currency
Infrastructure — revenues of $3.3 billion, up 15 percent, up 12 percent at constant currency:
– Hybrid Infrastructure up 28 percent, up 25 percent at constant currency
— IBM Z up 51 percent, up 48 percent at constant currency
— Distributed Infrastructure up 17 percent, up 13 percent at constant currency
– Infrastructure Support down 2 percent, down 6 percent at constant currency
Financing — revenues of $0.2 billion, up 15 percent, up 10 percent at constant currency
Cash Flow and Balance Sheet
In the first quarter, the company generated net cash from operating activities of $5.2 billion, up $0.8 billion year to year. IBM’s free cash flow was $2.2 billion, up $0.3 billion year to year. The company returned $1.6 billion to shareholders in dividends in the first quarter and invested in the acquisition of Confluent.
IBM ended the first quarter with $11.8 billion of cash, restricted cash and marketable securities, down $2.6 billion from year-end 2025. Debt, including IBM Financing debt of $12.8 billion, totaled $66.4 billion, up $5.1 billion year to date.
Full-Year 2026 Expectations
Revenue: The company continues to expect full-year constant currency revenue growth of more than 5 percent. At current foreign exchange rates, currency is expected to be about a half-point to one-point tailwind to growth for the year
Free cash flow: The company continues to expect full-year free cash flow to increase by about $1 billion year-over-year
Dividend Declaration
The IBM board of directors declared an increase in the regular quarterly cash dividend to $1.69 per common share, payable June 10, 2026 to stockholders of record as of May 8, 2026.
This is the 31st year in a row that IBM has increased its quarterly cash dividend. IBM has paid consecutive quarterly dividends 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-1q26. 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)
Three Months Ended
March 31,
2026
2025
REVENUE BY SEGMENT
Software
$ 7,052
$ 6,336
Consulting
5,272
5,068
Infrastructure
3,326
2,886
Financing
220
191
Other
48
61
TOTAL REVENUE
15,917
14,541
GROSS PROFIT
8,950
8,031
GROSS PROFIT MARGIN
Software
82.8
%
83.6
%
Consulting
27.5
%
27.3
%
Infrastructure
56.9
%
52.8
%
Financing
43.4
%
45.8
%
TOTAL GROSS PROFIT MARGIN
56.2
%
55.2
%
EXPENSE AND OTHER INCOME
SG&A
5,089
4,886
R&D
2,173
1,950
Intellectual property and custom development income
(172)
(253)
Other (income) and expense
(1)
(165)
Interest expense
473
455
TOTAL EXPENSE AND OTHER INCOME
7,562
6,873
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
1,387
1,158
Pre-tax margin
8.7
%
8.0
%
Provision for/(benefit from) income taxes
172
103
Effective tax rate
12.4
%
8.9
%
INCOME FROM CONTINUING OPERATIONS
$ 1,216
$ 1,054
DISCONTINUED OPERATIONS
Income from discontinued operations, net of taxes
0
1
NET INCOME
$ 1,216
$ 1,055
EARNINGS PER SHARE OF COMMON STOCK
Assuming dilution
Continuing operations
$ 1.28
$ 1.12
Discontinued operations
$ 0.00
$ 0.00
TOTAL
$ 1.28
$ 1.12
Basic
Continuing operations
$ 1.30
$ 1.14
Discontinued operations
$ 0.00
$ 0.00
TOTAL
$ 1.30
$ 1.14
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M’s)
Assuming dilution
952.1
945.4
Basic
938.5
928.0
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
($ in millions)
At March 31,
2026
At December 31,
2025
ASSETS:
Current assets:
Cash and cash equivalents
$ 10,819
$ 13,587
Restricted cash
45
54
Marketable securities
964
830
Notes and accounts receivable – trade, net
6,493
8,112
Short-term financing receivables
Held for investment, net
5,767
7,344
Held for sale
743
1,131
Other accounts receivable, net
1,242
1,052
Inventories
1,476
1,220
Deferred costs
1,157
1,084
Prepaid expenses and other current assets
3,209
2,530
Total current assets
31,914
36,944
Property, plant and equipment, net
5,781
5,899
Operating right-of-use assets, net
3,219
3,129
Long-term financing receivables, net
7,014
7,708
Prepaid pension assets
7,578
7,544
Deferred costs
831
825
Deferred taxes
8,552
8,610
Goodwill
74,709
67,717
Intangibles, net
14,624
11,391
Investments and sundry assets
2,009
2,112
Total assets
$ 156,229
$ 151,880
LIABILITIES:
Current Liabilities:
Taxes
$ 2,053
$ 2,347
Short-term debt
8,655
6,424
Accounts payable
4,039
4,756
Compensation and benefits
3,941
4,114
Deferred income
17,034
16,101
Operating lease liabilities
798
800
Other liabilities
3,582
4,116
Total current liabilities
40,101
38,658
Long-term debt
57,706
54,836
Retirement-related obligations
8,763
9,018
Deferred income
4,195
4,271
Operating lease liabilities
2,643
2,547
Other liabilities
9,767
9,810
Total liabilities
123,174
119,139
EQUITY:
IBM stockholders’ equity:
Common stock
63,936
63,318
Retained earnings
155,327
155,648
Treasury stock – at cost
(170,874)
(170,605)
Accumulated other comprehensive income/(loss)
(15,415)
(15,713)
Total IBM stockholders’ equity
32,974
32,648
Noncontrolling interests
81
93
Total equity
33,056
32,740
Total liabilities and equity
$ 156,229
$ 151,880
INTERNATIONAL BUSINESS MACHINES CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
($ in millions)
2026
2025 (1)
Cash flows from operating activities:
Net income
$ 1,216
$ 1,055
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation (2)
555
536
Amortization of capitalized software and acquired intangible assets
719
641
Stock-based compensation
506
401
Net (gain)/loss on divestitures, asset sales and other
(11)
(22)
Changes in operating assets and liabilities, net of acquisitions/divestitures
2,185
1,759
Net cash provided by operating activities
5,169
4,370
Cash flows from investing activities:
Payments for property, plant and equipment
(232)
(244)
Proceeds from disposition of property, plant and equipment/other
8
74
Investment in software
(159)
(151)
Purchases of marketable securities and other investments
(1,612)
(6,486)
Proceeds from disposition of marketable securities and other investments
1,971
927
Acquisition of businesses, net of cash acquired
(10,465)
(7,098)
Divestiture of businesses, net of cash transferred
1
(1)
Net cash provided by/(used in) investing activities
(10,489)
(12,979)
Cash flows from financing activities:
Proceeds from new debt
7,437
8,378
Payments to settle debt
(2,928)
(1,257)
Short-term borrowings/(repayments) less than 90 days – net
0
(29)
Common stock repurchases for tax withholdings
(350)
(284)
Proceeds from issuance of shares
178
216
Financing – other
(42)
(32)
Cash dividends paid
(1,576)
(1,549)
Net cash provided by/(used in) financing activities
2,719
5,443
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(177)
167
Net change in cash, cash equivalents and restricted cash
(2,777)
(2,999)
Cash, cash equivalents and restricted cash at the beginning of the period
13,640
14,160
Cash, cash equivalents and restricted cash at the end of the period
$ 10,864
$ 11,161
____________________
(1) Reclassified to align with the Consolidated Statement of Cash Flows presentation.
(2) Includes operating lease right-of-use assets amortization.
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
Three Months Ended
March 31,
($ in billions)
2026
2025
Yr/Yr
Net income as reported (GAAP)
$ 1.2
$ 1.1
$ 0.2
Less: income from discontinued operations, net of tax
0.0
0.0
0.0
Income from continuing operations
1.2
1.1
0.2
Provision for/(benefit from) income taxes from continuing ops.
0.2
0.1
0.1
Pre-tax income from continuing operations (GAAP)
1.4
1.2
0.2
Non-operating adjustments (before tax)
Acquisition-related charges (1)
0.6
0.6
0.1
Non-operating retirement-related costs/(income)
0.1
0.0
0.1
Operating (non-GAAP) pre-tax income from continuing ops.
2.1
1.7
0.4
Net interest expense
0.3
0.3
0.1
Depreciation/amortization of non-acquired intangible assets
0.7
0.7
0.0
Stock-based compensation
0.5
0.4
0.1
Workforce rebalancing charges
0.3
0.3
0.0
Corporate (gains) and charges (2)
0.0
0.0
0.0
Adjusted EBITDA
$ 4.0
$ 3.4
$ 0.6
Revenue
$ 15.9
$ 14.5
9 %
GAAP net income margin
7.6 %
7.3 %
0.4pts
Adjusted EBITDA margin
25.0 %
23.4 %
1.7pts
____________________
(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)
Three Months Ended March 31, 2026
($ in millions)
Software
Consulting
Infrastructure
Financing
Revenue
$ 7,052
$ 5,272
$ 3,326
$ 220
Segment profit
$ 2,099
$ 558
$ 524
$ 118
Segment profit margin
29.8
%
10.6
%
15.8
%
53.8
%
Change YTY revenue
11.3
%
4.0
%
15.3
%
14.8
%
Change YTY revenue – constant currency
7.9
%
0.9
%
11.7
%
10.2
%
Three Months Ended March 31, 2025
($ in millions)
Software
Consulting
Infrastructure
Financing
Revenue
$ 6,336
$ 5,068
$ 2,886
$ 191
Segment profit
$ 1,847
$ 558
$ 248
$ 69
Segment profit margin
29.1
%
11.0
%
8.6
%
35.8
%
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; $ in millions except per share amounts)
Three Months Ended March 31, 2026
Continuing Operations
GAAP
Acquisition-
Related
Adjustments (1)
Retirement-
Related
Adjustments (2)
Tax
Reform
Impacts
Operating
(Non-GAAP)
Gross profit
$ 8,950
$ 237
$ —
$ —
$ 9,187
Gross profit margin
56.2
%
1.5
pts
—
pts
—
pts
57.7
%
SG&A
$ 5,089
$ (408)
$ —
$ —
$ 4,682
Other (income) & expense
(1)
—
(96)
—
(98)
Total expense & other (income)
7,562
(409)
(96)
—
7,057
Pre-tax income from continuing operations
1,387
646
96
—
2,129
Pre-tax income margin from continuing
operations
8.7
%
4.1
pts
0.6
pts
—
pts
13.4
%
Provision for/(benefit from) income taxes (3)
$ 172
$ 137
$ 3
$ (4)
$ 308
Effective tax rate
12.4
%
2.7
pts
(0.4)
pts
(0.2)
pts
14.5
%
Income from continuing operations
$ 1,216
$ 508
$ 94
$ 4
$ 1,821
Income margin from continuing operations
7.6
%
3.2
pts
0.6
pts
0.0
pts
11.4
%
Diluted earnings per share: continuing
operations
$ 1.28
$ 0.53
$ 0.10
$ 0.00
$ 1.91
Three Months Ended March 31, 2025
Continuing Operations
GAAP
Acquisition-
Related
Adjustments (1)
Retirement-
Related
Adjustments (2)
Tax
Reform
Impacts
Operating
(Non-GAAP)
Gross profit
$ 8,031
$ 201
$ —
$ —
$ 8,232
Gross profit margin
55.2
%
1.4
pts
—
pts
—
pts
56.6
%
SG&A
$ 4,886
$ (353)
$ —
$ —
$ 4,533
Other (income) & expense
(165)
—
(23)
—
(187)
Total expense & other (income)
6,873
(357)
(23)
—
6,494
Pre-tax income from continuing operations
1,158
557
23
—
1,738
Pre-tax income margin from continuing
operations
8.0
%
3.8
pts
0.2
pts
—
pts
12.0
%
Provision for/(benefit from) income taxes (3)
$ 103
$ 128
$ (12)
$ 2
$ 221
Effective tax rate
8.9
%
4.5
pts
(0.8)
pts
0.1
pts
12.7
%
Income from continuing operations
$ 1,054
$ 429
$ 35
$ (2)
$ 1,517
Income margin from continuing operations
7.3
%
3.0
pts
0.2
pts
0.0
pts
10.4
%
Diluted earnings per share: continuing
operations
$ 1.12
$ 0.45
$ 0.04
$ 0.00
$ 1.60
____________________
(1) Includes amortization of acquired intangible assets, in-process R&D, 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 Months Ended
March 31,
($ in millions)
2026
2025
Net cash provided by operating activities per GAAP
$ 5,169
$ 4,370
Less: change in IBM Financing receivables
2,565
2,087
Net cash from operating activities excl. IBM Financing receivables
2,604
2,283
Capital expenditures, net
(384)
(321)
Free cash flow
$ 2,220
$ 1,962
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP OPERATING CASH FLOW TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
Three Months Ended
March 31,
($ in billions)
2026
2025
Net cash provided by operating activities
$ 5.2
$ 4.4
Add:
Net interest expense
0.3
0.3
Provision for/(benefit from) income taxes from continuing operations
0.2
0.1
Less change in:
Financing receivables
2.6
2.1
Net (gain)/loss on divestitures, assets sales and other (1)
0.0
0.0
Other assets and liabilities/other, net (1,2)
(0.9)
(0.7)
Adjusted EBITDA
$ 4.0
$ 3.4
Revenue
$ 15.9
$ 14.5
Net cash provided by operating activities margin
32.5 %
30.1 %
Adjusted EBITDA margin
25.0 %
23.4 %
____________________
(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.
SOURCE IBM