IBM Unveils Strong Third-Quarter Financial Results
IBM has revealed promising financial outcomes for the third quarter of 2025, reporting substantial growth in revenue and profit across all its segments. This strong performance has led the company to raise its full-year outlook for revenue growth and free cash flow.
Key Financial Highlights
- Revenue: $16.3 billion, a 9% increase (7% at constant currency).
- Software Revenue: $7.2 billion, up 10% (9% at constant currency).
- Consulting Revenue: $5.3 billion, a 3% rise (2% at constant currency).
- Infrastructure Revenue: $3.6 billion, up 17% (15% at constant currency).
Profit Margins
The gross profit margin stood at 57.3%, increasing by 1.1 percentage points compared to the previous year. The pre-tax income margin reached 14.9%, a significant jump of 20.2 points year-over-year.
Cash Flow Performance
Year-to-date, IBM generated a net cash flow from operating activities amounting to $9.2 billion, with free cash flow of $7.2 billion. In the third quarter alone, the company recorded free cash flow of $2.4 billion, reflecting an increase of $0.3 billion from the previous year.
Segment Performance
Each business segment contributed to the company’s robust results:
- Software: Revenue of $7.2 billion, up 10%. Key growth areas included Hybrid Cloud (up 14%) and Automation (up 24%).
- Consulting: Revenue reached $5.3 billion, driven largely by Intelligent Operations (up 5%).
- Infrastructure: Generated $3.6 billion, with Hybrid Infrastructure growing 28%.
Future Outlook
IBM anticipates a constant currency revenue growth exceeding 5% for the full year, bolstered by favorable exchange rates, which may provide additional growth support. The company also projects approximately $14 billion in free cash flow by year-end.
Dividend Declaration
The Board of Directors announced a quarterly cash dividend of $1.68 per share, scheduled for payment on December 10, 2025, to shareholders recorded by November 10, 2025. This marks another milestone, as IBM has been consistently paying dividends since 1916.
Management Commentary
IBM Chairman Arvind Krishna attributed the company’s performance to innovation and a strong portfolio. CFO James Kavanaugh noted that disciplined operations have led to double-digit growth in adjusted EBITDA and robust free cash flow, which aids in investments and shareholder returns.
The quarter’s results reflect IBM’s agile response to market demands and positions the company well for future growth, with an emphasis on AI and technology solutions driving productivity and enhancing business value for clients globally.
