IBM reported its financial results for the third quarter of 2025, showing growth in revenue, profit, and cash flow across all segments. The company posted total revenue of $16.3 billion for the quarter, representing a 9 percent increase from the previous year, or 7 percent at constant currency.
Arvind Krishna, IBM chairman, president and chief executive officer, stated: “This quarter we accelerated performance across all of our segments, and again exceeded expectations for revenue, profit and free cash flow. Clients globally continue to leverage our technology and domain expertise to drive productivity in their operations and deliver real business value with AI. Our AI book of business now stands at more than $9.5 billion. Given the strength of our business, we are raising our full-year outlook for revenue growth and free cash flow.”
The company’s software segment reported revenues of $7.2 billion, up 10 percent (9 percent at constant currency), driven by increases in Hybrid Cloud (Red Hat) up 14 percent, Automation up 24 percent, and Data up 8 percent. Consulting revenues reached $5.3 billion, a rise of 3 percent (2 percent at constant currency). Infrastructure revenues grew to $3.6 billion, up 17 percent (15 percent at constant currency), led by Hybrid Infrastructure which increased by 28 percent.
IBM’s gross profit margin improved to 57.3 percent on a GAAP basis (up 1.1 points) and to 58.7 percent on an operating (non-GAAP) basis (up 1.2 points). The pre-tax income margin also saw gains.
James Kavanaugh, IBM senior vice president and chief financial officer, said: “New innovation, the strength and diversity of our portfolio, and our disciplined execution led to acceleration in revenue growth and profit in the quarter. Consistent focus on the fundamentals of our business delivered double-digit growth in adjusted EBITDA, and drove another quarter of strong free cash flow, the fuel for our investments and ability to return value to shareholders.”
In the third quarter, IBM generated net cash from operating activities of $3.1 billion (an increase of $0.2 billion year-over-year), with free cash flow at $2.4 billion (up $0.3 billion). For the first nine months of 2025, net cash from operating activities was $9.2 billion (flat year-over-year), while free cash flow reached $7.2 billion (up $0.6 billion).
The company ended the quarter with $14.9 billion in cash and marketable securities—$0.1 billion higher than at the end of 2024—and total debt of $63.1 billion.
IBM updated its full-year guidance, now expecting constant currency revenue growth of more than 5 percent and approximately $14 billion in free cash flow.
On October 22, 2025, IBM’s board approved a quarterly dividend of $1.68 per common share for shareholders of record as of November 10, 2025; this marks continued consecutive quarterly dividends since 1916.
IBM will hold its quarterly earnings conference call today at 5:00 p.m. ET. The webcast can be accessed via https://www.ibm.com/investor/events/earnings-3q25.
Forward-looking statements in this release are subject to various risks described in IBM’s filings with the U.S. Securities and Exchange Commission.
