IBM reported its third-quarter 2025 financial results, showing increases in revenue, profit, and free cash flow. The company announced revenue of $16.3 billion for the quarter, a 9 percent increase compared to the same period last year. Revenue growth at constant currency was 7 percent.
Arvind Krishna, IBM chairman, president and chief executive officer, said, “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 generated $7.2 billion in revenue, up 10 percent from the previous year. The consulting segment saw a 3 percent increase to $5.3 billion, while infrastructure revenues rose by 17 percent to $3.6 billion. Financing revenues were $0.2 billion, a 10 percent increase.
James Kavanaugh, IBM senior vice president and chief financial officer, stated, “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.”
Gross profit margin on a GAAP basis was 57.3 percent, an increase of 1.1 points. The operating (non-GAAP) gross profit margin reached 58.7 percent, up by 1.2 points. Pre-tax income margin improved significantly on both a GAAP and non-GAAP basis.
Net cash from operating activities during the third quarter was $3.1 billion, an increase of $0.2 billion compared to the prior year. Free cash flow for the quarter reached $2.4 billion, which is $0.3 billion higher than last year. Over the first nine months of 2025, net cash from operating activities totaled $9.2 billion and free cash flow was $7.2 billion.
IBM ended the quarter with $14.9 billion in cash and marketable securities. Total debt stood at $63.1 billion as of the end of the quarter.
For the full year 2025, IBM now expects constant currency revenue growth of more than 5 percent. The company also projects approximately $14 billion in free cash flow for the year.
On October 22, 2025, IBM’s board of directors approved a regular quarterly dividend of $1.68 per common share for stockholders of record as of November 10, 2025. With this dividend payment scheduled for December 10, IBM continues its record of consecutive quarterly dividends since 1916.
IBM will hold its regular quarterly earnings conference call at 5:00 p.m. ET today. The webcast can be accessed at https://www.ibm.com/investor/events/earnings-3q25.
The company noted that some statements in its release are forward-looking and subject to risks as outlined in filings with the U.S. Securities and Exchange Commission.
