IBM delivers strong Q3, sees 4% to 5% revenue growth in 2026

IBM delivered third quarter revenue growth of 5% as the company recovered from a rocky second quarter outing.

The company reported third quarter net income of $2.19 billion, or $2.30 a share, on revenue of $17.1 billion. Non-GAAP earnings in the third quarter were $2.95 a share, 8 cents a share ahead of Wall Street estimates.

CEO Arvind Krishna said "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."

Krishna added that the company continues to expect 2026 revenue growth of 4% to 5% with an increase of free cash flow of more than $1 billion.

By unit IBM said software revenue was up 8% with flat consulting revenue. Infrastructure revenue was up 4%.

IBM CFO James Kavanaugh said IBM is using AI inside the company to boost productivity and cash flow.

By the numbers:

• Software revenue in the third quarter was $7.8 billion, up 8%, with Red Hat and hybrid cloud up 11%. Data was up 19% and transaction processing was up 9%.
• Consulting revenue was $5.3 billion.
• Infrastructure revenue of $3.7 billion was driven by hybrid and distributed infrastructure. IBM Z revenue was down 20%.