IBM : 2026 Q1 Press release

Published: 2026-04-22 18:51:13 ET IBM

Published on 04/22/2026 at 06:51 pm EDT

ARMONK, N.Y., April 22, 2026 . . . 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."

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

$ 15.9B

$ 8.9B

56.2

$ 1.4B

8.7

$ 1.2B

$ 1.28

Year/Year

% (1)

1.0

Pts

0.8

Pts

Operating (Non-GAAP)

$ 9.2B

57.7

$ 2.1B

13.4

$ 1.8B

$ 1.91

Year/Year

1.1

Pts

1.4

Pts

(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."

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

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.

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

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.

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.

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.

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.

Contact: IBM

Tim Davidson, 914-844-7847 [email protected]

Erin McElwee, 347-920-6825 [email protected]

REVENUE BY SEGMENT

2026

2025

Software

$ 7,052

$ 6,336

Consulting

5,272

5,068

Infrastructure

3,326

2,886

Financing

220

191

Other

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

NET INCOME

$ 1,216

$ 1,055

EARNINGS PER SHARE OF COMMON STOCK

Assuming dilution

Continuing operations

$ 1.28

$ 1.12

Discontinued operations

$ 0.00

TOTAL

$ 1.28

$ 1.12

Basic

Continuing operations

$ 1.30

$ 1.14

Discontinued operations

$ 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

($ in millions)

At March 31,

2026

At December 31,

2025

ASSETS:

Current assets:

Cash and cash equivalents

$ 10,819

$ 13,587

Restricted cash

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

Total equity

33,056

32,740

Total liabilities and equity

$ 156,229

$ 151,880

($ 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

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)

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

(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

Reclassified to align with the Consolidated Statement of Cash Flows presentation.

Includes operating lease right-of-use assets amortization.

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

0.1

Depreciation/amortization of non-acquired intangible assets

0.7

0.0

Stock-based compensation

0.5

0.4

0.1

Workforce rebalancing charges

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

Primarily consists of amortization of acquired intangible assets.

Primarily consists of unique corporate actions such as gains on divestitures and asset sales.

($ 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

($ 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

Gross profit

$ 8,950

$ 237

$ -

$ 9,187

Gross profit margin

56.2

1.5

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

2,129

Pre-tax income margin from continuing operations

8.7

4.1

pts

0.6

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

Gross profit

$ 8,031

$ 201

$ -

$ 8,232

Gross profit margin

55.2

1.4

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

1,738

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

Pre-tax income margin from continuing

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.

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.

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.

($ 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

Capital expenditures, net (384) (321)

($ in billions)

2026

2025

Net cash provided by operating activities

$ 5.2

$ 4.4

Add:

Net interest expense

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

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 %

Reclassified to align with the presentation of similar line items in the Statement of Cash Flows.

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.

Disclaimer

IBM - International Business Machines Corporation published this content on April 22, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 22, 2026 at 22:50 UTC.