IBM : 2026 Q1 Charts

Published: 2026-04-22 18:51:11 ET IBM

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

1Q 2026

Earnings

April 22, 2026 ibm.com/investor

Arvind Krishna Chairman, President and Chief Executive Officer

James Kavanaugh

SVP, Finance & Operations and Chief Financial Officer

3

CEO perspective

"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.

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."

Arvind Krishna

IBM Chairman, President and CEO

4

1Q26

$15.9B

Revenue

$2.2B

Free cash flow

"Our solid revenue growth, portfolio mix and productivity initiatives drove double-digit profit and free cash flow growth in the quarter.

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."

James Kavanaugh

IBM SVP & CFO

6%

Revenue growth yr/yr

~170bps

Adjusted EBITDA margin expansion

140bps

Pre-tax margin expansion (operating)

13%

Free cash flow growth

17%

Adjusted EBITDA growth

19%

Diluted EPS growth (operating)

Solid recurring base; ARR of $24.6B, +10% yr/yr

Data growth of 16% driven by organic strength; early closing of Confluent

Red Hat growth accelerated to 10% yr/yr; OpenShift ARR now $2B

Segment profit margin expansion of over 60bps

Revenue categories-1Q26

Automation

+7% yr/yr

Hybrid Cloud

+10% yr/yr

Transaction Processing

+2% yr/yr

Data

+16% yr/yr

+8%

Revenue growth

$7.1B

Revenue

Broad-based Hybrid Infrastructure growth driven

by AI-enabled platform demand

Record first quarter revenue for IBM Z as z17 continues to outperform prior cycles

Distributed Infrastructure performance reflects strength in both Power and storage

Significant gross and segment profit margin

expansion

Distributed Infrastructure +13%

+48%

IBM Z

Hybrid

Infrastructure

+25% yr/yr

Infrastructure

Support

(6%) yr/yr

Revenue categories-1Q26

+12%

Revenue growth

$3.3B

Revenue

Revenue momentum continues, driven by enterprise demand for AI and modernization

Signings returned to growth with strength across

large transformational offerings

Generative AI embedded across engagements,

representing about 30% of our backlog

Asset-led delivery model supporting productivity and margin discipline

Revenue categories-1Q26

Strategy and

Technology

+1% yr/yr

Intelligent

Operations

+1% yr/yr

+1%

Revenue growth

$5.3B

Revenue

Summary

1Q26 Summary

Strong start to the year with durable revenue growth and accelerating pre-tax* margin expansion ahead of expectations

Productivity, revenue scale, and mix drove 17% adjusted EBITDA and 19% diluted EPS* growth

Generated $2.2 billion of free cash flow, the highest first quarter free cash flow margin in reported history

Productivity initiatives enabling accelerating

investment in innovation across AI and Quantum

Strong liquidity position and solid investment grade balance sheet; committed to disciplined capital allocation

*Pre-tax margin & diluted EPS - operating Revenue growth rates @CC

2026 Expectations

Maintaining full year guidance of sustained 5%+ revenue growth

Software revenue now expected to grow 10% plus

Operating PTI margin to expand by about a point,

despite early closing of Confluent

On track to achieve $5.5 billion of productivity run rate savings exiting 2026, a key enabler of our margin expansion

Continue to expect free cash flow up about $1 billion year over year, growing high single digits

9

ibm.com/investor

Revenue and P&L highlights

Adjusted EBITDA performance

Cash flow and balance sheet highlights Currency impact on revenue growth Software & Infrastructure segment details Consulting segment details

Expense summary Balance sheet summary Free cash flow summary Statement of cash flows

Software segment categories Consulting segment categories Infrastructure segment categories Non-GAAP supplemental materials

Revenue highlights

1Q26

B/(W)

Yr/Yr

Revenue

$15.9

6%

Americas

$7.9

8%

Europe/ME/Africa

$5.2

5%

Asia Pacific

$2.8

2%

Operating P&L highlights $

1Q26

B/(W)

Yr/Yr

Gross profit

$9.2

12%

Expense

$7.1

(9%)

Pre-tax income

$2.1

23%

Net income

$1.8

20%

Earnings per share

$1.91

19%

Adjusted EBITDA

$4.0

17%

Operating P&L highlights %

1Q26

B/(W)

Yr/Yr

Gross profit margin

57.7%

1.1 pts

Expense E/R

44.3%

0.3 pts

Pre-tax income margin

13.4%

1.4 pts

Net income margin

11.4%

1.0 pts

Tax rate

14.5%

(1.7 pts)

1Q26

Yr/Yr

Operating (non-GAAP) pre-tax income from continuing operations

$2.1

$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

$0.1

Workforce rebalancing charges

$0.3

$0.0

Corporate (gains) and charges*

$0.0

$0.0

Adjusted EBITDA

$4.0

$0.6

$ in billions

Cash flow

1Q26

Yr/Yr

Net cash from operations*

$2.6

$0.3

Free cash flow**

$2.2

$0.3

Select uses of cash

1Q26

Yr/Yr

Net capital expenditures

$0.4

$0.1

Acquisitions

$10.5

$3.4

Dividends

$1.6

$0.0

Balance sheet

Mar 26

Dec 25

Mar 25

Cash & marketable securities

$11.8

$14.5

$17.6

Total debt

$66.4

$61.3

$63.3

Select debt measures

Mar 26

Dec 25

Mar 25

IBM Financing debt

$12.8

$15.1

$10.0

Core (non-IBM Financing) debt

$53.5

$46.2

$53.3

$ in billions

*Non-GAAP financial measure; excludes Financing receivables

Quarterly averages per US $

1Q26

Yr/Yr

Spot Assumed*

2Q26

3Q26

4Q26

FY26

Euro

0.85

10%

0.85

3%

1%

1%

4%

Pound

0.74

7%

0.74

1%

0%

2%

2%

Yen

156.81

(3%)

159.32

(10%)

(8%)

(3%)

(6%)

Revenue impact, future @assumed spot*

0-0.5 pts

~(0 pts)

~0.5 pts

0.5-1 pts

Prior view

~3 pts

~0 pts

~(1 pts)

~0 pts

~0.5 pts

US $B

Yr/Yr

Revenue as reported

$15.9

9%

Currency impact

Revenue @CC

$0.5

3. 4 pts

6%

Software segment

1Q26

B/(W)

Yr/Yr

Revenue

$7.1

8%

Hybrid Cloud

$1.9

10%

Automation

$1.7

7%

Data

$1.5

16%

Transaction Processing

$1.9

2%

Segment profit

$2.1

14%

Segment profit margin

29.8%

0.6 pts

Annual recurring revenue

$24.6

10%

Infrastructure segment

1Q26

B/(W)

Yr/Yr

Revenue

$3.3

12%

Hybrid Infrastructure

$2.1

25%

IBM Z

48%

Distributed Infrastructure

13%

Infrastructure Support

$1.2

(6%)

Segment profit

$0.5

112%

Segment profit margin

15.8%

7.2 pts

$ in billions

Consulting segment

1Q26

B/(W)

Yr/Yr

Revenue

$5.3

1%

Strategy and Technology

$2.9

1%

Intelligent Operations

$2.4

1%

Gross profit margin

27.5%

0.2 pts

Segment profit

$0.6

(0.1%)

Segment profit margin

10.6%

(0.4 pts)

Signings

$5.4

6%

Book-to-bill ratio (TTM)

1.04

Expense

1Q26

B/(W)

Yr/Yr

Currency

Acq/ Divest*

Base**

Operating expense & other income

$7.1

(9%)

(4 pts)

(4 pts)

(1 pts)

SG&A - operating

$4.7

(3%)

(3 pts)

(3 pts)

2 pts

R&D - operating

$2.2

(12%)

(1 pts)

(5 pts)

(5 pts)

IP and custom development income

($0.2)

(32%)

Other (income)/expense - operating

($0.1)

(48%)

Interest expense

$0.5

(4%)

$ in billions

*Includes acquisitions in the last twelve months net of non-operating acquisition-related charges and includes impact of closed divested businesses

Mar 26

Dec 25

Mar 25

Cash & marketable securities

$11.8

$14.5

$17.6

Core (non-IBM Financing) assets*

$130.2

$120.4

$116.8

IBM Financing assets

$14.2

$17.0

$11.3

Total assets

$156.2

$151.9

$145.7

Other liabilities

$56.8

$57.9

$55.4

Core (non-IBM Financing) debt*

$53.5

$46.2

$53.3

IBM Financing debt

$12.8

$15.1

$10.0

Total debt

$66.4

$61.3

$63.3

Total liabilities

$123.2

$119.1

$118.7

Equity

$33.1

$32.7

$27.0

$ in billions

QTD 1Q26

B/(W)

Yr/Yr

Net cash from operations $5.2 $0.8

Less: IBM Financing receivables

$2.6

$0.5

Net cash from operations (excluding IBM Financing receivables)

$2.6

$0.3

Net capital expenditures

($0.4)

($0.1)

Free cash flow (excluding IBM Financing receivables)

$2.2

$0.3

1Q26

1Q25

Net income

Depreciation*

$1.2

$0.6

$1.1

$0.5

Amortization of capitalized software and acquired intangible assets

$0.7

$0.6

Stock-based compensation

$0.5

$0.4

Net (gain)/loss on divestitures, asset sales and other

($0.0)

($0.0)

Changes in operating assets and liabilities, net of acquisitions/divestitures

$2.2

$1.8

Net cash provided by Operating Activities

Payments for property, plant and equipment

$5.2

($0.2)

$4.4

($0.2)

Proceeds from disposition of property, plant and equipment/other

$0.0

$0.1

Investment in software

($0.2)

($0.2)

Purchases of marketable securities and other investments

($1.6)

($6.5)

Proceeds from disposition of marketable securities and other investments

$2.0

$0.9

Acquisition of businesses, net of cash acquired

($10.5)

($7.1)

Divestiture of businesses, net of cash transferred

$0.0

($0.0)

Net cash provided by/(used in) investing activities

Proceeds from new debt

($10.5)

$7.4

($13.0)

$8.4

Payments to settle debt

($2.9)

($1.3)

Short-term borrowings/(repayments) less than 90 days - net

($0.0)

($0.0)

Common stock repurchases for tax withholdings

($0.3)

($0.3)

Proceeds from issuance of shares

$0.2

$0.2

Financing - other

($0.0)

($0.0)

Cash dividends paid

Net cash provided by/(used in) financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

($1.6)

$2.7 ($0.2)

($1.5)

$5.4

$0.2

Net change in cash, cash equivalents & restricted cash

($2.8)

($3.0)

Aligned with the Consolidated Statement of Cash Flows in the 10-Q

$ in billions

Revenue categories

Revenue categories - FY 2025

The Software portfolio delivers end-to-end enterprise capabilities for Hybrid Cloud and AI:

Hybrid Cloud

Automation

Hybrid Cloud

Transaction

Processing

Data

incl. RHEL, OpenShift, Ansible, Red Hat AI

Automation

incl. application development & integration, infrastructure lifecycle management incl. HashiCorp, network management, security software for identity access management and threat management, observability, FinOps, IT financial management, asset lifecycle management

Data

incl. AI assistants and agents, AI tools and governance, databases, data intelligence, data integration, data security, Confluent

Transaction Processing

incl. Customer Information Control System and storage software, analytics and integration software on IBM operating systems, AI assistants for Z, security software for Z

Consulting segment categories

Revenue categories

Strategy and Technology

Intelligent Operations

Revenue categories - FY 2025

Strategy and Technology

Provides advice on strategy, process design, system implementation, cloud architecture and implementation services for complex end-to-end business transformations with hybrid cloud and AI, and modernize applications, data and technology. By leveraging IBM technology - including Red Hat - and an ecosystem of partners - including Adobe, AWS, Microsoft, Oracle, Palo Alto Networks, Salesforce and SAP, among others - we enable clients to drive innovation and achieve business outcomes

Intelligent Operations

Operates application workflows and business processes, manage application data, AI, and hybrid cloud workflows, and integrate security solutions to de-risk and prevent threats. By leveraging AI-powered solutions, we deliver faster, more efficient outcomes that help clients scale and innovate securely

Infrastructure segment categories

Revenue categories

Revenue categories - FY 2025

Hybrid Infrastructure

Innovative infrastructure platforms to help meet the new requirements of hybrid multi-cloud and enterprise AI workloads leveraging flexible and as-a-service consumption models:

IBM Z: incl. hardware and operating system

Distributed Infrastructure: incl. Power hardware and operating system, storage hardware, IBM Cloud IaaS, OEM asset recovery service

Infrastructure Support

Comprehensive, proactive and AI enabled services to maintain and improve the availability and value of clients' IT infrastructure (hardware and software) both on-premises and in the cloud incl. maintenance for IBM products and other technology platforms

Hybrid Infrastructure

Infrastructure

Distributed Infrastructure

IBM Z

Support

Reconciliation of revenue performance - 1Q 2026

1Q26 Yr/Yr

GAAP @CC

Total revenue

9%

6%

Americas

9%

8%

Europe/ME/Africa

15%

5%

Asia Pacific

1%

2%

The above reconciles the non-GAAP financial information contained in the "Financial highlights", "Revenue and P&L highlights", and "Prepared remarks"

discussions in the company's earnings presentation. See Exhibit 99.2 included in the company's Form 8-K dated April 22, 2026, for additional information on the

Reconciliation of segment revenue performance - 1Q 2026

1Q26 Yr/Yr

Software

11%

8%

Hybrid Cloud

13%

10%

Automation

10%

7%

Data

19%

16%

Transaction Processing

6%

2%

ARR

13%

10%

GAAP @CC

1Q26 Yr/Yr

Consulting

4%

1%

Strategy and Technology

4%

1%

Intelligent Operations

4%

1%

GAAP @CC

Infrastructure

15%

12%

Hybrid Infrastructure

28%

25%

IBM Z

51%

48%

Distributed Infrastructure

17%

13%

Infrastructure Support

(2%)

(6%)

The above reconciles the non-GAAP financial information contained in the "Software", "Consulting", "Infrastructure", "Software & Infrastructure segment details - 1Q 2026", "Consulting segment details - 1Q 2026" and "Prepared remarks" discussions in the company's earnings presentation. See Exhibit 99.2 included in the company's Form 8-K dated April 22, 2026, for additional information on the use of these non-GAAP financial measures. 26

Reconciliation of expense summary - 1Q 2026

1Q26

Non-GAAP Operating GAAP adjustments (non-GAAP)

SG&A

Currency

Acquisitions/divestitures Base*

(3 pts)

(2 pts)

1 pts

0 pts

0 pts

1 pts

(3 pts)

(3 pts)

2 pts

R&D

Currency

(1 pts)

0 pts

(1 pts)

Acquisitions/divestitures

(5 pts)

0 pts

(5 pts)

Base*

(5 pts)

0 pts

(5 pts)

Operating expense & other income

Currency

(4 pts)

0 pts

(4 pts)

Acquisitions/divestitures

(3 pts)

0 pts

(4 pts)

Base*

(3 pts)

2 pts

(1 pts)

*Represents the percentage change after excluding the impact of currency translation & hedges, acquisitions and divestitures

The above reconciles the non-GAAP financial information contained in the "Expense summary" discussion in the company's earnings presentation. See Exhibit 99.2 included in the company's Form 8-K dated April 22, 2026, for additional information on the use of these non-GAAP financial measures. 27

Reconciliation of continuing operations - 1Q 2026

1Q26

GAAP

Acquisition-

related adjustments

Retirement-

related adjustments

Tax reform impacts

Operating (non-GAAP)

Gross profit

$8,950

$237

-

-

$9,187

Gross profit margin

56.2%

1.5 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

1,387

646

96

-

2,129

Pre-tax income margin

8.7%

4.1 pts

0.6 pts

-

13.4%

Effective tax rate

12.4%

2.7 pts

(0.4 pts)

(0.2 pts)

14.5%

Income from cont. ops.

1,216

508

94

4

1,821

Income margin from cont. ops.

7.6%

3.2 pts

0.6 pts

0.0 pts

11.4%

Diluted earnings per share

$1.28

$0.53

$0.10

$0.00

$1.91

$ in millions (except EPS which is in whole dollars)

The above reconciles the non-GAAP financial information contained in the "Revenue and P&L highlights", "Expense summary" and "Prepared remarks" discussions in

the company's earnings presentation. See Exhibit 99.2 included in the company's Form 8-K dated April 22, 2026, for additional information on the use of these non-

GAAP financial measures. 28

Reconciliation of GAAP net income to adjusted EBITDA

1Q26

Yr/Yr

Net income as reported (GAAP)

$1.2

$0.2

Less: income/(loss) from discontinued operations, net of tax

$0.0

$0.0

Income from continuing operations

$1.2

$0.2

Provision for/(benefit from) income taxes from continuing operations

$0.2

$0.1

Pre-tax income from continuing operations (GAAP)

$1.4

$0.2

Non-operating adjustments (before tax)

Acquisition-related charges*

$0.6

$0.1

Non-operating retirement-related costs/(income)

$0.1

$0.1

Operating (non-GAAP) pre-tax income from continuing operations

$2.1

$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

$0.1

Workforce rebalancing charges

$0.3

$0.0

Corporate (gains) and charges**

$0.0

$0.0

Adjusted EBITDA

$4.0

$0.6

Revenue

$15.9

9%

GAAP net income margin

8%

0.4 pts

Adjusted EBITDA margin

25%

1.7 pts

$ in billions

*Primarily consists of amortization of acquired intangible assets

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

The above reconciles the non-GAAP financial information contained in the "Summary", "Financial highlights", "Revenue and P&L highlights", "Adjusted EBITDA

performance" and "Prepared remarks" discussions in the company's earnings presentation. See Exhibit 99.2 included in the company's Form 8-K dated April 22, 2026, for

additional information on the use of these non-GAAP financial measures. 29

Reconciliation of net cash from operations to adjusted EBITDA

1Q26

1Q25

Net cash provided by operating activities

$5.2

$4.4

Add:

Net interest expense

$0.3

$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, asset sales and other*

$0.0

$0.0

Other assets and liabilities/other, net*,**

($0.9)

($0.7)

Adjusted EBITDA

$4.0

$3.4

Revenue

$15.9

$14.5

Net cash provided by operating activities margin

32%

30%

Adjusted EBITDA margin

25%

23%

$ in billions

*Aligned with the Consolidated Statement of Cash Flows in the 10-Q

**Mainly consists of Changes in operating assets and liabilities, net of acquisitions/divestitures in the "Statement of Cash Flows" discussion, workforce rebalancing

charges, non-operating impacts and corporate (gains) and charges, less Financing receivables

The above reconciles the non-GAAP financial information contained in the "Prepared remarks" discussion in the company's earnings presentation. See Exhibit 99.2

included in the company's Form 8-K dated April 22, 2026, for additional information on the use of these non-GAAP financial measures. 30

Reconciliation of pre-tax income margin - 2Q 2026 expectations

Operating

GAAP

(non-GAAP)

Pre-tax income margin

B/(W)

B/(W)

Pre-tax income margin Yr/Yr

~(1 pt)

~0.5 pt

The above reconciles the non-GAAP financial information contained in the "Prepared remarks" discussion in the company's earnings presentation.

See Exhibit 99.2 included in the company's Form 8-K dated April 22, 2026, for additional information on the use of this non-GAAP financial measure. The

reconciliation of IBM's FY operating pre-tax income guidance to GAAP is included in the company's 4Q 2025 earnings charts posted at https://www.ibm.com/investor/financial-reporting. 31

ibm.com/investor

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.