Technology · NYSE: IBM
IBM: how the business works
IBM sells software, consulting and computer systems such as mainframes to organizations worldwide, with revenue of $67.5 billion in FY2025.
By Hardik Bhandare · Checked against filings:
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International Business Machines Corporation · Armonk, New York · Founded 1911
Last updated
- Revenue, FY2025
- $67.5B
- Pre-tax income, FY2025
- $10.3B
- Net income, FY2025 (incl. a tax benefit)
- $10.6B
- Employees, Dec 31, 2025
- About 264,300
- Incorporated
- 1911
The short version
IBM in 5 points
1 · What it sells
IBM sells software, consulting and computer systems such as mainframes to organizations in more than 175 countries, with $67.5 billion of revenue in FY2025.
2 · Who pays it
IBM does not report revenue by client type and no client reached 10 percent; by segment, in FY2025 software buyers paid 44.4% of revenue, consulting clients 31.2%, infrastructure buyers 23.3% and financing clients 1.1%.
3 · What it keeps from $100
Of every $100 that came in during FY2025, IBM kept $15.4 as net income, including a tax benefit; IBM reports no operating income line, and its pre-tax income was $15.29 per $100 of revenue.
4 · Where the operating profit comes from
IBM reports no operating income by segment; in FY2025 Software earned 60.6% of segment profit, IBM's measure before stock-based payPay given as shares instead of cash, which spreads ownership more thinly. Learn more and some other costs, on 44.4% of revenue.
5 · The one thing to watch
On Jan 28, 2026 IBM said it expected 10% Software growth for FY2026; on Oct 21, 2026 it said about 7% to 8%, after Software grew 8% in Q3.
Sources: From IBM's FY2025 10-K, Q3 2026 earnings release and earnings calls · checked
See the full receipt and the management scorecard below
01Where the money goes · FY2025
Where does $100 of IBM's money go?
IBM · FY2025
Receipt for every $100
| Cost of services | $30.4 |
|---|---|
| Cost of sales and financing | $10.5 |
| Selling, general and admin | $29.2 |
| Research and development | $12.1 |
| Interest | $2.8 |
| Tax benefit and discontinued operations | −$0.4 |
| Kept as net income | $15.4 |
| Total | $100 |
Each line = amount ÷ total money in × 100. Lines may not add to exactly $100 because of rounding.
How this is worked out
Cityfort calculation from FY2025 10-K. Of every $100 that came in during FY2025 (revenue plus other income): each line = line ÷ $68.9 billion × 100. The negative line is a tax benefit, which added to net income.
Each week: one company explained in 5 points, picked by earnings date.
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02The business in one line
What does IBM do?
Organizations pay IBM for software, consulting and computer systems; most of the money goes on delivering services, selling and research, and what is left is profit.
- In FY2025, Software brought in 44.4% of revenue, Consulting 31.2%, Infrastructure 23.3% and Financing 1.1%.
- IBM's income statement has no operating income line. It shows pre-tax income of $10.3 billion for FY2025, and net income of $10.6 billion, which includes a tax benefit.
03Who pays it
Who pays IBM?
Software buyers
44%
of revenue
Organizations paying for Red Hat, automation, data and transaction software. Shares here are by segment: IBM does not report revenue by client type.
Consulting clients
31%
of revenue
Organizations paying for advice, application building and outsourced operations.
Infrastructure buyers
23%
of revenue
Organizations paying for mainframes, servers, storage, cloud infrastructure and maintenance.
Financing clients
1%
of revenue
Clients and partners paying interest and lease charges on IBM financing.
- Software buyers44%
- Consulting clients31%
- Infrastructure buyers23%
- Financing clients1%
How spread out the customers are
No single client was 10 percent or more of IBM's revenue in 2025, 2024 or 2023. IBM does not report revenue by client or industry. Divested and other items were the remaining 0.1% of FY2025 revenue.
04Why it makes money
Why does IBM make money?
Software brings in less than half of the revenue but most of the segment profit.
IBM's Software kept $33.10 of segment profit per $100 of its revenue in FY2025, Infrastructure $22.00 and Consulting $11.70. About 80% of Software revenue was recurring in Q3 FY2026. Remaining performance obligationsSigned contracts with customers that have not been billed yet., contracted work not yet recognized as revenue, were about $69 billion at Sep 30, 2026.
Gross profit per $100 of revenue
$54.9$58.2
FY2021 to FY2025
- Clients run critical systems on IBM software and hardware
- Recurring software and support revenue follows
- Software earns more per dollar than consulting or hardware
- Profit and borrowing pay for research and acquisitions
- New software and systems are sold to the same clients
↺ Step 5 feeds back into step 1.
05Business segments · FY2025
Which businesses make up IBM?
Software
44%Red Hat, automation, data and AI tools, and transaction software. FY2025 segment profit was $9.9 billion, a 33.1% margin and 60.6% of the $16.4 billion total. Segment profit is IBM's segment measure: it leaves out stock-based pay and some other costs, and it is not operating income.
Revenue $30.0B
Consulting
31%Advice, application building and running business processes. FY2025 segment profit was $2.5 billion, an 11.7% margin and 15.1% of the total.
Revenue $21.1B
Infrastructure
23%Mainframes, servers, storage, cloud infrastructure and maintenance. FY2025 segment profit was $3.5 billion, a 22.0% margin and 21.1% of the total.
Revenue $15.7B
Financing
1%Leases and loans for IBM products. FY2025 segment profit was $521 million, a 70.7% margin and 3.2% of the total. The chart starts at FY2023 because IBM changed its segments in January 2024 and the revenue categories within them in January 2025: FY2023 Software is $25.0 billion on today's basis and was $26.3 billion on the older one, so earlier years do not compare.
Revenue $737M
How the mix changed
- Software
- Consulting
- Infrastructure
- Financing
Revenue by segment, FY2023 to FY2025.
US$
See the numbers
06The numbers · Consolidated · US$
How has IBM done?
Revenue
$67.5BFY2025
Revenue rose every year, from $57.4 billion in FY2021 to $67.5 billion in FY2025, and Q3 FY2026 revenue was $17.1 billion, up from $16.3 billion a year earlier.
US$
See the numbers
Net profit
$10.6BFY2025
Every year shows total net income, including discontinued operations ($1,030 million from Kyndryl in FY2021 and a $143 million loss in FY2022); pre-tax income, with no operating income line above it, was $10.3 billion in FY2025 and $1.2 billion in FY2022, when a $5.9 billion pension charge left stock-based pay equal to 60.2% of net income.
US$
See the numbers
Profit kept per $100 of revenue
$15.7FY2025
Net income per $100 of revenue was $15.69 in FY2025, including a tax benefit, while pre-tax income per $100 was $15.29 (FY2024: $9.60 and $9.24).
$ of profit per $100 of revenue (net margin)
See the numbers
Free cash flow
$12.1BFY2025
Free cash flow here is cash from operations minus purchases of property and equipment ($12.1 billion in FY2025), not IBM's own measure, and FY2021 cash flow includes Kyndryl.
US$ · cash from operations minus spending on plants and equipment
See the numbers
See all yearly numbers
EBITDA here = operating income plus depreciation and amortization (from the cash flow statement). Fiscal years are the company's own (December 31; IBM's fiscal year is the calendar year, so Q3 FY2026 is July to September 2026). Net profit is the share belonging to the company's owners.
Learn: Stock-based compensation and dilution: pay that becomes shares
07Who runs it
Who runs IBM, and did they deliver?
Arvind Krishna
Chairman, President and CEO · since 2020
Executive officer since 2020. 2025 total pay was $37,989,685, or 765 times the median employee's $49,630.
James J. Kavanaugh
SVP, Finance and Operations, and CFO · since 2008
Executive officer since 2008.
Robert D. Thomas
SVP, Software, and Chief Commercial Officer · since 2023
Executive officer since 2023.
Gary D. Cohn
Vice Chairman · since 2021
Executive officer since 2021.
What they said, and what happened
2 delivered · 3 too early to tell
Said on Jan 29, 2025
FY2025 constant-currency revenue growth of "at least 5 percent".
DeliveredWhat happened
FY2025 revenue grew 7.6% as reported and 6.1% adjusted for currency.
Said on Apr 23, 2025
Q2 FY2025 revenue of $16.40 billion to $16.75 billion.
DeliveredWhat happened
Q2 FY2025 revenue was $17.0 billion.
Said on Jan 28, 2026
FY2026 constant-currency revenue growth of more than 5 percent.
Too early to tellWhat happened
On Jul 22, 2026 IBM lowered the range to 4% to 5%, and kept it on Oct 21, 2026. The year is not yet reported.
Said on Jan 28, 2026
FY2026 Software revenue growth of 10%.
Too early to tellWhat happened
IBM lowered this to 6% to 8% on Jul 22, 2026, then to about 7% to 8% on Oct 21, 2026. The year is not yet reported.
Said on May 28, 2026
First large-scale fault-tolerant quantum computer by 2029.
Too early to tellWhat happened
The target date has not been reached.
08What could go wrong
What could go wrong for IBM?
- Execution
Large deals can slip between quarters
In Q2 FY2026 management said tens of large deals failed to close on the expected timelines, as clients moved spending to servers, storage and memory. Its 10-Q later said a significant portion closed in Q3.
Watch Software revenue growth against IBM's statement on Oct 21, 2026 of about 7% to 8% for FY2026.
- Demand
Mainframe revenue moves in cycles
IBM Z revenue has moved from up 70% to down 42% by quarter around the z17 launch in June 2025. Software sold with mainframes also moves: Transaction Processing fell 8% in Q2 FY2026.
Watch IBM Z and Transaction Processing growth in each earnings release.
- Debt
Debt and acquisition goodwill
Debt was $63.8 billion at Sep 30, 2026, after acquisitions including Confluent. Goodwill and intangibles were 57.1% of assets, and IBM's risk factors name impairment and higher debt from acquisitions.
Watch Net debt, credit ratings and any goodwill impairment.
- Competition
Competition and new technology bets
IBM's risk factors say its hybrid cloud, AI and quantum initiatives may fail. Some named rivals, such as Microsoft and Oracle, are also its partners.
Watch Software growth, research spending and IBM's Quantum Day on Dec 10, 2026.
- Demand
Consulting revenue has barely grown
Consulting revenue was $20.9 billion in FY2023 and $21.1 billion in FY2025, and it was flat in Q3 FY2026. Signings fell 13.3% in FY2025.
Watch Consulting revenue, signings and book-to-bill.
- Other
Pension charges and tax items move net income
Pension settlement charges were $5.9 billion in FY2022 and $3.1 billion in FY2024. A tax benefit from resolving audit matters lifted Q4 FY2025. IBM's plans were a net $2.3 billion underfunded at Dec 31, 2025.
Watch Pre-tax income beside net income, and pension funding in the FY2026 10-K.
- Currency
Most revenue comes from outside the US
About 60.2% of FY2025 revenue came from outside the United States, and IBM's risk factors name currency moves and local legal and political conditions.
Watch The gap between reported and constant-currency revenue growth.
09Both sides
What do supporters and critics point to?
What supporters point to
- Software earned 60.6% of FY2025 segment profit, and about 80% of Software revenue was recurring in Q3 FY2026.
- Gross profit per $100 of revenue rose from $54.9 in FY2021 to $58.2 in FY2025.
- Revenue rose every year from FY2021 to FY2025, and remaining performance obligations were about $69 billion at Sep 30, 2026.
- No single client was 10 percent or more of revenue in 2023 to 2025.
- IBM says it has paid quarterly dividends every year since 1916.
What critics point to
- IBM lowered its FY2026 revenue range on Jul 22, 2026, after large deals failed to close on time in Q2.
- Net debt rose from $40.2 billion at Dec 31, 2024 to $52.7 billion at Sep 30, 2026, helped by acquisitions.
- FY2025 net income of $10.6 billion includes a tax benefit; IBM's effective tax rate was (2.3)%.
- Consulting revenue was $21.1 billion in FY2025, against $20.9 billion in FY2023.
- IBM paid more in dividends than its net income in FY2021, FY2022 and FY2024.
10What to watch next
What should you watch next at IBM?
Next event
Q4 FY2026 results
Date not announced yet.
Software growth against IBM's statement
IBM said on Oct 21, 2026 that it expects about 7% to 8% Software growth for FY2026, down from 10% stated on Jan 28, 2026. Software grew 8% in Q3 FY2026.
IBM Z and the mainframe cycle
IBM Z revenue fell 20% in Q3 FY2026. Q4 FY2025, the quarter the next results compare with, was up 67%.
Debt after Confluent
Debt was $63.8 billion at Sep 30, 2026, up $2.6 billion from Dec 31, 2025.
11Key dates
What are the key dates for IBM?
| Event | Date | Source |
|---|---|---|
| Dividend record date ($1.69 a share) | Q3 2026 earnings release (Form 8-K, Exhibit 99.1) | |
| Dividend payment date | Q3 2026 earnings release (Form 8-K, Exhibit 99.1) | |
| IBM Quantum DayAnnounced on the Oct 21, 2026 earnings call. | Q3 2026 earnings call transcript |
Learn: IPO lock-up agreements: what they are and when they end
12Key facts
Key facts about IBM
- What does IBM do?
- IBM sells software, consulting services and computer systems such as mainframes to organizations in more than 175 countries. IBM's revenue was $67.5 billion in FY2025 (calendar 2025).
- How does IBM make money?
- In FY2025 IBM made $30.0 billion from Software, $21.1 billion from Consulting, $15.7 billion from Infrastructure and $737 million from Financing. About 80% of IBM's Software revenue was recurring in Q3 FY2026.
- What is IBM's business model?
- IBM's business model pairs software with the consulting and hardware around it. In FY2025 IBM's Software segment earned 60.6% of segment profit on 44.4% of revenue, while Consulting earned 15.1% on 31.2%.
- Is IBM profitable?
- Yes. IBM reported pre-tax income of $10.3 billion and net income of $10.6 billion in FY2025; net income includes a tax benefit from resolving tax audit matters. IBM's Q3 FY2026 net income was $2.2 billion. IBM reports no operating income line.
- What is IBM's revenue by segment?
- IBM's FY2025 revenue was Software $29,962 million (44.4%), Consulting $21,055 million (31.2%), Infrastructure $15,718 million (23.3%) and Financing $737 million (1.1%). Divested and other items were $63 million (0.1%).
- Who are IBM's customers?
- IBM's customers are organizations, including clients in banking, airlines and retail. No single client was 10 percent or more of IBM's revenue in 2025, 2024 or 2023, and IBM does not report revenue by client type.
- Who owns IBM?
- IBM has one class of stock with one vote per share and 945.1 million shares at Sep 30, 2026. In filings, Vanguard Capital Management reported 7.48% (Mar 31, 2026), BlackRock 8.3% and State Street 6.03% (January 2024 filings). IBM's proxy says its directors and executive officers as a group hold no more than 1%.
- What is IBM's Software business?
- IBM's Software segment sells Red Hat, automation, data and AI tools, and transaction software for mainframes. It had revenue of $30.0 billion in FY2025 and $7.8 billion in Q3 FY2026, up 8% from a year earlier.
- What is IBM's Consulting business?
- IBM Consulting advises clients, builds applications and runs business processes for them. It had revenue of $21.1 billion in FY2025 and $5.3 billion in Q3 FY2026, flat from a year earlier.
- What is IBM's Infrastructure business?
- IBM's Infrastructure segment sells IBM Z mainframes, Power servers, storage and IBM Cloud, plus maintenance. It had revenue of $15.7 billion in FY2025 and $3.7 billion in Q3 FY2026, up 4% from a year earlier.
Go deeper
More detail from the same filings. Open any section.
13What it sells
13What it sells
What does IBM sell?
Software
Red Hat (Linux and OpenShift), automation tools including HashiCorp, data and AI tools including watsonx and Confluent, and transaction software for mainframes.
Consulting
Advice on strategy and technology, building applications, and running business processes and security for clients.
Infrastructure
IBM Z mainframes, Power servers, storage and IBM Cloud infrastructure, plus maintenance of installed systems.
Financing
Leases and loans of generally up to seven years to clients buying IBM products, plus short-term financing to partners.
Think of it like this
IBM's transaction systems are like the plumbing of a bank or airline: customers rarely see them, but the transactions run through them.
What it does
- Does: Sells software subscriptions, licenses and support
- Does: Advises clients and runs business processes for them
- Does: Builds and maintains mainframes, servers and storage
- Does: Lends to clients buying IBM products
What it does not do
- Does not: Run the managed infrastructure business it separated as Kyndryl in 2021
- Does not: Hold any Kyndryl stock: its stake ended on Nov 2, 2022
- Does not: Own The Weather Company assets, which it sold in 2024
14How the money flows
14How the money flows · FY2025
How does money flow through IBM?
Money in
- Services revenue$30.7B
- Sales revenue (software and hardware)$36.1B
- Financing revenue$737M
- Intellectual property income and other income$1.4B
The company
IBM
$68.9B came in
Money out
- Cost of services$21.0B
- Cost of sales and financing$7.3B
- Selling, general and admin$20.1B
- Research and development$8.3B
- Interest$1.9B
- Income tax (a benefit) and discontinued operations−$264M
- Net income$10.6B
- Clients paid IBM $67.5 billion in FY2025; intellectual property and other income added $1.4 billion.
- Delivering services, products and financing cost $28.2 billion.
- Selling, general and admin took $20.1 billion, research $8.3 billion and interest $1.9 billion.
- That left $10.3 billion of pre-tax income; IBM reports no operating income line.
- A $242 million tax benefit and $22 million from discontinued operations took net income to $10.6 billion.
15What it needs to run
15What it needs to run
What does IBM need to run?
People
About 264,300 employees at IBM and wholly owned subsidiaries at Dec 31, 2025, down from 282,200 two years earlier.
Research
$8.3 billion of research and development in FY2025, 12.3% of revenue.
Borrowed money
$63.8 billion of debt at Sep 30, 2026, of which $12.7 billion funds the Financing segment.
Facilities
About 39 million square feet worldwide at Dec 31, 2025, with headquarters in Armonk, New York.
16Where it sells
16Where it sells · FY2025
Where does IBM sell?
- Americas49%
- Europe, Middle East and Africa33%
- Asia Pacific18%
17Competitors and what protects it
17Competitors and what protects it
Who does IBM compete with?
Microsoft
Named by IBM as a Software competitor, and also as a strategic partner.
Oracle
Named by IBM as a Software competitor, and also as a strategic partner.
Amazon
Named by IBM as a Software competitor; its AWS cloud is also named as a strategic partner.
Accenture
Named by IBM as a Consulting competitor.
Dell Technologies
Named by IBM as an Infrastructure competitor.
What protects the business
Each strength is scored 1 (weak) to 5 (strong) for the business, with the reason. It is not a rating of the share.
- Recurring software revenue4 of 5
IBM says about 80% of Software revenue was recurring in Q3 FY2026, from subscriptions, as-a-service contracts and support.
- Mainframe installed base4 of 5
Management said on Jul 22, 2026 that IBM Z runs over 70% of the world's transaction volume by value; this is IBM's own claim.
- Spread of clients4 of 5
No client was 10 percent or more of revenue in 2023 to 2025, and IBM sells in more than 175 countries.
- Consulting margins2 of 5
Consulting kept $11.70 of segment profit per $100 of revenue in FY2025, the lowest of IBM's segments, and IBM names many rivals.
Weak spot
Mainframe product cycles
IBM Z revenue rose 67% in Q4 FY2025 and fell 20% in Q3 FY2026, a swing tied to the z17 launch in June 2025.
18Where growth could come from
18Where growth could come from
Where could IBM's growth come from?
IBM said on its Q3 FY2026 earnings call (Oct 21, 2026) that it expects FY2026 revenue growth of 4% to 5%, with about 4% as its base case. It said it expects Software growth of about 7% to 8%, low-single-digit Infrastructure growth and low-to-mid single-digit Consulting growth.
Red Hat (Hybrid Cloud)
WorkingUp 11% in Q3 FY2026
Hybrid Cloud revenue was $2.1 billion in Q3 FY2026.
Status: Working, on track against what the company said.
Data, with Confluent
NewUp 19% in Q3 FY2026
IBM closed its Confluent purchase on Mar 17, 2026, for a total purchase price of $11.6 billion. Data revenue was $1.7 billion in Q3 FY2026.
Status: New, recently announced.
Distributed Infrastructure
WorkingUp 31% in Q3 FY2026
This covers Power servers, storage and IBM Cloud infrastructure. Management said on Jul 22, 2026 that clients were buying servers, storage and memory ahead of expected price increases.
Status: Working, on track against what the company said.
IBM Z mainframes
MixedDown 20% in Q3 FY2026
Revenue swings with each model: up 70% in Q2 FY2025 after the z17 launch and down 42% in Q2 FY2026.
Status: Mixed, partly on track.
Automation
MixedDown 3% in Q3 FY2026
IBM bought HashiCorp on Feb 27, 2025. The 10-Q says Automation fell against a strong prior year, partly offset by HashiCorp growth.
Status: Mixed, partly on track.
Quantum computing
EarlyMore than $10B over 5 years
IBM said on May 28, 2026 that it plans this investment and is targeting its first large-scale fault-tolerant quantum computer by 2029.
Status: Early, too early to judge.
Status compares progress with what the company itself said it would do: Working = on track against what the company said; Mixed = partly on track; Behind = behind the company's own plan; New = recently announced; Early = too early to judge.
19The company's own measures (non-GAAP)
19The company's own measures · FY2021 to FY2025 and the nine months to Sep 30, 2026
What do IBM's own measures show?
Official (GAAP): Net cash from operating activities, FY2025
$13.2B
Company's own measure: Free cash flow, FY2025 (IBM's definition)
$14.7B
IBM takes operating cash, removes the change in Financing receivables and subtracts net capital spending, including software. On Jan 29, 2025 IBM said it expected about $13.5 billion. The free cash flowCash from operations minus spending on buildings and equipment. Learn more in "The numbers" subtracts only purchases of property and equipment ($12.1 billion).
Official (GAAP): Net cash from operating activities, FY2024
$13.4B
Company's own measure: Free cash flow, FY2024 (IBM's definition)
$12.7B
Same definition.
Official (GAAP): Net cash from operating activities, FY2023
$13.9B
Company's own measure: Free cash flow, FY2023 (IBM's definition)
$11.2B
Same definition.
Official (GAAP): Net cash from operating activities, FY2022
$10.4B
Company's own measure: Free cash flow, FY2022 (IBM's definition)
$9.3B
Same definition. This year includes immaterial cash flows from discontinued operations.
Official (GAAP): Net cash from operating activities, FY2021
$12.8B
Company's own measure: Free cash flow, FY2021 (IBM's definition)
$6.5B
This year includes Kyndryl: $1.6 billion of operating cash came from discontinued operations, and IBM's measure carries about $1.4 billion of Kyndryl-related structural actions and separation charges. IBM's table gives this year as $6.5 billion.
Official (GAAP): Net cash from operating activities, nine months to Sep 30, 2026
$11.8B
Company's own measure: Free cash flow, nine months to Sep 30, 2026 (IBM's definition)
$7.8B
This excludes a $2.8 billion inflow from Financing receivables that operating cash includes. On Oct 21, 2026 IBM said it expects FY2026 free cash flow to rise by more than $1 billion.
Official (GAAP): Net income, FY2025
$10.6B
Company's own measure: Adjusted EBITDA, FY2025
$19.2B
Starting from net income, IBM removes tax and adds back acquisition charges, non-operating retirement costs, net interest, depreciation and amortization of non-acquired intangibles, stock-based compensation and workforce rebalancing charges, and adjusts for corporate gains and charges.
Official (GAAP): Net income, Q3 FY2026
$2.2B
Company's own measure: Adjusted EBITDA, Q3 FY2026
$4.9B
Same definition.
Official (GAAP): Income from continuing operations, FY2025
$10.6B
Company's own measure: Operating (non-GAAP) earnings, FY2025
$11.0B
IBM leaves out acquisition-related charges, acquired-intangible amortization, non-operating retirement costs and tax reform effects. This is IBM's own measure, not an operating income line on its income statement.
Official (GAAP): Diluted EPS from continuing operations, FY2025
$11.14
Company's own measure: Operating (non-GAAP) diluted EPS, FY2025
$11.59
Same exclusions, per share.
Official (GAAP): Diluted EPS from continuing operations, Q3 FY2026
$2.31
Company's own measure: Operating (non-GAAP) diluted EPS, Q3 FY2026
$2.95
Same exclusions, per share.
Official (GAAP): Reported revenue growth, FY2025
7.6%
Company's own measure: Revenue growth at constant currency, FY2025
6.1%
IBM removes the effect of exchange-rate changes.
Official (GAAP): Reported revenue growth, Q3 FY2026
5.0%
Company's own measure: Revenue growth at constant currency, Q3 FY2026
6.0%
IBM removes the effect of exchange-rate changes.
Official (GAAP): Software revenue, Q3 FY2026
$7.8B
Company's own measure: Software annual recurring revenue, Sep 30, 2026
$24.9B
The quarter's recurring revenue times four. IBM changed the definition in Q1 FY2025 to cover all Software, so older figures do not compare. IBM warns it may not represent revenue to be recognized.
Official (GAAP): Hybrid Cloud (Red Hat) revenue, Q3 FY2026
$2.1B
Company's own measure: OpenShift annual recurring revenue, Sep 30, 2026
$2.4B
IBM's 10-Q gives this as about $2.4 billion and adds no separate definition for OpenShift. OpenShift is part of Hybrid Cloud.
Official (GAAP): Consulting revenue, Q3 FY2026
$5.3B
Company's own measure: Consulting signings, Q3 FY2026
$5.0B
Signings are management's initial estimate of a client's services commitment, with no third-party standard. They fell 3.7% from a year earlier; book-to-bill over the trailing 12 months was about 1.04.
These are the company's own measures, defined by the company. They are not comparable across companies, and they are not added together. Each sits beside the nearest official (GAAP) figure.
Sources
2025 Annual Report to Stockholders (Exhibit 13 to Form 10-K FY2025); Q4 2024 earnings release (Form 8-K, Exhibit 99.1); Q4 2025 earnings release (Form 8-K, Exhibit 99.1) and 6 more
Learn: Non-GAAP measures: what a company's "adjusted" numbers leave out · Stock-based compensation and dilution: pay that becomes shares
20Financial strength and debt
20Financial strength · Sep 30, 2026
How much debt does IBM have?
- Total debt$63.8B
- Cash and investments$11.1B
- Net debt (debt minus cash)$52.7B
- Net worth (shareholders' money)$35.5B
- Debt to equity
- 1.8×
- $ of debt for every $1 of shareholders' money
- Debt includes $12.7 billion that funds the Financing segment and $51.2 billion for the rest of IBM. Net debt counts both, and is a Cityfort calculation from FY2025 10-K and Q3 FY2026 10-Q.
- Operating lease liabilities of $3.3 billion are separate and not counted as debt here.
- Goodwill and intangible assets were $88.5 billion, or 57.1% of total assets of $155.0 billion.
- Long-term debt due: $0.4 billion in the rest of 2026, $6.7 billion in 2027, $6.0 billion in 2028, $5.6 billion in 2029, $5.7 billion in 2030 and $40.6 billion later (before swaps).
- IBM's pension plans were a net $2.3 billion underfunded at Dec 31, 2025.
- In June 2026 IBM extended committed credit lines of $2.5 billion to 2029 and $7.5 billion to 2031.
21Who owns it
21Who owns it · ownership as of Dec 31, 2025
Who owns IBM?
- Officers and directors (as a group), shares
- 0.2%
Share classes
Holders of 5% or more
From the company's proxy statement (DEF 14A), later Schedule 13G filings and the share counts on its latest annual or quarterly report. Each holder row shows the date of its own filing.
Sources
Form 10-Q for the quarter ended Sep 30, 2026; 2025 Annual Report to Stockholders (Exhibit 13 to Form 10-K FY2025); Schedule 13G, Vanguard Capital Management and 3 more
Learn: How to read a proxy statement (DEF 14A): Nvidia's 2026 proxy · Form 4 insider filings: who files, the codes and the footnotes
22What it does with profit
22What it does with profit
What does IBM do with its profit?
Dividend per share
$6.71FY2025
Dividend paid for each share, by financial year.
$ per share
See the numbers
Money raised · Feb 3, 2026
Issued $3.25 billion of US dollar fixed-rate notes, $3.3 billion of euro fixed-rate notes and $0.9 billion of euro floating-rate notes, as IBM states them.
$7.5B
Money raised · Aug 11, 2026
Filed a prospectus supplement for C$2.75 billion of notes due 2030 and 2034 (Canadian-dollar amount; not converted).
23Governance signals
23Governance signals
What do IBM's governance filings show?
- Auditor
- PricewaterhouseCoopers LLP (it or firms it acquired), since 1923
- Auditor changes
- None in the period covered
- Audit qualifications
- None reported
- Related-party dealings
- IBM's 2026 proxy describes its review policy for related-person transactions and names no specific transaction.
- Credit rating
- S&P, Moody's and Fitch (senior long-term debt, as reported by IBM) A- (S&P) / A3 (Moody's) / A- (Fitch) (outlook not stated in the 10-Q), Sep 30, 2026
A credit rating describes the company's ability to repay debt. It is not a rating of the share.
Flags to know about
disclosure
No revenue by client type
IBM does not report revenue by client or industry, or market shares, in the sections of its filings used here.
other · Jul 14, 2026
Preliminary results letter
On Jul 14, 2026 IBM's CEO published a letter with preliminary Q2 FY2026 results, saying "this quarter we faltered".
other · Sep 14, 2026
US government stake in a subsidiary
On Sep 14, 2026 IBM's subsidiary Anderon finalized an award of up to $1.0 billion from the US Department of Commerce, which took a minority equity interest in Anderon.
other
Insider share rules
IBM's proxy says its insider policy bars hedging and using IBM shares as collateral, and that shares in its main ownership column are not used that way.
other
Pension class action settled
A lawsuit filed Jun 2, 2022 alleged the IBM Pension Plan miscalculated certain pension benefits. The parties settled and it was dismissed with prejudice on Dec 11, 2025, with no material financial impact to IBM.
24What the market paid
24What the market paid · price as of Oct 30, 2026
What did the market pay for IBM on Oct 30, 2026?
Price as of Oct 30, 2026 (shown for education; prices change daily).
Price as of Oct 30, 2026: IBM closed at $257.81, from Nasdaq's historical price table; IBM's shares are listed on the NYSE. Times 945.1 million shares (Sep 30, 2026), that is a market value of about $243.7 billion (Cityfort calculation from the Oct 30, 2026 closing price and the Q3 FY2026 10-Q cover). P/E is price ÷ earnings per share: 23.1 on FY2025 diluted EPS of $11.17, which includes a tax benefit. IBM's $1.69 quarterly dividend is $6.76 over four quarters, or 2.62% of that price.
- Share price
- $257.81
- Market value (market cap)
- $243.7B
- P/E
- 23.1×
Source: IBM historical daily prices, October 2026 (close of Oct 30, 2026); Form 10-Q for the quarter ended Sep 30, 2026; 2025 Annual Report to Stockholders (Exhibit 13 to Form 10-K FY2025) and 1 more
25How it got here
25How it got here
How did IBM get here?
1911
Milestone
Incorporated in New York
IBM began as the Computing-Tabulating-Recording Co. and took its name in 1924.
2019
Business-model change
Bought Red Hat
IBM acquired all of Red Hat on Jul 9, 2019, adding Linux and OpenShift.
2021
Business-model change
Separated Kyndryl
On Nov 3, 2021 IBM moved its managed infrastructure services into a new public company, distributing 80.1% of the shares.
2022
Crisis
$5.9 billion pension charge
A non-cash settlement charge in Q3 2022 cut FY2022 net income to $1.6 billion.
2023
Milestone
Bought Apptio
The purchase price for Apptio was $4.6 billion, most of the $5.2 billion IBM spent on nine deals that year.
2024
Milestone
Sold QRadar SaaS and Weather assets
IBM recorded pre-tax gains of $349 million and $243 million. It also bought StreamSets and webMethods for about $2.3 billion.
2025
Business-model change
Bought HashiCorp and launched z17
HashiCorp closed on Feb 27, 2025 at an equity value of about $7.2 billion, and the z17 mainframe launched that June.
2026
Business-model change
Bought Confluent
IBM closed the purchase on Mar 17, 2026, for a total purchase price of $11.6 billion.
2026
Crisis
Q2 shortfall letter
On Jul 14, 2026 IBM's CEO pre-announced a Q2 FY2026 shortfall, and IBM lowered its FY2026 revenue range on Jul 22.
26Sources and changes
Where every number on this page comes from
Sources (30 documents)
- S1Form 10-K for fiscal year 2025 · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Feb 24, 2026
- S22025 Annual Report to Stockholders (Exhibit 13 to Form 10-K FY2025) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Feb 24, 2026
- S32024 Annual Report to Stockholders (Exhibit 13 to Form 10-K FY2024) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Feb 25, 2025
- S42023 Annual Report to Stockholders (Exhibit 13 to Form 10-K FY2023) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Feb 26, 2024
- S52022 Annual Report (Exhibit 13 to Form 10-K FY2022) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Feb 28, 2023
- S62021 Annual Report (Exhibit 13 to Form 10-K FY2021) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Feb 22, 2022
- S7Form 10-Q for the quarter ended Sep 30, 2026 · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Oct 22, 2026
- S12Form 10-Q for the quarter ended Mar 31, 2025 · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Apr 24, 2025
- S14Q3 2026 earnings release (Form 8-K, Exhibit 99.1) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Oct 21, 2026
- S15Q2 2026 earnings release (Form 8-K, Exhibit 99.1) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Jul 22, 2026
- S16Q1 2026 earnings release (Form 8-K, Exhibit 99.1) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Apr 22, 2026
- S17Q4 2025 earnings release (Form 8-K, Exhibit 99.1) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Jan 28, 2026
- S18Q3 2025 earnings release (Form 8-K, Exhibit 99.1) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Oct 22, 2025
- S19Q2 2025 earnings release (Form 8-K, Exhibit 99.1) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Jul 23, 2025
- S20Q1 2025 earnings release (Form 8-K, Exhibit 99.1) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Apr 23, 2025
- S21Q4 2024 earnings release (Form 8-K, Exhibit 99.1) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Jan 29, 2025
- S22Q3 2024 earnings release (Form 8-K, Exhibit 99.1) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Oct 23, 2024
- S23CEO letter with preliminary Q2 2026 results (Form 8-K, Exhibit 99.1) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Jul 14, 2026
- S24Non-GAAP rationale, Q3 2026 (Form 8-K, Exhibit 99.2) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Oct 21, 2026
- S252026 Notice of Annual Meeting and Proxy Statement (DEF 14A) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Mar 10, 2026
- S26Schedule 13G, Vanguard Capital Management · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Apr 30, 2026
- S27Schedule 13G/A, The Vanguard Group (Mar 2026) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Mar 27, 2026
- S28Schedule 13G/A, The Vanguard Group (Feb 2025) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Feb 7, 2025
- S30Form 8-K: credit agreements extended · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Jun 23, 2026
- S31Form 8-K: quantum investment plan (Reg FD) · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · May 28, 2026
- S33Form 424B5 prospectus supplement: C$2.75B notes · International Business Machines Corporation (SEC EDGAR) · Tier 1: company or exchange filing · Aug 11, 2026
- S34Q4 2025 earnings call transcript · International Business Machines Corporation · Tier 1: company or exchange filing · Jan 28, 2026
- S35Q2 2026 earnings call transcript · International Business Machines Corporation · Tier 1: company or exchange filing · Jul 22, 2026
- S37Q3 2026 earnings call transcript · International Business Machines Corporation · Tier 1: company or exchange filing · Oct 21, 2026
- S44IBM historical daily prices, October 2026 (close of Oct 30, 2026) · Nasdaq, Inc. · Tier 1: company or exchange filing · Oct 30, 2026
Changes to this page (v2 · Nov 1, 2026)
- v2 · Nov 1, 2026Standardized calculation labels to name the filing they come from; no figures changed. (editorial update, Q3 FY2026)
- v1 · Nov 1, 2026First version, through Q3 FY2026 (quarter ended Sep 30, 2026). (first version)
Numbers come only from tier 1 and tier 2 sources. Read how we research.
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