IBM Smashes Q3 Forecasts: $2.65 EPS & $16.33B Revenue Defy Wall Street Expectations
Tech Titan Outperforms in Turbulent Market
IBM delivered a stunning third-quarter performance that left analysts scrambling to update their spreadsheets. The computing giant posted earnings of $2.65 per share—clearing the consensus bar with room to spare.
Revenue rockets to $16.33 billion as enterprise clients double down on hybrid cloud and AI solutions. The numbers suggest corporate America's digital transformation push remains firmly intact despite economic headwinds.
Another quarter proving that while crypto traders chase memecoins, established tech players continue printing actual money. Sometimes the real alpha hides in plain sight—right in the earnings reports of companies that actually generate revenue.
AI drives optimism for IBM as its core business faces more pressure
IBM has leaned heavily on AI to improve efficiency and lower costs. Krishna previously told The Wall Street Journal in May that the company had replaced 200 human resources roles with automation tools.
While that helped improve margins, the earnings release showed that growth remains uneven across the company’s segments.
The software unit brought in $7.21 billion, surging by 10% from a year earlier and matching StreetAccount’s estimate. However, investors expected stronger performance given the AI narrative that the company has promoted all year.
The consulting segment generated $5.3 billion, ahead of the $5.24 billion projection, while infrastructure revenue, which includes the mainframe computing business, jumped by 17% to $3.6 billion.
The company also announced a quarterly dividend of $1.68 per share, continuing a streak that dates back to 1916. IBM generated $3.1 billion in cash from operating activities during the third quarter, up $0.2 billion year over year. Free cash Flow reached $2.4 billion, rising $0.3 billion from the prior year, while $1.6 billion was returned to shareholders in dividends.
Surging cash flow and debt define the third quarter
For the first nine months of 2025, IBM reported $9.2 billion in net cash from operations, unchanged from the prior year, and $7.2 billion in free cash flow, an increase of $0.6 billion. The company ended the third quarter with $14.9 billion in cash, restricted cash, and marketable securities, up $0.1 billion from the end of 2024.
Total debt stood at $63.1 billion, including $11.3 billion in IBM Financing debt, an $8.1 billion increase since the start of the year.
For 2025, IBM expects constant-currency revenue growth of more than 5%. With current exchange rates, currency is expected to add a 1.5-point tailwind. Free cash flow is projected to remain around $14 billion for the full year.
Earlier, before the report came out, IBM’s board approved a regular quarterly dividend of $1.68 per share for shareholders of record on November 10, payable on December 10.
Chief Financial Officer James Kavanaugh said, “New innovation, the strength and diversity of our portfolio, and our disciplined execution led to acceleration in revenue growth and profit in the quarter.”
James added that IBM’s “consistent focus on the fundamentals” drove double-digit adjusted EBITDA growth and another period of strong free cash flow, providing the funds needed for continued investments and shareholder returns.
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