IBM posted full-year 2025 revenue of $67.5B, up 7.6% year over year, with GAAP diluted EPS of $11.17 and net income of $10.6B. Operating (non-GAAP) EPS reached $11.59, up 12%. Free cash flow hit $14.7 billion, the highest in over a decade. Shares jumped 5.13% the day after the earnings announcement on January 28, 2026.
About International Business Machines (IBM)
International Business Machines Corporation (NYSE: IBM) is a multinational technology and consulting company headquartered in Armonk, New York. Founded in 1911 as the Computing-Tabulating-Recording Company and later renamed IBM, the firm operates across four primary business segments: Software, Consulting, Infrastructure, and Financing. IBM serves clients in over 170 countries, providing hybrid cloud computing platforms, artificial intelligence solutions, enterprise infrastructure, and consulting services.
As of March 2026, IBM carries a market capitalization of approximately $234.7B, trades at a P/E ratio of 22.98, and offers a trailing dividend yield of 2.69%. The company employs approximately 270,300 people worldwide. IBM has paid consecutive quarterly dividends every year since 1916, marking 110 straight years of payments. The current stock price stands at $250.20, within a 52-week range of $214.50 to $324.90.
Top Financial Highlights
- Total revenue for FY2025 reached $67.5 billion, reflecting a 7.6% increase year over year, while growth stood at 6% at constant currency.
- Net income for FY2025 totaled $10.6 billion, rising 75.7% from $6.0 billion in FY2024, supported by the absence of the $3.1 billion pension settlement charges recorded in the prior year.
- GAAP diluted earnings per share reached $11.17 in FY2025, compared with $6.43 in FY2024, representing a 73.7% increase year over year.
- Operating non GAAP diluted earnings per share stood at $11.59, reflecting 12% growth compared with the previous year.
- Gross profit reached $39.3 billion, with a gross margin of 58.2%, representing an improvement of 150 basis points.
- Operating non GAAP gross margin increased to 59.5%, reflecting an expansion of 170 basis points year over year.
- Operating cash flow for the full year reached $13.2 billion, indicating strong cash generation from core operations.
- Free cash flow totaled $14.7 billion, increasing by $2.0 billion or 16% year over year, marking the highest level recorded in more than a decade.
- Revenue from the software segment reached $30.0 billion, increasing 10.6% year over year, while growth stood at 9% at constant currency.
- Consulting segment revenue totaled $21.1 billion, reflecting 1.8% growth, while remaining flat at constant currency.
- Infrastructure segment revenue reached $15.7 billion, increasing 12.1% year over year, with 10% growth at constant currency.
- The generative AI book of business surpassed $12.5 billion since inception, reflecting rising enterprise demand for AI driven solutions.
- Cash and cash equivalents totaled $13.6 billion at the end of the fiscal year.
- Research and development spending reached $8.3 billion in FY2025, highlighting continued investment in technology and innovation.
- Guidance for 2026 indicates more than 5% constant currency revenue growth, along with approximately $1 billion increase in free cash flow compared with the previous year.
Beat or Miss?
| Metric | Reported | Analyst Estimate | Difference |
| Q4 Revenue | $19.69B | $19.19B | +$496M (2.6% beat) |
| Q4 Operating EPS | $4.52 | $4.33 | +$0.19 (4.4% beat) |
| Q4 GAAP Net Income | $5.6B | $2.9B (Q4 2024) | +91% year over year |
| Q4 Gross Margin (GAAP) | 60.60% | 59.5% (Q4 2024) | +110 basis points |
| FY2025 Revenue | $67.5B | Consensus ~$67B | Beat expectations |
| FY2025 Free Cash Flow | $14.7B | Company guided $13.5B+ | Exceeded guidance |
| FY2026 Revenue Estimate (Consensus) | N/A | $71.2B | N/A |
| FY2026 EPS Estimate (Consensus) | N/A | $17.44 | N/A |
| FY2026 FCF Estimate (Consensus) | N/A | $15.9B | N/A |
IBM beat analyst expectations for the fourth consecutive quarter in Q4 2025. The revenue surprise of 2.6% and EPS surprise of 4.4% both represented stronger-than-typical beats for the company.
What Leadership Is Saying?
“In the fourth quarter, we delivered strong revenue growth, with double-digit Software performance. Additionally, Infrastructure continued its double-digit revenue growth with the robust adoption of the next generation of our mainframe platform. Our generative AI book of business now stands at more than $12.5 billion.
This capped a strong 2025 for IBM where we exceeded expectations for revenue, profit and free cash flow. We enter 2026 with momentum and in a position of strength, giving us confidence in our full-year expectations of more than 5% constant currency revenue growth and an increase of about $1 billion in year-over-year free cash flow.”– Arvind Krishna, IBM Chairman, President and CEO
“2025 put IBM’s durability, resilience and differentiation on display. Our portfolio mix, integrated value and rapid innovation drove higher revenue growth and double-digit profit and free cash flow growth. We are excited about our prospects for 2026 as our disciplined execution and unwavering focus on productivity will continue to enable us to invest in the future while returning value to shareholders.”- James Kavanaugh, IBM Senior Vice President and CFO
Historical Performance: FY2025 vs FY2024
| Category | FY2025 | FY2024 | Change (%) |
| Total Revenue | $67.5B | $62.8B | +7.6% |
| Net Income (GAAP) | $10.6B | $6.0B | +75.7% |
| Diluted EPS (GAAP) | $11.17 | $6.43 | +73.7% |
| Gross Profit | $39.3B | $35.6B | 10.50% |
| Gross Profit Margin | 58.20% | 56.70% | +150 bps |
| Operating Profit | $12.3B | $7.5B | 63.30% |
| Operating Cash Flow | $13.2B | $13.4B | -1.90% |
| Free Cash Flow | $14.7B | $12.7B | +15.7% |
| Total Operating Expenses (COGS+SGA+R&D) | $56.7B | $54.4B | +4.2% |
Note: FY2024 GAAP net income and EPS were negatively affected by $3.1 billion ($2.4 billion net of tax) in pension settlement charges recorded in Q3 and Q4 2024. FY2025 GAAP results include a tax benefit from the resolution of certain tax audit matters.
Segment-Level Comparison (FY2025 vs FY2024)
| Segment | FY2025 Revenue | FY2024 Revenue | Change (%) | FY2025 Gross Margin |
| Software | $30.0B | $27.1B | +10.6% | 83.5% |
| Consulting | $21.1B | $20.7B | +1.8% | 28.1% |
| Infrastructure | $15.7B | $14.0B | +12.1% | 58.6% |
| Financing | $0.74B | $0.71B | 3.40% | 45.3% |
Software was the largest and most profitable segment, contributing $9.9B in segment income. Infrastructure saw the strongest year-over-year growth at 12.1%, driven by the IBM Z mainframe refresh cycle and strong adoption of the z17 platform.
Competitor Comparison: Annual Performance
The table below compares IBM’s most recent fiscal year results against three key peers: Accenture (ACN), Oracle (ORCL), and Cisco (CSCO). Note that fiscal year-end dates vary by company (IBM: Dec 2025; ACN: Aug 2025; ORCL: May 2025; CSCO: Jul 2025).
Revenue Comparison
| Company | Latest FY Revenue | Prior FY Revenue | Change (%) |
| IBM (FY2025) | $67.5B | $62.8B | +7.6% |
| Accenture (FY2025) | $69.7B | $64.9B | +7.4% |
| Oracle (FY2025) | $57.4B | $53.0B | +8.4% |
| Cisco (FY2025) | $56.7B | $53.8B | 5.30% |
Net Income Comparison
| Company | Latest FY Net Income | Prior FY Net Income | Change (%) |
| IBM (FY2025) | $10.6B | $6.0B | +75.7% |
| Accenture (FY2025) | $7.8B | $7.4B | +5.6% |
| Oracle (FY2025) | $12.4B | $10.5B | +18.9% |
| Cisco (FY2025) | $10.2B | $10.3B | -1.40% |
Operating Expenses Comparison (COGS + SGA + R&D)
| Company | Latest FY OpEx | Prior FY OpEx | Change (%) |
| IBM (FY2025) | $56.7B | $54.4B | +4.2% |
| Accenture (FY2025) | $58.8B | $54.9B | +7.3% |
| Oracle (FY2025) | $37.0B | $33.9B | +9.3% |
| Cisco (FY2025) | $43.1B | $40.1B | +7.4% |
IBM’s net income growth of 75.7% substantially outpaced all three competitors in the comparison period, though this figure is amplified by the $3.1 billion pension settlement charge that depressed FY2024 results. On an operating (non-GAAP) basis, IBM’s net income grew 14% year over year. IBM also kept operating expense growth at 4.2%, the lowest among its peers, reflecting the company’s $4.5 billion in productivity savings at the 2025 exit run rate.
How the Market Reacted?
IBM shares jumped approximately 5.13% the day following the January 28, 2026 earnings release, with broader coverage indicating gains of up to 7-10% in the days that followed. The stock initially rose 0.1% in after-hours trading to $294, then surged over 5% to $309.24 in extended trading before climbing further to approximately $315 in subsequent sessions.
The positive reaction was driven by the revenue and EPS beats, the strong free cash flow result, and the 2026 guidance that called for more than 5% constant currency revenue growth, which was slightly above consensus expectations.
Analyst sentiment remained firmly positive, with the consensus rating at “Buy” and an average price target of approximately $320. Bank of America, RBC Capital, and Evercore ISI all raised their price targets following the report. As of March 2026, however, IBM shares have pulled back to $250.20, down roughly 20% from the 52-week high of $324.90, reflecting broader market weakness rather than company-specific concerns.
