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Dec 31, 2025
IBM Q4 2025 Earnings Report
IBM reported strong fourth-quarter 2025 earnings, driven by double-digit growth in Software and Infrastructure, exceeding expectations for revenue, profit, and free cash flow.
Key Takeaways
IBM delivered a strong fourth quarter in 2025, with revenue reaching $19.7 billion, up 12% year-over-year, and diluted EPS of $5.86. The company saw robust performance in Software and Infrastructure segments, both achieving double-digit growth. Full-year results also showed significant increases in revenue, profit, and free cash flow, with generative AI bookings exceeding $12.5 billion.
Fourth-quarter revenue was $19.7 billion, an increase of 12% (9% at constant currency) year-over-year.
Software revenue grew by 14% (11% at constant currency) and Infrastructure revenue increased by 21% (17% at constant currency).
Diluted earnings per share (EPS) from continuing operations was $5.86, up 88% year-over-year.
Full-year free cash flow reached $14.7 billion, up $2.0 billion year-over-year.
Revenue by Segment
Forward Guidance
IBM expects full-year 2026 constant currency revenue growth of more than 5 percent and an increase of about $1 billion in year-over-year free cash flow, with a half-point currency tailwind.
Positive Outlook
- Full-year constant currency revenue growth expected to be more than 5 percent.
- Full-year free cash flow expected to increase by about $1 billion year-over-year.
- Current foreign exchange rates are expected to provide about a half-point tailwind to growth for the year.
- Momentum from strong 2025 performance is expected to continue into 2026.
- Disciplined execution and unwavering focus on productivity will enable investments in the future.
Challenges Ahead
- No specific negative forward guidance was provided in the report.
- Potential downturn in economic environment and client spending budgets could impact results.
- Failure of innovation initiatives or damage to reputation could hinder growth.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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