IBM(US:IBM)2025-10-23 20:21Financial Performance - Revenue for Q3 2025 was $16.3 billion, a 9.1% increase from $14.97 billion in Q3 2024[227] - Operating (non-GAAP) earnings for Q3 2025 were $2.5 billion, up 16.8% from $2.16 billion in Q3 2024[230] - Diluted earnings per share from continuing operations were $1.84 in Q3 2025, compared to a loss of $0.34 in Q3 2024[240] - Gross profit margin increased to 57.3%, up 1.1 percentage points year-over-year[227] - Revenue for the nine months ended September 30, 2025, was $47.8 billion, a 5.9% increase from $45.2 billion in 2024[243] - Net income for the nine months ended September 30, 2025, was $4.993 billion, a 60.6% increase from $3.109 billion in 2024[245] - Diluted earnings per share from continuing operations increased by 59.7% to $5.27 in the first nine months of 2025[254] - Total revenue for Q3 2025 was $16.331 billion, a 9.1% increase from $14.968 billion in Q3 2024[262] - Total revenue for the nine months ended September 30, 2025, was $47,849 million, representing a year-over-year increase of 5.9%[264] Revenue Breakdown - Software revenue grew by 10.5% as reported, while consulting revenue increased by 3.3%[234] - Americas revenue increased by 9.3% as reported, while EMEA revenue rose by 14.6%[235] - Software revenue for the same period was $20,932 million, up 9.2% year-over-year, driven by strong growth in Hybrid Cloud and Automation[270] - Consulting revenue for the nine months was $15,706 million, a modest increase of 1.2% year-over-year, with Intelligent Operations showing a growth of 2.8%[276] - Hybrid Cloud revenue increased by 13.7% in Q3 2025, driven by strong demand for subscription offerings like OpenShift and Ansible[268] - Infrastructure revenue for Q3 2025 was $3,559 million, reflecting a 17.0% increase year-over-year, with Hybrid Infrastructure revenue growing by 28.2% to $2,263 million[285] Cash Flow and Expenses - The company generated $3.1 billion in cash from operations and $2.4 billion in free cash flow in Q3 2025[233] - Cash provided by operating activities was $3.1 billion in Q3 2025, an increase of $0.2 billion compared to Q3 2024[241] - Free cash flow for the first nine months of 2025 was $7.2 billion, an increase of $0.6 billion compared to the prior-year period[258] - Total expenses decreased by 24.8% in Q3 2025, primarily due to a prior-year pension settlement charge of $2.7 billion[237] - Total expense decreased by 24.8% year-over-year to $6,931 million for the three months ended September 30, 2025[300] Investments and Acquisitions - The company made significant investments in innovation, including the acquisition of HashiCorp in Q1 2025[256] - The company invested $7.9 billion in acquisitions during the first nine months of 2025, including the acquisition of HashiCorp[371] - The company completed six acquisitions in the first nine months of 2025, including HashiCorp, enhancing its hybrid cloud capabilities[354] Profitability Metrics - Operating (non-GAAP) pre-tax income from continuing operations was $3.0 billion, a 22.0% increase compared to Q3 2024[239] - Operating (non-GAAP) earnings for the first nine months of 2025 were $6.7 billion, an 11.5% increase from $5.994 billion in 2024[245] - The gross profit margin for Software increased to 83.5% for the first nine months of 2025, up 0.4 points compared to the prior year[273] - The gross profit margin for Infrastructure in Q3 2025 was 57.2%, an increase of 2.2 percentage points compared to the prior year, with segment profit rising 52.6% to $644 million[287] Tax and Debt - The effective tax provision for Q3 2025 was $686 million, compared to a tax benefit of $485 million in Q3 2024, influenced by a one-time charge from tax law changes[323] - Total debt rose to $63,115 million as of September 30, 2025, an increase of $8,142 million from December 31, 2024, due to debt issuances for liquidity[331] - The amount of unrecognized tax benefits as of September 30, 2025, was $9,325 million, which could favorably affect the company's effective tax rate if recognized[328] Market and Economic Outlook - The company expects technology to continue supporting overall economic growth and competitive advantage[231] - AI adoption is accelerating, with IBM's AI offerings focused on helping businesses scale AI and improve productivity through solutions like IBM watsonx[352] - The company faces various risks including economic downturns, innovation failures, and integration challenges from acquisitions[393]