IBM Raises 2026 Free Cash Flow Outlook After Software Revenue Gains 8%

IBM raised its 2026 free cash flow outlook after software revenue growth accelerated from the prior quarter, while its full-year revenue forecast stayed unchanged. The company now expects free cash flow to rise by more than $1 billion year over year, compared with its previous expectation of an increase of about $1 billion.

For the quarter ended Sept. 30, IBM’s revenue totaled $17.103 billion, up 5% from a year earlier and 6% at constant currency. Operating non-GAAP diluted earnings per share were $2.95, an 11% increase. Diluted earnings per share from continuing operations were $2.31.

Software revenue reached $7.804 billion, up 8% year over year, or 9% at constant currency. Consulting revenue was $5.335 billion, flat from a year earlier and up 2% at constant currency. Infrastructure revenue increased 4% to $3.707 billion, or 5% at constant currency.

Software’s 8% growth rate was faster than its 5% increase in the second quarter. IBM’s earlier quarter also included a 7% decline in Infrastructure revenue and an 8% drop in Transaction Processing revenue. The latest results show growth in Infrastructure alongside the continued expansion of Software. IBM’s second-quarter results preview had highlighted software growth as a key question for the next report.

IBM maintained its 2026 revenue growth outlook of 4% to 5% at constant currency. The free cash flow forecast was the guidance change: IBM had previously expected an increase of about $1 billion for the year.

“We now expect free cash flow to increase by more than $1 billion year-over-year,” IBM Chairman, President and CEO Arvind Krishna said.