IBM Reports Strong Q3 2025 Revenue and Profit Growth, Raises Full-Year Outlook

IBM (IBM.US) announced robust third-quarter 2025 results, with revenue reaching $16.3 billion, marking a 9% increase year-over-year. Operating (non-GAAP) diluted earnings per share stood at $2.65, exceeding the analyst estimate of $2.44. The company's performance was also highlighted by a significant growth in free cash flow, contributing to an optimistic outlook for the remainder of the year.

Accelerated Segment Performance

All of IBM's segments demonstrated accelerated performance during the quarter. Software revenue rose by 10%, with Hybrid Cloud (Red Hat) growing 14% and Automation up 24%. Infrastructure revenue saw a substantial increase of 17%, driven by a 28% rise in Hybrid Infrastructure, including 61% growth in IBM Z.

Consulting revenue also experienced growth, increasing by 3%. This broad-based strength across core business areas underscores the company's ability to drive productivity and deliver value through its technology and domain expertise, particularly with AI.

Management Raises Full-Year Outlook

Building on these strong results, management has raised its full-year expectations. The company now anticipates constant currency revenue growth of more than 5% for 2025. This revised outlook reflects confidence in the sustained momentum across its segments and continued client demand.

Furthermore, IBM now expects to generate approximately $14 billion in free cash flow for the full year. This strong free cash flow provides the necessary capital for investments and shareholder returns, as demonstrated by the consistent quarterly dividend.