01—Abstract
Summary
Summary of the 10-Q filed April 23, 2026. Cited figures are marked; the original filing is the authoritative source.
International Business Machines Corporation (IBM) reported a strong first quarter for 2026, with total revenue increasing by 9.5% year-over-year to $15.9 billiona.
This growth was driven by robust performance across its segments, particularly Software and Infrastructure, with Software revenue up 11.3% and Infrastructure revenue up 15.3%. The company also highlighted a significant increase in its operating (non-GAAP) earnings, which grew by 20.1% to $1.8 billionb, demonstrating effective cost management and operational efficiency.
The company's strategic focus on hybrid cloud and AI continues to yield positive results, evidenced by strong revenue growth in key software offerings like Hybrid Cloud and Automation, and the successful integration of recent acquisitions such as Confluent. IBM generated $5.2 billionc in cash from operations and $2.2 billion in free cash flow, underscoring its financial stability and ability to return value to shareholders through dividends while also investing in strategic growth initiatives.
02—Key points
Key Highlights
- Total revenue grew 9.5% to $15.9 billion in Q1 2026, up from $14.5 billion in Q1 2025.
- Software segment revenue increased 11.3% to $7.05 billion, driven by Hybrid Cloud and Data offerings.
- Infrastructure revenue saw a significant jump of 15.3% to $3.33 billion, boosted by strong performance in Hybrid Infrastructure and IBM Z.
- Operating (non-GAAP) earnings surged by 20.1% to $1.8 billion, indicating improved profitability and operational efficiency.
- Diluted earnings per share (EPS) from continuing operations increased by 14.3% to $1.28.
- Cash from operating activities was $5.2 billion, an increase of $0.8 billion year-over-year.
- IBM completed the acquisition of Confluent, Inc. in March 2026 to bolster its AI and data flow capabilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, International Business Machines Corp kept $0.08.
- Revenue$15.92B100.0%
- Cost of revenue−$6.97B43.8%
- Gross profit$8.95B56.2%
- Operating costs−$7.73B48.6%
- Operating income$1.22B7.6%
- Interest, other & tax$-00.0%
- Net income$1.22B7.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 23, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $15.92B$14.54B | +9.5% |
| Cost of Revenue | $6.97B$6.51B | +7.0% |
| Gross Profit | $8.95B$8.03B | +11.4% |
| R&D Expenses | $2.17B$1.95B | +11.4% |
| SG&A Expenses | $5.09B$4.89B | +4.2% |
| Operating Income | $1.22B$1.05B | +15.4% |
| Interest Expense | $473.00M$455.00M | +4.0% |
| Net Income | $1.22B$1.05B | +15.3% |
| EPS (Basic) | $1.30$1.14 | +14.0% |
| EPS (Diluted) | $1.28$1.12 | +14.3% |
| Shares Outstanding (Basic) | 938.53M928.01M | +1.1% |
| Shares Outstanding (Diluted) | 952.13M945.37M | +0.7% |
05—Questions
Frequently Asked Questions
What was IBM's overall revenue performance in the first quarter of 2026?
IBM reported a 9.5% year-over-year increase in total revenue, reaching $15.9 billion for the first quarter of 2026, compared to $14.5 billion in the same period of 2025. Adjusted for currency, revenue growth was 6.1%.
How did IBM's key business segments perform?
The Software segment showed strong growth, with revenue up 11.3% to $7.05 billion, driven by Hybrid Cloud and Data offerings. Infrastructure revenue also performed well, increasing by 15.3% to $3.33 billion, largely due to Hybrid Infrastructure and IBM Z. Consulting revenue grew by 4.0% to $5.27 billion.
What is the significance of the Confluent acquisition?
IBM completed the acquisition of Confluent, Inc. in March 2026. This strategic move aims to enhance IBM's capabilities in deploying generative and agentic AI by providing improved data flow and communication between environments, applications, and APIs.
How did IBM's profitability and cash flow fare in the quarter?
Profitability improved, with operating (non-GAAP) earnings increasing by 20.1% to $1.8 billion. Diluted earnings per share from continuing operations rose by 14.3% to $1.28. The company generated strong cash flow, with $5.2 billion from operating activities and $2.2 billion in free cash flow.
06—Continue