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IBM's Fourth Quarter and Full-Year Results for 2025

IBM (NYSE:IBM) recently revealed its fourth-quarter earnings for 2025, showcasing a remarkable performance that reflects the company's ongoing commitment to innovation and growth. The results were bolstered by substantial revenue increases in software and infrastructure sectors, highlighting IBM's strategic focus on cutting-edge technology and services.

Fourth Quarter Highlights

For the fourth quarter, IBM achieved total revenues of $19.7 billion, an increase of 12% year-over-year, and 9% in constant currency. The growth was led primarily by double-digit increases in software revenue, which surged by 14%, and was accompanied by a 21% rise in infrastructure revenue. This impressive growth reflects strong demand for their latest mainframe technology and innovative cloud solutions.

Arvind Krishna, the Chairman and CEO of IBM, commented, "In the fourth quarter, we delivered strong revenue growth, particularly in our software and infrastructure segments. Our generative AI book of business is now valued at over $12.5 billion, confirming that our strategic focus is yielding significant results."

Moreover, the gross profit margin improved from 59.5% to 60.6%, indicating enhanced operational efficiency. Operating profit also increased significantly, lifting operating margins from 59.5% to 61.8%.

Full Year Overview

For the entire year of 2025, IBM reported substantial total revenue of $67.5 billion, a 6% increase when adjusted for constant currency. The software business experienced growth of 11%, while consulting services rose 2%. Gross profit margins for the year reached 58.2%, a significant improvement over the previous year.

The company generated net cash from operations of $13.2 billion and free cash flow of $14.7 billion, showing a healthy financial position and ability to return value to shareholders. In line with this performance, IBM’s board approved a quarterly cash dividend of $1.68 per common share, extending its streak of consecutive dividends since 1916.

Looking Ahead to 2026

As IBM transitions into 2026, the company expresses optimism for continued growth, expecting a 5% revenue increase on a constant currency basis, alongside a further $1 billion increase in free cash flow compared to 2025. James Kavanaugh, IBM's CFO, remarked, "Our disciplined execution and unwavering focus on productivity will allow us to invest in the future while also providing shareholders with returns."

The financial outlook is strong, and IBM is well-positioned to capitalize on emerging trends in AI, cloud computing, and data analytics. As the technology landscape evolves, the focus on innovation will continue to drive growth and profitability for IBM, reinforcing its status as a leader in the tech industry.

In conclusion, IBM's fourth quarter and full-year results for 2025 reflect robust business performance, signaling a bright future as the company adapts to changing market demands and continues to innovate across its product offerings.