IBM delivered a strong finish to 2025, reporting fourth-quarter revenue of $19.7 billion, up 12 percent year over year, driven by accelerating demand for software, generative AI, and next-generation mainframe systems.
For the full year 2025, IBM posted revenue of $67.5 billion, an increase of 8 percent, reflecting broad-based growth across software, infrastructure, and consulting, with generative AI emerging as the company’s most powerful growth engine.
Software leads growth with AI momentum
IBM’s Software segment generated $9.0 billion in revenue in Q4 2025, up 14 percent, marking another quarter of double-digit growth. Annual recurring revenue reached a solid $23.6 billion, rising by more than $2 billion from the end of 2024. Growth accelerated to 11 percent, supported by more than seven points of organic expansion.
Hybrid Cloud, led by Red Hat, grew 10 percent, while Automation revenue climbed 18 percent. The Data portfolio delivered the strongest performance, rising 22 percent, and Transaction Processing increased 8 percent.
IBM’s AI strategy continued to gain traction, with strong performance across AI offerings. The company’s generative AI book of business surpassed $2 billion in the quarter, taking total generative AI bookings to more than $12.5 billion.
Consulting delivers record GenAI bookings
Consulting revenue reached $5.3 billion in the fourth quarter, up 3 percent year over year. Strategy and Technology grew 2 percent, while Intelligent Operations rose 5 percent, reflecting steady enterprise demand for digital transformation and AI-led services.
IBM delivered its largest generative AI bookings quarter to date, exceeding $2 billion, pushing total consulting GenAI bookings to more than $10.5 billion. The consulting backlog stood at $32 billion, up 2 percent at actual rates. Segment profit margins continued to expand, with full-year margins reaching a three-year high.
Infrastructure surges on IBM Z strength
Infrastructure revenue climbed 21 percent in Q4 2025 to $5.1 billion, fueled by exceptional performance in Hybrid Infrastructure, which grew 29 percent. IBM Z revenue surged 67 percent, marking a record revenue quarter as enterprises adopted the new z17 platform with AI-led innovation.
Distributed Infrastructure revenue rose 3 percent, with new Power server adoption offsetting storage product cycle dynamics. Infrastructure Support increased 1 percent. IBM said IBM Z remains a key contributor to profit and free cash flow, with full-year segment profit margin expansion of 450 basis points.
Financing and regional performance
IBM Financing revenue reached $0.2 billion in the quarter, up 5 percent.
For the full year, software revenue increased 11 percent, consulting revenue rose 2 percent, and infrastructure revenue grew 12 percent. Regionally, the Americas delivered $33.3 billion in revenue, up 7 percent. Europe, Middle East and Africa contributed $22.2 billion, up 9 percent, while Asia Pacific generated $12.0 billion, down 1 percent.
IBM Software
IBM’s Software segment delivered strong performance in both the fourth quarter and full year 2025, reflecting sustained enterprise demand for hybrid cloud, automation, data, and transaction processing solutions.
In Q4 2025, Software revenue reached $9.0 billion, growing 11 percent. Automation and Data were the fastest-growing sub-segments, with Automation revenue rising 14 percent to $2.3 billion and Data increasing 19 percent to $2.1 billion. Hybrid Cloud generated $2.0 billion in revenue, up 8 percent, while Transaction Processing contributed $2.6 billion, growing 4 percent.
For the full year 2025, Software revenue totaled $30.0 billion, up 9 percent. Automation remained a key growth driver, increasing 16 percent to $7.7 billion, followed by Hybrid Cloud, which grew 12 percent to $7.3 billion. Data revenue rose 11 percent to $6.3 billion, while Transaction Processing revenue was flat at $8.6 billion.
IBM Consulting
IBM’s Consulting segment delivered stable performance in the fourth quarter and full year 2025, supported by steady demand for digital transformation and operational services.
In Q4 2025, consulting revenue reached $5.3 billion, increasing 1 percent. Strategy and Technology generated $2.9 billion in revenue and remained flat compared with the prior year, while Intelligent Operations rose 3 percent to $2.4 billion, reflecting continued enterprise focus on efficiency and process optimization.
For the full year 2025, consulting revenue totaled $21.1 billion and was flat. Strategy and Technology declined 1 percent to $11.5 billion, while Intelligent Operations grew 2 percent to $9.5 billion.
IBM Infrastructure Segment Summary – Q4 and Full Year 2025
IBM’s Infrastructure segment delivered strong growth in the fourth quarter and full year 2025, driven primarily by robust demand for hybrid infrastructure and the IBM Z mainframe platform.
In Q4 2025, infrastructure revenue reached $5.1 billion, growing 17 percent. Hybrid Infrastructure was the main growth engine, rising 24 percent to $3.8 billion, supported by strong adoption of next-generation platforms. IBM Z posted exceptional growth of 61 percent in the quarter, reflecting a major mainframe refresh cycle. In contrast, Distributed Infrastructure was flat, while Infrastructure Support declined 2 percent to $1.3 billion.
For the full year 2025, infrastructure revenue totaled $15.7 billion, up 10 percent. Hybrid Infrastructure increased 17 percent to $10.6 billion, while IBM Z revenue surged 48 percent for the year, reinforcing its role as a key profit and cash flow contributor. Distributed Infrastructure declined 3 percent, and Infrastructure Support slipped 1 percent to $5.1 billion.
Leadership commentary
“In the fourth quarter, we delivered strong revenue growth, with double-digit Software performance. Additionally, Infrastructure continued its double-digit revenue growth with the robust adoption of the next generation of our mainframe platform,” said Arvind Krishna, IBM chairman, president and chief executive officer, commenting on the fourth-quarter 2025 earnings results.
RAJANI BABURAJAN
