$IBM · INTERNATIONAL BUSINESS MACHINES CORP

IBM filed its 10-Q for Q3 FY2026 (ended September 30, 2026), reporting total revenue of $17.103B (+4.7% YoY), net income of $2.19B (+25.6% YoY), and GAAP diluted EPS of $2.30 versus $1.84 in the prior-year quarter. Software led segment growth at +8.2%, while Consulting was nearly flat at +0.2%. Gross margin contracted to 56.8% from 57.3% a year ago, and R&D expense jumped 14.2% to $2.378B.

Extended-hours trading shows IBM at $237.56, down 5.53% from the regular-session close of $251.48, despite net income rising 25.6% YoY and revenue beating the prior-year quarter by $772M. The selloff suggests the market is reacting to gross margin compression (56.8% vs 57.3% a year ago) and the 14.2% R&D spending surge.

IBM's 25.6% net income jump and Software strength are overshadowed by margin erosion and a 5.5% after-hours selloff — a classic "good earnings, bad stock" signal worth watching.

IBM's Software segment (+8.2%) continues to outpace Consulting (+0.2%) and Infrastructure (+4.2%), consistent with the broader enterprise shift toward AI and hybrid cloud. The $11.4B in YTD acquisitions signals an aggressive inorganic growth strategy in a consolidating IT services landscape.

R&D spending rose 14.2% YoY to $2.378B, well above the 4.7% revenue growth rate, pressuring operating leverage. Financing segment profit margin contracted sharply to 56.1% from 61.6%, with management citing higher unallocated credit loss reserves reflecting current economic conditions.