# IBM Raises Free Cash Flow Growth Target to Over $1 Billion

> IBM lifts free cash flow growth outlook above $1 billion as software accelerates to 9% and transaction processing rebounds 10%.
- Title: IBM Raises Free Cash Flow Growth Target to Over $1 Billion
- Summary: IBM lifts free cash flow growth outlook above $1 billion as software accelerates to 9% and transaction processing rebounds 10%. IBM raised its full-year free…
- Keywords: ibm, software, transaction processing, free cash flow, revenue growth, q3 2026, arvind krishna, jim kavanaugh, red hat, open shift, confluent, lightwell
- Source: BigGo Finance — https://finance.biggo.com/news/US_IBM_2026-10-21
- Author: BigGo Finance
- Published: 2026-10-21T23:14:29+00:00
- Read time: 2 min
- Topics: ibm, software, transaction processing, free cash flow, revenue growth, q3 2026, arvind krishna, jim kavanaugh, red hat, open shift, confluent, lightwell
## IBM Reports Q3 2026 Revenue Growth
IBM reported third-quarter 2026 revenue growth of 6% at constant currency, accelerating from the 4% base case outlined in July.
## Software Revenue Accelerates to 9%
Software revenue rose 9%, with high-value annual recurring revenue climbing 8% to $24.9 billion.
## Transaction Processing Rebounds 10%
Transaction processing surged 10% after a double-digit decline in Q2, attributed to timing rather than demand destruction.
## Operating Margins Expand
Operating pre-tax margin expanded 70 basis points and diluted operating EPS grew 11%.
## Free Cash Flow Margin Records
Through nine months, IBM generated roughly $8 billion in free cash flow, up 8% year-over-year, with the highest nine-month free cash flow margin in reported history.
## CFO Notes Software Acceleration
CFO Jim Kavanaugh said roughly one-quarter of the software acceleration came from closing about two-thirds of Q2 slip deals.
## Software Acceleration Breakdown
About three-quarters of the software acceleration came from net new business, with transaction processing growing double digits.
## Lightwell Pipeline Expands
IBM's Lightwell, an open-source security offering, has a pipeline approaching $700 million with 40,000 remediated packages released.
## Infrastructure Revenue Grows 5%
Infrastructure revenue grew 5%, driven by 32% growth in distributed infrastructure and record storage revenue growth.
## z17 Mainframe Program Strong
The z17 mainframe program generated more than $1 billion in incremental revenue over six quarters versus prior programs.
## Consulting Revenue Improves 2%
Consulting revenue grew 2%, led by strategy and technology up 4%, with AI embedded in 30% of consulting revenue.
## Full-Year Free Cash Flow Target Raised
IBM raised its full-year free cash flow growth expectation to more than $1 billion, up from its prior target.
## Q&A on TP Durability
CEO Arvind Krishna cautioned that double-digit TP growth will not persist but highlighted a long application modernization cycle benefiting Red Hat OpenShift.
## 2027 Guidance Details
IBM will detail 2027 guidance in January, with focus on software growth, quantum, and AI adoption.
## Key takeaway

IBM raised its full-year free cash flow growth expectation to more than $1 billion after software revenue grew 9% and transaction processing rebounded 10%.