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Cash flow generation is strong but volatile, with free cash flow margin reaching 30.0% in Q1 2026 despite minimal net income of $1.2B, yet operating cash flow conversion has swung from -8.73x to 4.25x over the past ten quarters due to massive non-cash adjustments.
International Business Machines Corporation (IBM) cash flow statement — 30-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 | Dec'08 | Dec'07 | Dec'06 | Dec'05 | Dec'04 | Dec'03 | Dec'02 | Dec'01 | Dec'00 | Dec'99 | Dec'98 | Dec'97 | Dec'96 |
|---|
| Cash from Operations | 14.89B | 13.19B | 13.45B | 13.93B | 10.44B | 12.8B | 18.2B | 14.77B | 15.25B | 16.72B | 17.08B | 17.25B | 16.87B | 17.48B | 19.59B | 19.85B | 19.55B | 20.77B | 18.81B | 16.09B | 15.02B | 14.91B | 15.35B | 14.54B | 13.79B | 14.02B | 9.27B | 10.11B | 9.27B | 8.87B | 10.28B |
| Operating CF Margin % | - | 19.53% | 21.43% | 22.52% | 17.24% | 22.31% | 32.98% | 25.59% | 19.16% | 21.13% | 21.38% | 21.11% | 18.18% | 17.78% | 19.04% | 18.56% | 19.57% | 21.69% | 18.15% | 16.29% | 16.43% | 16.36% | 15.94% | 16.31% | 16.98% | 16.88% | 10.49% | 11.55% | 11.35% | 11.29% | 13.99% |
| Operating CF Growth % | 71.21% | -1.88% | -3.49% | 33.5% | -18.45% | -29.68% | 23.2% | -3.13% | -8.83% | -2.11% | -0.99% | 2.29% | -3.53% | -10.73% | -1.31% | 1.52% | -5.89% | 10.42% | 16.92% | 7.12% | 0.7% | -2.83% | 5.59% | 5.43% | -1.66% | 51.19% | -8.28% | 9.04% | 4.6% | -13.72% | -4.04% |
| Net Income | 10.72B | 10.57B | 6.02B | 7.5B | 1.64B | 5.74B | 5.59B | 9.43B | 8.73B | 5.75B | 11.87B | 13.19B | 12.02B | 16.48B | 16.6B | 15.86B | 14.83B | 13.43B | 12.33B | 10.42B | 9.49B | 7.93B | 7.48B | 6.56B | 5.33B | 8.15B | 8.09B | 7.71B | 6.33B | 6.09B | 5.43B |
| Depreciation & Amortization | 1.48B | 5.02B | 4.67B | 4.4B | 4.8B | 6.42B | 6.7B | 6.06B | 4.48B | 4.54B | 4.38B | 3.85B | 4.49B | 4.68B | 4.68B | 4.82B | 4.83B | 4.99B | 5.45B | 5.2B | 4.98B | 5.19B | 4.92B | 4.92B | 4.49B | 4.51B | 5B | 6.58B | 4.99B | 5B | 5.01B |
| Stock-Based Compensation | -336M | 0 | 1.31B | 1.13B | 987M | 982M | 937M | 679M | 510M | 534M | 544M | 468M | 512M | 614M | 688M | 697M | 629M | 558M | 659M | 713M | 846M | 1.04B | 1.58B | 1.57B | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Deferred Taxes | 0 | 0 | -2.33B | -1.11B | -2.73B | -2B | -3.2B | -1.53B | 853M | -931M | -1.13B | 1.39B | -237M | -1.61B | 797M | 1.21B | 1.29B | 1.77B | 1.9B | 740M | 1.72B | 2.19B | 1.79B | 790M | -67M | 664M | 29M | -713M | -606M | 358M | 11M |
| Other Non-Cash Items | 10.96B | 1.74B | 2.46B | -170M | 5.53B | -136M | -71M | -1.1B | 122M | 14M | 62M | 551M | 1.84B | -234M | -730M | -343M | -801M | -395M | -338M | -93M | -250M | -1.49B | -382M | -195M | 1.06B | 120M | -792M | -4.79B | -261M | -273M | -1.79B |
| Working Capital Changes | -2.93B | -4.14B | 1.31B | 2.18B | 202M | 1.79B | 8.25B | 1.23B | 554M | 6.81B | 1.36B | -2.2B | -1.77B | -2.45B | -2.45B | -2.39B | -1.24B | 418M | -1.19B | -890M | -1.78B | 57M | -35M | 895M | 2.96B | 585M | -3.05B | 1.32B | -1.18B | -2.31B | 1.61B |
| Change in Receivables | 0 | -3.16B | -374M | 725M | -539M | 1.37B | 5.3B | 502M | 1.01B | 1.3B | 712M | 812M | 1.27B | -1.41B | -2.23B | -1.28B | -489M | 2.13B | 274M | -1.41B | -512M | 2.22B | 2.61B | 2.02B | 4.13B | 2.84B | -4.72B | -1.68B | -2.74B | -3.73B | -650M |
| Change in Inventory | 0 | 0 | -166M | 390M | 71M | 138M | -209M | 67M | -127M | 18M | -14M | 133M | -39M | -57M | 280M | -163M | 92M | 263M | -102M | 182M | 112M | 202M | -291M | 293M | 793M | 287M | -55M | 301M | 73M | 432M | 196M |
| Change in Payables | 0 | 0 | -13M | 65M | 213M | 85M | 138M | -503M | 126M | 47M | 197M | 81M | -456M | -529M | -224M | 451M | 174M | 170M | -860M | -142M | 355M | -536M | 411M | 617M | -55M | 0 | 2.25B | -3M | 362M | 699M | 319M |
| Cash from Investing | -9.99B | -10.3B | -4.94B | -7.07B | -4.2B | -5.97B | -3.03B | -26.94B | -4.91B | -7.1B | -10.54B | -8.2B | -3B | -7.3B | -9B | -4.4B | -8.51B | -6.73B | -9.29B | -4.67B | -11.55B | -4.42B | -5.35B | -5.12B | -6.9B | -6.11B | -4.25B | -1.67B | -6.13B | -6.16B | -5.72B |
| Capital Expenditures | -1.22B | -1.62B | -1.05B | -1.25B | -1.35B | -2.06B | -2.62B | -2.29B | -3.4B | -3.23B | -3.57B | -3.58B | -3.74B | -3.62B | -4.08B | -4.11B | -4.18B | -3.45B | -4.17B | -4.63B | -4.36B | -3.84B | -4.37B | -4.39B | -4.75B | -5.4B | -5.62B | -5.96B | -6.52B | -6.79B | -5.88B |
| CapEx % of Revenue | 1.77% | 2.39% | 1.67% | 2.01% | 2.22% | 3.6% | 4.74% | 3.96% | 4.27% | 4.08% | 4.46% | 4.38% | 4.03% | 3.68% | 3.97% | 3.84% | 4.19% | 3.6% | 4.02% | 4.69% | 4.77% | 4.22% | 4.54% | 4.93% | 5.85% | 6.5% | 6.35% | 6.81% | 7.98% | 8.65% | 8.01% |
| Acquisitions | -3.12B | -8.29B | -2.59B | -5.09B | -1.08B | -3.18B | 167M | -31.55B | -139M | -701M | -6.15B | -3.75B | 1.7B | -2.76B | -3.12B | -1.8B | -5.87B | -794M | -6.24B | -699M | -3.8B | -550M | -1.71B | -1.74B | -1.93B | -916M | 565M | 4.88B | 0 | 0 | -716M |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | -17.2B | -2M | -80M | -243M | -515M | -320M | 51M | 6.64B | -825M | -2.11B | -1.05B | -599M | -1.12B | -1.21B | -832M | -242M | -203M | -483M | -382M | -213M | -375M | 315M | 623M | 458M | 178M | 494M | 1.05B | 743M | 655M | 816M | 1.02B |
| Cash from Financing | -9.43B | -3.83B | -7.08B | -1.77B | -4.96B | -13.35B | -9.72B | 9.04B | -10.47B | -6.42B | -5.92B | -9.41B | -15.45B | -9.88B | -11.98B | -13.7B | -12.43B | -14.7B | -11.83B | -4.74B | -8.2B | -7.15B | -7.56B | -7.77B | -7.26B | -5.31B | -6.36B | -8.63B | -4.99B | -3.09B | -3.95B |
| Debt Issued (Net) | -2.62B | 2.87B | -880M | 4.5B | 1.22B | -8.12B | -3.71B | 16.28B | -301M | 3.45B | 2.76B | 19M | 1.78B | 6.96B | 2.25B | 2.37B | 2.35B | -7.46B | -2.44B | 12.11B | -122M | 609M | -1.03B | -3.48B | -3.17B | -437M | 643M | -1.1B | 2.12B | 3.94B | 1.76B |
| Equity Issued (Net) | -319M | -308M | 745M | -402M | -407M | -319M | -302M | -1.63B | -4.61B | -4.53B | -3.63B | -4.86B | -13.68B | -13.86B | -11.99B | -15.05B | -15.38B | -7.43B | -6.8B | -18.83B | -6.4B | -6.51B | -5.36B | -3.2B | -3.09B | -3.91B | -6.07B | -6.64B | -6.28B | -6.25B | -5B |
| Dividends Paid | -6.31B | -6.25B | -6.15B | -6.04B | -5.95B | -5.87B | -5.8B | -5.71B | -5.67B | -5.51B | -5.26B | -4.9B | -4.3B | -4.1B | -3.77B | -3.47B | -3.18B | -2.86B | -2.58B | -2.15B | -1.68B | -1.25B | -1.17B | -1.08B | -1B | -966M | -929M | -879M | -834M | -783M | -706M |
| Share Repurchases | -1.05B | -1.02B | 0 | -402M | -407M | -319M | -302M | -1.63B | -4.61B | -4.53B | -3.63B | -4.86B | -13.68B | -13.86B | -11.99B | -15.05B | -15.38B | -7.43B | -10.58B | -18.83B | -8.08B | 0 | 0 | -3.23B | -3.09B | -3.91B | 0 | 0 | 0 | 0 | 0 |
| Other Financing | -176M | -139M | -797M | 176M | 176M | 909M | 92M | 98M | 112M | 174M | 204M | 535M | 709M | 1.07B | 1.54B | 2.45B | 3.77B | 3.05B | -1M | 4.12B | 0 | 0 | 0 | -32M | 0 | 0 | 0 | 0 | -5M | -1M | 0 |
| Net Change in Cash | -4.81B | -520M | 1.07B | 5.1B | 1.03B | -6.72B | 5.36B | -3.29B | -630M | 4.15B | 140M | -800M | -2.2B | 300M | -1.5B | 1.26B | -1.52B | -558M | -2.25B | 6.97B | -4.55B | 2.52B | 2.76B | 1.91B | -948M | 2.77B | -1.48B | -332M | -1.73B | -581M | 428M |
| Free Cash Flow | 13.96B | 11.57B | 11.76B | 12.12B | 8.46B | 10.03B | 14.97B | 11.86B | 11.28B | 12.95B | 12.93B | 13.1B | 12.69B | 13.35B | 14.87B | 15.18B | 14.79B | 16.7B | 13.93B | 10.58B | 9.85B | 10.28B | 10.29B | 9.56B | 8.44B | 8.62B | 3.09B | 3.69B | 2.5B | 1.76B | 4.1B |
| FCF Margin % | 20.21% | 17.14% | 18.74% | 19.59% | 13.98% | 17.49% | 27.12% | 20.55% | 14.18% | 16.36% | 16.18% | 16.03% | 13.67% | 13.57% | 14.45% | 14.2% | 14.81% | 17.44% | 13.44% | 10.71% | 10.78% | 11.28% | 10.69% | 10.73% | 10.39% | 10.38% | 3.5% | 4.21% | 3.06% | 2.24% | 5.58% |
| FCF Growth % | 18.25% | -1.57% | -2.98% | 43.22% | -15.61% | -33% | 26.17% | 5.14% | -12.88% | 0.13% | -1.3% | 3.3% | -4.95% | -10.25% | -2.04% | 2.6% | -11.39% | 19.9% | 31.57% | 7.42% | -4.15% | -0.13% | 7.63% | 13.33% | -2.12% | 178.73% | -16.13% | 47.34% | 42.38% | -57.09% | -20.31% |
| FCF per Share | 14.66 | 12.20 | 12.55 | 13.15 | 9.28 | 11.09 | 16.69 | 13.29 | 12.31 | 13.82 | 13.49 | 13.33 | 12.56 | 12.10 | 12.87 | 12.51 | 11.49 | 12.45 | 10.08 | 7.30 | 6.34 | 6.32 | 6.02 | 5.45 | 4.87 | 4.86 | 1.71 | 1.97 | 1.30 | 0.87 | 1.92 |
| FCF Conversion (FCF/Net Income) | 1.30x | 1.25x | 2.23x | 1.86x | 6.36x | 2.23x | 3.26x | 1.57x | 1.75x | 2.91x | 1.44x | 1.31x | 1.40x | 1.06x | 1.18x | 1.25x | 1.32x | 1.55x | 1.53x | 1.54x | 1.58x | 1.88x | 2.05x | 2.22x | 3.85x | 1.82x | 1.15x | 1.31x | 1.47x | 1.45x | 1.89x |
| Interest Paid | 0 | 0 | 1.98B | 1.67B | 1.4B | 1.51B | 1.83B | 1.69B | 1.42B | 1.21B | 1.16B | 995M | 1.06B | 982M | 1.01B | 956M | 951M | 1.24B | 1.46B | 1.49B | 1.2B | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 0 | 1.72B | 1.56B | 1.86B | 2.1B | 2.25B | 2.09B | 1.75B | 1.6B | 1.08B | 2.66B | 5.75B | 4.02B | 3.17B | 4.17B | 3.24B | 1.57B | 2.11B | 2.61B | 2.07B | 1.99B | 1.84B | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Quick answers to the most common questions about buying IBM stock.
International Business Machines Corporation (IBM) generated $13.19B in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
International Business Machines Corporation (IBM) generated $11.57B in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
International Business Machines Corporation (IBM) spent $1.62B on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, International Business Machines Corporation (IBM) returned $6.25B to shareholders via cash dividends and spent $1.02B on share repurchases. This shows the company's commitment to returning capital to its equity investors.
Key Metrics
Top Statement Risk
Leverage limits strategic flexibility
Metrics are mathematically derived from official filings.
Earnings Quality Masked by Volatile Non-Cash Items
IBM's operating cash flow conversion ratio has been highly erratic, ranging from -8.73x to 4.25x over the past ten quarters, indicating that reported net income is frequently distorted by significant non-cash adjustments and pension-related items.
The extreme volatility in the OCF/NI ratio, particularly the massive 4.25x figure in Q1 2026 and the negative -8.73x in Q3 2024, suggests that GAAP net income is an unreliable proxy for underlying cash generation. This pattern is consistent with the prior finding of earnings volatility from non-operational items, and it implies that investors must look beyond the income statement to assess the true economic health of the business. The wide gap in certain quarters appears driven by large swings in working capital and non-cash pension adjustments, which can obscure the core operational performance.
FCF Growth Accelerates Against Muted Net Income
Despite a modest $1.2B net income in Q1 2026, IBM generated a record $4.8B in free cash flow, representing a 30.0% FCF margin and signaling a potential decoupling of cash flow from accounting profits.
The trajectory shows a significant acceleration in FCF generation in early 2026, with the Q1 and Q2 results showing strong, sustained cash output. This trend suggests the company's strategic shift towards higher-margin software and recurring revenue streams is beginning to manifest in tangible cash returns. However, the historical volatility, such as the $1.5B FCF in Q2 2025, indicates this acceleration may not yet be fully entrenched and could be susceptible to macroeconomic cycles or lumpy deal timings.
Disciplined Buybacks Fund a Hefty Dividend Commitment
Over the past ten quarters, IBM has deployed over $15.6 billion toward dividends and share repurchases, a figure that appears to be funded primarily by operating cash flow, indicating a shareholder-centric capital allocation strategy.
The consistent quarterly dividend payments of approximately $1.5-$1.6 billion underscore its importance as a core return mechanism for investors. The repurchase activity, while variable (peaking at $414M in Q3 2025), has been modest relative to the dividend outlay, suggesting management is prioritizing income stability over aggressive EPS accretion. This allocation pattern, when viewed alongside the company's elevated leverage, warrants monitoring to ensure that cash is not being returned at the expense of necessary reinvestment in AI and cloud infrastructure.
Working Capital Swings Create FCF Volatility
Working capital changes have been a major driver of quarterly operating cash flow volatility, with a massive $2.2 billion positive contribution in Q1 2026 contrasting sharply with a $3.3 billion negative drag in Q4 2025.
These large, inconsistent swings in working capital suggest that IBM's cash flow profile is significantly influenced by the timing of receivables collections and payables management, which is typical for a large-scale IT services and hardware business. The pattern implies that single-quarter operating cash flow figures can be misleading without smoothing out these effects. The negative $1.3 billion working capital change in Q2 2026 indicates that the prior quarter's favorable dynamics were not sustained, pointing to the underlying lumpiness of the business model.
What the Cash Flow Statement Obscures
The reported operating cash flow figure consistently includes significant add-backs for depreciation, amortization, and pension income, which, while non-cash, can inflate the headline number and obscure the cash cost of maintaining IBM's capital-intensive legacy infrastructure.
The steady stream of over $1.1 billion in quarterly D&A charges represents the cash cost required to maintain IBM's existing asset base, a figure that is added back to calculate operating cash flow. Furthermore, the treatment of pension-related income can be opaque, potentially masking the true underlying cash requirements of the business. This is consistent with the prior analysis noting that pension income can create a gap between GAAP net income and actual free cash flow, and it suggests investors should carefully examine the non-cash components within the operating cash flow line.