International Business Machines said first-quarter fiscal 2026 revenue rose 6%, free cash flow hit $2.2 billion and the company ended the period with $11.8 billion in cash, a performance that underscored a stronger start to the year for one of the market's closely watched technology names. IBM also said diluted operating earnings per share climbed 19% and adjusted EBITDA rose 17% in the quarter.
The numbers matter because IBM is trying to show that its software-heavy strategy can keep translating into growth while still throwing off cash. For investors tracking the ibm stock price, the quarter delivered several signals at once: operating pretax margin expanded by 140 basis points, software revenue grew 8% and annualized recurring revenue reached $24.6 billion, up 10% from a year earlier.
Management said demand for data, automation and AI platforms was building faster than expected, even as consulting and infrastructure support showed pockets of pressure. That mix is typical of IBM's current business: the company is leaning on software, hybrid cloud, AI and mainframe systems to offset slower spots elsewhere. It also said the recent acquisition of Confluent closed in mid-March, adding to a software portfolio that is already carrying more weight in the company's growth story.
Red Hat revenue increased 10% in the quarter, while data revenue surged 16% and OpenShift scaled to a $2 billion annualized recurring revenue business. IBM said it has booked more than $600 million in virtualization signings since early 2024, a sign that customers are still buying into its platform strategy. Infrastructure revenue climbed 12% overall, helped by a 25% rise in hybrid infrastructure revenue and a 48% jump in IBM Z revenue.
There were also signs that IBM's cost discipline is feeding the expansion. The company said it has achieved $4.5 billion in productivity savings since 2023 and expects another $1 billion in savings in 2026. Those efficiencies are helping fund growth initiatives, support margin expansion and leave room for acquisitions and investment, which is central to the case IBM is making to shareholders.
Consulting signings rose 6%, but the company said that business still faced some pressure, leaving IBM with a split picture: stronger software and infrastructure on one side, uneven consulting demand on the other. Even so, management said it expects full-year software growth of at least 10%, a target that would help determine whether the first quarter was a clean start or simply a strong opening stretch.
