International Business Machines Corporation stock research
FY2025 Q4
International Business Machines (IBM) Gross Margin — Quarter Ended Dec 31, 2025
Revenue and gross profit both increased compared to the prior quarter and the same quarter last year, while cost of revenue rose less proportionally. Gross margin improved versus both periods, reflecting a stronger relationship between revenue and gross profit.
Gross margin takeaway
Quarter ended Dec 31, 2025 · FY2025 Q4
Revenue and gross profit both increased compared to the prior quarter and the same quarter last year, while cost of revenue rose less proportionally. Gross margin improved versus both periods, reflecting a stronger relationship between revenue and gross profit.
- The most observable driver is the improvement in gross margin, which rose compared to both the prior quarter and the year-ago quarter, supported by a higher gross profit relative to revenue.
- Compared to the prior quarter, revenue and gross profit were higher, and gross margin improved. Versus the same quarter last year, all three metrics were also higher, with gross margin strengthening.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
60.6%
Gross profit
$11.9B
Revenue
$19.7B
Cost of revenue
$7.8B
Quarter-over-quarter change
+3.3 pts
Year-over-year change
+1.1 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Mar 31, 2025 | $14.5B | $8.0B | $6.5B | 55.2% |
| Jun 30, 2025 | $17.0B | $10.0B | $7.0B | 58.8% |
| Sep 30, 2025 | $16.3B | $9.4B | $7.0B | 57.3% |
| Dec 31, 2025 | $19.7B | $11.9B | $7.8B | 60.6% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Sep 30, 2025
+3.3 pts
Year-over-year change
Dec 31, 2024
+1.1 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The most observable driver is the improvement in gross margin, which rose compared to both the prior quarter and the year-ago quarter, supported by a higher gross profit relative to revenue.
Compared to the prior quarter, revenue and gross profit were higher, and gross margin improved. Versus the same quarter last year, all three metrics were also higher, with gross margin strengthening.
Monitor the trend in cost of revenue relative to revenue, as its slower growth contributed to margin expansion.