Welcome, and thank you for standing by. At this time, all participants are in a listen-only mode. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now, I will turn the meeting over to Olympia McNerney, IBM's Global Head of Investor Relations. Olympia, you may begin. Thank you. I'd like to welcome you to IBM's third quarter 2025 earnings presentation. I'm Olympia McNerney, and I'm here today with Arvind Krishna, IBM's Chairman, President, and Chief Executive Officer, and Jim Kavanaugh, IBM's Senior Vice President and Chief Financial Officer. We'll post today's prepared remarks on the IBM Investor website within a couple of hours, and a replay will be available by this time tomorrow. To provide additional information to our investors, our presentation includes certain non-GAAP measures. For example, all of our references to revenue and signings growth are at constant currency. We provided reconciliation charts for these and other non-GAAP financial measures at the end of the presentation, which is posted to our investor website. Finally, some comments made in this presentation may be considered forward-looking under the Private Securities Litigation Reform Act of 1995. These statements involve factors that could cause our actual results to differ materially. Additional information about these factors is included in the company's SEC filings. With that, I'll turn the call over to Arvind. Thank you for joining us today. In the third quarter, IBM delivered strong results across revenue, profit, and free cash flow, exceeding our expectations. Revenue growth accelerated to 7%, our highest growth in several years, with all our segments accelerating sequentially. These results underscore the strength of our business model and portfolio, and the innovation we are delivering to clients. Clients continue to turn to IBM as a trusted partner to help them modernize, embed AI, and build resilient infrastructure. Let me touch on the economy before I turn to our execution. Last quarter, I said we had moved from being cautiously optimistic to optimistic. Technology remains a key driver of growth and competitive advantage. AI adoption is accelerating, and hybrid cloud remains the foundation of enterprise IT. Clients are leaning on enterprise technologies to scale, innovate, and drive productivity. There are always macro uncertainties, but overall, we continue to see broad-based demand from clients and remain optimistic. Now turning to our execution this quarter, our strategy remains focused: hybrid cloud and artificial intelligence. Our products and services fuel growth and productivity for our clients. You can see this in our results for the quarter. Software growth accelerated to 9%, led by strength in Automation. Automation was up 22%, highlighting our end-to-end portfolio of leading solutions that optimize operations, automate infrastructure and workflows, build resiliency, and drive cost efficiency for clients. Many of our automation products are infused with AI, enhancing their capabilities. HashiCorp also continues to accelerate within IBM, benefiting from our go-to-market distribution and joint product innovation, highlighting our synergy potential. Consulting accelerated, reflecting growing demand for AI services as clients need help designing, deploying, and governing AI at scale. Infrastructure delivered robust performance, growing 15%, driven by continued strength in z 17, our strongest two-quarter launch in history. The Spyre accelerator, which will be available in Q4, will bring advanced GenAI and real-time inferencing capabilities inside IBM Z, redefining how enterprises capture AI value within their most mission-critical environments. In addition to being a demand driver, AI is also a powerful productivity driver for IBM, contributing to our strong financial performance. In 2023, we set out on a goal to achieve $2 billion of productivity savings, and today we are well ahead of that with an expectation of $4.5 billion of annual run-rate savings exiting this year. I believe we have significant opportunity ahead of us to continue to become even leaner and more nimble. Our Client Zero approach sets us apart, as we have internally identified and addressed pain points on data readiness, siloed and vertical workflows, application and IT sprawl, using our own technology and domain expertise. Clients see these results and look to us to help them on their own transformations, driving over 1,000 Client Zero engagements this year. The breadth of our AI offerings is a key differentiator, combining an innovative technology stack with Consulting at scale and our Client Zero journey. Our GenAI book of business continues to show momentum at over $9.5 billion inception to date. In Consulting, we are embracing disruption and leading the way with our digital asset and services as Software strategy. While we are early in this journey, we have over 200 consulting projects using digital workers at scale. In Software, demand for watsonx and Red Hat AI remains strong, with early momentum in our agentic platform, watsonx Orchestrate. watsonx Orchestrate helps enterprises deploy AI by connecting agents, models, and workflows with governance and security. Orchestration will be critical as enterprises run a variety of models to optimize cost and performance. Our hybrid approach to models enables clients to use the best option for each use case: IBM's Granite models, third-party models, or open models from Hugging Face, Meta, and Mistral. We recently launched Granite 4.0, our next-generation family of open small language models. Granite 4.0 delivers high performance and cost efficiency using 70% less memory and offering twice the inferencing speed of conventional models. We also partnered with Anthropic to infuse Claude into IBM products to unlock new GenAI features and capabilities. This week, we announced a partnership to run watsonx on Groq, giving clients access to their inferencing technology, which provides ultra-high-speed, low-latency AI capabilities at lower costs. All this leads to real, tangible value for clients. Companies like Deutsche Telekom and S&P Global are embedding watsonx into core workflows. In Infrastructure, clients such as Nationwide, State Street, and Crédit Agricole are turning to AI to manage increased workloads and use z17 for its advanced AI inferencing capabilities and enhanced resiliency. Accelerating innovation remains a core focus for IBM. At our recent IBM Tech Xchange developer and builder conference, we showcased how we are helping clients and partners with innovation that blends enterprise strength and AI speed. We had almost twice the number of participants as last year, with speakers including United Airlines, T-Mobile, Prudential, UPS, Morgan Stanley, Verizon, and Cigna. We announced Project Bob, facilitating AI-powered software development, helping teams ship higher-quality code faster. We have more than 8,000 developers within IBM that are using Project Bob, reporting productivity gains averaging 45%, another powerful Client Zero use case. We also announced new automation capabilities, including a real-time infrastructure graph connecting applications, services, and ownership through HashiCorp Terraform. As outlined at our Investor Day, we are on a path to demonstrate the first error-corrected quantum computer by 2028 and continue to deliver key milestones in our quantum roadmap. As we collaborate with our ecosystem of over 280 partners, we are making tangible progress on near-term use cases. For example, HSBC achieved a notable improvement in bond trading predictions using IBM's Heron quantum processor. Vanguard announced a breakthrough in optimizing portfolio construction using IBM's quantum computing as a service. We recently announced a partnership with AMD to build quantum-centric supercomputing architectures, leveraging IBM's quantum expertise and AMD's CPUs, GPUs, and other accelerator technologies. Just last week, IBM and the Basque Government unveiled Europe's first IBM Quantum System Two. This marks the second installation outside the United States and underscores our commitment to global leadership in quantum computing. In closing, we are executing on our strategy of accelerating revenue growth and delivering higher profitability. Given these results and the momentum in our portfolio, we are raising expectations for revenue growth to more than 5% and free cash flow to about $14 billion for the year. With that, let me hand it over to Jim to go through the financials. Thanks, Arvind. In the third quarter, our revenue growth accelerated to 7%, our highest growth in several years, with all of our segments accelerating sequentially. Revenue scale, mix, and productivity drove 290 basis points of adjusted EBITDA margin expansion, 22% adjusted EBITDA growth, and 15% operating earnings per share growth, highlighting the significant operating leverage in our business model. Through the first nine months, we generated $7.2 billion of free cash flow, our highest nine-month free cash flow margin in reported history. We exceeded our expectations on revenue, profitability, adjusted EBITDA, earnings per share, and free cash flow, reflecting the strength of our portfolio and the disciplined execution across our business. Software revenue grew 9%, fueled by accelerating organic growth, up a few points since last quarter, and continued contribution from our high-value annual recurring revenue base, which grew to $23.2 billion, up 9% since last year. Growth in Automation accelerated to 22%, driven by strength in the organic portfolio and early synergies with HashiCorp, which maintained momentum and delivered its highest bookings quarter in history. Red Hat bookings growth accelerated to about 20%, and revenue grew 12%. This performance was driven by a softening in consumption-based services and RHEL trending back towards single-digit growth as we wrap on last year's exceptional double-digit performance. Demand for our hybrid cloud products remains strong, and all three of our major subscription offerings gained market share again this quarter, with growth accelerating for both OpenShift and Ansible. OpenShift ARR is now $1.8 billion, growing over 30%. Data was up 7%, driven by continued strength in our AI portfolio, and Transaction Processing revenue declined by 3%, reflecting another quarter of Z17 outperformance as clients continue to prioritize hardware spend on our latest IBM Z system. While this dynamic impacts near-term revenue, we're encouraged by a healthy pipeline that positions us well for future demand. Infrastructure delivered another strong quarter, growing 15%. Hybrid Infrastructure grew 26%, and Infrastructure Support was flat. Within Hybrid Infrastructure, IBM Z delivered its highest third-quarter revenue in nearly two decades, up 59% year-to-year, fueled by the early success of our z17 platform, purpose-built for AI and hybrid cloud, with breakthrough capabilities in real-time inferencing, quantum-safe security, and AI-driven operational efficiency. Clients are investing in z17 not only for its rel iability and scalability, but because it enables secure, high-performance computing at the core of their digital transformation strategies. Distributed Infrastructure, up 8%, reflects broad-based growth across our Storage portfolio as clients scale capacity to meet rising data and AI demands. Consulting returned a growth in the third quarter, with revenue up 2%, improving sequentially and marking a positive inflection point in performance. Intelligent Operations was up 4%, while Strategy and Technology revenue stabilized, with both lines of business showing quarter-over-quarter momentum. This growth reflects solid demand for our strategic offerings: business application transformation, application modernization and migration, and application operations, as clients focus investments on solutions that accelerate AI transformation and maximize return. As Arvind mentioned, we are embracing AI disruption and leading with a software-driven services delivery model. We are transforming into a hybrid model of people plus software that delivers efficiency and scale. This approach is already driving internal productivity, reflected in the 220 basis points of segment profit margin expansion year to date and resonating with clients seeking to operationalize AI strategies. By combining domain expertise with scalable technology platforms, we reinforce our role as a strategic provider of choice in this evolving landscape. Our Consulting generative AI book of business accelerated to over $1.5 billion in the quarter, with the number of projects more than doubling year to year, underscoring our momentum. While total signings declined this quarter, the quality of signings continued to strengthen, with more strategic wins from new clients and expanded engagements within existing ones. Turning to profitability, we have delivered nine consecutive quarters of operating pre-tax margin expansion, highlighting the evolution of our portfolio mix and our laser focus on productivity, which again played out this quarter. Revenue scale, mix, and productivity drove expansion of operating gross profit margin by 120 basis points, adjusted EBITDA margin by 290 basis points, and operating pre-tax margin by 200 basis points, ahead of our expectations and well above our model. Segment profit margins expanded by 420 basis points in Infrastructure, 270 basis points in Software, and 200 basis points in Consulting, with Consulting margins at the highest level in three years. Revenue scale and mix contribution from IBM Z is a significant source of profitability and free cash flow, and combined with the 3x - 4x stack multiplier, helps fuel our investment in innovation and drive growth. Productivity is also a key driver of profit margin expansion as we deploy AI at scale across IBM in areas including finance, supply chain, sales, HR, service delivery, and customer support to improve efficiency and reduce costs. While we have made progress on this journey and expect $4.5 billion of run-rate savings exiting this year, there is still significant opportunity ahead for us to drive even more efficiency and cost savings. Through the third quarter, we generated $7.2 billion of free cash flow, up about $600 million year-over-year, resulting in our highest year-to-date free cash flow margin in reported history. The largest driver of this growth is adjusted EBITDA, up $1.8 billion year-over-year, partially offset by proceeds from the Palo Alto QRadar transaction, which resulted in a reduction in CapEx in the third quarter of last year and working capital dynamics. Our strong liquidity position, solid investment-grade balance sheet, and disciplined capital allocation policy remain a focus for us. We ended the quarter with cash of $14.9 billion. Our debt balance ending the quarter was $63.1 billion, including $11.3 billion of debt for our financing business, with a receivables portfolio that is over 75% investment grade. In addition, year to date, we returned $4.7 billion to shareholders in the form of dividends. Now, let me talk about what we see going forward. Through the first nine months of the year, we delivered 5% revenue growth, 17% adjusted EBITDA growth, 10% operating earnings per share growth, and 9% free cash flow growth. The strength and diversity of our portfolio, disciplined capital allocation, and relentless focus on productivity continue to drive the durability of our revenue and free cash flow performance. Given the strength of this performance, we are raising our expectations for revenue, adjusted EBITDA, and free cash flow. We now expect to deliver revenue growth of more than 5%, adjusted EBITDA growth of mid-teens, and free cash flow of about $14 billion for 2025. Let me focus on full-year growth for the segments. We continue to expect Software revenue growth of approaching double digits for the full year. Through the first nine months, we delivered growth above our model of 17% in Automation and inline model growth of 7% in Data, and these trends should continue. We continue to expect mid-teens growth for Red Hat, albeit at the low end. This is underpinned by strong bookings growth in the third quarter of about 20% and our revenue under contract, which is growing in the mid-teens. As we wrap on elevated growth in consumption-based services last year, we expect double-digit revenue growth in the fourth quarter, with an accelerated growth profile heading into 2026. While Transaction Processing was down 1% year to date as clients prioritize spend on our high-value innovation z17, the strength of the new cycle provides future monetization value across the Z stack. We are seeing this strength in our pipeline as we enter the fourth quarter, which we expect will return to growth. With continued strength in Z17, we now expect Infrastructure to contribute over 1.5 points to IBM's revenue growth this year. In Consulting, we are encouraged by our return to growth this quarter and continued progress in our GenAI book of business. We see an inflection in growth going forward, with fourth-quarter revenue performance similar to our third-quarter growth. Now turning to profitability, we started this year expecting over 50 basis points of operating pre-tax margin expansion. Through the first nine months of this year, we delivered 130 basis points of expansion, well ahead of our expectations. This performance is driven by our revenue scale, portfolio mix, and progress with productivity initiatives, enabling operating leverage while providing investment flexibility. We are raising IBM's full-year operating pre-tax margin expansion to over a point, and our operating tax rate expectation for the year remains in the mid-teens. For the fourth quarter, we are comfortable with consensus estimates for constant currency revenue growth and profitability. Let me conclude by saying we are pleased with our continued disciplined execution and look forward to capturing growth opportunities ahead of us. Arvind and I are now happy to take your questions. Olympia, let's get started. Thank you, Jim. Before we begin Q&A, I'd like to mention a couple of items. First, supplemental information is provided at the end of the presentation. Second, as always, I'd ask you to refrain from multi-part questions. Operator, let's please open it up for questions. Thank you. At this time, we'll begin the question and answer session of the conference. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Amit Daryanani with Evercore ISI. Please state your question. Yep. Thanks a lot. Good afternoon, everyone. I guess maybe just I want to focus on free cash flow. I really appreciate the quantification of free cash flow at $14 billion for the year. If I get my math right, this sort of implies free cash flow is up double digits in 2025, and your conversion rate is around 125%, give or take. Can you just touch on if there's any one-off dynamics that we should be aware of that are helping in free cash flow in 2025? I'm really just trying to think that as we get into 2026, and if your growth is in line to your longer-term models, is there anything that could preclude free cash flow growing a few points higher than sales growth, sort of the way you folks have talked about it? I'd love to just kind of spend a little bit of time on free cash flow and if anything alters on the capital allocation as well. Thank you. Thanks, Amit. I appreciate the question. It's right at the heart of how Arvind has repositioned this company around the two key measures. One, accelerating revenue growth, and two is driving that free cash flow engine that's going to fuel the investments for us to continue to make to drive long-term sustainable competitive advantage. If you take a step back first, as we said in prepared remarks, we're very pleased with our free cash flow engine, starting out the next evolution of our journey coming off the mid-term model. Year to date, $7.2 billion, up $600 million year-over-year, highest free cash flow margin in reported history through three quarters for our company. I'll just state that underneath it, we overcame in the third quarter a $500 million headwind from last year as a result of the Palo Alto QRadar transaction that was recorded as an asset sale and reduction in CapEx. We got through 2025's headwind around that. What's driving that free cash flow? Probably the most important thing is the underlying fundamentals of our business: an accelerating top-line revenue growth profile and an operating leverage engine that is driving productivities like we haven't seen in a long period of time. I think we're nine quarters in a row of driving operating leverage and significant margin productivity. I would tell you, high quality, high sustainable free cash flow. That's what gave us the confidence for the second quarter in a row to take up our free cash flow estimate for the year, now about $14 billion. Why did we do that? We took up revenue, we took up operating margin, we took up adjusted EBITDA, we took up our profitability, and all that leads to free cash flow. When you take a look at what's driving that $14 billion, $2.5 billion, give or take, year-to-year growth in adjusted EBITDA, mid-teens growth, well above our model. Underneath that, you take a look at some of the dynamics we've been talking about since back in January. Yes, a higher profitable-based engine will pay higher cash tax. Yes, we're investing long-term for this business. We are going to have higher CapEx outside of the QRadar transaction. Yes, we made a significant strategic acquisition. We've got acquisition-related charges and foregone interests. All of that is embedded in 2025's guidance. Now you take a step back to the heart of your question of 2026. 2026, I would tell you, what is our free cash flow generation engine flywheel? It's accelerated revenue growth, the 5% + in this company, it's driving operating leverage, and it's leveraging an efficient balance sheet. We see all that continuing to play out in 2026. Those underlying fundamentals, yeah, they deliver a sustainable realization number, by the way, in the mid to high 120s, kind of to your question. By the way, we've been there for four years in a row already, so we can handle that. You bring that all together, I think it talks to the statement and the confidence of our focused portfolio, our disciplined capital allocation, the diversity of our business model, and the relentless focus of us driving productivity and operating leverage that gives us the investment flexibility to continue driving long-term sustainable competitive advantage. Thank you very much for the question. Great. Operator, let's take our next question. Thank you. Your next question comes from Wamsi Mohan with Bank of America. Please state your question. Yes, thank you so much. Arvind, you said AI adoption is accelerating right at the top of the call. I'm wondering if you can maybe help us think through the financial impact in maybe revenue terms for IBM, how we should think about the progression for that. Are we hitting some kind of inflection that we should see meaningful upside into 2026 on the AI front? Maybe quickly, your quick thoughts on the impact of the federal government shutdown, if there's any materiality to that to IBM here in the fourth quarter. If I could, Jim, if you could just clarify the organic growth in Software in third quarter and expectations for Transaction Processing going into the end of the year. Thank you so much. Wamsi, thanks for those questions. Let me try and unpack it. Let me go with the easiest one first. The easiest one is on the current government shutdown. I would tell you that we see a de minimis impact to IBM. It's always hard to say zero because something could happen. We still got two months to go in the quarter. So far, we have not seen any impact from the shutdown. The reason for that is the makeup of our business. Our technology business is largely comprised of hardware as well as software, software mostly on a subscription basis. These are running critical systems: payments for Social Security, benefits for the VA. All of these are considered essential, so I don't really see that at risk. A little bit over half the business is consulting projects, but the consulting we do is of a similar nature: ERP, benefits, helping people reduce paper, reduce errors, back to payments. These are all considered essential. That is the reason that we may be in the minority of not seeing any direct impact so far. I just leave it at that because so far we have not. Nobody has come to us about any of these projects. That's the first question that is straightforward. Next, you asked about AI. Look, our book of business, we talked about it being over $9.5 billion. Just the Consulting piece was $1.5 billion in the quarter itself. These are very real numbers. As those consulting projects start to get executed and as that backlog builds up, certainly the contribution to Consulting is going to be very real. We talked about another number to tie it there, which is not a different number, is the 200 projects in Consulting, which are already using digital workers, which effectively are the AI agents that we have built that get deployed by our consultants on behalf of our clients. About not quite, but close to 20% of our overall book of business is Technology and Software. There, that is mostly subscription revenue as well as products that people are purchasing from us. Those numbers certainly begin to add up. I would tell you that a big fuel behind both our OpenShift growth as well as our automation growth is due to the AI capabilities that are infused inside those products. If I sort of put the first two pieces together, de minimis on the government shutdown and definitely the AI piece is a strong contributor to the software growth. I believe it's a big piece of why Consulting is making a return to growth because we called the play to move towards AI almost two years ago. As that book of business has built up, it is overcoming the headwinds from staff augmentation projects going away and people getting rid of discretionary spending in consulting. Jim, I'll let you take the third piece. Yeah, just to amplify the last piece, and then I'll get into your question about software organic and TP. To Arvind's point, year to date from a software perspective, we're growing 8.5% overall, approaching 9% right now. About two points of that growth is coming out from our GenAI book of business. We're getting very good realization and penetration. To Arvind's point on Consulting, north of a $7.5 billion book of business, I'd put that up against any consulting company right now. We called that play, to Arvind's point, a few years ago. We do think we have a differentiated competitive value proposition of a company with an integrated tech stack plus strategic partnership AI plus a consulting business at scale with an integral part of IBM Client Zero that drives distinctive use cases and references. We've already had over 1,000 client engagements year to date around GenAI from an enterprise software and consulting perspective overall. In Consulting, it's already north of 22% of our $31 billion backlog. In this quarter, we eclipsed double-digit composition of our revenue, 12% of our revenue, growing very nicely at still a two to three-point competitive advantage in terms of margin overall. By the way, you see that play out in our Consulting margins, year to date up 220 basis points, the highest margins we've had in a long time. Now, to your point about Software, Software, we're very pleased growing 9% in the quarter. We accelerated about three points organically quarter to quarter. This wasn't an inorganic contribution. In fact, our inorganic contribution came down as we wrapped on some of these. It's being driven by the strong contribution of our high-value recurring revenue, now a book of business $23 billion, up 9%. When you look underneath it, TP, TP right now, just given the strength of the mainframe cycle driving cycle dynamics, we're very encouraged around the future monetization value opportunity. As you heard in prepared remarks, we're calling a return to growth in TP in the fourth quarter with the strong pipeline we got. If you map it back to the z16 cycle, what happened? In 2022, our TP revenue was flat. In 2023, we grew high single digit. In 2024, we grew double digit. You look at 2025 right now, we're calling back to growth, probably a quarter early compared to a historical cycle. We feel very good about that growth profile. Given the strong z17, where we've shipped over 100% more MIPS than the P16 or the z16 cycle, we're actually feeling pretty good about that valuation opportunity moving forward. Great. Operator, let's take our next question. Your next question comes from Ben Reitzes with Melius Research. Please state your question. Hey, guys, thanks a lot. Appreciate the question. Arvind, I appreciate that fourth quarter reported Software growth is set to accelerate in your guidance. It sounds like above 10%. I was just wondering about next year. You do wrap the Hashi acquisition in the spring, or I think March. Are there signs that it can accelerate from here? Obviously with Red Hat decelerating a little, I just think folks would like to know broadly if you can keep double digit next year or even accelerate based on the portfolio, realizing that you're wrapping the acquisitions in that time frame. Thanks so much, guys. Yeah, Ben, great question. Let me decompose it into the four parts of software that we talk about, and then we'll touch on acquisitions and their contribution. I'll ask Jim to try to put it all together back into the financial model for you. Let's take Red Hat. We talked about 20% signings growth this quarter. We had similar numbers in the previous quarter. As that becomes the bulk of the Red Hat book of business entering 2026, we do expect to see Red Hat returning to mid-teens or close to mid-teens growth. That would be an acceleration from where we are this quarter. Next, we talked about, and in the last question, Jim touched on Transaction Processing or mainframe software. We have seen this happen multiple times. In the first couple of quarters of a new cycle, TP tends to come down because people are very much focused on getting their hardware capacity. As that hardware capacity gets deployed, the TP revenue begins to come up along with some of the ELA cycle dynamics that are there, and we begin to see that. I expect to see TP grow, not quite in double digits, to be clear, but let's call it low single digits for sure into next year. Automation has been growing in this last quarter at 22%. Yes, the HashiCorp acquired revenue was a piece of it, and as you point out, that'll go away in the second quarter. However, the acquired properties we have tend to provide continued growth for quite a while. Because of the Hashi bookings, which are significantly ahead of where we had planned them to be, I expect we'll continue to see growth out of Hashi through 2026 as well. Not quite as much as an acquired growth, but I do expect that we'll continue to see automation in the double digits for sure, but maybe not north of [20%]. We've continued to see the Data and AI portfolio grow in the mid to high single digits. That does put aside what other acquisitions we will do. Part of our model for Software is that we'll get a couple of points of growth from acquired revenue, and we see a good market for targets. Yes, that is yet to play out, but in the current regulatory environment, combined with what we can see out there, we expect that we should be able to do that as well. That was sort of giving you a color on the portfolio and the different pieces. I'll ask Jim to get into then closing it back up in terms of what is the organic and inorganic and overall Software numbers. Yeah, thanks, Ben, for the question overall. Obviously, Software, we are a software-centric platform company overall. It is at the heart of both our top-line growth factor profile and also, more importantly, from a free cash flow generation engine overall because it delivers about three quarters of our profit. You take a look at 2025, I think we positioned extremely well with regards to accelerating revenue growth throughout the year off of tougher comps at the end of 2024. We got to remember that. I think that's a reflection of the strength of that portfolio, the diversity of our portfolio across the board, and to the discipline execution. Now, when you look at 2026, early indicators, and I'll put them in some big buckets. Arvind went into some of the detail. First, I think we shouldn't forget, and Arvind called this out 90 days ago, which I think surprised many of you. We're operating in an attractive TAM and a positive backdrop from a technology perspective overall. We feel very good about technology being a source of competitive advantage, and you're seeing that play out in areas around hybrid cloud modernization, around AI, around automation, and many areas. We see that continue. The market backdrop, we couldn't be more optimistic around 2026. Two, the strength and diversity of our portfolio, not only has it been repositioned over the last three or four years to accelerate growth, what is happening? More and more of our composition of software is now aligned to higher growth and markets, which gives us a better vector of growth even as we go into 2026. Three, our annuity portfolio, and I don't think we get a lot of value for this, and we keep bringing it up. Over a $23 billion ARR book of business, we feel we're going to exit the fourth quarter at double digits. That's a great indicator for 2026 because that is 80% of our Software portfolio overall. Four, new innovation, GenAI. I already talked about GenAI, the book of business and the acceleration we got, and all of the capital investment that's going into the infrastructure providers, I think is just going to accelerate the innovation curve for enterprise AI overall. We are a leader in enterprise AI, just given our tech stack, our Software portfolio, and Consulting, and that should deliver a few points. Five, Red Hat. Our bookings, our three-month, our six-month, our nine-month, our 12-month RPO shows accelerating growth coming off a 20% bookings overall. By the way, we actually had more opportunity to do even better than that 20%, and that should fuel and inflect growth. Next, M&A. The point I would bring up on M&A, Arvind already talked about, it's embedded in our model. We've said that all along. I think we've got to continue selling the investor narrative because that M&A drives a much higher organic growth engine because those synergies play to those acquisitions. That's how we pay for control premiums. That's how we get an accelerated top-line growth. That's how we get an accelerated bottom-line growth, and we get a creative value in free cash flow in two years. Our organic engine continues to grow. Finally, TP monetization. Arvind wrapped up on it. Let's just remind all the investors, TP gets monetized based on hardware installed MIP usage. I already said two quarters in, albeit early, we're 130% program to program on z17. Off of a z16, that was the most successful program in the history of IBM. We're at 130%. I do my math and calculation. Higher capacity opportunity creates higher monetization opportunity, creates higher price opportunity, creates higher value creation opportunity. I think when you look at it, we feel pretty good about delivering our model and software. Operator, let's take the next question. Your next question comes from Erik Woodring with Morgan Stanley. Please state your question. Hey, guys, thank you very much for taking my question. Just one quick clarification question there, Arvind. The growth rates you just provided in the response to that question for 2026 or into 2026, I just wanted to confirm those were all organic growth rates or whether they included M&A embedded in them. My question, just taking a step back, Arvind, is we've seen cloud providers experience exceptional growth recently, particularly in infrastructure services and large-scale AI workloads. How does IBM view that trend, and do you see a similar opportunity for IBM Cloud to capture long-term infrastructure-driven demand? Thanks. The growth rates that we talked about, we tend not to do much M&A or any in both our mainframe or TPS as well as in some of the other areas. The growth rates I mentioned, I would call it, are largely organic without having any significant M&A, but tokens, small M&A are probably all included in there, Erik. If we do anything substantial, it would help accelerate those growth rates. Let's just put it that way. I'll also let Jim comment on it after I talk about the cloud opportunity. We actually partner deeply with all the hyperscalers. A thing that we haven't talked about, but it's certainly no secret, for example, we are one of CoreWeave's large clients. We also tend to use a lot of infrastructure at AWS, at Azure, as well as at GCP. As opposed to that, it's an opportunity for us. Erik, it's the flip. We get a huge opportunity to do both consulting projects as well as deploy our software on those infrastructures for our clients. As an example, if I take one of our very large health insurance clients, as they think through where they're going to deploy their AI models, they do not like deploying in a public instance, but they're perfectly fine getting a private instance in a cloud and deploying models there, deploying our software stacks there, and getting growth. We tend to do that. We also tend to, in some cases, for example, with Groq, we are deploying Groq in people's own data centers. That's a big opportunity that comes there that'll show up in revenue for us, both in Consulting as well as in Software, because on top of the Groq infrastructure, we tend to put our software stacks in some instances. It's less about us getting an opportunity in our cloud only, but much more that that's a growth vector that we are able to ride and that helps increase overall growth rate in both Software as well as in Consulting. Lastly, let's not forget, our biggest beneficiary of AI infrastructure is our mainframe and our storage portfolio at this time. The latest generation mainframe, we will surprise you with some of the numbers. This quarter, a fully populated single system is capable of doing 450 billion inferences per day. As clients purchase that capability, that'll be both a further accelerant to mainframe Infrastructure growth, but it also comes with a software stack that helps them do all of that inferencing. If I look at our storage portfolio, as many people have realized, you need a lot of storage to be able to do AI training, and we are going to be beneficiaries of that inside our storage portfolio as people deploy that. I would much more say we are actually the direct beneficiary of the hyperscaler growth of AI capability and capacity as enterprises use this capability. We will be a beneficiary in our mainframe and storage stack in a direct way. I think that would, I hope Erik, address that part of the question. Yeah, Erik, and just to the numbers piece, I mean, first of all, we are all focused here to execute a very important fourth quarter, to finish a very successful 2025 for IBM. Both Arvind and I are giving some color about 2026, about the confidence we have in our portfolio. Let me just take a step back and remind you on Software. Our Software model shared at Investor Day, approaching double digits, that is all in, that has two to three points, give or take, at each year, maybe a point more and maybe a point less, depending on our discipline capital allocation around M&A of inorganic contribution and six to seven to eight points of organic. When you look at 2025, you go do the math, we're probably going to be approaching 6% + organic growth overall, and we're going to have somewhere three to four points this year because we took advantage of a very strategic opportunity with HashiCorp this year. When you take a look at 2026, the TP growth monetization value that I talked about, the Red Hat accelerated growth profile that's on our revenue under contract, the annuity growth profile that is approaching or now going to be double digits at the exiting the year, each of those are going to fuel that organic growth engine overall. I think, you know, big picture, the model is pretty much what we kind of look at right now for 2026. Great. Operator, let's take the next question. Your next question comes from Jim Schneider with Goldman Sachs. Please state your question. Good evening. Thanks for taking my question. Arvind, I was wondering if you could maybe elaborate a little bit on how you're thinking about M&A from a target perspective. You've previously stated that you're looking to accelerate growth and you're looking for things that fit strategically with a portfolio. On the margin, anything in any way you're thinking about differently about either the portfolio or the product piece of it or the potential size of a transaction you might like to undertake? Specifically, would you consider undertaking a somewhat larger, more transformative transaction, maybe not quite as big as you did with Red Hat, but of sort of similar scale relative to your overall portfolio? Thank you. Yeah, Jim, thanks for that question. M&A is an extremely important part of our strategy. I want to just perhaps reiterate because this has come up on prior calls as well. We look at it always in a multi-year window. We got to look at what is our excess cash flow over a few years. Once we have that window, that means we can sort of buy ahead, which means we can sort of lean in. If we don't find a good target, like we didn't, for example, I think in 2023, then we actually spent much less than we could have. That's just a backdrop to the amount of financial flexibility that we have, which if I remember at our Investor Day earlier this year, we laid out that we have somewhere in the mid-20s, perhaps a bit more flexibility over a three-year window. That's kind of a way to sort of look at it. Next, we are very focused on the areas that we have already explained as our strategy. Very top level, we say hybrid cloud and artificial intelligence. That translates into our Hybrid portfolio, our Automation portfolio, and our Data and AI portfolio. You've seen us do acquisitions in there. For example, we bought an AI company that does B-LLM, but it fit into our Hybrid portfolio because it's a direct part of the Red Hat and OpenShift portfolios. We did HashiCorp, which fits directly into Automation. We did DataStax, which fits into Data. When I look at the target lists, there is, I think, a pretty rich list of opportunities that are out there in the private markets, in the PE world, and the public markets across those opportunities that we think will, some of them will be actionable. It's hard to predict upfront which are and which are not. I think that if I put it that way, and just to be clear, anything that is of size has to fit three criteria. It has to fit with the strategy we just laid out. There has to be synergy, a.k.a. the growth rate inside IBM will be above what it was as a standalone entity. Some of that comes from our geography spread. We have a sales team in most countries in the world. Some of it comes by the ability to bundle more attractive offerings together. It comes from faster deployment, for example, leveraging our consulting team or the rest of our sales team. All three will be able to add to a faster growth rate. Third, if it is of size, then we are very disciplined also that we like it to become accretive to cash by the end of the second year. Those are the criteria. As you've seen, we have found plenty in the last few years that do fit that whole criteria. I hope that gives you a sense. Now, your question on larger, I'll just use that word, larger. We will never rule anything out, but it has to meet all the criteria that we just laid out. It is not for size alone. Red Hat allowed us to enter a new space, helped accelerate IBM's overall growth rate, by the way, both in Software and in Consulting. That was the sort of the synergy piece that was there. Many people forget, Red Hat also had a very attractive free cash flow profile that we have been able to leverage since the acquisition. Great. Operator, let's take one final question. Thank you. That question comes from Brian Essex with JP Morgan. Please state your question. Hi, good afternoon, and thank you for taking the question. Arvind, maybe as a follow-up to part of Erik's question, and I appreciate your hybrid exposure here, could you generalize what you're seeing with regard to mixes enterprises focus on AI readiness? Are cloud-native ISV-based agentic applications, maybe targeted at task and point solution automation, those low-hanging fruit to prove ROI before pursuing self-hosted projects? Within the IT budgets, where's the spending coming from? What's at risk of getting trimmed as companies focus on adopting AI-based technology? Brian, let me address the first part of your question with a bit of depth. I actually think that these are an and. Are people going to leverage ISV? Otherwise, I'll call it SaaS applications for getting exposure to AI and agents either as part of those entities or as added value onto them. There are hundreds, if not thousands, of little boutique companies that provide some of those agents that are out there. I think they will absolutely do that. They'll kick the tires on it. They'll get some value. At the end of the day, to get real value from AI, people have to be able to integrate their existing applications. How do they tie what is happening in their payroll system and HR system to perhaps something that is happening in their CRM system to perhaps something that is happening in their ERP system? As people begin to want to build much more profound agents, that is where a lot of the action that we see is happening. As people try to build those agents out, they get deeply concerned about what is that data, where is that data going, and they are going to deploy those either in their own data centers or in a private instance. Note, a private instance on the cloud is quite protected, and people do deploy a lot of critical applications that are there. If I think about our clients, in the regulated industries, banking and insurance still is very much a data center as well as a cloud picture. If I look at healthcare, healthcare data tends not to go out very much from their own data centers. If I look at telecom, most people build their own backbones, and their data and applications reside there, but certain other things like marketing may well reside in the public cloud. As we begin to look upon all that, I believe that we are at the very beginning. I would actually characterize this, Brian, that if I was to use the baseball analogy, we are still in the first innings of enterprise AI rollout, and I expect that we'll be seeing an and. We will see more SaaS AI usage. We will see more public cloud AI usage, and we will begin to see a lot more private AI usage as people begin to get into more critical applications and agents. On the IT budgets, look, IT budgets have been growing ahead of GDP. That's simply an observation. I think this began four or five years ago, but IT budgets are growing typically two to three points ahead of GDP growth. You combine that then with inflation because GDP, after all, is real, not nominal. I see IT budgets staying healthy. A lot of the growth comes from the fact that the IT budgets are growing as opposed to at the cost of something else. That said, I think people are getting very, very effective at trying to run and maintain with lower costs and putting more money towards newer projects. Five, ten years ago, that ratio used to be 70/30. 70 are running what is, 30 are new. I think that is shifting more towards a 60/40 spread. Where it'll go is where we'll get the benefit. That is why our Automation portfolio and our hybrid portfolio get a lot more growth because people are using that. It is sort of substituting for labor and in some cases for services by letting those capabilities move into Software. Great. Operator, I think we have time for one last question. Thank you. The next question comes from Mark Newman with Bernstein. Please state your question. Oh, hi, thanks for taking my question. Very good to see the growing AI book of business, and thanks for those comments just now. Arvind, I don't think you've given any specific breakdown yet on the breakdown between Software and Consulting of the AI book of business. Is there any clarity on that? I think it used to be 80/20. Just want to clarify if there's any clarity you've given on that today. A follow-up on Consulting. I think there's two quarters in a row now where we're seeing the book-to-bill ratio a touch below one. I know you point in the earnings to a book-to-bill ratio greater than one if you're looking at the trailing 12 months, but I would just like to understand more on a shorter-term basis. Last six months, it seems like the book-to-bill ratio is below one. If you could explain kind of why, you know, maybe why that's the case, why we shouldn't be worried, especially considering I think around 30% of signings, you mentioned, are AI, which I believe are longer durations. Just a little bit of clarity around Consulting and how AI plays into the book-to-bill ratio, and that recent number being below one would be appreciated. Thanks very much. Okay, Mark, this is Jim. I'll take both of those. Let's start with the second one first, and then I'll come back to your clarification question on GenAI, and in particular around the Software portfolio overall. I want to dive a little bit deeper in that. When we take a look at Consulting, let's dial back 90 days ago. I think we surprised many just compared to what many other consulting companies had been talking about publicly. We talked about green shoots that we saw entering second half. At that time, we were prudently cautious about how we were going to monitor client buying behaviors, and we didn't expect growth in the second half, although we saw many green shoots overall. Now we posted, I think, a marked inflection point of consulting back to growth, up 2%. It's been driven by what we're seeing as continued opportunity for growth as clients accelerate investment in AI-driven transformation, what we've been talking about on many of these questions here. Why? Companies are looking to unlock efficiency, business model innovation, and growth, growth, growth. AI is accelerating overall. When we take a look at right now, fourth quarter, and more importantly, early parts of 2026, we again see momentum around those key metrics: our backlog position, our GenAI book, strategic partnerships, and around productivity. Backlog $31 billion, healthy growth 4% right now. Our best ever erosion in, I think, multiple years. What does that say? Clients' commitment to IBM Consulting, the quality of our delivery, and the value of our differentiated offerings are doing extremely well. To your point about signings, signings were down 5%. By the way, signings have been down five of the last six quarters, something like that. As I've said many times before, why do I always start with backlog? That, to me, is the most critical component that's closest to the outcome measure. The outcome measure is revenue. Revenue growth, revenue growth, as Arvind always likes to say in this conference room with our operating team. Indicators, o ur backlog, indicators are signings, but signings are not all equal. Those signings numbers have been driven down. I think we posted down 5% based on lower large deal renewal volume. By the way, I would argue that's at best no revenue realization and probably worst dilutive revenue because renewals typically drive more price and more productivity. Underneath that, what are we seeing? We're seeing a tremendous improvement in the quality of our signings. Our net new business penetration, again, another quarter in a row, up double digits year to year on a penetration. Over 300 new clients year to date fueling our backlog. Our backlog realization is up over four points year-over-year. When we take a look at our backlog runout, it's pretty healthy, growing at market level growth rates here over the next three, six, nine, 12 months. A lot of work still to do to sell and build within quarter, but a lot of good indicators. That Gen AI, to your point, over 22% of our backlog, 30% of our signings, 12% of our revenue, that's what's inflecting the growth overall. We feel pretty good. That's why we called the market inflection and we said we're going to grow consulting here in the fourth quarter. We feel pretty good about getting back to market growth levels in 2026. Now, Gen AI, the over $9.5 billion book of business, Arvind already talked about over $7.5 billion in Consulting, well over $1.5 billion, almost approaching $2 billion in Software. We're what, seven, eight quarters in here. That number might vary quarter by quarter as far as the composition. We're still pretty damn close to that [20/80] overall. The underpinnings behind that of the Software book in the generation, you see that play out and how it's accelerating automation growth, but also Red Hat. I know there's been a lot of questions around Red Hat. Let me just spend a minute just to close the call on Red Hat. Red Hat, we delivered 12% growth. We were down a couple of points quarter to quarter. In year to date, we're at 13% low teens. Let me break down some of the performance. One from a position of strength, and Arvind talked about a few points. OpenShift, up nearly 40% bookings. Our ARR, $1.8 billion, up mid-30s year-over-year, accelerating profile. Virtualization, now we've closed total contract value of bookings over $400 million. We got a $700 million pipeline over the next 5+ quarters. Ansible, 20% bookings in the quarter, accelerating the high teens. What happened on the sequential decline? One, as we knew, we were facing tougher comparison on the consumption-based services. That impacted us by about a point. RHEL, about 50% of our portfolio, we've been talking about we've been growing RHEL abnormally in the mid-teens. We reverted back to our model, growing 6%, that had about a point. Taking a step back, Red Hat model's mid-teens. When you look at it, our 80% subs business, we got to grow low end of that high teens. The consumption base, we got to grow high single digit. When you look at our year to date, and Arvind talked about our bookings year to date, we're well positioned on that subscription-based business, growing high teens already on bookings. When you look at that six, nine, 12 month revenue under contract, we're accelerating that growth as we go into 2026. That gives us confidence in that acceleration comment that Arvind talked about and I talked about as qualitative statements about confidence in 2026. When you look at fourth quarter, let's put this in perspective. We're going to accelerate Red Hat growth in 2025. It's going to be a nice acceleration on the subs, and we got about a two-point headwind on consumption-based services. We knew about that because last year we grew consumption-based services high teens. When you look at fourth quarter, we're going to wrap on that. We've known about that all year long. When we look at fourth quarter, double digit, solid double digit growth in Red Hat, low teen growth for the year, nice composition of where that acceleration is. The most important thing, we're well positioned for 2026. With that, I'll turn it back over to Arvind to close out the call. Thanks, Jim. Look, to close out, we are pleased with the performance this quarter. All of our segments accelerated sequentially. Our portfolio strength, business model, and relentless focus on productivity reinforced our confidence in the trajectory. I look forward to sharing our progress as we close out the year. Thank you, Arvind. Operator, let me turn it back to you to close out the call. Thank you for participating on today's call. The conference has now ended. You may disconnect at this time.