IBM (IBM) Q1 2025 Earnings
How Did IBM Stock React to Q1 2025 Earnings?
S&P 500 over the same 30 days: +8.13%.
Did IBM Beat Earnings? Q1 2025 Results
Yes. IBM reported Q1 2025 earnings of $1.60 a share on Apr 23, 2025, beating the $1.43 consensus estimate by 12.0%. Revenue was $14.5B against a $14.4B estimate.
IBM kicked off 2025 on solid footing, posting first-quarter earnings that cleared Wall Street expectations on both the top and bottom lines. Operating diluted EPS came in at $1.60, beating the $1.43 consensus by 12.04%, while revenue of $14.54 billion edged past the $1.43 billion estimate by 1.05%, representing a modest 0.6% gain year over year. The primary engine behind the upside was a resurgent Software segment, which grew 7% to $6.34 billion, with Red Hat surging 12% and Automation up 14%, more than offsetting a 6% decline in Infrastructure and a 2% dip in Consulting. GAAP gross margin expanded 170 basis points to 55.2%, reflecting a favorable revenue mix shift toward higher-margin software. IBM's generative AI book of business also crossed $6.00 billion inception-to-date, adding over $1.00 billion in the quarter alone, underscoring accelerating enterprise adoption. The company maintained its full-year outlook for at least 5% constant-currency revenue growth and approximately $13.50 billion in free cash flow, while introducing Q2 revenue guidance of $16.40 billion to $16.75 billion.
- Strong Software revenue growth of 7% (9% at constant currency) led by Red Hat, Automation, and Data
- Significant gross margin expansion of 170 basis points GAAP and 190 basis points operating
- Productivity initiatives driving operating leverage
- Free cash flow of $2.0 billion, up $0.1 billion year over year
- Generative AI demand continuing to drive book of business growth
“We exceeded expectations for revenue, profitability and free cash flow in the quarter, led by strength across our Software portfolio. There continues to be strong demand for generative AI and our book of business stands at more than $6 billion inception-to-date, up more than $1 billion in the quarter.”
IBM CEO, on the earnings call
What Was IBM's Outlook in Q1 2025?
IBM maintains its full-year 2025 guidance for constant currency revenue growth of at least 5%, with currency now expected to provide approximately a 1 to 1.5 percentage point tailwind to growth for the year. The company continues to expect about $13.5 billion in free cash flow for the full year. For Q2 2025, IBM expects revenue in the range of $16.40 billion to $16.75 billion. Management noted the macroeconomic environment is fluid but based on current conditions is maintaining full-year expectations.
IBM YoY Financials
| Metric | Q1 2025 | Q1 2024 | Year over year |
|---|---|---|---|
| Revenue | $14.5B | $14.5B | +0.6% |
| Gross Profit | $8.0B | $7.7B | +3.7% |
| Operating Income | $1.2B | $1.6B | −25.9% |
| Net Income | $1.1B | $1.6B | −34.3% |
IBM Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.