Companies /Technology

International Business Machines Corp

NYSE: IBM Information Technology Services
$238.79
â–² $8.92 (+3.88%) today
Markets closed · 6:44am ET

Q2 2025 Earnings

Reported Jul 23, 2025, 4:16pm ET · SEC source
$2.80
Beat +5.47%
EPS · est. $2.65
$17.0B
Beat +2.32%
Revenue · est. $16.6B
−9.4%
Trailing market
IBM vs S&P since report
1 quarter
Consecutive EPS misses

Market Reaction

% change · around the report
−4%0+4%Jul 23Jul 24report 4:16pm ETearnings+0.2%−3.0%
−4%0+4%Jul 23Jul 24earnings+0.2%−3.0%
IBM −3.0%S&P 500 +0.2%
−4%0+4%Jul 23Jul 24report 4:16pm ETearnings+0.1%−3.0%
−4%0+4%Jul 23Jul 24earnings+0.1%−3.0%
IBM −3.0%NASDAQ +0.1%
−4%0+4%+8%Jul 22Jul 31report 4:16pm ETearnings−0.5%−5.4%
−4%0+4%+8%Jul 22Jul 31earnings−0.5%−5.4%
IBM −5.4%S&P 500 −0.5%
−4%0+4%+8%Jul 22Jul 31report 4:16pm ETearnings−0.3%−5.4%
−4%0+4%+8%Jul 22Jul 31earnings−0.3%−5.4%
IBM −5.4%NASDAQ −0.3%
−7.62%
Day of report
−0.30%
Next session
−2.83%
One week
−8.09%
30 days

S&P 500 over the same 30 days: +1.27%.

Did IBM Beat Earnings? Q2 2025 Results

IBM delivered a broad-based beat in Q2 2025, with revenue climbing 7.7% year over year to $16.98 billion against a consensus estimate of $16.59 billion, while non-GAAP diluted EPS of $2.80 topped the $2.65 consensus by 5.47%, underlining the company's strongest quarterly execution in recent memory. The single most material driver was a 70% surge in IBM Z mainframe revenue, which powered the Infrastructure segment to $4.14 billion and provided substantial lift to gross margins, with GAAP gross profit margin expanding 200 basis points to 58.8%. Software remained a structural growth engine at $7.39 billion, up 10%, as Red Hat and Automation each grew 16%, though slightly softer organic software momentum triggered a notable share price decline that some analysts characterized as a buying opportunity. IBM's generative AI book of business crossed $7.50 billion on an inception-to-date basis, adding a forward-looking dimension to the results. Management raised its full-year free cash flow outlook to more than $13.50 billion while maintaining its constant currency revenue growth target of at least 5%.

Key Takeaways
  • Software and Infrastructure revenue growth led results
  • Hybrid Cloud (Red Hat) revenue up 16% driven by enterprise hybrid cloud adoption
  • IBM Z mainframe revenue surged 70% on product cycle strength
  • Automation revenue grew 16%
  • Revenue growth, portfolio mix, and ongoing productivity initiatives drove significant margin expansion
  • GAAP gross profit margin expanded 200 basis points to 58.8%
  • Operating (non-GAAP) gross profit margin expanded 230 basis points to 60.1%

“We once again exceeded expectations for revenue, profit and free cash flow in the quarter. IBM remains highly differentiated in the market because of our deep innovation and domain expertise, both crucial in helping clients deploy and scale AI. Our generative AI book of business continues to accelerate and now stands at more than $7.5 billion. With our strong first-half performance, we are raising our full-year outlook for free cash flow, which we expect to exceed $13.5 billion.”

IBM CEO, on the earnings call

Forward Guidance & Outlook

IBM continues to expect constant currency revenue growth of at least 5% for full-year 2025, with currency now expected to be about a 1.5-point tailwind to growth for the year. The company raised its free cash flow outlook, now expecting more than $13.5 billion for the full year, up from the prior expectation.

IBM YoY Financials

Q2 2025 vs Q2 2024 · SEC filings Q2 2024 Q2 2025
$0$5.0B$10.0B$15.0B$15.8B$17.0BRevenue$9.0B$10.0BGross Profit$2.4B$2.6BOperating Income$1.8B$2.2BNet Income
$0$5.0B$10.0B$15.0BRevenueGross ProfitOperating IncomeNet Income

IBM Revenue by Segment

Software$7.4B+9.6%
Consulting$5.3B+2.6%
Infrastructure$4.1B+13.6%
Financing$166.0M−1.7%

Figures from SEC filings and company reports. Not investment advice.