Live: Complete IBM Earnings Coverage

• Hybrid Cloud (Red Hat): +16%

• Automation: +16%

• Data: +9%

• Transaction processing was flat, suggesting stability in legacy workloads.

Operating profit from Software hit $2.30B, with a 31.1% segment margin — sustaining IBM’s strategy of expanding recurring, high-margin revenue tied to enterprise infrastructure and AI tools.

CEO Arvind Krishna emphasized IBM’s differentiated AI offerings and momentum across key segments:

“Our generative AI book of business continues to accelerate and now stands at more than $7.5 billion.”

CFO James Kavanaugh added:

“Portfolio mix and ongoing productivity initiatives drove significant margin expansion and double-digit profit growth.”

Together, their comments positioned IBM as both a value compounder and emerging AI monetization play.

IBM raised its full-year free cash flow target to over $13.5B, up from the prior estimate of $12B. Revenue guidance was maintained at ≥5% constant currency growth, though FX is now expected to add a 150bps tailwind. The company also reaffirmed its dividend policy, announcing a quarterly payout of $1.68/share payable September 10.

• IBM raised FY25 FCF outlook to >$13.5B; reiterated ≥5% constant-currency revenue growth.

• Software +10% YoY, with Red Hat and Automation up 16%

• IBM Z mainframe revenue +70%, Infrastructure margin +540bps YoY

• Consulting margin improved to 10.6% despite soft growth

• Dividend maintained ($1.68/share)

IBM delivered across the board in Q2 2025, with revenue, EPS, and free cash flow all coming in ahead of consensus. Software and mainframe-fueled Infrastructure gains led the topline, while margin expansion and cost discipline drove stronger profitability. IBM also raised its full-year free cash flow guidance, highlighting confidence in generative AI monetization and cash conversion. But not enough to keep investors from selling. Share price is down 4.8% after- hours.

We are just 30 minutes from the closing bell.

IBM was up most the day, but has seen some late selling that have pushed its performance to flat on the day. Shares are up .1% as of 3:32 p.m. ET.

As a reminder, we’ll be posting live analysis right after earnings are released. Simply stay on this page and new updates will load. We expect earnings to release shortly after 4 p.m. ET. 

IBM’s dividend and buybacks are core to the bull thesis. This table provides a snapshot of how much free cash is being generated — and where it’s going.

While Magnificent 7 stocks attract most of the attention when it comes to “AI winners,” the fact of the matter is that IBM has quietly become a massive winner.

Here’s some figures IBM provided on their last conference call around the trajectory of their AI business:

• $6 billion-plus generative AI book of business that increased $1 billion quarter-over-quarter. The backlog is about 20% software and 80% consulting.
• Generative-AI products (WatsonX, AI Assitants, etc.) delivered 6 points of the software unit’s 9% year-over-year growth.
• AI driving mainframe & storage needs and swinging Infrastructure from a 1 point drag to a 1 point tailwind this fiscal year.
• AI is now embedded into 70+ internal workflows, providing $3.5 billion in internal savings exiting 2024.

Wall Street will be closely monitoring updates and new figures around the company’s growth opportunities from AI.

IBM’s transformation depends on the mix shifting toward higher-value segments. This table spotlights revenue by division so investors can assess the pace of that shift.

Margins reflect whether IBM is successfully scaling software and consulting. This trendline gives investors a clean view of operating leverage over time.

IBM has delivered three positive surprises in its last four quarters with steady post-earnings gains. Sentiment remains stable, hinging on consistent cash flow execution.