The earnings call reflected strong financial performance and growth in key areas such as software, infrastructure, and AI. Despite challenges in consulting revenue and a decline in transaction processing, IBM's overall performance exceeded expectations, leading to increased guidance for free cash flow.

Company Guidance -

Q3 2025

During IBM's second quarter 2025 earnings call, the company reported solid performance, exceeding expectations across several key metrics. Revenue grew over 5% at constant currency, with software and infrastructure leading the way. Specifically, Red Hat saw a 14% growth, and IBM Z infrastructure reported a 67% increase, showcasing strong demand for the new z17 mainframe. The company raised its full-year free cash flow guidance to above $13.5 billion, reflecting confidence in sustained profitability. IBM's software annual recurring revenue (ARR) grew to $22.7 billion, up 10% year-over-year, while consulting revenue remained flat due to a dynamic demand environment. The company is also focused on artificial intelligence (AI) and hybrid cloud strategies, with a GenAI book of business reaching $7.5 billion inception-to-date, indicating momentum in AI-driven transformation across its client base.

Solid Overall Financial Performance

IBM delivered $17 billion in revenue, $4.7 billion of adjusted EBITDA, $3.2 billion of operating pretax income, and operating earnings per share of $2.80. The company generated $4.8 billion of free cash flow, its highest first half free cash flow margin in many years.

Software and Infrastructure Growth

Software grew 8% with notable growth in Red Hat at 14%. Infrastructure revenue grew 11%, with Hybrid Infrastructure up 19%. IBM Z was up 67%, driven by the strong start of the z17 program.

Red Hat and Automation Success

Red Hat growth accelerated to 14%, with OpenShift revenue growing more than 20%. Automation grew 14%, with HashiCorp off to a strong start, reflecting IBM's global reach and product synergies.

AI and GenAI Business Momentum

IBM's GenAI book of business stands at over $7.5 billion inception-to-date, with significant demand for AI agents, assistants, and consulting services to deploy AI.

Increased Free Cash Flow Guidance

IBM raised its expectations for free cash flow to above $13.5 billion for the year, reflecting strong performance and confidence in sustainable growth.

International Business Machines (IBM) Earnings, Revenues Date & History

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IBM Earnings History

Report Date	Fiscal Quarter	Forecast / EPS	Last Year's EPS	EPS YoY Change	Slides	Play Transcript
Oct 22, 2025	2025 (Q3)	2.44 / -	2.3	―	―	―
Jul 23, 2025	2025 (Q2)	2.65 / 2.80	2.43	15.23% (+0.37)
Apr 23, 2025	2025 (Q1)	1.42 / 1.60	1.68	-4.76% (-0.08)
Jan 29, 2025	2024 (Q4)	3.78 / 3.92	3.87	1.29% (+0.05)
Oct 23, 2024	2024 (Q3)	2.23 / 2.30	2.2	4.55% (+0.10)
Jul 24, 2024	2024 (Q2)	2.18 / 2.43	2.18	11.47% (+0.25)
Apr 24, 2024	2024 (Q1)	1.59 / 1.68	1.36	23.53% (+0.32)
Jan 24, 2024	2023 (Q4)	3.79 / 3.87	3.6	7.50% (+0.27)
Oct 25, 2023	2023 (Q3)	2.12 / 2.20	1.81	21.55% (+0.39)
Jul 19, 2023	2023 (Q2)	2.01 / 2.18	2.31	-5.63% (-0.13)

The table shows recent earnings report dates and whether the forecast was beat or missed. See the change in forecast and EPS from the previous year.

Beat

Missed

IBM Earnings-Related Price Changes

Report Date	Price 1 Day Before	Price 1 Day After	Percentage Change
Jul 23, 2025	$280.12	$258.76	-7.63%
Apr 23, 2025	$242.22	$226.28	-6.58%
Jan 29, 2025	$224.10	$253.15	+12.96%
Oct 23, 2024	$226.35	$212.39	-6.17%

Earnings announcements can affect a stock’s price. This table shows the stock's price the day before and the day after recent earnings reports, including the percentage change.