“Big Blue” Drops with Software Revenue
IBM (NYSE:IBM) shares fell early Thursday after the tech conglomerate issued second-quarter results that topped Wall Street projections.
The company known in the industry as “Big Blue” reported earnings per share of $2.80 adjusted vs. $2.64 expected.
Revenue was reported to be $16.98 billion vs. $16.59 billion
IBM’s revenue increased nearly 8% year over year in the quarter. Growth in the first quarter was below 1%. Net income, which includes costs related to acquisitions, rose to $2.19 billion, or $2.31 per share, from $1.83 billion, or $1.96 per share, a year ago.
“While not a major factor overall, geopolitical tensions are prompting a few clients to move cautiously,” CEO Arvind Krishna said. “U.S. federal spending was also somewhat constrained in the first half, but we do not expect it to create long term headwinds.”
Software revenue climbed about 10% to $7.39 billion, falling short of the $7.43 billion consensus among analysts surveyed by StreetAccount. Hybrid cloud revenue, including Red Hat, showed 16% growth. The software unit’s gross margin of 83.9% was barely narrower than StreetAccount’s 84.0% consensus.
With respect to guidance, IBM called for over $13.5 billion in 2025 free cash flow, similar to a projection from April. The company still sees at least 5% revenue growth at constant currency for the year.
IBM shares began Thursday down $23.65, or 8.4%, to $258.16.
