IBM (IBM) investor relations material

Executive summary

• Second-quarter 2026 revenue reached $17.2B, up 1% year-over-year, with net income at $2.2B and diluted EPS of $2.27, both down 1% year-over-year.

• Software led growth, up 5% year-over-year, while Infrastructure declined 7% and Consulting was flat; recurring software revenue comprised 80% of the segment and ARR reached $24.6B, up 8%.

• Strategic investments continued in AI, quantum computing, and open source, with new offerings like Lightwell and major quantum R&D commitments.

• Productivity initiatives and go-to-market changes are being accelerated to enhance margins and capture growth opportunities beyond the Fortune 1000.

• The Confluent and HashiCorp acquisitions were integrated into the software portfolio, strengthening recurring revenue streams.

Financial highlights

• Q2 gross profit was $9.9B with a margin of 57.7% (GAAP), and operating (non-GAAP) gross profit margin was 59.4%, both down year-over-year.

• Adjusted EBITDA for Q2 was $4.8B, up $0.1B year-over-year, with a margin of 27.8%.

• Free cash flow for the first half was $4.8B, flat year-over-year; $3.2B was returned to shareholders via dividends.

• Net income for Q2 was $2.2B, down 1.3% year-over-year; diluted operating EPS was $2.93, up 5%.

• Debt at quarter-end was $62.0B, with $8.2B in cash and marketable securities.

Outlook and guidance

• Full-year 2026 constant currency revenue growth expected at 4–5%, with free cash flow projected to increase by about $1B year-over-year.

• Software growth guidance set at 6–8% for the year, with Infrastructure expected to grow low single digits and Consulting to accelerate to low-to-mid single digits.

• Operating pre-tax margin expansion of 100 basis points anticipated for the full year.