IBM (IBM) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered strong results, exceeding expectations in revenue, profitability, and cash flow, driven by Software and Infrastructure, while Consulting lagged due to discretionary spending constraints.

• Hybrid cloud and AI strategies, including generative AI with over $2B in bookings since watsonx launch, are fueling organic growth and client adoption.

• Net income from continuing operations rose 15.8% to $1.8B, with diluted EPS of $1.96, up 14% year-over-year.

• Raised full-year free cash flow guidance to over $12 billion, reflecting robust first-half performance.

Financial highlights

• Q2 revenue reached $15.8 billion, up 4% at constant currency year-over-year.

• Operating pre-tax income grew 17% to $2.8 billion; operating EPS up 11% to $2.43.

• Free cash flow for the first half was $4.5 billion, up $1.1 billion year-over-year.

• Gross profit margin expanded to 56.8% GAAP (+180 bps) and 57.8% operating (+190 bps).

• Returned $3.1 billion to shareholders via dividends in H1; cash balance at $16 billion; total debt at $56.5 billion.

Outlook and guidance

• Full-year 2024 constant currency revenue growth expected at the low end of mid-single digits; currency to be a 1–2 point headwind.

• Free cash flow guidance raised to over $12 billion, driven by adjusted EBITDA growth.

• Software segment growth outlook raised to high single digits; Consulting expected to grow low single digits.

• Operating pre-tax margin expansion now expected to exceed half a point year-over-year.

• HashiCorp acquisition ($6.4B) expected to close by year-end 2024; QRadar SaaS asset sale to Palo Alto Networks expected to close in Q3.