IBM Demonstrates Strong Performance in Q2 2025, Driven by Innovation and AI Growth
July 23, 2025
ARMONK, N.Y. — IBM (NYSE: IBM) has released its financial results for the second quarter of 2025, showcasing a robust performance that exceeded market expectations. The company’s success this quarter is largely attributed to revenue growth in its Software and Infrastructure segments, as well as significant advancements in margin expansion. As a result of this strong performance, IBM has revised its outlook for the remainder of the year, increasing its projections for both profit and free cash flow.
Key Highlights from the Second Quarter
IBM reported a total revenue of $17.0 billion for the second quarter, marking an 8% increase. When considering constant currency, the growth stands at 5%. The Software segment experienced a revenue growth of 10%, or 8% at constant currency, while the Consulting and Infrastructure segments showed respective revenue increases of 3% and 14%. In terms of profit, IBM achieved a gross profit margin of 58.8% (GAAP), an improvement of 200 basis points from the previous year, and a pre-tax income margin of 15.3% (GAAP), which is up by 120 basis points.
IBM’s net cash from operating activities for the year to date is at $6.1 billion, with free cash flow reaching $4.8 billion. The company attributes its financial achievements to its innovative approach and expertise in the AI domain, which has allowed it to assist clients in deploying and scaling AI technologies effectively.
Segment Performance
IBM’s Software segment generated $7.4 billion in revenue, reflecting a 10% increase. The Hybrid Cloud (Red Hat) and Automation divisions both saw a 16% rise in revenue, while the Data division increased by 9%. The Transaction Processing segment experienced a modest 1% increase.
The Consulting segment’s revenue rose to $5.3 billion, with Strategy and Technology contributing a 1% increase, while Intelligent Operations improved by 5%.
Infrastructure revenue reached $4.1 billion, with a significant 21% growth in Hybrid Infrastructure. Within this, IBM Z saw a staggering 70% rise, although Distributed Infrastructure experienced a 15% decline.
The Financing segment, however, saw a slight revenue decrease of 2%, totaling $0.2 billion.
Financial Position and Expectations
IBM concluded the second quarter with $15.5 billion in cash, restricted cash, and marketable securities. The company’s debt, including IBM Financing debt, stands at $64.2 billion, an increase from the year-end 2024 figure.
Looking ahead, IBM maintains its expectation for a constant currency revenue growth of at least 5% for the full year. The company has also raised its free cash flow expectation to exceed $13.5 billion.
Dividend Declaration
The IBM board of directors has declared a regular quarterly cash dividend of $1.68 per common share, payable on September 10, 2025, to stockholders of record as of August 8, 2025. This dividend marks IBM’s long-standing tradition of consecutive quarterly dividend payments since 1916.
Forward-Looking Statements and Cautionary Notes
IBM’s forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, are based on current assumptions and involve various risks and uncertainties. Factors that could impact actual results include economic conditions, innovation challenges, competitive pressures, and regulatory changes. IBM continues to monitor these factors and remains committed to maintaining transparency with its stakeholders.
Additional Information
IBM has provided non-GAAP financial measures in this release for better investor insight. These measures include constant currency adjustments, operating earnings per share, free cash flow, and adjusted EBITDA. The rationale for these measures is detailed in the company’s Form 8-K.
Conference Call and Webcast
IBM will host its regular quarterly earnings conference call today at 5:00 p.m. ET. The webcast can be accessed through IBM’s investor relations website.
IBM’s strategic focus on AI and its commitment to innovation have positioned the company favorably in the market. As it continues to drive growth and deliver value to shareholders, IBM remains a key player in the technology landscape. For more detailed financial results and further analysis, please visit IBM’s official investor relations page.
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