We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
IBM (IBM) Down 8.1% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for IBM (IBM - Free Report) . Shares have lost about 8.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is IBM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
IBM Surpasses Q2 Earnings Estimates on Solid Demand Trends
IBM reported strong second-quarter 2025 results, with adjusted earnings and revenues beating the respective Zacks Consensus Estimate.
The company witnessed healthy demand trends for hybrid cloud and AI solutions with a client-focused portfolio and broad-based growth. IBM exceeded the target metrics related to revenue, profitability and cash flow growth for the quarter. Despite economic uncertainty stemming from geopolitical issues, supply chain vulnerabilities, constrained federal spending and the evolving landscape of interest rates and inflation levels, the company expects to deliver sustainable growth through advanced technology and deep consulting expertise.
Net Income
On a GAAP basis, net income for the reported quarter was $2.19 billion or $2.31 per share compared with $1.83 billion or $1.96 per share in the year-ago quarter. The significant improvement in GAAP earnings was primarily led by top-line growth.
Excluding non-recurring items, non-GAAP net income from continuing operations was $2.80 per share compared with $2.43 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 16 cents.
Quarter Details
Quarterly total revenues increased to $16.98 billion from $15.77 billion on strong demand for hybrid cloud and AI, driving growth in the Software segment. On a constant currency basis, revenues were up 5% year over year. The top line exceeded the consensus estimate of $16.58 billion.
Gross profit improved to $9.98 billion from $8.95 billion in the prior-year quarter, resulting in respective gross margins of 58.8% and 56.8% owing to a strong portfolio mix. Total expenses increased to $7.38 billion from $6.73 billion due to higher selling, general and administrative expenses and research and development costs.
Segmental Performance
Software: Revenues improved to $7.39 billion from $6.74 billion, driven by growth in Hybrid Cloud (Red Hat, up 16%), Automation (16%), Data (9%) and Transaction Processing (1%). The segment’s revenues missed our estimate of $7.52 billion despite solid hybrid cloud traction. Segment profit was $2.3 billion compared with $2.1 billion in the year-ago quarter for margins of 31.1% and 31.3%, respectively. The company is witnessing healthy hybrid cloud adoption by clients and solid demand trends across automation and generative AI offerings like watsonx.
Consulting: Revenues were $5.31 billion compared with $5.18 billion a year ago as clients prioritized spending and pulled back on discretionary projects. The segment’s revenues beat our estimate of $5.17 billion. Segment profit improved to $562 million from $463 million for margins of 10.6% and 8.9%, respectively.
Infrastructure: Revenues were $4.14 billion compared with $3.64 billion on higher demand for hybrid and distributed infrastructure. Segment profit was $965 million compared with $654 million in the year-ago quarter, for respective margins of 23.3% and 17.9%. This reflected strength in the z17 program as AI use cases resonated strongly with clients. Higher investments in the business across areas like AI, hybrid cloud and quantum also buoyed segment performance.
Financing: Revenues declined to $166 million from $169 million a year ago. Segment profit was up to $179 million from $77 million in the year-ago quarter for respective margins of 107.9% and 45.3%.
Cash Flow & Liquidity
During the quarter, IBM generated $1.7 billion in cash from operations compared with $2.07 billion in the year-ago quarter, bringing the respective tallies for the first six months of 2025 and 2024 to $6.07 billion and $6.23 billion. Free cash flow was $2.84 billion in the quarter, up from $2.61 billion in the prior-year period, driven by higher profit and working capital efficiencies. As of June 30, 2025, the company had $11.94 billion in cash and cash equivalents with $55.22 billion of long-term debt.
Outlook
For 2025, the company expects revenues to grow at least 5% on a constant currency basis, driven by a strong portfolio mix, operating leverage and yield from productivity initiatives. Free cash flow is expected to be in the vicinity of $13.5 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, IBM has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
IBM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
IBM (IBM) Down 8.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for IBM (IBM - Free Report) . Shares have lost about 8.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is IBM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
IBM Surpasses Q2 Earnings Estimates on Solid Demand Trends
IBM reported strong second-quarter 2025 results, with adjusted earnings and revenues beating the respective Zacks Consensus Estimate.
The company witnessed healthy demand trends for hybrid cloud and AI solutions with a client-focused portfolio and broad-based growth. IBM exceeded the target metrics related to revenue, profitability and cash flow growth for the quarter. Despite economic uncertainty stemming from geopolitical issues, supply chain vulnerabilities, constrained federal spending and the evolving landscape of interest rates and inflation levels, the company expects to deliver sustainable growth through advanced technology and deep consulting expertise.
Net Income
On a GAAP basis, net income for the reported quarter was $2.19 billion or $2.31 per share compared with $1.83 billion or $1.96 per share in the year-ago quarter. The significant improvement in GAAP earnings was primarily led by top-line growth.
Excluding non-recurring items, non-GAAP net income from continuing operations was $2.80 per share compared with $2.43 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 16 cents.
Quarter Details
Quarterly total revenues increased to $16.98 billion from $15.77 billion on strong demand for hybrid cloud and AI, driving growth in the Software segment. On a constant currency basis, revenues were up 5% year over year. The top line exceeded the consensus estimate of $16.58 billion.
Gross profit improved to $9.98 billion from $8.95 billion in the prior-year quarter, resulting in respective gross margins of 58.8% and 56.8% owing to a strong portfolio mix. Total expenses increased to $7.38 billion from $6.73 billion due to higher selling, general and administrative expenses and research and development costs.
Segmental Performance
Software: Revenues improved to $7.39 billion from $6.74 billion, driven by growth in Hybrid Cloud (Red Hat, up 16%), Automation (16%), Data (9%) and Transaction Processing (1%). The segment’s revenues missed our estimate of $7.52 billion despite solid hybrid cloud traction. Segment profit was $2.3 billion compared with $2.1 billion in the year-ago quarter for margins of 31.1% and 31.3%, respectively. The company is witnessing healthy hybrid cloud adoption by clients and solid demand trends across automation and generative AI offerings like watsonx.
Consulting: Revenues were $5.31 billion compared with $5.18 billion a year ago as clients prioritized spending and pulled back on discretionary projects. The segment’s revenues beat our estimate of $5.17 billion. Segment profit improved to $562 million from $463 million for margins of 10.6% and 8.9%, respectively.
Infrastructure: Revenues were $4.14 billion compared with $3.64 billion on higher demand for hybrid and distributed infrastructure. Segment profit was $965 million compared with $654 million in the year-ago quarter, for respective margins of 23.3% and 17.9%. This reflected strength in the z17 program as AI use cases resonated strongly with clients. Higher investments in the business across areas like AI, hybrid cloud and quantum also buoyed segment performance.
Financing: Revenues declined to $166 million from $169 million a year ago. Segment profit was up to $179 million from $77 million in the year-ago quarter for respective margins of 107.9% and 45.3%.
Cash Flow & Liquidity
During the quarter, IBM generated $1.7 billion in cash from operations compared with $2.07 billion in the year-ago quarter, bringing the respective tallies for the first six months of 2025 and 2024 to $6.07 billion and $6.23 billion. Free cash flow was $2.84 billion in the quarter, up from $2.61 billion in the prior-year period, driven by higher profit and working capital efficiencies. As of June 30, 2025, the company had $11.94 billion in cash and cash equivalents with $55.22 billion of long-term debt.
Outlook
For 2025, the company expects revenues to grow at least 5% on a constant currency basis, driven by a strong portfolio mix, operating leverage and yield from productivity initiatives. Free cash flow is expected to be in the vicinity of $13.5 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, IBM has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
IBM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.