Live Updates
Updates appear automatically as they are published.
Operating Margin Trend
Margins reflect whether IBM is successfully scaling software and consulting. This trendline gives investors a clean view of operating leverage over time.
| Quarter | Operating Margin | Commentary |
|---|---|---|
| Q1 2025 | 18.3% | Strong consulting + SW leverage |
| Q4 2024 | 19.1% | Seasonally strong revenue mix |
| Q3 2024 | 17.2% | FX headwinds, infra margin drag |
| Q2 2024 | 17.8% | Modest margin expansion YoY |
How Did IBM’s Stock Perform After Past Earnings
IBM has delivered three positive surprises in its last four quarters with steady post-earnings gains. Sentiment remains stable, hinging on consistent cash flow execution.
| Quarter | EPS Surprise | 1-Day Move | 7-Day Move | 14-Day Move |
|---|---|---|---|---|
| Q1 2025 | +4.3% | +4.0% | +6.4% | +5.2% |
| Q4 2024 | +2.6% | +3.2% | +3.8% | +3.1% |
| Q3 2024 | -1.7% | -2.2% | -1.9% | -0.8% |
| Q2 2024 | +1.3% | +1.8% | +2.4% | +2.6% |
IBM (NYSE:IBM) reports Q2 2025 earnings after the market closes tonight. The company is navigating an inflection point in hybrid cloud and AI monetization, as Red Hat, consulting, and platform services work to offset soft demand in legacy infrastructure and currency headwinds. Last quarter’s solid EPS beat and reaffirmed free cash flow guidance ($12B for FY25) helped shore up investor confidence, but this print will need to validate that IBM’s high-value software and consulting business lines can drive margin expansion and predictability in the face of mixed macro demand.
What to Expect
-
Revenue: $15.69 billion
-
EPS (Normalized): $2.20
-
FY 2025 Revenue: $63.63 billion
-
FY 2025 EPS: $9.91
Estimates imply ~2.6% YoY revenue growth and ~7.6% EPS growth, with most of the profit expansion coming from operating leverage and an improved mix of software and service
Key Areas to Watch Tonight
1. Red Hat and AI Software Uptake
IBM continues to position Red Hat OpenShift and watsonx as foundational to enterprise AI adoption. Management said “Red Hat growth is accelerating” in Q1 and expects that to continue. Updates on watsonx platform traction, enterprise adoption rates, and AI-related consulting deals will be critical.
2. Consulting Bookings and Margins
IBM Consulting delivered 8% YoY growth in Q1 and showed stable margins despite macro uncertainty. Investors will look for commentary on large deal signings, especially in regulated industries, and margin performance in light of continued wage inflation.
3. Infrastructure Outlook and Mainframe Demand
While Power and Storage remained stable, zSystems revenue fell in Q1 and is expected to remain weak as the mainframe cycle matures. Management hinted that z16 refresh demand is behind us, so Infrastructure likely drags total growth again this quarter.
4. Software Recurring Revenue Mix
Growth in automation, data, and security software has helped increase IBM’s ARR share. Management emphasized the importance of “ratable revenue” and “enterprise stickiness.” Investors will want clarity on how much of FY25 revenue base is recurring vs. project-based.
5. Free Cash Flow and Capital Return
IBM reaffirmed its $12B free cash flow target for FY25 and emphasized strong cash conversion in Q1. With a 4% dividend yield and moderate buybacks, the Q2 print needs to support full-year FCF visibility to preserve capital allocation flexibility.
The post Live: Complete IBM Earnings Coverage appeared first on 24/7 Wall St..
Click this link for the original source of this article.
Author: Joel South
This content is courtesy of, and owned and copyrighted by, https://247wallst.com and its author. This content is made available by use of the public RSS feed offered by the host site and is used for educational purposes only. If you are the author or represent the host site and would like this content removed now and in the future, please contact USSANews.com using the email address in the Contact page found in the website menu.
