IBM Q1 earnings report 2025

IBM reported better-than-expected earnings and revenue for the first quarter on Wednesday.

Here’s how the company performed:

• Earnings per share: $1.60 adjusted vs. $1.40 expected
• Revenue: $14.54 billion vs. $14.4 billion expected

Revenue increased 0.6% in the quarter from $14.5 billion a year earlier, according to a statement. Net income slid to $1.06 billion, or $1.12 per share, from $1.61 billion, or $1.72 per share, in the same quarter a year ago. The company accelerated productivity efforts, Jim Kavanaugh, its finance chief, said on a conference call with analysts.

For 2025, IBM reiterated its expectation for $13.5 billion in free cash flow and at least 5% revenue growth at constant currency. At current exchange rates, currency will provide 150 basis points of benefit for 2025 growth, down from the company’s forecast of 200 basis points in January.

Management called for $16.4 billion to $16.75 billion in second-quarter revenue. The middle of the range, $16.58 billion, is ahead of the LSEG consensus of $16.33 billion. IBM has become more cautious about the contribution of consulting, Kavanaugh said on the conference call.

“While sentiment and the operating environment have been rapidly shifting, our performance reflects the continued success of our focused strategy around hybrid cloud and AI, especially where clients are looking for cost savings, productivity gains and trusted partners to help them move fast and scale,” IBM CEO Arvind Krishna said on the call.

“Those needs remain front and center in today’s market. Before going deeper into our results, let me start by saying that we appreciate the administration’s focus on economic growth and rational regulation, which will strengthen the US competitive position. We believe this will result in long-term value creation and make it easier for technology to contribute to economic growth.”

In the first quarter, software revenue rose 7% to $6.34 billion, in line with the consensus among analysts polled by StreetAccount. The hybrid cloud software category that includes Red Hat grew 12%, compared with 16% in the fourth quarter.

IBM’s consulting unit contributed $5.07 billion in revenue, which was down 2% and slightly above StreetAccount’s $5.05 billion consensus.

The company’s infrastructure division, which includes mainframe computers, posted a 6% decline in revenue to $2.89 billion, higher than the $2.76 billion consensus. Earlier this month, IBM introduced its z17 mainframe. Infrastructure revenue growth generally picks up as customers adopt the next generation and then drifts down late in the cycle.

During the first quarter, IBM said it had settled its lawsuits with chip manufacturer GlobalFoundries. IBM also closed its $6.4 billion acquisition of cloud software maker HashiCorp and announced plans to buy data storage software startup DataStax for undisclosed terms.

IBM has been an outperformer this year as the broader market has sold off due largely to concerns around President Donald Trump’s tariffs and…