International Business Machines Corporation (NYSE:IBM) Q1 2025 Earnings Conference Call April 23, 2025 5:00 PM ET Company Participants Olympia McNerney - Global Head of IR Arvind Krishna - Chairman, President and CEO James Kavanaugh - SVP and CFO Conference Call Participants Jim Schneider - Goldman Sachs Wamsi Mohan - Bank of America Amit Daryanani - Evercore ISI Ben Reitzes - Melius Research Erik Woodring - Morgan Stanley Brian Essex - JPMorgan Matt Swanson - RBC Capital Markets Operator Welcome. And thank ...

Financial Performance - For the quarter ended March 2025, IBM reported revenue of $14.54 billion, reflecting a 0.6% increase year-over-year and a surprise of +0.66% over the Zacks Consensus Estimate of $14.45 billion [1] - Earnings per share (EPS) for the quarter was $1.60, down from $1.68 in the same quarter last year, with an EPS surprise of +12.68% compared to the consensus estimate of $1.42 [1] Segment Performance - Consulting revenue was $5.07 billion, slightly below the average estimate of $5.09 billion, representing a -2.3% change year-over-year [4] - Infrastructure revenue reached $2.89 billion, exceeding the estimate of $2.83 billion, but showing a -6.2% decline compared to the previous year [4] - Software revenue was $6.34 billion, surpassing the estimate of $6.31 billion, with a +7.4% increase year-over-year [4] - Other revenue was $61 million, significantly below the estimate of $78.46 million, marking a -43.5% change year-over-year [4] - Transaction Processing revenue was $1.80 billion, slightly below the estimate of $1.88 billion, with no change year-over-year [4] - Infrastructure Support revenue was $1.20 billion, just under the estimate of $1.21 billion, reflecting a -7.7% change year-over-year [4] - Hybrid Infrastructure revenue was $1.60 billion, below the estimate of $1.64 billion, indicating an -11.1% decline year-over-year [4] Profitability Metrics - Segment Profit for Software was $1.85 billion, exceeding the estimate of $1.51 billion [4] - Segment Profit for Financing was $69 million, below the average estimate of $84.84 million [4] - Segment Profit for Infrastructure was $248 million, under the estimate of $282.23 million [4] - Segment Profit for Consulting was $558 million, significantly above the estimate of $388.71 million [4] Stock Performance - IBM shares have returned -3.6% over the past month, compared to the Zacks S&P 500 composite's -6.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Tech and consulting giant IBM was not immune to the Department of Government Efficiency’s (DOGE) cuts.IBM had 15 of its federal contracts cancelled due to DOGE-related cuts during the first quarter of 2025, according to reporting from Reuters and Bloomberg. These cuts amount to $100 million in future payments, per Bloomberg. Federal contracts represent between 5% and just under 10% of IBM’s consulting practice. After being peppered with questions during IBM’s earnings call Wednesday, Arvind Krishna, IBM’s ...

Group 1 - IBM experienced cancellations of 15 federal contracts due to cuts from the Department of Government Efficiency (DOGE), resulting in a loss of $100 million in future payments [1][2] - Federal contracts account for approximately 5% to just under 10% of IBM's consulting practice, which made up 34% of the company's revenue in Q1 [1][3] - The consulting revenue for IBM in Q1 was slightly over $5 billion, reflecting a 2% decline overall [4] Group 2 - IBM's CEO and CFO downplayed the potential impact of DOGE on future business, emphasizing that the cancelled contracts represent a small portion of their annualized backlog of over $30 billion [2][3] - The majority of IBM's federal government consulting contracts are focused on critical work, such as processing veterans benefit claims and implementing payroll systems, with only a minority being discretionary [4] - The diversity of IBM's business portfolio is seen as a strength in navigating the current economic climate, with confidence in future growth [5]

Exhibit 99.1 IBM RELEASES FIRST-QUARTER RESULTS Results exceed expectations driven by strong Software revenue growth, significant gross margin expansion and solid free cash flow ARMONK, N.Y., April 23, 2025 . . . IBM (NYSE: IBM) today announced first-quarter 2025 earnings results. "We exceeded expectations for revenue, profitability and free cash flow in the quarter, led by strength across our Software portfolio. There continues to be strong demand for generative AI and our book of business stands at more t ...

IBM CEO Arvind Krishna speaks at the SXSW conference in Austin, Texas, on March 11, 2025.IBM reported better-than-expected earnings and revenue for the first quarter on Wednesday. The stock slipped 4% in extended trading.Here's how the company performed:Earnings per share: $1.60 adjusted vs. $1.40 expectedRevenue: $14.54 billion vs. $14.4 billion expectedRevenue 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, fr ...

Results exceed expectations driven by strong Software revenue growth, significant gross margin expansion and solid free cash flowARMONK, N.Y., April 23, 2025 /PRNewswire/ -- IBM (NYSE: IBM) today announced first-quarter 2025 earnings results."We exceeded expectations for revenue, profitability and free cash flow in the quarter, led by strength across our Software portfolio. There continues to be strong demand for generative AI and our book of business stands at more than $6 billion inception-to-date, up mor ...

Core Insights - IBM presents a stable investment opportunity in contrast to newer tech companies, with a 33% increase in stock value over the past year [2][3] - The company is well-positioned in high-growth sectors such as hybrid cloud and artificial intelligence, indicating potential undervaluation by the market [3][14] Financial Performance - IBM's market capitalization is approximately $222.4 billion, and it has a consistent history of dividend increases for 29 years, making it a Dividend Aristocrat [4] - The current annual dividend is $6.68 per share, yielding about 2.78%, with $6.1 billion returned to shareholders in FY2024 [5] - Free cash flow grew to $12.7 billion in FY2024, a $1.5 billion increase from the previous year, and the company has a beta of 0.67, indicating lower volatility [5] Strategic Developments - Software and Consulting now account for about 75% of IBM's revenue, with hybrid cloud being a central focus [6] - The acquisition of HashiCorp for $6.4 billion enhances IBM's cloud automation capabilities, and further acquisitions are planned to expand its hybrid cloud and data solutions [8] - The Software division achieved a 9.0% growth at constant currency, with significant contributions from Transaction Processing and the new Automation category [9] Market Sentiment and Analyst Ratings - Despite strong performance, IBM has a Hold consensus rating among analysts, with an average price target of $232.75, suggesting limited upward movement from its current price [11] - Analysts have mixed views, with some recommending a Hold or Sell, while others see significant future potential with high-end price targets ranging from $275 to $320 [11] Upcoming Events - The Q1 2025 earnings report on April 23rd is anticipated to provide insights into IBM's strategic progress, particularly in new Software segments [13] - Historical data indicates a 60% likelihood of a positive one-day return following earnings announcements, which could influence market perception [13]

International Business Machines Corporation (IBM) is scheduled to report first-quarter 2025 results on April 23, after the closing bell. In the to-be-reported quarter, the company is likely to have recorded higher revenues from the Software segment with a strong focus on product innovation and healthy AI traction across various sectors. Factors at PlayIBM’s Software segment includes Hybrid Platform & Solutions and Transaction Processing, focusing on technologies that enhance enterprise productivity and inno ...

International Business Machines Corporation (IBM) is scheduled to report first-quarter 2025 results on April 23, after the closing bell. In the to-be-reported quarter, the company is likely to have recorded lower revenues from the Consulting segment owing to the persistence of uncertainty in some end markets stemming from macroeconomic headwinds. However, a strong focus on product innovation and multiple deal wins is a tailwind.  Factors at PlayIBM’s Consulting segment provides strategy and technology and i ...