International Business Machines Corporation · NYSE:IBM
International Business Machines — Q2 2025 Earnings Presentation
32 slides from International Business Machines's earnings presentation, Jul 24, 2025
Slide 1: 2Q 2025 Earnings
July 23, 2025 ibm.com/investor 2Q 2025 Earnings Exhibit 99.2
Slide 2: Forward-looking statements and non-GAAP information
Forward-looking statements and non-GAAP information Certain comments made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Forward- looking statements are based on the company’s current assumptions regarding future business and
Slide 3: Arvind Krishna and James Kavanaugh
3 Arvind Krishna Chairman, President and Chief Executive Officer James Kavanaugh SVP, Finance & Operations and Chief Financial Officer
Slide 4: CEO perspective
“We once again exceeded expectations for revenue, profit and free cash flow in the quarter. IBM remains highly differentiated in the market because of our deep innovation and domain expertise, both crucial in helping clients deploy and scale AI. Our generative AI book of business continues to accele
Slide 5: Financial highlights
Financial highlights 5Revenue & ARR growth rates @CC $17.0B Revenue $2.8B Free cash flow 2Q25 “The innovation we are bringing to market across the portfolio continues to resonate with clients as they scale their AI adoption and investments. As a result, revenue growth, portfolio mix and ongoing prod
Slide 6: Revenue categories 2Q25 - Software
6 Revenue categories-2Q25 Software 2Q25 results; revenue & ARR growth rates @CC High value recurring revenue base; ARR of $22.7 billion, +10% yr/yr Red Hat growth accelerated to 14%; OpenShift ARR $1.7B First full quarter with HashiCorp, accelerated bookings growth Strong performance across our AI o
Slide 7: Revenue categories 2Q25 - Infrastructure
7 Infrastructure 2Q25 results; revenue growth rates @CC Revenue categories-2Q25 IBM Z +67% Distributed Infrastructure (17%) Infrastructure Support (3%) yr/yr Hybrid Infrastructure +19% yr/yr Strong early start to z17 Innovating across the portfolio to accelerate AI and hybrid cloud adoption Distribu
Slide 8: Revenue categories 2Q25 - Consulting
8 Consulting 2Q25 results; revenue growth rates @CC Revenue categories-2Q25 Stabilization of revenue and solid backlog performance Continued momentum in generative AI bookings Signings impacted by discretionary spend Strong gross and profit margin expansion Strategy and Technology (2%) yr/yr Intelli
Slide 9: Summary and 2025 Expectations
9 Summary 2025 Expectations Revenue growth @CC inflecting higher to 5%+ Raising operating pre-tax margin to expand by about a point Raising full-year free cash flow to over $13.5 billion 2Q25 Summary Exceeded our expectations across revenue, profitability, and free cash flow Productivity initiatives
Slide 10: ibm.com/investor
ibm.com/investor
Slide 11: Supplemental material
Supplemental material 11Some columns and rows in these materials, including the supplemental exhibits, may not add due to rounding Revenue and P&L highlights Adjusted EBITDA performance Cash flow and balance sheet highlights Currency impact on revenue growth Software & Infrastructure segment details
Slide 12: Revenue and P&L highlights
Revenue and P&L highlights 12Revenue growth rates @CC, $ in billions Revenue highlights 2Q25 B/(W) Yr/Yr Revenue $17.0 5% Americas $8.5 7% Europe/ME/Africa $5.4 8% Asia Pacific $3.1 (3%) Operating P&L highlights $ 2Q25 B/(W) Yr/Yr Gross profit $10.2 12% Expense $7.0 (11%) Pre-tax income $3.2 15% Net
Slide 13: Adjusted EBITDA performance
Adjusted EBITDA performance 13 $ in billions *Corporate (gains) and charges primarily consists of unique corporate actions such as gains on divestitures QTD YTD 2Q25 Yr/Yr 2Q25 Yr/Yr Operating (non-GAAP) pre-tax income from continuing operations $3.2 $0.4 $4.9 $0.5 Net interest expense $0.3 $0.1 $0.
Slide 14: Cash flow and balance sheet highlights
Cash flow and balance sheet highlights 14 $ in billions *Non-GAAP financial measure; excludes Financing receivables **Non-GAAP financial measure; adjusts for Financing receivables and net capital expenditures Cash flow 2Q25 YTD Yr/Yr Net cash from operations* $5.5 $0.2 Free cash flow** $4.8 $0.3 Sel
Slide 15: Currency impact on revenue growth
Currency impact on revenue growth 15 Quarterly averages per US $ 1Q25 Yr/Yr 2Q25 Yr/Yr Spot @3Q 3Q25 4Q25 FY25 Earnings Euro 0.95 (3%) 0.88 5% 0.85 6% 9% 4% Pound 0.79 (1%) 0.75 6% 0.74 4% 5% 3% Yen 152 (3%) 144 7% 146 2% 4% 3% Revenue impact, future @3Q Earnings Spot 2.4 pts 1.5-2 pts ~3.5 pts ~1.5
Slide 16: Software & Infrastructure segment details
Software & Infrastructure segment details 16 $ in billions Revenue & ARR growth rates @CC Infrastructure segment 2Q25 B/(W) Yr/Yr Revenue $4.1 11% Hybrid Infrastructure $2.9 19% IBM Z 67% Distributed Infrastructure (17%) Infrastructure Support $1.3 (3%) Segment profit $1.0 48% Segment profit margin
Slide 17: Consulting segment details
Consulting segment details 17Revenue & signings growth rates @CC, $ in billions Consulting segment 2Q25 B/(W) Yr/Yr Revenue $5.3 Flat Strategy and Technology $2.9 (2%) Intelligent Operations $2.4 2% Gross profit margin 27.5% 1.2 pts Segment profit $0.6 21% Segment profit margin 10.6% 1.6 pts Signing
Slide 18: Expense summary
Expense summary 18 $ in billions *Includes acquisitions in the last twelve months net of non-operating acquisition-related charges and includes impact of closed divested businesses **Represents the percentage change after excluding the impact of currency translation & hedges, acquisitions and divest
Slide 19: Balance sheet summary
Balance sheet summary 19 $ in billions *Includes eliminations of inter-company activity Jun 25 Dec 24 Jun 24 Cash & marketable securities $15.5 $14.8 $16.0 Core (non-IBM Financing) assets* $120.0 $108.9 $105.3 IBM Financing assets $13.1 $13.5 $12.5 Total assets $148.6 $137.2 $133.8 Other liabilities
Slide 20: Free cash flow summary
Free cash flow summary 20$ in billions QTD B/(W) YTD B/(W) 2Q25 Yr/Yr 2Q25 Yr/Yr Net cash from operations $1.7 ($0.4) $6.1 ($0.2) Less: IBM Financing receivables ($1.5) ($0.5) $0.6 ($0.3) Net cash from operations (excluding IBM Financing receivables) $3.2 $0.2 $5.5 $0.2 Net capital expenditures ($0.
Slide 21: Cash flow (ASC230)
Cash flow (ASC230) 21 $ in billions *Includes operating lease right-of-use assets amortization QTD QTD YTD YTD 2Q25 2Q24 2Q25 2Q24 Net income from operations $2.2 $1.8 $3.2 $3.4 Depreciation / amortization of intangibles* $1.3 $1.2 $2.4 $2.3 Stock-based compensation $0.4 $0.3 $0.8 $0.6 Operating ass
Slide 22: Software segment categories
Software segment categories Revenue categories – FY 2024Revenue categories 22 The Software portfolio delivers end-to-end enterprise capabilities for Hybrid Cloud and AI: Hybrid Cloud incl. RHEL, OpenShift, Ansible, Red Hat AI Automation incl. application development & integration, infrastructure lif
Slide 23: Consulting segment categories
Consulting segment categories Revenue categories – FY 2024 23 Revenue categories Strategy and Technology Provides strategy, process design, system implementation, cloud architecture and implementation services to help clients transform their businesses for growth and enable innovation. These service
Slide 24: Infrastructure segment categories
Infrastructure segment categories Hybrid Infrastructure Innovative infrastructure platforms to help meet the new requirements of hybrid multi-cloud and enterprise AI workloads leveraging flexible and as-a-service consumption models: – IBM Z: incl. hardware and operating system – Distributed Infrastr
Slide 25: Reconciliation of revenue performance – 2Q 2025
Non-GAAP supplemental materials Reconciliation of revenue performance – 2Q 2025 25 The above reconciles the non-GAAP financial information contained in the “Financial highlights”, “Revenue and P&L highlights”, and “Prepared remarks” discussions in the company’s earnings presentation. See Exhibit 99.
Slide 26: Reconciliation of segment revenue performance – 2Q 2025
Non-GAAP supplemental materials Reconciliation of segment revenue performance – 2Q 2025 26 The above reconciles the non-GAAP financial information contained in the “Software”, “Consulting”, “Infrastructure”, “Software & Infrastructure segment details”, “Consulting segment details” and “Prepared rema
Slide 27: Reconciliation of expense summary – 2Q 2025
Non-GAAP supplemental materials Reconciliation of expense summary – 2Q 2025 27 *Represents the percentage change after excluding the impact of currency translation & hedges, acquisitions and divestitures The above reconciles the non-GAAP financial information contained in the “Expense summary” discu
Slide 28: Reconciliation of continuing operations – 2Q 2025
Non-GAAP supplemental materials Reconciliation of continuing operations – 2Q 2025 28 $ in millions (except EPS which is in whole dollars) The above reconciles the non-GAAP financial information contained in the “Revenue and P&L highlights”, “Expense summary” and “Prepared remarks” discussions in the
Slide 29: Net income to adjusted EBITDA reconciliation
QTD YTD 2Q25 Yr/Yr 2Q25 Yr/Yr Net income as reported (GAAP) $2.2 $0.4 $3.2 ($0.2) Less: income/(loss) from discontinued operations, net of tax $0.0 ($0.0) $0.0 ($0.0) Income from continuing operations $2.2 $0.4 $3.2 ($0.2) Provision for/(Benefit from) income taxes from continuing operations $0.4 $0.
Slide 30: Reconciliation of net cash from operations to adjusted EBITDA
Non-GAAP supplemental materials Reconciliation of net cash from operations to adjusted EBITDA 30 $ in billions *Other assets and liabilities/other, net mainly consists of operating assets and liabilities/other, net in the “Cash flow (ASC230)” discussion, workforce rebalancing charges, non-operating
Slide 31: Reconciliation of tax rate and pre-tax income margin – FY 2025
Non-GAAP supplemental materials Reconciliation of tax rate and pre-tax income margin – FY 2025 expectations *Includes estimated discrete tax events for the year; actual events will be recorded as they occur. The FY tax rate expectations do not include any impact from H.R. 1, signed into law on July
Slide 32: ibm.com/investor
ibm.com/investor
International Business Machines — Q2 2025 Earnings Presentation on 6ix