# IBM (IBM) Q2 2026 earnings

Results filed 2026-07-22 for the quarter ended 2026-06-30. Source page: https://earnings.opennash.com/companies/ibm/2026-q2/
Press release and exhibits: https://www.sec.gov/Archives/edgar/data/51143/000005114326000077/0000051143-26-000077-index.htm
> Summaries and transcripts are machine-generated and can contain errors.

## In brief

IBM reported second-quarter 2026 GAAP revenue of $17.2B, up 1%, with diluted EPS of $2.27 and operating (non-GAAP) EPS of $2.93, and now expects full-year constant currency revenue growth in the range of four-to-five percent.

IBM's second-quarter revenue was $17.2 billion, up 1% from a year ago. Software grew 5% to $7.8 billion, led by Data (up 19%) and Red Hat (up 11%). Consulting was flat and Infrastructure fell 7%, as IBM Z dropped 42% while Distributed Infrastructure rose 37%. GAAP diluted EPS was $2.27, down 2%, while operating (non-GAAP) EPS rose 5% to $2.93. Free cash flow was $2.5 billion, down $0.3 billion.
IBM now expects full-year constant currency revenue growth of four-to-five percent and still expects free cash flow to rise by about $1 billion. It also expects improved pre-tax income margin expansion. The CFO acknowledged revenue headwinds late in the second quarter. The tension is that IBM is investing in sales coverage, AI talent and quantum while revenue growth is slim and mainframe sales are sharply lower. Acquisitions of $10.5 billion this year have also cut cash and raised goodwill.

## Key numbers

| Metric | Value | Change | Basis |
| --- | --- | --- | --- |
| Revenue (GAAP, continuing operations) | $17.2B | up 1% from a year ago | GAAP |
| Net income | $2,165 | down from $2,194 million a year ago | GAAP |
| Diluted EPS, continuing operations | $2.27 | down 2% from a year ago | GAAP |
| Operating (non-GAAP) diluted EPS | $2.93 | up 5% from a year ago | non-GAAP |
| GAAP gross profit margin | 57.7% | down 1.0 points from a year ago | GAAP |
| Net cash from operating activities | $2.6 billion | up $0.9 billion year to year | GAAP |
| Free cash flow | $2.5 billion | down $0.3 billion year to year | non-GAAP |
| Adjusted EBITDA margin | 27.8% | up 0.2 points from a year ago | non-GAAP |

## Segments and operating metrics

| Name | Value | Change |
| --- | --- | --- |
| Software | $7.8 billion | up 5 percent |
| Consulting | $5.3 billion | flat, up 1 percent at constant currency |
| Infrastructure | $3.8 billion | down 7 percent |
| Financing | $0.2 billion | up 12 percent, up 11 percent at constant currency |
| Data (Software) | 19 percent | up 19 percent, up 18 percent at constant currency |
| Hybrid Cloud (Red Hat) | 11 percent | up 11 percent |
| Distributed Infrastructure | 37 percent | up 37 percent |
| IBM Z | 42 percent | down 42 percent |

## Outlook

| Metric | Period | Outlook |
| --- | --- | --- |
| Free cash flow increase year over year | full-year 2026 | about $1 billion |

## Key takeaways

1. **Revenue growth was only 1% in the quarter** GAAP revenue was $17.2B, up 1%, and the CFO cited revenue headwinds late in the second quarter. Operating (non-GAAP) revenue growth was 0%.
2. **Software grew 5% led by Data and Red Hat** Software revenue was $7.8 billion, with Data up 19 percent and Hybrid Cloud (Red Hat) up 11 percent. Transaction Processing fell 8 percent.
3. **IBM Z drop dragged Infrastructure down 7%** IBM Z was down 42 percent, while Distributed Infrastructure was up 37 percent. Power and Storage built an order backlog of nearly $500 million.
4. **Operating EPS rose 5% while GAAP EPS fell** Operating (non-GAAP) EPS was $2.93, up 5%, while GAAP diluted EPS was $2.27, down 2%. Pre-tax income margin was 14.4% GAAP and 19.2% operating.
5. **Full-year view: four-to-five percent growth, FCF up $1 billion** IBM now expects constant currency revenue growth in the range of four-to-five percent and about $1 billion of higher free cash flow. It also expects improved pre-tax income margin expansion.

## Questions

**What were IBM's second-quarter 2026 revenue and earnings?** GAAP revenue was $17.2B, up 1%, with diluted EPS of $2.27 and net income of $2.2B. Operating (non-GAAP) EPS was $2.93, up 5%.
**Which IBM segments grew and which shrank?** Software grew 5% to $7.8 billion and Financing rose 12%, while Consulting was flat. Infrastructure fell 7% to $3.8 billion as IBM Z dropped 42 percent.
**What is IBM's full-year 2026 outlook?** IBM expects full-year constant currency revenue growth in the range of four-to-five percent, with currency neutral to growth at current rates. It continues to expect free cash flow to increase by about $1 billion.
**How much free cash flow did IBM generate?** Second-quarter free cash flow was $2.5 billion, down $0.3 billion year to year. For the first six months it was $4.8 billion, flat year to year.
**What is IBM's dividend and balance sheet position?** The board approved a quarterly dividend of $1.69 per share. IBM ended the quarter with $8.2 billion of cash, restricted cash and marketable securities, and total debt of $62.0 billion.