International Business Machines Corp (NYSE:IBM) shares were set to open about 2% lower on Thursday after the technology company reported second-quarter revenue and adjusted earnings that missed Wall Street expectations while lowering its full-year constant currency revenue…
owth forecast. For the quarter, IBM reported adjusted earnings per share of $2.93, below the $2.97 expected by analysts, while revenue rose 1% year-over-year to $17.16 billion, missing the LSEG consensus estimate of $17.58 billion
The company now expects full-year constant currency revenue growth of 4% to 5%, down from its previous outlook, while maintaining its expectation for free cash flow to increase by about $1 billion year-over-year in 2026. IBM also said it aims to expand its full-year pre-tax margin by about one percentage point through productivity improvements. Software revenue increased 5% to $7.8 billion, led by 11% growth in Hybrid Cloud, including Red Hat (NYSE:RHT), and a 19% increase in Data.
Automation revenue rose 4%, while Transaction Processing declined 8%. Consulting revenue was flat at $5.3 billion, or up 1% in constant currency, with both Strategy and Technology and Intelligent Operations posting flat reported growth. Infrastructure revenue declined 7% to $3.8 billion, reflecting a 42% drop in IBM Z revenue and a 10% decline in Hybrid Infrastructure, partially offset by 37% growth in Distributed Infrastructure.