IBM announced its earnings for the second quarter of 2025. The company reported an increase in revenue, profit, and free cash flow, exceeding market expectations.

"We once again exceeded expectations for revenue, profit and free cash flow in the quarter," said Arvind Krishna, IBM chairman, president and chief executive officer. He added that IBM's generative AI business is growing rapidly and has reached $7.5 billion. The company has raised its full-year outlook for free cash flow to over $13.5 billion.

The company's revenue was $17 billion, marking an 8% increase compared to last year. Software revenue rose by 10%, consulting by 3%, and infrastructure by 14%. Gross profit margin increased as well, with a GAAP margin of 58.8% and an operating margin of 60.1%.

James Kavanaugh, IBM's senior vice president and chief financial officer, highlighted the positive response from clients to IBM's innovation efforts. "Revenue growth, portfolio mix and ongoing productivity initiatives drove significant margin expansion," he stated.

Software segment revenues reached $7.4 billion with notable growth in hybrid cloud and automation sectors. Consulting revenues were up at $5.3 billion while infrastructure revenues stood at $4.1 billion.

In terms of cash flow, IBM generated net cash from operating activities totaling $6.1 billion for the first half of the year with a free cash flow of $4.8 billion.

Looking forward to the full year of 2025, IBM expects constant currency revenue growth of at least 5% with free cash flow surpassing $13.5 billion.

The board declared a regular quarterly dividend of $1.68 per share payable on September 10th to stockholders recorded by August 8th.

IBM also provided cautionary statements about forward-looking information based on current assumptions about future business performance which could be affected by various risks including economic downturns or failures in innovation initiatives among others.

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