Total Revenue

+0.6% (from $14,462M to $14,541M)

Modest revenue gain driven by strong performance in high-margin segments like Software, which partially offset declines in Infrastructure and Consulting. This slight increase reflects the balanced impact of previous period performance and evolving client demand. " "

Software Revenue

+7.4% (from $5,899M to $6,336M)

Strong growth propelled by robust demand for generative AI and hybrid cloud solutions, spurred by new product introductions and strategic acquisitions; this builds on the prior period’s solid performance in similar high-growth segments. " "

Infrastructure Revenue

–6.3% (from $3,076M to $2,886M)

Decline driven by product lifecycle dynamics, particularly the late-stage IBM Z platform and slower distributed infrastructure growth; the continued pressure from these factors that had affected the previous period carried into Q1 2025. " "

Consulting Revenue

–2.3% (from $5,186M to $5,068M)

Slight decline likely due to macroeconomic headwinds and a shift in client spending priorities away from traditional consulting services, which continued trends observed in the previous quarter. " "

Net Income

–34% (from $1,605M to $1,055M)

Substantial drop caused by increased operating expenses and margin pressures despite revenue stability. In addition, factors such as higher costs and possibly legacy impacts from prior period adjustments contributed to the significant decline in net income. " "

R&D Expense

+8.6% (from $1,796M to $1,950M)

Increased investment in innovation areas including AI, hybrid cloud, and quantum computing, reflecting IBM's commitment to future growth and a continuation of the increased R&D spending trend seen in previous periods. " "

Financing Cash Flows

+190% (from $1,877M to $5,443M)

Sharp rise resulted from significant debt issuance and financing activities to support strategic acquisitions and investments, marking a dramatic change from the prior period’s outflows. " "

Operating Cash Flow

+4.9% (from $4,168M to $4,370M)

Relatively stable operational performance with a modest improvement that reflects consistent cash generation despite evolving revenue mix and expense structures compared to the previous period. " "

Balance Sheet Snapshot

Stable (Total Assets at $145,667M; Stockholders’ Equity at $26,880M)

Capital structure remains steady with minor adjustments, as increases in marketable securities and shifts in debt levels balance each other. These changes denote strategic acquisitions, cash flow activities, and ongoing investments, echoing the incremental adjustments observed in previous periods. "

Revenue Growth

FY 2025

5% plus " " "

5%-plus " " "

no change

Free Cash Flow

FY 2025

$13.5 billion " " "

$13.5 billion " " "

no change

Operating Pretax Margin

FY 2025

Expand by over 0.5 point "

Expand by over 0.5 point "

no change

Tax Rate

FY 2025

mid‑teens "

mid‑teens "

no change

Software Growth

FY 2025

Red Hat projected to grow at mid‑teens "

Mid‑teens growth expected for Red Hat " "

no change

Consulting

FY 2025

Accelerate to low single digits "

Remain flat or grow in low single digits " " "

no change

Revenue Growth

Q2 2025

no prior guidance

At least 4% at constant currency, revenue range $16.4B–$16.75B " " "

no prior guidance

Software Growth

Q2–Q4 2024: Consistent robust software revenue growth (8–11%) driven by Red Hat performance, AI/automation initiatives, and strong recurring revenue. " " " "

Q1 2025: Continued 9% software growth with Red Hat and AI/automation as key drivers, though with a warning of sequential slowdown in consumption-based segments. " " "

Recurring but maturing: Robust growth remains a strength; however, concerns about a deceleration in the consumption part of the business have emerged.

Free Cash Flow & Margin Expansion

Q2–Q4 2024: Repeated emphasis on strong free cash flow generation and disciplined margin expansion—with notable increases in free cash flow levels and margins growing by 190–220 basis points. " " "

Q1 2025: IBM posted its highest first‐quarter free cash flow margin in history and maintained disciplined margin expansion (e.g., 240 basis points in adjusted EBITDA margin). " " "

Consistent and improving: Financial discipline remains a core focus with incremental improvements in free cash flow and margin expansion metrics.

Consulting Vulnerabilities

Q2–Q4 2024: Multiple references to vulnerabilities—discretionary spending pressures, flat or modest consulting revenue, and challenges from shifting client priorities. " " "

Q1 2025: Continued sensitivity in consulting due to discretionary pullbacks with additional reference to vulnerabilities from DOGE‐related initiatives affecting certain contracts. " "

Persistent risk with added nuance: The consulting business remains vulnerable under macroeconomic pressures, now compounded by a new element (DOGE-related initiatives), even though mission-critical work holds steady.

Generative AI Initiatives

Q2–Q4 2024: Generative AI initiatives were frequently cited as a growth driver in both consulting and software, despite lower near-term revenue yields relative to traditional projects. " " "

Q1 2025: Emphasis on the evolution of generative AI with a shift toward ROI-driven applications across consulting and software and expansion of its AI book of business. " " "

Maturing narrative: The focus has shifted from purely technology-driven excitement to an emphasis on real-world ROI and scalable, long-term impact.

HashiCorp Acquisition

Q2–Q4 2024: Balanced discussion highlighting both significant revenue growth potential and specific dilution concerns (e.g., estimated dilution of ~$0.30 per share). " " "

Q1 2025: Discussion centers on the strategic revenue growth potential from HashiCorp with less emphasis on dilution issues. " "

Evolving emphasis: The narrative is shifting from concerns about dilution to a stronger focus on integrating the acquisition as a revenue growth catalyst.

Mainframe Innovations

Q3–Q4 2024: Emerging focus on the upcoming z17 launch and related innovations as part of IBM’s diversification in its infrastructure portfolio; Q2 2024 mentioned solid performance of the z16 but did not specifically cover z17. " " "

Q1 2025: Strong focus on the z17 launch with detailed highlights on new AI capabilities, enhanced security, lower power consumption, and anticipated cycle strength. " " "

Gaining prominence: An emerging topic now being prominently positioned as a diversification strategy to modernize infrastructure.

FX Volatility Risks

Q2–Q3 2024: Discussions around FX risks included expected revenue impacts (100–200 basis point headwind and 0.5–1 point influence) due to the strengthening dollar. " "

Q1 2025: Detailed hedging strategy is outlined; FX now shows a mix of tailwinds (adding ~$2 billion to revenue) and operating margin headwinds due to prior hedges. "

Consistent concern: FX risks remain a constant theme with ongoing tactical hedging measures; the focus is on managing both tailwind benefits and margin pressures.

Watsonx Platform

Q2–Q4 2024: Watsonx was consistently highlighted as a cornerstone of IBM’s generative AI strategy, with substantial contributions to the software segment. " " "

Q1 2025: No reduction in emphasis is noted; Watsonx continues to be an integral part of IBM’s AI product suite contributing to organic growth. " "

Stable priority: Continued and strong focus, with no sign of de-emphasis across the periods.

DOGE-Related Initiatives

Q2–Q4 2024: No mention of DOGE-related initiatives affecting consulting was observed.

Q1 2025: Introduced as a factor impacting consulting contracts, highlighting vulnerabilities amid discretionary pullbacks. " "

New topical risk: A previously unmentioned area in earlier periods; now emerging as an additional factor affecting consulting dynamics.

Red Hat Performance & Sequential Slowdown

Q2 2024: Some indication of a 1-point deceleration in growth, whereas Q3–Q4 2024: Red Hat exhibited strong performance with high subscription-driven growth rates. " " "

Q1 2025: Warnings of a sequential slowdown emerge, particularly in the consumption-based portion (growing at high single digits vs. mid-teens), despite overall robust Red Hat performance. "

Mixed sentiment: While overall performance remains robust, increased caution around the slowdown in consumption-based revenue signals a more nuanced outlook.

Generative AI Consulting Revenue Yields

Q2–Q4 2024: Generative AI projects were noted to have 3–4 points lower near-term revenue yields compared to traditional consulting projects, attributed to longer project durations. " "

Q1 2025: This specific point is not explicitly mentioned.

Shift in focus: Reduced emphasis in Q1 2025 suggests a potential shift in narrative away from near-term revenue yield concerns toward broader strategic benefits.