Total Revenue

7.6% increase (from $15,770M in Q2 2024 to $16,977M in Q2 2025) " " " "

Strong cross‐segment performance drove the revenue uplift, building on improvements from previous periods where lower overall segment contributions and currency headwinds were noted. The combination of robust Software and Infrastructure growth compared to the prior period helped lift the total revenue figure. " " " "

Software Revenue

9.6% increase (from $6,739M in Q2 2024 to $7,387M in Q2 2025) " " "

Robust demand for hybrid cloud and AI capabilities, supported by strategic acquisitions and organic improvements, propelled the Software revenue growth. This increase builds on prior period momentum where similar drivers, such as strong performance in generative AI and recurring revenue streams, had already been established. " " "

Consulting Revenue

2.6% increase (from $5,179M in Q2 2024 to $5,314M in Q2 2025) " " "

Modest growth in consulting revenue reflects a rebound from earlier periods influenced by cautious client spending and macroeconomic uncertainty. Unlike previous quarters that faced sharper declines or mixed performance due to reprioritized budgets, the current period shows a steadier trend driven by resilient demand in strategic and technology-focused consulting areas. " " "

Infrastructure Revenue

13.6% increase (from $3,645M in Q2 2024 to $4,142M in Q2 2025) " " "

The sharp rise in Infrastructure revenue is linked to improved performance in hardware and distributed infrastructure segments, aided by new product cycles and recovery from earlier product cycle slowdowns. This improvement contrasts with previous periods where product cycle dynamics had led to declines, indicating a successful turnaround in this segment. " " "

Financing Revenue

Slight decline (from $169M in Q2 2024 to $166M in Q2 2025) " " "

The marginal drop in Financing revenue reflects ongoing challenges such as reduced client asset financing and higher credit loss reserves, trends that had also impacted prior periods. Despite adjustments in currency effects previously, these underlying issues continue to weigh on the segment performance. " " "

Other Category

Reversal from a $38M positive in Q2 2024 to a $(31)M loss in Q2 2025 " " "

The shift in the Other category mainly arises from a reversal in gains on divestitures and changes in net exchange and retirement-related costs. In previous periods, higher divestiture gains and favorable exchange outcomes boosted this category; the current period shows a correction with lower gains and reduced non-operating costs. " " "

Revenue growth

FY 2025

5%-plus " " "

5% plus " " " "

no change

Free Cash Flow

FY 2025

$13.5 billion " " "

above $13,500,000,000 " " " "

no change

Operating Pre-Tax Margin

FY 2025

expand by over 0.5 point "

expand by about a point " " " "

raised

Tax Rate

FY 2025

mid-teens "

mid-teens " " " "

no change

Software revenue growth

FY 2025

mid-teens growth " "

approaching double digits " " " "

lowered

Consulting growth

FY 2025

flat or low single digits " " "

prudently cautious "

no change

Infrastructure contribution

FY 2025

growth expected " "

about 1.5 points "

raised

Transaction processing growth

FY 2025

no prior guidance

low single-digit growth " " " "

no prior guidance

Productivity savings

FY 2025

no prior guidance

$4,500,000,000 " " " "

no prior guidance

Integrated Software Growth

Discussed in Q1 2025 ( " " " " ), Q4 2024 ( " " ), and Q3 2024 ( " " " ) with emphasis on multiple components such as Red Hat, automation, data and recurring revenue.

Q2 2025 call noted software growth at 8% with confidence of approaching double‐digit annual growth, driven by Red Hat and other portfolio contributions ( " " " ).

Recurring focus with steady portfolio strength. Quarterly fluctuations exist, but forward‐looking guidance remains positive ( " " " ).

AI and Generative AI Initiatives

Emphasized in Q1 2025 ( " " ), Q4 2024 ( " " ) and Q3 2024 ( " " ), outlining generative AI product contributions and growing books of business in consulting and software.

Q2 2025 highlighted accelerated momentum with a generative AI book of business over $7.5B, deeper integration in workflows, and expanded partner collaborations ( " " " " ).

Growing momentum and scale. Enhanced product offerings and increased market recognition indicate a stronger future impact ( " " " ).

Consulting Business Performance and Volatility

Covered in Q1 2025 ( " " ), Q4 2024 ( " " " ) and Q3 2024 ( " " " ) with discussions on flat revenue, volatility due to client pullbacks, and evolving signings.

Q2 2025 reported flat revenue, a healthy backlog with slight improvements in strategic wins and adjusted booking durations ( " " " " ).

Stable but amid volatility. While traditional challenges persist, there is cautious optimism with new client wins and a solid backlog ( " " ).

Operational Efficiency, Free Cash Flow, and Margin Expansion

Addressed in Q1 2025 ( " " " ), Q4 2024 ( " " " ) and Q3 2024 ( " " ) highlighting significant productivity initiatives and margin gains.

Q2 2025 showcased record free cash flow, improved EBITDA and operating margins with 200 bps of EBITDA margin expansion and a strong focus on productivity ( " " " " ).

Consistently positive and improving. Financial management and efficiency measures are strengthening margins and cash flow generation, enhancing future investment potential ( " " ).

Strategic Acquisitions

Mentioned in Q1 2025 ( " " " ), Q4 2024 ( " " ) and Q3 2024 ( " " ) with emphasis on transactions like HashiCorp, Neural Magic, and others enhancing the hybrid cloud and AI strategy.

Q2 2025 reiterated the strategic importance of acquisitions, particularly highlighting HashiCorp’s strong start and automation synergies, with a pipeline three times last year ( " " " " ).

Consistent emphasis with growing synergy. Acquisitions remain central to growth, with enhanced expectations of value creation through integration and portfolio expansion ( " " ).

Mainframe and Transaction Processing Revenue Dynamics

Q1 2025 ( " " " ) discussed the transition from the z16 and upcoming z17 launch; Q4 2024 ( " " " ) and Q3 2024 ( " " " " ) focused on strong z16 performance and mixed transaction processing trends.

Q2 2025 emphasized robust IBM Z performance, with IBM Z up 67% on the Z17 program, while transaction processing declined 2% due to cyclical hardware spend shifts ( " " ).

Mixed dynamics with a positive outlook. Mainframe performance is strong thanks to the new cycle, though transaction processing shows expected cyclical pressure ( " " ).

Sustainability of Organic Software Growth

Q1 2025 ( " " ) noted an ARR of $21.7B with 11% growth and 6 points from organic software; Q4 2024 ( " ) and Q3 2024 ( " ) discussed organic contributions of 7–8 points and recurring revenue strength.

Q2 2025 highlighted a robust recurring revenue base of $23B with double digit growth, underpinned by strong contributions from Red Hat, automation, and data segments ( " " " ).

Steady and optimistic. The narrative remains that organic growth is sustainable and may even accelerate going forward given the high recurring revenue mix ( " " ).

FX and Currency Volatility Risks

Q1 2025 ( " " ) detailed significant FX devaluation impacts; Q4 2024 ( " ) and Q3 2024 ( " ) mentioned modest headwinds due to a strengthening dollar.

Q2 2025 reported FX as a minor tailwind, with only a small portion of the revenue beat attributable to currency effects ( " ).

Reduced prominence. FX volatility is now less of a headwind compared to the dramatic impact noted in Q1 2025, suggesting more stable currency conditions ( " ).

Transient Impacts

Q1 2025 ( " ) mentioned some transient impacts from DOGE-related initiatives affecting consulting, though this was limited in scope; Q3 2024 and Q4 2024 did not mention this.

Q2 2025 did not mention any transient impacts such as DOGE-related initiatives ([N/A]).

Disappearing topic. Previously noted transient effects are no longer mentioned, indicating these impacts have likely subsided and are not a current concern ( " ).