Q1 2026 International Business Machines Corp Earnings Call Transcript
Key Points
- International Business Machines Corp (IBM) reported a strong start to 2026 with a 6% revenue growth and a 13% increase in free cash flow.
- Software revenue grew by 8%, with data and Red Hat experiencing double-digit growth.
- Infrastructure revenue increased by 12%, driven by a record performance in IBM Z, which grew by 48%.
- IBM's consulting segment showed momentum with a 1% growth, driven by enterprise data and business application transformations.
- The company is making significant advancements in AI, with a focus on building platforms that allow enterprises to deploy AI on their terms, enhancing security and integration.
- Despite strong performance, IBM did not raise its guidance for the year, citing macroeconomic uncertainties and potential energy impacts in Europe.
- Consulting segment profit margin declined slightly due to currency headwinds and reinvestment of productivity gains.
- There are concerns about the impact of supply chain disruptions, particularly in the software area related to RHEL.
- The company is absorbing incremental dilution from the early closing of Confluent, impacting operating pre-tax margins.
- IBM's hardware business, while important, is only 25% of its overall business, which may limit growth potential in that segment.
Welcome, and thank you for standing by. (Operator Instructions)
Now, I will turn the meeting over to Olympia McNerney, IBM's Global Head of Investor Relations. Olympia, you may begin.
Thank you. I'd like to welcome you to IBM's first-quarter 2026 earnings presentation. I'm Olympia McNerney, and I'm here today with Arvind Krishna, IBM's Chairman, President, and Chief Executive Officer; and Jim Kavanaugh, IBM's Senior Vice President and Chief Financial Officer.
We'll post today's prepared remarks and a replay of today's webcast on the IBM Investor website within a couple of hours. The earnings presentation is already available.
To provide additional information to our investors, our presentation includes certain non-GAAP measures. For example, all of our references to revenue and signings growth are a constant currency. We provided reconciliation charts for these and other non-GAAP financial measures at the end of the presentation, which is
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