Q2 2026 International Business Machines Corp Earnings Call Transcript
Key Points
- International Business Machines Corp (IBM) reported a 1% revenue growth and a 5% increase in diluted operating earnings per share for the second quarter.
- The company has a strong liquidity position with $8.2 billion in cash and a solid investment-grade balance sheet.
- IBM's software revenue grew by 5%, with 80% of it being recurring, reflecting strong demand for subscription and consumption-based offerings.
- The company is investing aggressively in quantum computing, with plans to invest more than $10 billion over the next five years.
- IBM's AI strategy is well-aligned with its strengths in hybrid cloud, sovereignty, and trust, positioning it to help clients optimize AI deployments.
- IBM's second quarter performance fell short of expectations, with a significant shortfall in software revenue due to shifts in client spending priorities.
- The company experienced a decline in infrastructure revenue by 7%, with mainframe performance below expectations.
- Transaction processing revenue declined by 9%, impacted by clients prioritizing other CapEx investments.
- IBM revised its full-year revenue growth expectation to a range of 4% to 5%, down from the previous guidance of 5% or more.
- The company faces challenges in execution, with a need to adapt to deliver greater business value and align with client priorities.
Welcome, and thank you for standing by. (Operator Instructions) Today's conference is being recorded. If you have any objections, you may disconnect at this time. 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 second 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 at constant currency.
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