IBM Q2 Revenue Hits $17.2B, Misses Wall Street Estimates as Mainframe Sales Plunge 42%, Cuts Full-Year Outlook

IBM said in an SEC 8-K filing on July 22 (local time) that its second-quarter revenue came in at $17.2 billion, up 1% year-over-year but below Wall Street estimates.

📊 Price at Time of Writing (July 23, 2026, 09:11 KST)
$205.77 ▼ -2.25%

Q2 Results at a Glance

IBM posted second-quarter revenue of $17.2 billion and pre-tax income of $2.5 billion. Revenue grew, but a sharp slowdown in the mainframe (IBM Z) business left results short of market expectations. Adjusted pre-tax income, which excludes interest and taxes, rose to $3.3 billion from a year earlier.

• Revenue: $17.2 billion, up 1% year-over-year
• GAAP earnings per share (EPS): $2.27, down 2% year-over-year
• Adjusted (non-GAAP) EPS: $2.93, up 5% year-over-year
• Free cash flow (FCF, operating cash flow minus capital expenditures): $2.5 billion, down $300 million year-over-year

Outlook

IBM lowered its full-year revenue growth outlook, excluding currency effects, to 4-5%. The company said that if current exchange rates hold, currency effects should have no impact on annual growth. It maintained its existing forecast for free cash flow to rise by about $1 billion from a year earlier. CEO Arvind Krishna said, 'We had some revenue headwinds late in the second quarter, but our AI strategy remains the right direction.' CFO James Kavanaugh said, 'In a quarter like this, it's important to maintain financial and operational discipline while investing in growth and returning value to shareholders through dividends.'

Market Reaction

IBM shares swung sharply after the earnings release. Yahoo Finance described it as a 'historic stock plunge,' reporting that CEO Krishna personally stepped in to clarify that there were no issues with the company's AI strategy. Bloomberg and the Wall Street Journal cited the 42% plunge in data-center mainframe revenue as the key reason behind the lowered annual outlook. Reuters noted that as customers prioritize AI infrastructure spending, other IBM hardware purchases have been pushed back. StockStory assessed that the quarter's revenue fell short of market expectations, though specific consensus figures were not available in public disclosures. IBM returned $1.6 billion to shareholders via dividends in the second quarter, and the board approved a new quarterly dividend of $1.69 per share. As of 9:11 a.m. KST on July 23, IBM shares were trading at $205.77, down 2.25% from the previous close.

Segment Breakdown

• Software: $7.8 billion, up 5% year-over-year (hybrid cloud segment, including Red Hat, up 11%)
• Consulting: $5.3 billion, roughly flat year-over-year (up 1% excluding currency effects)
• Infrastructure: $3.8 billion, down 7% year-over-year (IBM Z mainframe revenue plunged 42%, while distributed infrastructure surged 37%)
• Financing: $200 million, up 12% year-over-year

This article was automatically generated based on the original SEC 8-K filing and international media reports, with the aim of quickly conveying key data immediately after the announcement. We recommend checking the company's official disclosure before making trading decisions. Prices reflect the time of writing and may differ from current levels.