Q1 2025 International Business Machines Corp Earnings Call Transcript
Key Points
- International Business Machines Corp (IBM) reported strong revenue growth, profitability, and cash flow generation, exceeding expectations for the first quarter of 2025.
- The company's Software segment grew by 9%, with notable strength in Red Hat, Automation, Data, and Transaction Processing.
- IBM's generative AI business saw significant traction, with a book of business now over $6 billion, up by $1 billion in the quarter.
- The upcoming launch of the z17 mainframe is expected to deliver enhanced AI capabilities and new security features, resonating well with clients.
- IBM's strategic acquisitions, such as HashiCorp, are expected to integrate well with its hybrid cloud strategy, offering synergy opportunities.
- Consulting revenue was flat, with some clients delaying decision-making, particularly in discretionary projects, impacting in-period signings.
- Infrastructure revenue declined by 4%, with IBM Z down 14% as the company wrapped up the z16 program.
- The macroeconomic environment remains uncertain, with potential impacts on client buying behavior and consulting services.
- IBM's federal consulting business, which is less than 10% of total consulting, could be susceptible to discretionary pullbacks.
- The company is cautious about the contribution from Consulting for the year, given the current economic conditions.
Welcome, and thank you for standing by. (Operator Instructions) Today's conference is being recorded. (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 2025 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 on the IBM investor website within a couple of hours, and a replay will be available by this time tomorrow. 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. We've provided reconciliation charts for these and other non-GAAP financial measures at the end of the
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