IBM reported second-quarter results that did not meet analyst expectations, yet its shares rose by 3% following a prior profit warning. The company posted adjusted earnings per share of $2.93, which was $0.08 shy of the analyst consensus. Revenue was reported at $17.2 billion, below the expected $17.9 billion but up 1% year-over-year. IBM revised its full-year revenue growth expectation down to 4%-5% from over 5%. CEO Arvind Krishna emphasized confidence in IBM’s strategy despite revenue challenges, while software revenue showed an increase, particularly in Hybrid Cloud and Data segments.

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IBM shares rise 3% post-Q2 earnings miss as investors eye prior profit warning

Louis Juricic

Wed, July 22, 2026 at 4:47 PM EDT2 min read

IBM \ -2.25%

Investing.com -- International Business Machines Corporation (NYSE:IBM) reported second-quarter results that fell short of analyst expectations, though shares rose 3% as the company had issued a profit warning last week.

The technology company posted adjusted earnings per share of $2.93 for the quarter, missing the analyst consensus of $3.01 by $0.08. Revenue came in at $17.2 billion, below the $17.9 billion estimate and up 1% YoY. IBM now expects full-year constant currency revenue growth of 4% to 5%, down from its prior guidance of more than 5%. The midpoint of 4.5% falls below the previous expectation. The company maintained its forecast for free cash flow to increase by approximately $1 billion YoY.

"Although we faced revenue headwinds late in the second quarter, we continued to focus on the fundamentals of our business, including driving productivity, strengthening our portfolio, and generating free cash flow," said James Kavanaugh, IBM senior vice president and chief financial officer.

Software revenue increased 5% to $7.8 billion, with Hybrid Cloud (Red Hat) up 11% and Data up 19%. Consulting revenue remained flat at $5.3 billion, while Infrastructure revenue declined 7% to $3.8 billion, primarily due to a 42% drop in IBM Z, partially offset by a 37% increase in Distributed Infrastructure.

The company generated $2.5 billion in free cash flow during the quarter, down $0.3 billion YoY. For the first six months, free cash flow was $4.8 billion, flat compared to the prior year period.

"We are confident in IBM's strategy and portfolio, and in our ability to capture growth opportunities ahead," said Arvind Krishna, IBM chairman, president and chief executive officer.

IBM continues to expect improved pre-tax income margin expansion for the full year.

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