IBM reported better-than-expected first quarter results and maintained its outlook in what CEO Arvind Krishna called a "fluid" macroeconomic environment.
Big Blue also said that its generative AI book of business is now more than $6 billion to date and up more than $1 billion in the quarter.
IBM reported first quarter earnings per share of $1.12 a share on revenue of $14.5 billion, up 1% from a year ago. Non-GAAP earnings were $1.60 a share.
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Wall Street was expecting IBM to report first quarter earnings of $1.40 a share on revenue of $14.4 billion. Krishna said:
"We remain bullish on the long-term growth opportunities for technology and the global economy. While the macroeconomic environment is fluid, based on what we know today, we are maintaining our full-year expectations for revenue growth and free cash flow."
- Software revenue of $6.3 billion was up 7% in the first quarter compared to a year ago. Growth was led by Red Hat with first quarter growth of 12% and automation, up 14%.
- Consulting revenue in the first quarter was $5.1 billion, down 2% from a year ago.
- Infrastructure revenue was $2.9 billion in the quarter, down 6%.
As for the outlook, IBM projected 2025 revenue growth of at least 5%. Second quarter revenue will be between $16.4 billion and $16.75 billion.
Krishna said:
"Technology remains a key competitive advantage allowing businesses to drive cost efficiencies, productivity and preserve the balance sheets. In the near term, uncertainty may cause clients to pause and take a wait and see approach. However, the value of hybrid cloud automation, data sovereignty and on premise solutions becomes even more critical in volatile windows. Recent conversations that I've had with clients reflect this view of the current environment."
He also touted AI's role.
"The AI portfolio we have built is designed to give clients a comprehensive set of tools to deploy AI within their enterprise. AI agents will accelerate the ability of many enterprises to turn the promise of generative AI into real value. Consulting is helping clients design and deploy AI strategies and use cases."
Other items from the call:
- Krishna said infrastructure is playing a bigger role with the new z17 mainframe and first installment of IBM Quantum System Two in Spain.
- CFO James Kavanaugh said IBM is leveraging AI to improve its own productivity. "We remain laser focused on accelerating our productivity initiatives. We are transforming our enterprise operation, leveraging technology and embedding AI across more than 70 workflows, such as HR IT support, procurement, finance, quote to cash and more," he said.
- IBM has decreased its vendor spend by more than $1 billion by optimizing supply chain and service delivery and right-sizing infrastructure.
- IBM has little tariff exposure in the US as goods imported outside of the US represent less than 5% of the overall spend.
