IBM (IBM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $15.8B, up 1.9–4% year-over-year at constant currency, led by strong Software and Infrastructure growth, while Consulting lagged due to discretionary spending constraints.

• Net income from continuing operations rose 15.8% to $1.8B, with diluted EPS of $1.96, up 14% year-over-year; operating EPS was $2.43, up 11–11.5%.

• Free cash flow for the first half was $4.5B, up $1.1B year-over-year; full-year guidance raised to over $12B.

• Generative AI book of business surpassed $2B since watsonx launch one year ago.

• Hybrid cloud and AI strategies are driving organic growth, with significant client adoption and ecosystem partnerships.

Financial highlights

• Q2 revenue was $15.8B, up 4% at constant currency; gross margin expanded to 56.8% GAAP (+180 bps) and 57.8% operating (+190 bps).

• Operating pre-tax income grew 17% to $2.8B; operating pre-tax margin was 17.7%, up 220 bps.

• Operating EPS increased 11–11.5% to $2.43; adjusted EBITDA for the quarter was $4.0B, up 10%.

• Free cash flow for H1 2024 was $4.5B, up $1.1B year-over-year; cash and equivalents at June 30, 2024 were $16.0B.

• Returned $3.1B to shareholders via dividends in H1; total debt was $56.5B, flat from year-end.

Outlook and guidance

• Full-year 2024 constant currency revenue growth expected at the low end of mid-single digits; currency to be a 1–2 point headwind.

• Free cash flow guidance raised to over $12B, driven by adjusted EBITDA growth.

• Software segment growth outlook increased to high single digits; consulting expected to grow low single digits.

• Infrastructure expected to be about neutral for the year.

• Operating pre-tax margin expansion guidance raised to over half a point.