IBM reported strong revenue growth in the second quarter of 2025, with total revenue rising 8 percent year-over-year to $17.0 billion.
The software segment led the performance with a 10 percent increase to $7.4 billion, driven by double-digit growth in Hybrid Cloud and Automation. IBM reported a 16 percent growth in both Hybrid Cloud (Red Hat) and Automation, a 9 percent rise in Data, and a 1 percent increase in Transaction Processing.
Infrastructure revenue surged 14 percent to $4.1 billion, propelled by a 70 percent jump in IBM Z systems. IBM reported a 21 percent increase in Hybrid Infrastructure, while Distributed Infrastructure declined 15 percent and Infrastructure Support slipped 1 percent.
Consulting revenue edged up 3 percent to $5.3 billion. IBM’s Strategy and Technology revenue rose 1 percent, while Intelligent Operations revenue grew 5 percent.
For the first half of 2025, total revenue reached $31.5 billion, up from $30.2 billion in the same period last year.
The company experienced significant margin growth, with gross profit margin improving to 58.8 percent and operating pre-tax income margin reaching 18.8 percent. Operating income and earnings per share also posted double-digit gains. IBM raised its full-year free cash flow outlook to over $13.5 billion, reflecting growing demand for AI-driven solutions and ongoing productivity initiatives.
IBM CEO Arvind Krishna highlighted that the company exceeded expectations for revenue, profit, and free cash flow in the second quarter, driven by its strong innovation and expertise in AI. He noted that IBM’s generative AI business has grown to over $7.5 billion and, based on robust first-half results, the company has raised its full-year free cash flow outlook to more than $13.5 billion.
AI
Arvind Krishna highlighted artificial intelligence (AI) as a central pillar of its growth and transformation strategy in Q2 2025. The company is embedding AI across more than 70 internal workflows, using its hybrid cloud and AI software to drive enterprise productivity and efficiency.
Its generative AI (GenAI) book of business has reached over $7.5 billion since inception, with growing demand for AI agents, assistants, RHEL AI, Granite models, and related consulting services, Arvind Krishna said.
IBM was recognized as an Emerging Leader in Gartner’s inaugural quadrant for GenAI consulting and implementation services. Clients such as UPS, Verizon, Mizuho, and Nestlé are leveraging IBM’s AI tools to unlock data and reduce operational friction.
IBM launched new watsonx Orchestrate features, enabling users to build no-code AI agents, with over 150 pre-built agents now available.
IBM also introduced watsonx Code Assistant for Z and watsonx Assistant for Z, running natively on the new z17 mainframe with high-speed AI inference capabilities. SAP’s adoption of IBM’s automation portfolio, including Red Hat Ansible and HashiCorp solutions, reflects rising synergy across AI offerings.
The acquisition of DataStax further bolsters IBM’s ability to deliver real-time, scalable AI applications. IBM’s internal use of AI through its “Client Zero” initiative is helping scale results externally and is expected to yield $4.5 billion in annual run-rate savings by end of 2025.
Rajani Baburajan
