IBM(US:IBM) ZACKSยท2025-04-24 14:00Core Viewpoint - IBM reported strong first-quarter 2025 results, with adjusted earnings and revenues exceeding Zacks Consensus Estimates, driven by robust demand in the Software segment and healthy free cash flow [1][3]. Financial Performance - Net income on a GAAP basis was $1.05 billion or $1.12 per share, down from $1.57 billion or $1.69 per share in the prior year, primarily due to high operating expenses [2]. - Non-GAAP net income from continuing operations was $1.60 per share, compared to $1.68 in the previous year, beating the Zacks Consensus Estimate by $0.18 [3]. - Total revenues increased to $14.54 billion from $14.46 billion, with a 2% year-over-year growth on a constant currency basis, surpassing the consensus estimate by $95 million [3]. Gross Profit and Expenses - Gross profit rose to $8.03 billion from $7.74 billion, resulting in gross margins of 55.2% compared to 53.5% in the prior year, attributed to a strong portfolio mix [4]. - Total expenses increased to $6.87 billion from $6.67 billion, driven by higher interest expenses and R&D costs [4]. Segmental Performance - Software: Revenues improved to $6.34 billion from $5.9 billion, driven by growth in Hybrid Platform & Solutions, Red Hat, and AI, with pre-tax income rising to $1.85 billion [5]. - Consulting: Revenues decreased to $5.07 billion from $5.19 billion due to soft demand, with pre-tax income increasing to $558 million [6]. - Infrastructure: Revenues fell to $2.89 billion from $3.08 billion, with pre-tax income decreasing to $248 million [7]. - Financing: Revenues remained flat at $191 million, with pre-tax income declining to $69 million [7]. Cash Flow and Liquidity - IBM generated $4.37 billion in cash from operations, up from $4.17 billion in the prior year, with free cash flow increasing to $1.96 billion [8]. - As of March 31, 2025, the company had $11.04 billion in cash and cash equivalents and $56.37 billion in long-term debt [8]. Outlook - For full-year 2025, IBM expects free cash flow of $13.5 billion and revenue growth of approximately 5% at constant currency [9]. - For Q2 2025, management anticipates revenues between $16.40 billion and $16.75 billion [9].