IBM $IBM reported first-quarter revenue of $15.92 billion, up 9% year over year, topping analyst expectations. Shares dropped 6% in after-hours trading, a move traders attributed to the company's decision to leave its full-year outlook in place.
Against CNBC's reported consensus of $15.62 billion in revenue and $1.81 in adjusted earnings per share, IBM came in ahead on both counts, delivering $1.91 per share on an adjusted basis.
Full-year targets were left untouched, with IBM still projecting a free cash flow gain of around $1 billion and constant-currency revenue expansion exceeding 5%. "I don't think we've ever raised guidance in a first quarter," IBM CFO Jim Kavanaugh told analysts on a conference call, adding that executives believe the company should be "a prudent operator."
Software was the largest revenue contributor at $7.05 billion, up 11% year over year. A 51% surge in Z mainframe hardware revenue, with the z17 model pacing ahead of earlier product cycles, pushed infrastructure sales up 15% to $3.33 billion. Consulting revenue grew 4% to $5.27 billion.
Free cash flow reached $2.22 billion in the quarter, up $258 million from the same period a year earlier. IBM ended the quarter with $11.8 billion in cash, restricted cash, and marketable securities, down $2.6 billion from year-end 2025. Total debt, including IBM Financing debt of $12.8 billion, rose to $66.4 billion.
IBM also declared a quarterly cash dividend of $1.69 per common share, payable June 10 to stockholders of record as of May 8. The company said it was the 31st consecutive year it has raised its quarterly dividend.
The $11 billion Confluent deal, a data streaming software transaction that closed around mid-March at roughly two months ahead of its anticipated timeline, has not altered IBM's margin targets; Kavanaugh said operating pre-tax margin expansion of about 1% remains on track.
Heading into Thursday's session, IBM had shed roughly 15% of its value since the start of 2026, a stretch during which the S&P 500 gained 4%.