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Get filing alertsIBM Q2 revenue up 1% to $17.2B but Infrastructure down 7% on mainframe deal slippage
Filed July 14, 2026 · Period ending July 14, 2026 · ~2 min read
Key Changes
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high
Infrastructure revenue fell 7% as clients shifted capex to supply-constrained servers/storage ahead of price increases and cybersecurity concerns distracted buyers; IBM acknowledged execution failures as large mainframe deals failed to close on expected timelines.
Exhibit 99.1 view on EDGAR → -
high
Q2 revenue $17.2B (up 1%), operating non-GAAP EPS $2.93 (up 5%), year-to-date free cash flow $4.8B; Software up 5%, Consulting flat, but Infrastructure shortfall drove majority of miss versus expectations.
Exhibit 99.1 view on EDGAR → -
high
Announced Lightwell, a $5B commitment with 20,000+ engineers to address open source vulnerabilities; early adopters include Bank of America, Citi, JPMorgan Chase, Goldman Sachs, and other major financial institutions.
Exhibit 99.1 view on EDGAR → -
high
Disclosed $10B+ quantum investment over five years (R&D, capex, manufacturing, M&A) and letter of intent with U.S. DoC to build Anderon quantum wafer foundry backed by $1B CHIPS incentives and $1B IBM cash; targeting first fault-tolerant quantum computer by 2029.
Exhibit 99.1 view on EDGAR → -
medium
Issued preliminary Q2 results via investor letter rather than standard earnings release; information furnished under Item 2.02 and Item 7.01 (Regulation FD), not filed, with non-GAAP reconciliations in exhibits.
Item 2.02 verify on EDGAR →
Summary
IBM disclosed preliminary Q2 2026 results showing 1% revenue growth to $17.2 billion, but the headline is a 7% decline in Infrastructure revenue driven by execution failures in the mainframe business.
The CEO acknowledged the company "faltered" and "did not adapt and move quickly enough" as clients shifted capex spending toward supply-constrained servers and storage ahead of expected price increases, while industry-wide cybersecurity concerns distracted buyers. Numerous large deals failed to close on expected timelines, driving the majority of the shortfall.
Software grew 5% and Consulting was flat, but the Infrastructure miss overshadowed otherwise solid performance in operating non-GAAP EPS (up 5% to $2.93) and year-to-date free cash flow of $4.8 billion. The filing also disclosed two major strategic initiatives. IBM announced Lightwell, a $5 billion commitment with over 20,000 engineers to create a trusted enterprise clearinghouse for open source software vulnerabilities, with early adoption by major financial institutions including Bank of America, Citi, JPMorgan Chase, and Goldman Sachs. On quantum computing, IBM revealed plans to invest more than $10 billion over the next five years and signed a letter of intent with the U.S. Department of Commerce to build the world's first pure-play quantum wafer foundry, backed by $1 billion in CHIPS incentives and $1 billion from IBM, targeting delivery of the first large-scale fault-tolerant quantum computer by 2029. The Infrastructure execution issues are a near-term concern, but the Lightwell and quantum investments position IBM in emerging high-value markets.
Section-by-Section Diff
Event · Item 2.02 — Results of Operations and Financial Condition
Added in current filing · verify on EDGAR →
On July 14, 2026, International Business Machines Corporation (the “company”) issued a letter to IBM investors providing certain information regarding its expected financial results for the fiscal quarter ended June 30, 2026.
IBM disclosed preliminary financial results for the quarter ended June 30, 2026, via an investor letter rather than a standard earnings release.1, which is not provided in this filing excerpt. This approach of issuing guidance or preliminary results via investor letter is unusual and may signal either early disclosure of material results or a change in reporting format.
Added in current filing · verify on EDGAR →
In an effort to provide investors with additional information regarding the company’s results as determined by generally accepted accounting principles (GAAP), the company has disclosed in the attached letter certain non-GAAP information which management believes provides useful information to investors. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included in the letter, which is Exhibit 99.1 to this Form 8-K.
IBM disclosed non-GAAP financial measures in the investor letter, with reconciliations to GAAP provided in Exhibit 99.1. The company's rationale for using non-GAAP measures is detailed in Exhibit 99.2. Non-GAAP metrics are common in earnings disclosures and typically adjust for items like restructuring charges, acquisition-related costs, or other one-time events to provide what management views as a clearer picture of operational performance.
Event · Item 7.01 — Regulation FD Disclosure
Item 7.01 — Regulation FD Disclosure filed; see Key Changes for terms.
Added in current filing · verify on EDGAR →
The information contained in Item 2.02 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 7.01.
IBM cross-references Item 2.02 content into Item 7.01 (Regulation FD Disclosure). Item 2.02 typically covers results of operations and financial condition, suggesting IBM is making financial or operational information publicly available under Regulation FD requirements. The filing explicitly states this information and the corresponding exhibits are being furnished, not filed, meaning they are not subject to liability under Section 18 of the Securities Exchange Act.
Show 1 minor / wording change
Added in current filing · verify on EDGAR →
The information in Item 2.02 and Item 7.01, including the corresponding Exhibits 99.1 and 99.2, are being furnished with the Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.
IBM clarifies that the Item 2.02 and Item 7.01 disclosures, along with Exhibits 99.1 and 99.2, are furnished rather than filed. This distinction means the information is publicly disclosed but does not carry the same legal liability exposure as formally filed documents. This is standard practice for earnings releases and similar forward-looking or supplemental financial information.
Event · Exhibit 99.1
IBM disclosed preliminary Q2 2026 results showing revenue up 1% to $17.2B but Infrastructure revenue down 7% due to mainframe shortfall.
Added in current filing · view on EDGAR →
Revenue of $17.2 billion, up 1 percent
-Software revenue up 5 percent
-Consulting revenue flat, up 1 percent at constant currency
-Infrastructure revenue down 7 percent
IBM disclosed preliminary second-quarter 2026 revenue of $17.2 billion, up 1 percent year-over-year. Software revenue grew 5 percent, Consulting was flat (up 1 percent at constant currency), but Infrastructure revenue declined 7 percent. The company is still finalizing its financial reporting and final results could differ slightly.
Added in current filing · view on EDGAR →
In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. This dynamic impacted client buying patterns. While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization. In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter.
These conditions require our teams to execute perfectly, and this quarter we faltered. We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall.
The CEO explained that Infrastructure revenue fell short of expectations due to clients shifting capex spending toward supply-constrained servers, storage, and memory ahead of expected price increases, combined with industry-wide cybersecurity concerns distracting clients. IBM acknowledged execution failures, stating the company did not adapt quickly enough and numerous large deals failed to close on expected timelines, driving the majority of the shortfall.
Added in current filing · view on EDGAR →
Gross Profit Margin: GAAP: 57.7 percent, down 100 basis points; Operating (Non-GAAP): 59.4 percent, down 70 basis points
-Pre-Tax Income Margin: GAAP: 14.4 percent, down 90 basis points; Operating (Non-GAAP): 19.2 percent, up 30 basis points ... Year to date, net cash from operating activities of $7.8 billion; free cash flow of $4.8 billion ... Diluted Earnings Per Share: GAAP: $2.27, down 2 percent; Operating (Non-GAAP): $2.93, up 5 percent
IBM reported Q2 2026 GAAP diluted EPS of $2.27 (down 2 percent) and operating non-GAAP EPS of $2.93 (up 5 percent). GAAP gross profit margin was 57.7 percent (down 100 basis points) while operating non-GAAP gross profit margin was 59.4 percent (down 70 basis points). Operating non-GAAP pre-tax income margin expanded 30 basis points to 19.2 percent. Year-to-date free cash flow was $4.8 billion.
Event · Exhibit 99.2
IBM filed exhibit defining non-GAAP metrics (operating EPS, free cash flow, constant currency) used in earnings reporting.
Show 2 minor / wording changes
Added in current filing · view on EDGAR →
Operating earnings from continuing operations is a non-GAAP measure that excludes the effects of certain acquisition-related charges and intangible asset amortization, expense resulting from basis differences on equity method investments, retirement-related costs and their related tax impacts.
IBM disclosed its methodology for calculating operating (non-GAAP) earnings, which excludes acquisition-related charges, intangible amortization, equity method basis differences, and retirement-related costs. This is a standard accounting policy disclosure defining how IBM presents supplemental earnings metrics to investors.
Added in current filing · view on EDGAR →
The company defines free cash flow as net cash from operating activities less the change in Financing receivables and net capital expenditures, including the investment in software and other asset sales.
IBM defined free cash flow as operating cash flow minus changes in financing receivables and net capital expenditures. The company treats financing receivables as profit-generating investments rather than working capital, which is why they are excluded from the free cash flow calculation.
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Figures/quotes linked to EDGAR · Narrative written by AI · Jul 16, 2026 · How we verify