“But given the current environment, we are appropriately more cautious on consulting's contribution to IBM this year.”

In context

“% plus and about $13.5 billion of free cash flow. Let me go through the drivers of these key metrics. As discussed at our investor day, our mix shift towards software is a key driver of our growth acceleration. Software is now about 45% of our business. With 80% recurring revenue. As a reminder, in the first quarter, we generated $21.7 billion of ARR, growing 11%. The combination of our portfolio strength, investment in innovation, and contribution from acquisitions to drive our full-year performance in software. And we continue to expect mid-teens growth for Red Hat. Underpinned by six-month revenue under contract which is growing in the mid-teens. In consulting, we are encouraged by this quarter's sequential growth in revenue. Our solid backlog up 6%, and our book of business in Gen AI. But given the current environment, we are appropriately more cautious on consulting's contribution to IBM this year. With our new mainframe launch, innovation across the portfolio, and capacity dynamics that could benefit our mainframe environments and storage needs we expect infrastructure to grow. While we feel good about the core growth drivers of our business, there are areas of our portfolio that could see greater variability in the event that the macroeconomic environment deteriorates. This includes consulting is more sensitive to discretionary pullbacks and Doge-related initiatives. Consumption-based services and software, including in Red Hat, and areas of distributed infrastructure. We continue to expect IBM's full-year operating pretax margin to expand by over a half a point driven by productivity initiatives, revenue scale, and mix, mitigated by the impact of dilution from acquisitions. And o”