IBM (IBM)

“Our third quarter operating tax rate should be in the mid-teens.”

“And for operating pretax margin, we expect similar performance to the second quarter.”

“Given the strengthening of the dollar, we now expect currency to be a 1.5 point headwind to revenue growth in the quarter.”

“Looking to the third quarter, we expect constant currency revenue growth consistent with the full year.”

“After all, we do have a large share of wallet at many of these clients. So there is a question of how much they will spend here, but I fully expect that we will do well in the data portfolio.”

“Now if I take the next 12 months and if I look at what both I talked about and where we see the demand signals, I fully expect data to perform well and to give us that tailwind that we are wanting there.”

“That is the point that we are going to, and we are not going to back off from our commitment of long-term double digit for software despite the 2Q hiccup.”

“We and I have complete conviction in the double-digit long-term software growth, let me be clear about that.”

“Given the confidence we have in our guidance in the second half, we will flush through a major portion of that inventory headwind. So that will become a tailwind in the second half.”

“But when we look at the guidance in the second half, I think prudently, when we're looking at 6% to 8%, 6% being the anchor, 8% approaching double digits in the second half, we've got TP down low single digits to mid-single digits overall because we're going to look at that as a 2027 growth vector opportunity for us.”

“Now Ben, to your question, how do we get confidence? Because our guide says we stay at that high 120-plus percent throughout 2026 overall.”

“On the high end, at 8%, we said that, that 80% revenue, we see continue and accelerate. We accelerated from 7% in the first quarter, 8% in the second quarter, and we see this going to about 10% in the second half.”

“The second is our software. And that software, when you look at it, at the high end of the range at 8%, that is the second half that's approaching double digits based on what Arvind said, the strength of our 80% high-value recurring revenue accelerating and a return to some normal level of closure rates of a strong pipeline in the second half.”

“Number one, the strength and confidence we have in our mainframe platform cycle. If we can maintain this at a high 120%-plus program to program, that is a tremendous indicator that will lead us to the high end of that guide range.”

“The first indicator, we have to show acceleration as we get into the second half of the year.”

“To give you a perspective, normally, we would not expect all of them to close, but we would expect maybe 2/3 to 3/4 of them to close over the next 6 months.”

“The primary driver of this growth will be adjusted EBITDA, offset by cash tax headwinds, higher CapEx and higher net interest expense, the majority of which is behind us.”

“For the full year, we continue to expect to grow free cash flow by about $1 billion.”

“Our operating tax rate for the year should be in the mid-teens, and the timing of discrete items can cause the rate to vary within the year.”

“As a result, we now expect to deliver 100 basis points of operating pretax margin expansion with productivity more than offsetting the revenue-related headwinds.”

“In Consulting, the quality of our backlog and momentum in Gen AI continue to support an acceleration in revenue growth to low to mid-single digits for the year.”

“In light of the strong demand environment in Power and Storage, we now expect Infrastructure to grow low single digits in 2026, driven by growth in Distributed Infrastructure and continued strong program-to-program performance in IBM Z through the second half of the year.”

“Given the second quarter shortfall, we are revising our software growth expectation to a range of 6% to 8% for the full year.”

“We believe the low end of the revenue range appropriately reflects the current environment and is our base case.”

“We now expect revenue growth for 2026 in the range of 4% to 5% and are maintaining our expectation to grow free cash flow by about $1 billion.”

“We continue to expect to grow free cash flow by about $1 billion this year as we accelerate our productivity initiatives.”

“We now expect revenue growth for the full year in a range of 4% to 5%.”

“While several of the deals that slipped from the second quarter have already closed in the first few weeks of the third quarter, the low end of the software range assumes that recent spending dynamics persist through the second half.”

“And I expect that actually some of that we'll be able to absorb and maintain our acceleration.”

“I would tell you that I would expect the second quarter will play out similar to the first quarter in the Middle East.”

“Our second quarter operating tax rate should be in the mid-teens.”

“Looking to the second quarter, we expect our constant currency revenue growth rate to be similar to the full year.”

“That positions our confidence in the year of us accelerating our revenue growth around low single digits and if things go well, can we do better than that? Obviously, yes.”

“While we are absorbing incremental dilution given the early closing of Confluent, actions we are taking to accelerate our cost synergies enable us to stay on track to expand operating pretax margins by about 1 point this year.”

“We remain confident this will be our strongest cycle given the AI innovation value we are delivering to clients.”

“The strong start to the year drives our confidence in delivering constant currency revenue growth of 5-plus percent in 2026 and free cash flow growth of about $1 billion year-over-year.”

“Given our strong start to the year, we remain confident in our ability to sustain revenue growth of 5% plus and grow free cash flow by about $1 billion this year.”

“We remain on track to deliver the first, large-scale fault-tolerant quantum computer by 2029.”

“We strongly believe that our partners will achieve the first examples of Quantum Advantage this year leveraging IBM hardware.”

“That's going to deliver 5 points of software growth.”

“For free cash flow, we continue to expect to grow about $1 billion for the full year, driven primarily by growth in adjusted EBITDA.”

“Our operating tax rate for the year should be in the mid-teens and the timing of discrete items can cause the rate to vary within the year.”

“We are off to a great start with z17. And 4 quarters into z17's launch, we prudently continue to expect infrastructure revenue to be down low single digits for the year, representing about a 0.5 point impact to IBM.”

“In consulting, the quality of our backlog and momentum in GenAI with backlog penetration at about 30%, continue to support an acceleration in revenue growth to low to mid-single digits for the year.”

“Since 2023, this has driven $4.5 billion of productivity savings, with an additional $1 billion expected in 2026.”

“Our first-quarter operating tax rate should be in the mid-teens.”

“With workforce rebalancing fairly consistent with the prior year.”

“Looking to the first quarter, we expect our constant currency revenue growth rate to be similar to the full year.”

“We took up our productivity target to $5.5 billion.”

“We said we'd guide confidently up a billion dollars at $15.7 billion. That's on a high single-digit growth.”

“Taking this all into account, we are confident in our ability to expand operating pretax margin by about a point in 2026.”

“We enter 2026 with momentum and confidence in our ability to sustain 5% plus revenue growth and grow free cash flow by about $1 billion.”

“We remain on track to deliver the first large-scale fault-tolerant quantum computer by 2029.”

“And then finally, the repositioning. We see more headroom on margin leverage about a point and a half as we go forward, and that's through productivity portfolio mix,”

“One backlog, $32 billion up 2% overall. But underpinning record low erosion duration that has continued to come down. And our realization to your question we see a realization out of that backlog that fully supports that low to mid-single-digit growth.”

“We will lose a half a point on portfolio mix because we are gonna wrap on an unprecedented launch momentum on mainframe.”

“When you look at 2026, we set about a point growth in margin. Gonna get about a half a point out of revenue scale just given the leverage of the acceleration of revenue.”

“The piece there that continues to be very, very attractive to growth is OpenShift. Which is almost at $2 billion and running at a 30% growth rate and we expect that to continue both for containers for hybrid applications, and virtualization.”

“Mainframe, given the very strong cycle we had, somewhere between low to mid-single-digit growth, is reasonable and we have seen that dynamic play through but it kinda follows the hardware placement by a few quarters.”

“For free cash flow, we expect to grow about $1 billion in 2026. In line with our Investor Day model of high single-digit growth.”

“We continue to accelerate our productivity initiatives and now expect an incremental $1 billion of productivity savings this year. Driving $5.5 billion of annual run rate savings by 2026.”

“We expect to realize about $500 million of operational spend run rate synergies by 2027.”

“We expect Confluent will be accretive to adjusted EBITDA within the first full year and to free cash flow in year two.”

“We anticipate absorbing about $600 million of dilution from Confluent in 2026.”

“Our operating tax rate for the year should be in the mid-teens.”

“For the full year, we expect IBM's operating pretax margin to expand by about a point.”

“In consulting, our backlog levels and momentum in GenAI with backlog penetration over 25% support an acceleration in revenue growth to low to mid-single digits for the year.”

“Consistent with our Investor Day model, we expect to sustain constant currency revenue growth of 5% plus in 2026. And free cash flow to be up about $1 billion year over year. Growing high single digits.”

“Low teen growth for the year, nice composition of where that acceleration is. But the most important thing, we're well positioned 2026.”

“By the way, if you map it back to the z16 cycle, what happened in '22? Our TP revenue was flat. In '23, we grew high single digit. In '24, we grew double digit. Look at '25 right now, we're calling back to growth probably a quarter early compared to a historical cycle.”

“We are raising IBM's full-year operating pretax margin expansion to over a point, and our operating tax rate expectation for the year remains in the mid-teens.”

“I would tell you that we see a de minimis impact to IBM.”

“For the fourth quarter, we are comfortable with consensus estimates for constant currency revenue growth and profitability.”

“And now we see an inflection in growth going forward, with fourth-quarter revenue performance similar to our third-quarter growth.”

“With continued strength in z17, we now expect infrastructure to contribute over 1.5 points to IBM's revenue growth this year.”

“And we continue to expect mid-teens growth for Red Hat, albeit at the low end.”

“We continue to expect software revenue growth of approaching double digits for the full year.”

“We now expect to deliver revenue growth of more than 5%, adjusted EBITDA growth of mid-teens, and free cash flow of about $14 billion for 2025.”

“In 2023, we set out on a goal to achieve $2 billion of productivity savings, and today, we are well ahead of that with an expectation of $4.5 billion of annual run rate savings exiting this year.”

“We feel pretty good about getting back to market growth levels in 2026.”

“And those underlying fundamentals, yeah, they deliver a sustainable realization number by the way, in the mid to high one twenties.”

“Now you take a step back to the heart of your question of 2026. 2026, I would tell you, what is our free cash flow generation engine flywheel? It's accelerated revenue growth, the 5 plus percent in this company, is driving operating leverage and it's leveraging an efficient balance sheet. We see all that continuing to play out in 2026.”

“We are on a path to demonstrate the first error-corrected quantum computer by 2028 and continue to deliver key milestones in our quantum roadmap.”

“Part of our model for software is we'll get a couple of points of growth from acquired revenue and we see a good market for targets, yes, that is yet to play out.”

“Now not quite as much as an acquired growth, but I do expect that we'll continue to see automation in the double digits for sure. If but maybe not north of '20.”

“Because of the Hashi bookings, which are significantly ahead of where we had planned them to be, I expect we'll continue to see growth out of Hashi through 2026 as well.”

“As that becomes the bulk of the Red Hat book of business entering 2026, we do expect to see Red Hat returning to mid-teens or close to mid-teens growth.”

“That is going to fuel second half, and that's why second half pipeline is so strong in Automation and Data around that synergistic value of IBM, Red Hat and Hashi together.”

“Now that will impact near term, but look at what happened on z16? Same thing happened in second quarter last year. And what happened? We accelerated that growth.”

“And our tax rate expectation for the year remains in the mid-teens.”

“Given this dynamic, we now expect low single-digit growth in Transaction Processing for the year.”

“And we continue to expect Red Hat to grow in the mid-teens.”

“we continue to expect Software revenue growth approaching double digits for the full year.”

“The Spyre Accelerator, which will be available in the fourth quarter, will enable watsonx Code Assistant for Z and watsonx Assistant for Z to run natively on z17.”

“and are raising our expectations for free cash flow to above $13.5 billion for the year.”

“Given our first half performance, we continue to expect accelerating revenue growth to 5%-plus and are raising our expectations for free cash flow to above $13.5 billion for the year.”

“So all those 3 parts of the portfolio, I would give you equal or higher growth rates going into 2026.”

“If I look at the underlying macros, all the parts we talked about Red Hat, I see them maintaining themselves into 2026. This is not unique to this quarter or a month. And so I would expect to see that same growth carry on there.”

“And in Consulting, while we are encouraged by our backlog growing mid-single digits and the continued progress in our GenAI book of business, given the current demand environment, we continue to be prudently cautious on Consulting's growth contribution to IBM this year.”

“Our free cash flow is gonna be driven by double-digit EBITDA for the year. And it's gonna be driven by a hundred plus basis point margin overall.”

“That's how we guided 2025. Underpinning that was an accelerating revenue growth profile of software. And right now, when you look at us maintaining our guidance in 2025, we are right on path to that.”

“I expect that through this year 2025 and the first half of 2026, it will be a very strong cycle.”

“To IBM for the full year at 2025, it's gonna be north of two and a half. We get another point of M&A.”

“With our tax rate in the mid to high teens.”

“We expect revenue growth of at least 4% at constant currency.”

“For free cash flow, we expect to generate about $13.5 billion in 2025.”

“And our tax rate expectation for the year remains in the mid-teens.”

“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.”

“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.”

“And we continue to expect mid-teens growth for Red Hat.”

“based on what we know today, we are maintaining our full-year guidance for accelerating revenue growth to 5% plus, and above $13.5 billion of free cash flow.”

“We are projecting though that if there is a slowdown in global GDP, there could be a small slowdown, not a big slowdown, in the Red Hat part of the consumption business.”

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

“Yes, first quarter, we expect about, again, about a similar point impact to IBM's growth. But second quarter on, we're back to growth above our model through the year, and that's what gives us confidence in the guide that we called for the year.”

“That CapEx number is going to go up a couple of hundred million dollars as we invest in our Software, our GenAI, our next-generation mainframe, et cetera, quantum, by the way, we continue to invest in.”

“So I would see more of a second half play than a first half play.”

“We expect workforce rebalancing fairly consistent with prior year.”

“Looking to the first quarter, I expect our constant currency revenue growth rate to be similar to the fourth quarter.”

“Our tax rate for the year should be in the mid-teens, and as always, the timing of discrete items can cause the rate to vary within the year.”

“In Consulting, the combination of our backlog levels, record signings in the fourth quarter, and our book of business in GenAI support an acceleration in growth to low-single-digits.”

“Given the continued strengthening of the dollar, we expect currency to be about a 2-point headwind to revenue growth for the year.”

“It is hard to predict discrete events. But our best view is that the first quarter tax rate could be a few points lower than the full year rate, but still a headwind over last year.”

“That kind of puts it in as Arvind and I have been talking here while we feel very confident in that upward growth inflection in ‘25.”

“We fully expect, by the way, that all drops to the quality in sustainability of free cash flow, we're going to be up well over $1 billion with north of $12 billion this year and will be set up very nicely for 2025.”

“So I think that gives you the pieces in Software... that gives us a lot of confidence on software being at or likely above the model that we had laid out a few years ago.”

“We are on track to grow revenue, expand operating profit and grow free cash flow as we close out 2024.”

“For free cash flow, given the strength of our performance year-to-date, we remain confident in delivering greater than $12 billion of free cash flow for the year, driven primarily by growth in adjusted EBITDA.”

“Consulting is going to be more of a second half '25 play as we move forward.”

“Additionally, the stream sets of web methods assets are now part of the software business. And we continue to expect the HashiCorp acquisition to close by the end of this year.”

“And given that we get at least six months to nine months’ worth of a look ahead based on the CRPO of Red Hat, we expect that to carry on to next year, that could easily then provide a significant amount of lift to software, perhaps about 3 points of growth for Software overall.”

“So if we look at Software, first of all, with Red Hat having just delivered 14%, us expecting similar performance for the next quarter.”

“Consistent with last year, we are maintaining our full year view of operating tax rate in the mid-teens range.”

“Consulting segment profit margin is now expected to be flat, and we continue to see Infrastructure segment profit margin in the mid to high-teens.”

“We expect Software segment profit margin to expand by well over 1 point for the year.”

“Actions taken in the third quarter helped accelerate our productivity initiatives, and we now believe we can achieve approximately $3.5 billion in annual run rate savings by the end of 2024, up from $3 billion.”

“For the full year, we are raising our expectation for operating pretax margin expansion to about 1 point year-to-year well above our model.”

“On currency, given the strengthening of the dollar, we now expect currency to be about a 0.5 point headwind to revenue growth in the quarter and about 1 point impact of revenue growth for the year.”

“And given we are at the end of a multiyear product cycle, we now expect the infrastructure to be about a 1 point impact to IBM for the full year.”

“This represents the weaker end of our prior expectations of low-single digit revenue growth for the year.”

“We expect fourth quarter revenue performance to be similar to the third quarter.”

“This now represents strong high-single digit growth for the year.”

“We expect low double-digit fourth quarter revenue growth for software, led by Red Hat growth in the mid-teens and continued strength in transaction processing.”

“We expect revenue growth in the fourth quarter to be consistent with the third quarter levels.”

“We're hoping to close that still by the end of the year, but that transaction stands on its own, strategic value, the attractive financial model and the synergistic value we get across our portfolio of Software and Consulting.”

“But I also want to call out credit. Inside the Infrastructure business, there is also a recurring revenue business, which is our hardware maintenance business. And that is also a piece that has gone from being a headwind to potentially close to flat next year. So just in year-to-year, that could well be a 4, 5 point tailwind on that part of the business.”

“And as far as we can see, the mainframe software will maintain perhaps mid-single digit growth, not maybe high-single digit growth going into next year.”

“We are positioned to grow revenue, expand operating profit and grow free cash flow for the year.”

“For free cash flow, given the strength in our performance in the first half, we feel confident in raising our expectations to greater than $12 billion, driven primarily by growth in adjusted EBITDA.”

“For profit, we expect our net income SKU through the third quarter to remain a couple of points ahead of the prior year, driven by the strength of our business.”

“For the third quarter, we see revenue growth consistent with the full-year.”

“And we are maintaining our view of operating tax rate in the mid-teens range, consistent with last year.”

“And given ongoing productivity initiatives and operating leverage, we now expect software segment profit margin to expand by over a point.”

“Looking to the full-year 2024, we are holding our view on revenue. We see full-year constant-currency revenue growth in line with our mid-single-digit model, still prudently at the low end.”

“We expect the HashiCorp acquisition to close by year end.”

“This includes investments in both AI and hybrid cloud as well as infrastructure ahead of our Nexi program in 2025, which we expect to accelerate our organic growth profile over time.”

“Now, in the short-term for the next six months, we do think it holds up a little bit.”

“Coming off of a 2-plus point acceleration positions us extremely well, even more confident in that double-digit for the year.”

“As we do organic innovation and as we do M&A, we will find that, that number will keep improving year-over-year.”

“But remember, we start ramping on that in the second half, so that provides us a tailwind in the second half.”

“we expect about a little bit less than 0.5 point impact to IBM”

“Software for the year will deliver over 3 points of that IBM mid-single digit by itself.”

“So if I look at where we are right now and where we project for the rest of the year, demand is actually quite strong. I would put it as very similar to 2023.”

“And for profit, we expect the first half skew of net income will remain a couple of points ahead of the prior year.”

“Our tax rate is expected to be in the high teens.”

“For the second quarter, I expect our constant currency revenue growth rate to be consistent with the full year.”

“We took a workforce rebalancing charge this quarter. And as I mentioned 90 days ago, we continue to see the overall amount this year consistent with last year. We expect this to pay back by the end of the year.”

“and we are maintaining our view of operating tax for the year to be consistent with last year, in the mid-teens range.”

“With these segment dynamics, we continue to expect IBM's operating pretax margin to expand by about 0.5 point year-to-year, consistent with our view 90 days ago”

“Given IBM Z cycle dynamics, we expect segment profit margin to be lower year-over-year.”

“And in Infrastructure, given product cycle dynamics, we expect revenue to decline, driving about a 0.5 point impact to our overall growth.”

“In Software, we had a solid start to the year and continue to expect growth slightly above the high end of our mid-single-digit model.”

“And for free cash flow, we expect to generate about $12 billion driven primarily by growth in adjusted EBITDA.”

“We see full year constant currency revenue growth in line with our mid-single-digit model, still prudently at the low end.”

“This puts us on track to deliver about $12 billion of free cash flow for the year, with the growth largely driven by adjusted EBITDA.”

“We are still expecting a full year operating tax rate consistent with last year.”

“This will drive a higher growth profile over time.”

“we see this business profile moving from about a mid-single-digit free cash flow margin business to about a 30% to 40% free cash flow margin business in a handful of years, free cash flow accretive by the end of year 2.”

“This gives us confidence that Red Hat will grow and provide that 2 to 2.5 points of overall software.”

“We are confident in achieving our midterm revenue model, and the strength of our diversified business model allows us to make progress each quarter.”

“And then the remaining 0.5 point is our continued growth of our transaction processing, and that's about 0.5 point.”

“Acquisitions will probably give us a little bit less than 2 points of that growth in 2024.”

“Red Hat will give us about 2.5 points of growth year-over-year.”

“So we feel pretty good that technology budgets should stay in line with 2023 going into '24.”

“I see '24 playing out quite similar to '23.”

“For profit, we expect the first half to second half SKU of net income to be fairly consistent with history and first quarter to be a couple of points better than last year's SKU.”

“Looking into the first quarter, I'd expect our revenue growth rate to be similar to the full year.”

“On a full-year basis, we expect this to impact revenue growth by over 0.5 point, and any pretax gain from the transaction will be partially offset by foregone profit.”

“First, we are seeing increased productivity in our business, which will lead to workforce rebalancing fairly consistent with 2023 levels.”

“Our tax rate for the year should also be fairly consistent with 2023, and as always, the timing of discrete items can cause the rate to vary within the year.”

“And given the z cycle dynamics, we expect Infrastructure pretax margin to be lower year-over-year.”

“we feel confident about the value and the growth contribution of the growth factor of consulting in our book of business heading into 2024.”

“While, as always, we are reliant on a seasonally strong fourth quarter, we're on track to achieve about $10.5 billion for the year.”

“We are ahead of pace to achieve our target of $2 billion in annual run-rate savings by the end of 2024.”

“Three quarters into the year, we are well positioned to deliver on 2023 expectations for both revenue growth and free cash flow.”

“And I think that's the best way to think about it in terms of what's happening right now. And we are certainly expecting and planning that that will only increase as the quarters go on.”

“we said in the prepared remarks, we expect a pretty similar fourth quarter at the high end overall, so we're maintaining Software.”

“We said we expect similar performance, fourth quarter, as we just executed in third quarter, constant currency revenue growth, right?”

“I'd expect constant currency revenue growth in the fourth quarter to be similar to the third.”

“As I look specifically at the fourth quarter, with the recent currency movements, we now see currency to be neutral to a 1-point headwind to revenue growth.”

“We continue to expect about a 0.5 point of operating pre-tax margin improvement, and we see a mid-teens tax rate for the year.”

“We still expect Software revenue growth at the high end of its mid-single digit model, and Consulting revenue in the 6% to 8% range.”

“and free cash flow of about $10.5 billion, that's up $1.2 billion over last year.”

“We continue to expect constant currency revenue growth of 3% to 5%, and free cash flow of about $10.5 billion, that's up $1.2 billion over last year.”

“So we feel pretty good, and that's why we had the confidence entering this year, Arvind, and I, to take up the transaction processing model to actually low single-digit growth from being down mid-singles. So we see that continuing.”

“If there remains underlying labor inflation, I fully expect to be able to pass that on, again, with a bit of a lag to clients in consulting because, otherwise, that's not a healthy business to go on.”

“This year, just given the differentiated price position, we said we'd grow mid-single-digit. We feel very confident exiting first-half.”

“All of this gives us confidence in our ability to achieve our full-year expectations for revenue and free cash flow, which remain our two primary areas of focus.”

“We see software at the high end of our model, and we see consulting as in the range that Jim just laid out.”

“But that raise in guidance I think is a reflection of the pervasive performance we've seen in the first-half that we feel pretty confident in. But I'll remind you, we expect a very quick accretive business as we go forward just given their profitable overall.”

“We continue to expect pre-tax margin in the low-teens.”

“For the year as you expect 2023 infrastructure revenue will decline, impacting IBM's overall revenue growth by over 1 point.”

“And then for infrastructure, as I described in the past, revenue is roughly flat over the mid-term model horizon, with performance in any year reflecting product cycle dynamics.”

“And to expand consulting pre-tax margin by at least 1 point.”

“We continue to expect consulting revenue growth in the range of 6% to 8%.”

“Our revenue growth drives operating leverage with software pre-tax margin expected to expand 1.5 points to 2 points year-to-year.”

“And then finally, while there has been some volatility in currency rates over the last couple of weeks, at current spot rates, currency translation is still expected to be fairly neutral to our revenue growth for the year.”

“We're also maintaining our view of our tax rate for the year, which is in the mid-to-high teens range.”

“We expect IBM's operating pre-tax margin to expand by about 0.5 point year-to-year, driven by a combination of product mix and progress on our productivity initiatives.”

“We see constant-currency revenue growth of 3% to 5% and we expect free cash flow of about $10.5 billion, which I'll remind you is up over $1 billion year-to-year.”

“I don't think it will be as strong as that, but I would expect maybe moderate increases based on just the pricing in TP.”

“Would I expect to see similar pricing on TP and then I'll come to other parts of both consulting and software? I doubt, David, that it will be on the same range because, definitely, I think we would all agree, ‘22 had a high inflation.”

“And as we look at the third quarter, the average of analysts' estimates looks reasonable.”

“We have started to see some of this pay back in our results, which gives us confidence in our ability to achieve our full year free cash flow objectives.”

“In closing, we entered the year as a more focused business with solid fundamentals. We had a good start to 2023 and are positioned to deliver revenue growth, expand margins and grow free cash flow for the year.”

“We expect that we will not get the full inflation. If I looked at the number this morning, the UK was saying 10%. You may not get 10% but we will get 4% or 5% or 6%.”

“We expect to remain 60%, maybe 75% of our total spend will be in software.”

“As long as you have reasonable employment and reasonable GDPs, we expect that, that demand is going to continue for our first-order clients.”

“For the full year, we think of our mid-single-digit model might be a couple of points.”

“We called the year now at 11% to 13%.”

“So we believe that will give us 1 point or 2 point further tailwind behind the Q1 numbers.”

“So Q1 was at the bottom end of that range. We are seeing more demand coming up as we go through the year.”

“All of this supports our revenue growth expectations for the year.”

“We still expect this action to pay back by the end of the year.”

“Between the first and second quarter, the charge should be in the range of $300 million, maybe a little more.”

“In terms of profit, we now expect a little over 1/3 of our operating net income in the first half and just under 2/3 in the second half.”

“Looking at the second quarter, we expect first to second quarter revenue seasonality to be fairly consistent with last year.”

“We now expect currency translation to be fairly neutral to our revenue growth for the year, which is about 0.5 point worse than 90 days ago.”

“And we continue to expect our tax rate to be in the mid- to high teens range.”

“With these segment dynamics, we would expect IBM's operating pre-tax margin to expand by about 0.5 point year-to-year.”

“To provide some perspective, Infrastructure should impact IBM's overall revenue growth by over 1 point.”

“As a result, we expect 2023 infrastructure revenue to decline with pre-tax margin in the low teens.”

“continue to expect to expand Consulting pre-tax margin by at least 1 point as we capitalize on the yield of our productivity actions.”

“This revenue growth drives operating leverage, and we still expect software pre-tax margin to expand by about 2 points year-to-year.”

“In Software, we continue to expect revenue growth in line with software's mid-single-digit model.”

“And we continue to expect free cash flow of about $10.5 billion, which is up over $1 billion year-to-year.”

“On the top line, we expect constant currency revenue growth of 3% to 5%.”

“This is up $100 million year-to-year and puts us on track to our full year expectation.”

“We expect to complete this action in the second quarter.”

“We're still going to get working capital efficiency. So our realization will definitely be up over 100%.”

“We see nice green shoots that lead to our guidance in 2023 at the high end of our high single-digit model in consulting on revenue coming off of a very strong 15% growth in 2022 and guiding another one point plus in operating margins going forward.”

“Yes, we'll get modest structural actions tailwind, but they're going to be offset by a cash tax headwind for the year.”

“We unveiled Osprey, a 433-qubit quantum processor, that brings us closer to delivering our goal of building a 1,000 qubit system later this year.”

“Then, I will acknowledge to you that '22 was a great ELA year, '23 will be not as good as '22.”

“So, I think, if you are looking at that one, Wamsi, low single-digit increases for transaction processing is what we think is appropriate for the short to medium-term model looking forward.”

“Given the timing of currency and stranded cost dynamics, we'd expect about one-third of our net income in the first half and about two-thirds in the second half.”

“Based on our year-end asset base, we expect this change to benefit 2023 pre-tax profit by over $200 million, primarily in our Infrastructure segment.”

“We would start to see benefits in the second half and pay back by the end of the year.”

“With the movement of spot rates over the last 90 days, currency translation would be fairly neutral to revenue in 2023 with a headwind in the first half, flipping to a tailwind in the second.”

“That's in line with our model and our tax rate should be in the mid- to high-teens range.”

“For perspective, infrastructure should impact IBM's overall revenue growth by over 1 point.”

“As a result, we expect 2023 infrastructure revenue below its model and pre-tax margin in the low-teens.”

“We expect to expand consulting pre-tax margin by at least 1 point as we continue to realize more of the price increases and improved utilization.”

“Last October we talked about that we are going to be in a mid single digit revenue growth model and that we will be increasing cash flow each year and we have set out a target of $10 billion for this year and $35 billion over the period. There is nothing that we see right now to alter us from what we had said at that time. So I’m going to say that those projections stay in place.”

“With the strong launch of our z16 earlier this year, Infrastructure revenue performance will be above the model level for the year, and that’s before the 5 to 6 points from sales to Kyndryl.”

“We remain on track towards our goal of building a 1,000-qubit system by 2023.”

“That price optimization really as you would expect, always translates back then into the value proposition of your offerings where we have value in application modernization, Red Hat, our hyperscaler and strategic partnerships. We’re seeing a nice margin accretion that’s playing out and that’s going to fuel the fourth quarter here and first half of 2023.”

“And by the way, we expect that to continue in the fourth quarter. Margins up sequentially and year-to-year.”

“Right now, I tell you, good pipelines based on the first nine months of the year, we expect yields to remain good or even better than before.”

“And we still see software pre-tax margin in the mid-20s range for 2022.”

“We continue to expect revenue growth in line with our mid-single digit model range, plus 5 to 6 points from sales to Kyndryl.”

“We expect strong free cash flow performance in the fourth quarter, while we continue to face some external headwinds, including appreciation of the U.S. dollar and exit of our Russia operations.”

“Looking at free cash flow, our other key metric, we continue to expect to generate about $10 billion for the year.”

“Even in an inflationary environment, even when the economy is not doing well, these tend to be the projects that stay the course, but maybe the signings come in smaller chunks and as long as we deliver well then people tend to sign up for more and more going forward. And that’s sort of a bit of color of what we’ve seen play out already this year and we expect that to maybe increase next year.”

“We are absolutely committed to our $35 billion total free cash flow cumulative over '22 through '24. And we still see very good signs, and we have confidence in delivering that number.”

“We remain confident in our ability to deliver revenue in 2022 at the high end of our mid-single-digit model.”

“If you look at this year, look, the year is not over, but you should expect it to stay in that range.”

“So when you think to the core of your question about how that [ then ] plays out for '23 and '24, that actually turns into tailwinds in '23 and '24 because we're depressed in our free cash flow guidance.”

“That will actually be -- as we wrap on easier comparison in the second half, that will be some nice margin accretion here in our consulting business in the second half overall.”

“We still expect margin increase year-over-year for the full year between that [ $9 billion ] and [ $10 billion ] absolute PTI.”

“As we go forward, you should expect to see us maintain, and we said, we talked about we'll remain in the mid-single digits on software. We will get towards the low end of double digits in consulting, which is actually up from our previous high single-digit margin, and infrastructure will benefit from the Z cycle.”

“But let me talk a little bit about the go-forward free cash flow... given the volume dynamics and now our mainframe cycle, which we got off to a good start, should provide leverage.”

“That said, we had said late last year that we expect growth in Red Hat to be in the upper teens. We continue to make that expectation.”

“So to be clear, we expect a strong year-to-year growth in zSystems.”

“Now after a solid start to the year, our view hasn't changed, and we still see 60% of the full year profit in the second half.”

“And we continue to expect a mid- to high-teens operating tax rate, which is a headwind to our profit growth.”

“Despite some of the pressures from component cost increases and supplier premiums, we continue to see mid- to high-teens pretax margin for infrastructure for the full year.”

“On top of that, we're planning for about 5 to 6 points of revenue growth from the sales to Kyndryl in 2022.”

“This will drive infrastructure revenue performance above the model level for the year.”

“This reflects improving margin performance in the second half as we increase utilization of the resources we've added and price realization starts to flow to revenue.”

“Our IBM consulting revenue growth has been strong, and we continue to expect low double-digit revenue growth rate for the year, which is above our model.”

“We also remain on track to a software pretax margin in the mid-20s range for 2022.”

“We continue to expect constant currency revenue growth in line with our mid-single-digit model range, plus 5 to 6 points from sales to Kyndryl.”

“We now expect free cash flow of about $10 billion for the year.”

“And on top of that, we expect about 3.5 points of growth from the Kyndryl sales spread over the first 3 quarters.”

“We continue to see constant currency revenue growth at the high end of the mid-single-digit model for the full year.”

“This keeps us on track for a full year software margin in the mid-20s.”

“This will help us move forward towards our road map to deliver 1,000-plus qubit system next year and a 4,000-plus qubit system in 2025.”

“I think, that because of the makeup of our portfolio, I think, it will actually fare quite well.”

“Even in difficult environments, we believe that the adoption of those platforms is going to continue with all of our clients.”

“Even if GDP falls to flat or there’s a quick recession or if it’s a very slight recession, we see demand staying strong and continuing.”

“Based on our solid first quarter performance and view of the year, we are on track to our midterm model.”

“We expect from early signals that we are going to see that continue over the next couple of years.”

“Our model calls for mid single-digit growth in both automation and data and AI.”

“Red Hat has been in the upper teens and that is where we expect it to keep performing for the rest of this year and that speaks to both the quality of the portfolio and the demand that’s in the market.”

“We are maintaining our guidance at $10 billion to $10.5 billion for 2022.”