Key Takeaways
IBM’s Consulting revenues are expected to reach $5.21B in Q2, up slightly from $5.18B a year ago. Expanded Deutsche Bank and Finanz Informatik deals fueled digital transformation and cloud growth. New AI features for the Masters tournament likely contributed incremental revenue to IBM’s Consulting unit.
International Business Machines Corporation (IBM Quick QuoteIBM – Free Report) is scheduled to report second-quarter 2025 earnings on July 23. In the to-be-reported quarter, the company is likely to have recorded higher revenues from the Consulting segment backed by rising demand for technology consulting and business transformation services.
Factors at Play
The Consulting segment comprises Business Transformation, Technology Consulting and Application Operations. It provides consulting and application management services that offer value and innovation to clients by leveraging industry, technology and business strategy, and process know-how.
During the to-be-reported quarter, IBM collaborated with the Masters tournament organizers to launch a wide range of artificial intelligence (AI)-native features to deliver an immersive digital experience for golf fans. The company offered predictive analytics during the game, forecasting how specific holes were likely to be played based on past information. Data-backed recaps throughout the tournament of how each hole had played were available on the APP and the website. These are likely to have generated incremental revenues for the Consulting segment.
In the second quarter, IBM extended its partnership with Deutsche Bank to provide the latter further access to IBM’s comprehensive suite of software solutions. This includes IBM’s business and IT automation stack, advanced hybrid cloud products and access to the watsonx AI portfolio. This will enable Deutsche Bank to accelerate its digital transformation and optimize its business processes, IT infrastructure and services by replacing legacy solutions, maximizing ROI and delivering an enhanced customer experience.
During the quarter, IBM strengthened its long-term collaboration with Finanz Informatik by inking a new contract for the continued modernization of its software and hardware infrastructure. The new contract will strengthen Finanz Informatik’s cyber resilience, in compliance with the EU Digital Operational Resilience Act, by leveraging state-of-the-art IBM mainframe, Power and storage systems. In addition to an accelerated digital transformation, the deal will enable Finanz Informatik to improve operational efficiency and service delivery. These are likely to have generated incremental revenues in the Consulting segment.
Overall Expectations
The Zacks Consensus Estimate for Consulting revenues is pegged at $5.21 billion, indicating an improvement from $5.18 billion in the year-ago quarter. Our estimate for revenues from Consulting is pegged at $5.17 billion, suggesting a 0.2% decline year over year.
The Zacks Consensus Estimate for total revenues for the company stands at $16.58 billion. It generated revenues of $15.77 billion in the prior-year quarter. The consensus mark for earnings is currently pegged at $2.64 per share, indicating growth from $2.43 in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for IBM for the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
IBM has an ESP of +1.35% with a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
CommScope Holding Company, Inc. (COMM Quick QuoteCOMM – Free Report) is set to release quarterly numbers on Aug. 7. It has an Earnings ESP of +19.18% and sports a Zacks Rank #1.
The Earnings ESP for Qualcomm Incorporated (QCOM Quick QuoteQCOM – Free Report) is +0.60% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on July 30.
The Earnings ESP for Genpact Limited (G Quick QuoteG – Free Report) is +0.94% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Aug. 7.