ARMONK, N.Y. -- IBM (NYSE: IBM) today announced second-quarter 2022 earnings results.

"In the quarter we delivered good revenue performance with balanced growth across our geographies, driven by client demand for our hybrid cloud and AI offerings. The IBM team executed our strategy well," said Arvind Krishna, IBM chairman and chief executive officer. "With our first half results, we continue to expect full-year revenue growth at the high end of our mid-single digit model."

Second-Quarter Highlights

• Revenue
  - Revenue of $15.5 billion, up 9 percent, up 16 percent at constant currency (about 5 points from sales to Kyndryl)
  - Software revenue up 6 percent, up 12 percent at constant currency (about 7 points from sales to Kyndryl)
  - Consulting revenue up 10 percent, up 18 percent at constant currency
  - Infrastructure revenue up 19 percent, up 25 percent at constant currency (about 7 points from sales to Kyndryl)
  - Hybrid cloud revenue, over the last 12 months, of $21.7 billion, up 16 percent, up 19 percent at constant currency
• Cash Flow
  - On a consolidated basis, year to date, net cash from operating activities of $4.6 billion; free cash flow of $3.3 billion 

"We are a faster-growing, focused, disciplined company with sound business fundamentals," said James Kavanaugh, IBM senior vice president and chief financial officer. "Our recurring revenue stream and solid cash generation position us well to continue to invest in R&D, acquire new companies, and strengthen our talent in every part of the business, while also returning value to shareholders through our dividend."

Segment Results for Second Quarter

• Software (includes Hybrid Platform & Solutions, Transaction Processing)— revenues of $6.2 billion, up 6.4 percent, up 11.6 percent at constant currency (about 7 points from sales to Kyndryl):
  - Hybrid Platform & Solutions up 4 percent, up 9 percent at constant currency (about 1.5 points from sales to Kyndryl):
     -- Red Hat up 12 percent, up 17 percent at constant currency
     -- Automation up 4 percent, up 8 percent at constant currency
     -- Data & AI flat, up 4 percent at constant currency
     -- Security flat, up 5 percent at constant currency
  - Transaction Processing up 12 percent, up 19 percent at constant currency (about 22 points from sales to Kyndryl)
  - Software segment hybrid cloud revenue up 14 percent, up 18 percent at constant currency
   
• Consulting (includes Business Transformation, Technology Consulting and Application Operations)— revenues of $4.8 billion, up 9.8 percent, up 17.8 percent at constant currency:
  - Business Transformation up 9 percent, up 16 percent at constant currency
  - Technology Consulting up 14 percent, up 23 percent at constant currency
  - Application Operations up 9 percent, up 17 percent at constant currency
  - Consulting segment hybrid cloud revenue up 20 percent, up 29 percent at constant currency
   
• Infrastructure (includes Hybrid Infrastructure, Infrastructure Support)— revenues of $4.2 billion, up 19.0 percent, up 25.4 percent at constant currency (about 7 points from sales to Kyndryl):
  - Hybrid Infrastructure up 34 percent, up 41 percent at constant currency (about 7 points from sales to Kyndryl)
     -- IBM z Systems up 69 percent, up 77 percent at constant currency
     -- Distributed Infrastructure up 11 percent, up 17 percent at constant currency
  - Infrastructure Support down 2 percent, up 5 percent at constant currency (about 8 points from sales to Kyndryl)
  - Infrastructure segment hybrid cloud revenue up 24 percent, up 30 percent at constant currency
   
• Financing (includes client and commercial financing)— revenues of $0.1 billion, down 29.9 percent, down 26.6 percent at constant currency

Cash Flow and Balance Sheet
On a consolidated basis, in the second quarter, the company generated net cash from operating activities of $1.3 billion or $2.6 billion excluding IBM Financing receivables. IBM's free cash flow was $2.1 billion. The company returned $1.5 billion to shareholders in dividends in the second quarter.

On a consolidated basis, for the first six months of the year, the company generated net cash from operating activities of $4.6 billion or $4.2 billion excluding IBM Financing receivables. IBM's free cash flow was $3.3 billion, which includes cash impacts from the company's structural actions initiated at the end of 2020.

IBM ended the second quarter with $7.8 billion of cash on hand (which includes marketable securities), up $0.2 billion from year-end 2021. Debt, including IBM Financing debt of $12.3 billion, totaled $50.3 billion, down $1.4 billion since the end of 2021.

Full-Year 2022 Expectations

• Revenue growth: The company continues to expect constant currency revenue growth at the high end of its mid-single digit model. The company also expects an additional 3.5 point contribution from incremental sales to Kyndryl. At mid-July 2022 foreign exchange rates, currency is expected to be about a six-point headwind.
   
• Free Cash Flow: The company now expects about $10 billion in consolidated free cash flow.