IBM (IBM) Prelim Q2 (USD): Adj. EPS 2.27 (exp. 3.02), Revenue 17.2bln (exp. 17.9bln), Non-GAAP gross profit margin 59.4%, -0.7%

When we discussed our expectations with you in April, we noted that we would be wrapping on the launch of z17 in the second quarter. Given this was the strongest start to a mainframe program in our history, we expected Infrastructure revenue to decline low-single digits for the year, beginning this quarter. What played out was worse than our expectations, driven by a shortfall in our Z performance and the associated software stack, primarily in Transaction Processing. 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 reprioritisation. In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter. Remain on track to deliver the first large-scale fault-tolerant quantum computer by 2029. Undertaking new initiatives and accelerating others, all to improve our results going forward.