IBM Relies on Software Portfolio as Mainframe Sales Decline

IBM's software portfolio is shouldering the weight of declining mainframe sales. The company reported second-quarter revenue growth of 1% to $17.2 billion, with software revenue increasing by 5% to $7.8 billion. Red Hat, IBM's hybrid cloud business, grew 11%, while data and automation saw increases of 19% and 4% respectively. In contrast, mainframe sales dropped 42%.

The company cited a tough comparison for the decline in mainframe sales, with the z17 program having had its strongest refresh cycle last year. IBM's software revenue is heavily weighted towards recurring revenue, with 80% of it coming from subscription-based services. OpenShift annual recurring revenue reached $2.2 billion.

IBM's board approved a regular quarterly dividend of $1.69 per share, payable on September 10, 2026, to holders of record on August 10, 2026. The company has paid consecutive quarterly dividends every year since 1916.