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IBM RELEASES SECOND-QUARTER RESULTS

Published

2 years ago

on

Accelerated revenue growth led by Software; Raises full-year free cash flow expectation

ARMONK, N.Y., July 24, 2024 /PRNewswire/ — IBM (NYSE: IBM) today announced second-quarter 2024 earnings results.

“We had a strong second quarter, exceeding our expectations, driven by growth in both revenue and free cash flow. We continue to see that clients turn to IBM for our technology and our expertise in enterprise AI, and our book of business for generative AI has grown to more than two billion dollars since the launch of watsonx one year ago,” said Arvind Krishna, IBM chairman and chief executive officer. “Given our first-half results, we are raising our full-year view of free cash flow, which we now expect to be more than $12 billion.” 

Second-Quarter Highlights

Revenue
– Revenue of $15.8 billion, up 2 percent, up 4 percent at constant currency
– Software revenue up 7 percent, up 8 percent at constant currency
– Consulting revenue down 1 percent, up 2 percent at constant currency
– Infrastructure revenue up 1 percent, up 3 percent at constant currency
Profit Margin
– Gross Profit Margin: GAAP: 56.8 percent, up 180 basis points; Operating (Non-GAAP): 57.8 percent, up 190 basis points
– Pre-Tax Income Margin: GAAP: 14.1 percent, up 110 basis points; Operating (Non-GAAP): 17.7 percent, up 220 basis points
Cash Flow
– Year to date, net cash from operating activities of $6.2 billion, down $0.2 billion; free cash flow of $4.5 billion, up $1.1 billion
– Over the last twelve months, net cash from operating activities of $13.8 billion; free cash flow of $12.3 billion

SECOND QUARTER 2024 INCOME STATEMENT SUMMARY

 

Revenue

 

Gross

Profit

 
 

Gross
Profit
Margin

 
 

Pre-tax

Income

 

Pre-tax

Income

Margin

 

Net

Income

 

Diluted

Earnings

Per Share

GAAP from
Continuing
Operations

$   15.8 B

 
 

$   8.9 B

 
 

56.8

%

 

$  2.2 B

 
 

14.1

%

 

$     1.8 B

 
 

$     1.96

 

Year/Year

2

%(1)

 

5

%

 

1.8

Pts

 

11

%

 

1.1

Pts

 

16

%

 

14

%

Operating

(Non-GAAP)

 
 
 

$   9.1 B

 
 

57.8

%

 

$  2.8 B

 
 

17.7

%

 

$     2.3 B

 
 

$     2.43

 

Year/Year

 
 
 

5

%

 

1.9

Pts

 

17

%

 

2.2

Pts

 

14

%

 

11

%

(1)  4% at constant currency.

“In the quarter, we accelerated our revenue growth as we continue to execute well on our strategy. Our business fundamentals, operating leverage, product mix and productivity initiatives all contributed to significant margin expansion and increased profit and free cash flow,” said James Kavanaugh, IBM senior vice president and chief financial officer. “Our strong cash generation enables us to continue investing in innovation and expertise across the portfolio, while returning value to shareholders through dividends.”

Segment Results for Second Quarter

Software — revenues of $6.7 billion, up 7.1 percent, up 8.4 percent at constant currency:
– Hybrid Platform & Solutions up 5 percent, up 6 percent at constant currency:
      — Red Hat up 7 percent, up 8 percent at constant currency
      — Automation up 15 percent, up 16 percent at constant currency
      — Data & AI down 3 percent, down 2 percent at constant currency
      — Security up 2 percent, up 3 percent at constant currency
– Transaction Processing up 11 percent, up 13 percent at constant currency

Consulting — revenues of $5.2 billion, down 0.9 percent, up 1.8 percent at constant currency:
– Business Transformation up 3 percent, up 6 percent at constant currency
– Technology Consulting down 3 percent, up 1 percent at constant currency
– Application Operations down 4 percent, down 2 percent at constant currency

Infrastructure — revenues of $3.6 billion, up 0.7 percent, up 2.7 percent at constant currency:
– Hybrid Infrastructure up 4 percent, up 6 percent at constant currency
      — IBM Z up 6 percent, up 8 percent at constant currency
      — Distributed Infrastructure up 3 percent, up 5 percent at constant currency
– Infrastructure Support down 5 percent, down 3 percent at constant currency

Financing — revenues of $0.2 billion, down 8.3 percent, down 6.6 percent at constant currency

Cash Flow and Balance Sheet

In the second quarter, the company generated net cash from operating activities of $2.1 billion, down $0.6 billion year to year. IBM’s free cash flow was $2.6 billion, up $0.5 billion year to year. The company returned $1.5 billion to shareholders in dividends in the second quarter.

For the first six months of the year, the company generated net cash from operating activities of $6.2 billion, down $0.2 billion year to year. IBM’s free cash flow was $4.5 billion, up $1.1 billion year to year. Over the last twelve months, the company generated net cash from operating activities of $13.8 billion and free cash flow of $12.3 billion.

IBM ended the second quarter with $16.0 billion of cash, restricted cash and marketable securities, up $2.5 billion from year-end 2023. Debt, including IBM Financing debt of $11.1 billion, totaled $56.5 billion, flat year to date.

Full-Year 2024 Expectations

Revenue: The company continues to expect constant currency revenue growth consistent with its mid-single digit model. At current foreign exchange rates, currency is expected to be about a one to two-point headwind to revenue growth
Free cash flow: The company now expects more than $12 billion in free cash flow

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company’s current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company’s innovation initiatives; damage to the company’s reputation; risks from investing in growth opportunities; failure of the company’s intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company’s ability to successfully manage acquisitions, alliances and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company’s failure to meet growth and productivity objectives; ineffective internal controls; the company’s use of accounting estimates; impairment of the company’s goodwill or amortizable intangible assets; the company’s ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity and data privacy considerations; adverse effects related to climate change and environmental matters; tax matters; legal proceedings and investigatory risks; the company’s pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; potential failure of the separation of Kyndryl Holdings, Inc. to qualify for tax-free treatment; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company’s Form 10-Qs, Form 10-K and in the company’s other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference.

Statements in this communication regarding the strategic acquisition that are forward-looking may include projections as to closing date for the transaction, the extent of, and the time necessary to obtain, the regulatory approvals required for the transaction, the anticipated benefits of the transaction, the impact of the transaction on IBM’s business, the synergies from the transaction, and the combined company’s future operating results.

Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.

Presentation of Information in this Press Release

In an effort to provide investors with additional information regarding the company’s results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information, which management believes provides useful information to investors:

IBM results —

adjusting for currency (i.e., at constant currency);
presenting operating (non-GAAP) earnings per share amounts and related income statement items;
free cash flow;
net cash from operating activities excluding IBM Financing receivables;
adjusted EBITDA.

The rationale for management’s use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.

For generative AI, book of business includes Software transactional revenue, SaaS Annual Contract Value and Consulting signings.

Conference Call and Webcast

IBM’s regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. ET, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-2q24. Presentation charts will be available shortly before the Webcast.

Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).

Contact:      IBM
                     Sarah Meron, 347-891-1770
                     sarah.meron@ibm.com

                     Tim Davidson, 914-844-7847
                     tfdavids@us.ibm.com  

INTERNATIONAL BUSINESS MACHINES CORPORATION

COMPARATIVE FINANCIAL RESULTS

(Unaudited; Dollars in millions except per share amounts)

 
 

Three Months Ended
June 30,

 
 

Six Months Ended
June 30,

 
 

2024

 
 

2023 (1)

 
 

2024

 
 

2023 (1)

 

REVENUE BY SEGMENT

 
 
 
 
 
 
 
 
 
 
 

Software

$                   6,739

 
 

$                   6,294

 
 

$                12,637

 
 

$                11,885

 

Consulting

5,179

 
 

5,226

 
 

10,365

 
 

10,423

 

Infrastructure

3,645

 
 

3,618

 
 

6,721

 
 

6,716

 

Financing

169

 
 

185

 
 

362

 
 

380

 

Other

38

 
 

152

 
 

146

 
 

321

 

TOTAL REVENUE

15,770

 
 

15,475

 
 

30,231

 
 

29,727

 
 
 
 
 
 
 
 
 
 
 
 
 

GROSS PROFIT

8,950

 
 

8,501

 
 

16,692

 
 

16,010

 
 
 
 
 
 
 
 
 
 
 
 
 

GROSS PROFIT MARGIN

 
 
 
 
 
 
 
 
 
 
 

Software

83.6

%

 

82.1

%

 

83.0

%

 

82.3

%

Consulting

26.3

%

 

25.9

%

 

25.8

%

 

25.7

%

Infrastructure

56.5

%

 

56.0

%

 

55.4

%

 

54.1

%

Financing

48.9

%

 

49.2

%

 

48.7

%

 

46.5

%

 
 
 
 
 
 
 
 
 
 
 
 

TOTAL GROSS PROFIT MARGIN

56.8

%

 

54.9

%

 

55.2

%

 

53.9

%

 
 
 
 
 
 
 
 
 
 
 
 

EXPENSE AND OTHER INCOME

 
 
 
 
 
 
 
 
 
 
 

S,G&A

4,938

 
 

4,900

 
 

9,912

 
 

9,754

 

R,D&E

1,840

 
 

1,687

 
 

3,637

 
 

3,342

 

Intellectual property and custom development income

(241)

 
 

(248)

 
 

(458)

 
 

(428)

 

Other (income) and expense

(233)

 
 

(261)

 
 

(550)

 
 

(506)

 

Interest expense

427

 
 

423

 
 

859

 
 

790

 

TOTAL EXPENSE AND OTHER INCOME

6,730

 
 

6,501

 
 

13,399

 
 

12,952

 
 
 
 
 
 
 
 
 
 
 
 
 

INCOME FROM CONTINUING OPERATIONS

BEFORE INCOME TAXES

2,219

 
 

2,000

 
 

3,293

 
 

3,058

 

Pre-tax margin

14.1

%

 

12.9

%

 

10.9

%

 

10.3

%

Provision for/(Benefit from) income taxes

389

 
 

419

 
 

(112)

 
 

543

 

Effective tax rate

17.5

%

 

21.0

%

 

(3.4)

%

 

17.8

%

 
 
 
 
 
 
 
 
 
 
 
 

INCOME FROM CONTINUING OPERATIONS

$                   1,830

 
 

$                   1,581

 
 

$                   3,405

 
 

$                   2,515

 
 
 
 
 
 
 
 
 
 
 
 
 

DISCONTINUED OPERATIONS

 
 
 
 
 
 
 
 
 
 
 

Income/(loss) from discontinued operations, net of taxes

4

 
 

2

 
 

34

 
 

(4)

 
 
 
 
 
 
 
 
 
 
 
 
 

NET INCOME

$                   1,834

 
 

$                   1,583

 
 

$                   3,439

 
 

$                   2,511

 
 
 
 
 
 
 
 
 
 
 
 
 

EARNINGS/(LOSS) PER SHARE OF COMMON STOCK

 
 
 
 
 
 
 
 
 
 
 

Assuming Dilution

 
 
 
 
 
 
 
 
 
 
 

Continuing Operations

$                      1.96

 
 

$                      1.72

 
 

$                      3.65

 
 

$                      2.74

 

Discontinued Operations

$                      0.00

 
 

$                      0.00

 
 

$                      0.04

 
 

$                      0.00

 

TOTAL

$                      1.96

 
 

$                      1.72

 
 

$                      3.68

 
 

$                      2.73

 
 
 
 
 
 
 
 
 
 
 
 
 

Basic

 
 
 
 
 
 
 
 
 
 
 

Continuing Operations

$                      1.99

 
 

$                      1.74

 
 

$                      3.71

 
 

$                      2.77

 

Discontinued Operations

$                      0.00

 
 

$                      0.00

 
 

$                      0.04

 
 

$                      0.00

 

TOTAL

$                      1.99

 
 

$                      1.74

 
 

$                      3.74

 
 

$                      2.76

 
 
 
 
 
 
 
 
 
 
 
 
 

WEIGHTED-AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (M’s)

 
 
 
 
 
 
 
 
 
 
 

Assuming Dilution

934.4

 
 

919.5

 
 

933.9

 
 

918.6

 

Basic

920.3

 
 

909.9

 
 

918.7

 
 

908.7

 

____________________

 

(1)  Recast to reflect January 2024 segment changes.

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

 

(Dollars in Millions)

 

At
June 30,
2024

 

At
December 31,
2023

ASSETS:

 
 
 
 

Current Assets:

 
 
 
 

Cash and cash equivalents

 

$                   12,210

 

$                   13,068

Restricted cash

 

2,268

 

21

Marketable securities

 

1,481

 

373

Notes and accounts receivable – trade, net

 

5,769

 

7,214

Short-term financing receivables, net

 

5,799

 

6,793

Other accounts receivable, net

 

757

 

640

Inventories

 

1,234

 

1,161

Deferred costs

 

997

 

998

Prepaid expenses and other current assets

 

2,784

 

2,639

Total Current Assets

 

33,299

 

32,908

 
 
 
 
 

Property, plant and equipment, net

 

5,600

 

5,501

Operating right-of-use assets, net

 

3,130

 

3,220

Long-term financing receivables, net

 

5,483

 

5,766

Prepaid pension assets

 

7,630

 

7,506

Deferred costs

 

820

 

842

Deferred taxes

 

6,378

 

6,656

Goodwill

 

59,416

 

60,178

Intangibles, net

 

10,251

 

11,036

Investments and sundry assets

 

1,840

 

1,626

Total Assets

 

$                  133,848

 

$                  135,241

 
 
 
 
 

LIABILITIES:

 
 
 
 

Current Liabilities:

 
 
 
 

Taxes

 

$                      1,691

 

$                      2,270

Short-term debt

 

3,602

 

6,426

Accounts payable

 

3,631

 

4,132

Deferred income

 

13,643

 

13,451

Operating lease liabilities

 

762

 

820

Other liabilities

 

6,319

 

7,022

Total Current Liabilities

 

29,648

 

34,122

 
 
 
 
 

Long-term debt

 

52,929

 

50,121

Retirement related obligations

 

10,200

 

10,808

Deferred income

 

3,489

 

3,533

Operating lease liabilities

 

2,546

 

2,568

Other liabilities

 

10,932

 

11,475

Total Liabilities

 

109,745

 

112,628

 
 
 
 
 

EQUITY:

 
 
 
 

IBM Stockholders’ Equity:

 
 
 
 

Common stock

 

60,501

 

59,643

Retained earnings

 

151,659

 

151,276

Treasury stock — at cost

 

(169,815)

 

(169,624)

Accumulated other comprehensive income/(loss)

 

(18,319)

 

(18,761)

Total IBM Stockholders’ Equity

 

24,026

 

22,533

 
 
 
 
 

Noncontrolling interests

 

77

 

80

Total Equity

 

24,103

 

22,613

 
 
 
 
 

Total Liabilities and Equity

 

$                 133,848

 

$                 135,241

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW ANALYSIS

(Unaudited)

 
 
 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

Trailing Twelve
Months Ended
June 30,

(Dollars in Millions)

 

2024

 

2023

 

2024

 

2023

 

2024

Net Cash from Operations per GAAP

 

$            2,066

 

$            2,638

 

$         6,234

 

$            6,412

 

$                      13,752

 
 
 
 
 
 
 
 
 
 
 

Less: change in IBM Financing receivables

 

(946)

 

50

 

951

 

2,028

 

156

Capital Expenditures, net

 

(399)

 

(487)

 

(761)

 

(944)

 

(1,305)

 
 
 
 
 
 
 
 
 
 
 

Free Cash Flow

 

2,612

 

2,101

 

4,522

 

3,441

 

12,292

 
 
 
 
 
 
 
 
 
 
 

Acquisitions

 

(153)

 

(334)

 

(235)

 

(356)

 

(4,961)

Divestitures

 

—

 

6

 

703

 

6

 

693

Dividends

 

(1,537)

 

(1,510)

 

(3,058)

 

(3,007)

 

(6,092)

Non-Financing Debt

 

(4,168)

 

(1,178)

 

1,076

 

8,514

 

(1,892)

Other (includes IBM Financing net receivables and debt)

 

(73)

 

(347)

 

(510)

 

(1,109)

 

(410)

 
 
 
 
 
 
 
 
 
 
 

Change in Cash, Cash Equivalents, Restricted Cash
and Short-term Marketable Securities

 

$          (3,318)

 

$          (1,263)

 

$         2,497

 

$            7,489

 

$                            (370)

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW

(Unaudited)

 
 
 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

(Dollars in Millions)

 

2024

 

2023

 

2024

 

2023

Net Income from Operations

 

$                     1,834

 

$                         1,583

 

$                     3,439

 

$                     2,511

Depreciation/Amortization of Intangibles (1)

 

1,155

 

1,076

 

2,287

 

2,150

Stock-based Compensation

 

316

 

288

 

636

 

556

Operating assets and liabilities/Other, net (2)

 

(293)

 

(359)

 

(1,079)

 

(832)

IBM Financing A/R

 

(946)

 

50

 

951

 

2,028

Net Cash Provided by Operating Activities

 

$                     2,066

 

$                         2,638

 

$                     6,234

 

$                     6,412

 
 
 
 
 
 
 
 
 

Capital Expenditures, net of payments & proceeds

 

(399)

 

(487)

 

(761)

 

(944)

Divestitures, net of cash transferred

 

–

 

6

 

703

 

6

Acquisitions, net of cash acquired

 

(153)

 

(334)

 

(235)

 

(356)

Marketable Securities / Other Investments, net

 

2,791

 

822

 

(1,679)

 

(6,659)

Net Cash Provided by/(Used in) Investing Activities

 

$                     2,239

 

$                                7

 

$                   (1,971)

 

$                   (7,953)

 
 
 
 
 
 
 
 
 

Debt, net of payments & proceeds

 

(2,900)

 

(1,135)

 

481

 

6,169

Dividends

 

(1,537)

 

(1,510)

 

(3,058)

 

(3,007)

Financing – Other

 

(78)

 

(86)

 

(61)

 

(185)

Net Cash Provided by/(Used in) Financing Activities

 

$                    (4,515)

 

$                       (2,731)

 

$                   (2,638)

 

$                     2,978

 
 
 
 
 
 
 
 
 

Effect of Exchange Rate changes on Cash

 

(76)

 

(25)

 

(236)

 

(1)

Net Change in Cash, Cash Equivalents and Restricted Cash

 

$                       (287)

 

$                          (110)

 

$                     1,389

 

$                     1,436

____________________

(1)  Includes operating lease right-of-use assets amortization. 

(2)  Includes the reduction of tax reserves. 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION

(Unaudited)

 
 
 

Three Months Ended

June 30,

 

Six Months Ended
June 30,

(Dollars in Billions)

 

2024

 

2023

 

Yr/Yr

 

2024

 

2023

 

Yr/Yr

Net Income as reported (GAAP)

 

$           1.8

 

$           1.6

 

$           0.3

 

$           3.4

 

$           2.5

 

$           0.9

Less: Income/(loss) from discontinued operations, net of tax

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

Income from continuing operations

 

1.8

 

1.6

 

0.2

 

3.4

 

2.5

 

0.9

Provision for/(Benefit from) income taxes from continuing ops.

 

0.4

 

0.4

 

0.0

 

(0.1)

 

0.5

 

(0.7)

Pre-tax income from continuing operations (GAAP)

 

2.2

 

2.0

 

0.2

 

3.3

 

3.1

 

0.2

Non-operating adjustments (before tax)

 
 
 
 
 
 
 
 
 
 
 
 

Acquisition-related charges (1)

 

0.5

 

0.4

 

0.1

 

1.0

 

0.8

 

0.2

Non-operating retirement-related costs/(income)

 

0.1

 

0.0

 

0.1

 

0.2

 

0.0

 

0.2

 
 
 
 
 
 
 
 
 
 
 
 
 

Operating (non-GAAP) pre-tax income from continuing ops.

 

2.8

 

2.4

 

0.4

 

4.4

 

3.8

 

0.6

 
 
 
 
 
 
 
 
 
 
 
 
 

Net interest expense

 

0.2

 

0.2

 

0.0

 

0.4

 

0.4

 

0.0

Depreciation/Amortization of non-acquired intangible assets

 

0.7

 

0.7

 

0.0

 

1.4

 

1.4

 

0.0

Stock-based compensation

 

0.3

 

0.3

 

0.0

 

0.6

 

0.6

 

0.1

Workforce rebalancing charges

 

0.0

 

0.1

 

(0.1)

 

0.4

 

0.4

 

0.0

Corporate (gains) and charges (2)

 

0.0

 

0.0

 

0.0

 

(0.2)

 

0.0

 

(0.2)

 
 
 
 
 
 
 
 
 
 
 
 
 

Adjusted EBITDA

 

$           4.0

 

$           3.7

 

$           0.4

 

$           7.1

 

$           6.5

 

$           0.5

____________________

(1)   Primarily consists of amortization of acquired intangible assets. 

(2)   Corporate (gains) and charges primarily consists of unique corporate actions such as gains on divestitures. 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

(Unaudited)

 
 
 

Three Months Ended June 30, 2024

 
 
 
 
 
 
 
 
 
 
 
 
 
 

(Dollars in Millions)

 

Software

 
 

Consulting

 
 

Infrastructure

 
 

Financing

 

Revenue

 

$                       6,739

 
 

$                        5,179

 
 

$                        3,645

 
 

$                            169

 

Segment Profit

 

$                       2,113

 
 

$                           463

 
 

$                           654

 
 

$                              77

 

Segment Profit Margin

 

31.3

%

 

8.9

%

 

17.9

%

 

45.3

%

Change YTY Revenue

 

7.1

%

 

(0.9)

%

 

0.7

%

 

(8.3)

%

Change YTY Revenue – Constant Currency

 

8.4

%

 

1.8

%

 

2.7

%

 

(6.6)

%

 
 
 
 
 
 

Three Months Ended June 30, 2023 (1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 

(Dollars in Millions)

 

 Software

 
 

Consulting

 
 

Infrastructure

 
 

Financing

 

Revenue

 

$                       6,294

 
 

$                        5,226

 
 

$                        3,618

 
 

$                            185

 

Segment Profit

 

$                       1,749

 
 

$                           483

 
 

$                           732

 
 

$                              64

 

Segment Profit Margin

 

27.8

%

 

9.2

%

 

20.2

%

 

34.8

%

____________________

(1) Recast to reflect January 2024 segment changes. 

 
 
 

Six Months Ended June 30, 2024

 
 
 
 
 
 
 
 
 
 
 
 
 
 

(Dollars in Millions)

 

Software

 
 

Consulting

 
 

Infrastructure

 
 

Financing

 

Revenue

 

$                     12,637

 
 

$                      10,365

 
 

$                        6,721

 
 

$                           362

 

Segment Profit

 

$                       3,612

 
 

$                           888

 
 

$                           965

 
 

$                           168

 

Segment Profit Margin

 

28.6

%

 

8.6

%

 

14.4

%

 

46.5

%

Change YTY Revenue

 

6.3

%

 

(0.6)

%

 

0.1

%

 

(4.9)

%

Change YTY Revenue – Constant Currency

 

7.2

%

 

1.8

%

 

1.5

%

 

(4.0)

%

 
 
 
 
 
 

Six Months Ended June 30, 2023 (1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 

(Dollars in Millions)

 

 Software

 
 

Consulting

 
 

Infrastructure

 
 

Financing

 

Revenue

 

$                     11,885

 
 

$                      10,423

 
 

$                       6,716

 
 

$                           380

 

Segment Profit

 

$                       3,128

 
 

$                           910

 
 

$                       1,039

 
 

$                           164

 

Segment Profit Margin

 

26.3

%

 

8.7

%

 

15.5

%

 

43.2

%

__________

(1) Recast to reflect January 2004 segment changes. 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION

(Unaudited; Dollars in millions except per share amounts)

 
 

Three Months Ended June 30, 2024

 
 

Continuing Operations

 
 

GAAP

 
 

Acquisition-

Related

Adjustments (1)

 
 

Retirement-

Related

Adjustments (2)

 
 

Tax

Reform

Impacts

 
 

Operating

(Non-GAAP)

 

Gross Profit

$       8,950

 
 

$                           170

 
 

$                               —

 
 

$                       —

 
 

$          9,120

 

Gross Profit Margin

56.8

%

 

1.1

pts

 

—

pts

 

—

pts

 

57.8

%

S,G&A

$       4,938

 
 

$                         (286)

 
 

$                               —

 
 

$                       —

 
 

$          4,651

 

Other (Income) & Expense

(233)

 
 

(18)

 
 

(98)

 
 

—

 
 

(349)

 

Total Expense & Other (Income)

6,730

 
 

(304)

 
 

(98)

 
 

—

 
 

6,328

 

Pre-tax Income from Continuing Operations

2,219

 
 

474

 
 

98

 
 

—

 
 

2,792

 

Pre-tax Income Margin from Continuing
Operations

14.1

%

 

3.0

pts

 

0.6

pts

 

—

pts

 

17.7

%

Provision for/(Benefit from) Income Taxes (3)

$          389

 
 

$                          113

 
 

$                              26

 
 

$                     (12)

 
 

$             516

 

Effective Tax Rate

17.5

%

 

1.1

pts

 

0.3

pts

 

(0.4)

pts

 

18.5

%

Income from Continuing Operations

$       1,830

 
 

$                          362

 
 

$                              72

 
 

$                      12

 
 

$          2,275

 

Income Margin from Continuing Operations

11.6

%

 

2.3

pts

 

0.5

pts

 

0.1

pts

 

14.4

%

Diluted Earnings Per Share: Continuing
Operations

$         1.96

 
 

$                         0.39

 
 

$                           0.08

 
 

$                   0.01

 
 

$            2.43

 
 
 
 
 

Three Months Ended June 30, 2023

 
 

Continuing Operations

 
 

GAAP

 
 

Acquisition-

Related

Adjustments (1)

 
 

Retirement-

Related

Adjustments (2)

 
 

Tax

Reform

Impacts

 
 

Operating

(Non-GAAP)

 

Gross Profit

$       8,501

 
 

$                          150

 
 

$                               —

 
 

$                      —

 
 

$           8,650

 

Gross Profit Margin

54.9

%

 

1.0

pts

 

—

pts

 

—

pts

 

55.9

%

S,G&A

$       4,900

 
 

$                         (245)

 
 

$                               —

 
 

$                      —

 
 

$           4,655

 

Other (Income) & Expense

(261)

 
 

0

 
 

(1)

 
 

—

 
 

(262)

 

Total Expense & Other (Income)

6,501

 
 

(246)

 
 

(1)

 
 

—

 
 

6,254

 

Pre-tax Income from Continuing Operations

2,000

 
 

395

 
 

1

 
 

—

 
 

2,396

 

Pre-tax Income Margin from Continuing
Operations

12.9

%

 

2.6

pts

 

0.0

pts

 

—

pts

 

15.5

%

Provision for/(Benefit from) Income Taxes (3)

$          419

 
 

$                            87

 
 

$                               (3)

 
 

$                  (110)

 
 

$              393

 

Effective Tax Rate

21.0

%

 

0.2

pts

 

(0.2)

pts

 

(4.6)

pts

 

16.4

%

Income from Continuing Operations

$       1,581

 
 

$                          308

 
 

$                                5

 
 

$                   110

 
 

$           2,003

 

Income Margin from Continuing Operations

10.2

%

 

2.0

pts

 

0.0

pts

 

0.7

pts

 

12.9

%

Diluted Earnings Per Share: Continuing
Operations

$         1.72

 
 

$                         0.34

 
 

$                           0.00

 
 

$                  0.12

 
 

$             2.18

 

____________________

(1)    Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax
        charges related to acquisition integration and pre-closing charges, such as financing costs. 2024 also includes a loss of $18 million on foreign
        exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG.

(2)    Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan
        curtailments/settlements and pension insolvency costs and other costs.

(3)    Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the
         As Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION

(Unaudited; Dollars in millions except per share amounts)

 
 

Six Months Ended June 30, 2024

 
 

Continuing Operations

 
 

GAAP

 
 

Acquisition-

Related

Adjustments (1)

 
 

Retirement-

Related

Adjustments (2)

 
 

Tax

Reform

Impacts (3)

 
 

Operating

(Non-GAAP)

 

Gross Profit

$    16,692

 
 

$                         341

 
 

$                               —

 
 

$                   —

 
 

$         17,033

 

Gross Profit Margin

55.2

%

 

1.1

pts

 

—

pts

 

—

pts

 

56.3

%

S,G&A

$      9,912

 
 

$                       (554)

 
 

$                               —

 
 

$                   —

 
 

$           9,358

 

Other (Income) & Expense

(550)

 
 

(68)

 
 

(194)

 
 

—

 
 

(812)

 

Total Expense & Other (Income)

13,399

 
 

(622)

 
 

(194)

 
 

—

 
 

12,584

 

Pre-tax Income from Continuing Operations

3,293

 
 

963

 
 

194

 
 

—

 
 

4,449

 

Pre-tax Income Margin from Continuing
Operations

10.9

%

 

3.2

pts

 

0.6

pts

 

—

pts

 

14.7

%

Provision for/(Benefit from) Income Taxes (4)

$        (112)

 
 

$                         255

 
 

$                              31

 
 

$                436

 
 

$              610

 

Effective Tax Rate

(3.4)

%

 

6.5

pts

 

0.9

pts

 

9.8

pts

 

13.7

%

Income from Continuing Operations

$      3,405

 
 

$                         707

 
 

$                            163

 
 

$               (436)

 
 

$           3,839

 

Income Margin from Continuing Operations

11.3

%

 

2.3

pts

 

0.5

pts

 

(1.4)

pts

 

12.7

%

Diluted Earnings Per Share: Continuing
Operations

$        3.65

 
 

$                        0.76

 
 

$                           0.17

 
 

$              (0.47)

 
 

$             4.11

 
 
 
 
 

Six Months Ended June 30, 2023

 
 

Continuing Operations

 
 

GAAP

 
 

Acquisition-

Related

Adjustments (1)

 
 

Retirement-

Related

Adjustments (2)

 
 

Tax

Reform

Impacts

 
 

Operating

(Non-GAAP)

 

Gross Profit

$    16,010

 
 

$                         298

 
 

$                               —

 
 

$                   —

 
 

$         16,308

 

Gross Profit Margin

53.9

%

 

1.0

pts

 

—

pts

 

—

pts

 

54.9

%

S,G&A

$      9,754

 
 

$                       (491)

 
 

$                               —

 
 

$                   —

 
 

$           9,263

 

Other (Income) & Expense

(506)

 
 

(2)

 
 

4

 
 

—

 
 

(504)

 

Total Expense & Other (Income)

12,952

 
 

(493)

 
 

4

 
 

—

 
 

12,463

 

Pre-tax Income from Continuing Operations

3,058

 
 

791

 
 

(4)

 
 

—

 
 

3,845

 

Pre-tax Income Margin from Continuing
Operations

10.3

%

 

2.7

pts

 

0.0

pts

 

—

pts

 

12.9

%

Provision for/(Benefit from) Income Taxes (4)

$         543

 
 

$                         178

 
 

$                            (14)

 
 

$               (115)

 
 

$              593

 

Effective Tax Rate

17.8

%

 

1.0

pts

 

(0.3)

pts

 

(3.0)

pts

 

15.4

%

Income from Continuing Operations

$      2,515

 
 

$                         613

 
 

$                             10

 
 

$                115

 
 

$           3,252

 

Income Margin from Continuing Operations

8.5

%

 

2.1

pts

 

0.0

pts

 

0.4

pts

 

10.9

%

Diluted Earnings Per Share: Continuing
Operations

$        2.74

 
 

$                        0.67

 
 

$                          0.01

 
 

$              0.13

 
 

$             3.54

 

____________________

(1)    Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax
        charges related to acquisition integration and pre-closing charges, such as financing costs. 2024 also includes a loss of $68 million on foreign
        exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG.

(2)    Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan
        curtailments/settlements and pension insolvency costs and other costs.

(3)    2024 includes a net benefit from discrete tax events.

(4)   Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the
        As Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

GAAP OPERATING CASH FLOW TO ADJUSTED EBITDA RECONCILIATION

(Unaudited)

 
 
 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

(Dollars in Billions)

 

2024

 

2023

 

2024

 

2023

Net Cash Provided by Operating Activities

 

$           2.1

 

$           2.6

 

$           6.2

 

$           6.4

 
 
 
 
 
 
 
 
 

Add:

 
 
 
 
 
 
 
 

Net interest expense

 

0.2

 

0.2

 

0.4

 

0.4

Provision for/(Benefit from) income taxes from continuing operations

 

0.4

 

0.4

 

(0.1)

 

0.5

 
 
 
 
 
 
 
 
 

Less change in:

 
 
 
 
 
 
 
 

Financing receivables

 

(0.9)

 

0.1

 

1.0

 

2.0

Other assets and liabilities/Other, net (1)

 

(0.4)

 

(0.5)

 

(1.5)

 

(1.2)

 
 
 
 
 
 
 
 
 

Adjusted EBITDA

 

$           4.0

 

$           3.7

 

$           7.1

 

$           6.5

____________________

(1)    Other assets and liabilities/Other, net mainly consists of Operating assets and liabilities/Other, net in the Cash flow chart, workforce
         rebalancing charges, non-operating impacts and corporate (gains) and charges. 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/ibm-releases-second-quarter-results-302205863.html

SOURCE IBM

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Technology

U.S. Quartz Workers: Strong Safeguard Remedies Needed to Save 100,000 American Manufacturing Jobs

Published

43 minutes ago

on

July 23, 2026

By

WASHINGTON, July 23, 2026 /PRNewswire/ — The Quartz Manufacturers Alliance for America (QMAA) released a powerful video featuring quartz manufacturing workers from across the country calling for free and fair trade policies to save 100,000 American jobs. QMAA, a coalition of leading U.S.-based quartz slab manufacturers, are calling for strong safeguard remedies after the U.S. International Trade Commission (ITC) found a huge flood of foreign imports had caused tremendous injury to the domestic quartz industry.

QMAA members are urging the Trump Administration to build on the ITC’s strong recommendation and address this major flood of quartz imports with a Tariff of 50% and a Reshoring Import Cap of 141 million square feet on imported quartz surface products. This will ensure a reshoring of the good-paying U.S. quartz manufacturing jobs stolen by companies who cheat U.S. trade law, distort competition and are decimating U.S. quartz manufacturing. Together, these trade remedies will provide the relief necessary to save the 100,000 jobs supported by the U.S. quartz industry.

The video features workers from LX Hausys, Guidoni USA and Cambria Company and is available here:
Save 100,000 American Quartz Jobs

Quotes from QMAA Quartz Manufacturing Workers
“This facility used to be a Husqvarna plant. Husqvarna closed down due to cheap foreign imports. There were over 1,000 people working here and all of a sudden…I’m worried I may see the same thing take place again.”
-Raymond Mack, Production Operator, Guidoni USA, Helena-McRae, GA

“Foreign countries, mainly China, Thailand, Malaysia, Vietnam, Indonesia, have been circumventing and cheating the American market. We believe in the industry. We believe in the American working power. We just want to level the playing field, make it fair for everyone and everyone will benefit.”
– Daniel Vas de Melo SA, Business Development Manager, Guidoni USA, McRae-Helena, GA

“In order for us to continue to compete, we need a strong Tariff and Import Cap on imported quartz surfaces. That will ensure we can play on an even playing field. That’s all we’re asking for. I would hate to see cheap, imported quartz have a negative impact on families such as mine and the other families that we employ here.”
– Mike Morici, Vice President – LX Hausys, Adairsville, GA

“The surge of foreign imports has shocked the U.S. economy, and the market for surfaces. It’s taken prices down to unsustainably low levels for any domestic supplier. The result of that is we’re not producing as much as we should, we can’t hire as many people as we would like to, and we can’t grow our business in the way that we and our peers in the U.S. want to grow.”
– Andrew Eich, President and Chief Operating Officer, Cambria

“As these foreign imports flood the market, we lose the ability to create and sustain jobs that ensure good paying conditions for manufacturing workers. There will be over 100,000 jobs that have the strong potential to go away.”
– Jack Sundry, SVP Core and Lexus – Cambria, Southern Minnesota

Background
In September 2025, QMAA filed a Global Safeguard petition with the U.S. International Trade Commission (ITC) under Section 201 of the U.S. Trade Act of 1974. The ITC’s thorough investigation found serious injury to the domestic industry caused by a massive import surge designed to undercut American businesses. Quartz imports have surged by 78.3% within the past five years, leading to a nearly 20% decline in domestic production, factory closures and major job reductions.

A final safeguard decision from the United States Trade Representative is expected by Aug. 1, 2026.

About the Quartz Manufacturing Alliance for America:
QMAA is a coalition of U.S.-based, American quartz slab manufacturing factories, united with other industry leaders to support and strengthen the American quartz industry. QMAA is committed to ensuring a free and fair, competitive marketplace born of free enterprise that provides the opportunity to compete on a level playing field for American quartz slab manufacturing factories and their valued workers. We also believe this effort will have a positive impact throughout the entire quartz surfacing industry, including to the strong benefit of American stone fabrication shops and upstream suppliers of quartz minerals and resin. Learn more at: https://www.qmaa.org/

View original content to download multimedia:https://www.prnewswire.com/news-releases/us-quartz-workers-strong-safeguard-remedies-needed-to-save-100-000-american-manufacturing-jobs-302833444.html

SOURCE Quartz Manufacturing Alliance of America

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Technology

Databricks and Microsoft expand partnership to help enterprises bring business context to enterprise AI

Published

43 minutes ago

on

July 23, 2026

By

Databricks and Microsoft extend strategic partnership through the 2030s to scale enterprise AIDatabricks deepens its bet on Azure, growing its use of Azure Databricks to run its own core business operations and analytics, while both companies advance native integration across the Microsoft stack, including Databricks Genie and Microsoft 365Databricks increases its use of Microsoft Azure Cobalt to improve performance and efficiency

REDMOND, Wash. and SAN FRANCISCO, July 23, 2026 /PRNewswire/ — Microsoft Corp. and Databricks on Wednesday announced an expansion of their decade-long strategic partnership, extending into the 2030s. Databricks will deepen its use of Azure Databricks to run core business operations and build its unified lakehouse, while leveraging Azure Cobalt, Microsoft’s next-generation Arm-based infrastructure, to improve performance and efficiency. Microsoft will also continue integrating Databricks Data and AI platform across its products, bringing capabilities like Genie, Databricks’ AI co-worker, directly into customer workflows. Together, the companies are helping enterprises build AI grounded in their own business context with the cost efficiency, control and choice needed to scale successfully.

Enterprises want AI that understands their customers, products, operations, metrics and business processes, all while running securely where work happens. Yet, most still struggle to connect AI to trusted business knowledge, govern models and agents consistently, and control costs. Microsoft and Databricks are helping customers close that gap: 

“For nearly a decade, Databricks and Microsoft have helped enterprises innovate with data and AI,” said Ali Ghodsi, Co‑Founder and CEO of Databricks. “Today, our partnership is stronger than ever. With Databricks Genie and Unity AI Gateway deeply integrated across Microsoft’s products, we’re helping enterprises unify their data and ground AI in business knowledge. This lets customers get the full benefits of agents and models while controlling costs and ensuring governance.”

“The next generation of AI will be defined by how effectively organizations turn their unique knowledge into intelligence,” said Judson Althoff, CEO, Microsoft Commercial Business. “Microsoft and Databricks are helping customers connect data, AI and business context to accelerate decision-making and drive measurable impact. With Databricks deepening its investment in Azure Databricks and Azure Cobalt-powered infrastructure, customers will benefit from greater performance, efficiency and scale for their most demanding workloads. Databricks’ decision to run its own core business operations on Azure Databricks also gives customers confidence in a platform proven at enterprise scale.”

Databricks runs core business operations on Azure Databricks 

As part of this latest deal, Databricks deepens its commitment to Azure, running its own core business operations and analytics on Azure Databricks, using the very platform it delivers to customers at scale.

Advancing performance with Azure Cobalt

Databricks will also expand its use of Azure Cobalt, Microsoft’s next-generation Arm-based infrastructure, to improve performance and efficiency for agentic and data-intensive workloads. Databricks currently uses Cobalt 100 and plans to adopt Cobalt 200, which delivers up to 50% better performance and includes memory encryption enabled by default.

Deep integrations for Databricks Genie and Unity AI Gateway with Microsoft product stack

By combining the Databricks Data + AI Platform with Azure’s global scale, customers can accelerate AI transformation while maintaining control and reliability. As a native Azure service, Azure Databricks makes its AI capabilities available directly within customers’ existing Microsoft environment, grounding and operating agents on enterprise data with Genie and Genie Ontology, and governing models, agents and cost through Unity AI Gateway. Deeply integrated across the Microsoft ecosystem spanning Microsoft Entra, Azure Data Lake Storage, Azure security, Microsoft OneLake, Power BI, Microsoft Purview, Microsoft Foundry, Power Platform, Microsoft 365, Teams and Copilot, these capabilities bring governed, real-time data and AI into business workflows, giving organizations the context, control, choice and cost efficiency needed to drive impact.

Continued investment is evident from our recent announcements with Databricks at Data + AI Summit in June.

Customer impact with Azure Databricks

The deepened collaboration strengthens support for joint customers running data, analytics and AI workloads on Azure Databricks, delivering improved performance, security, AI governance and enterprise readiness. Thousands of customers, including Banco Bradesco, the Cincinnati Reds, Electrolux, SMBC and Unilever, already use Azure Databricks to run critical workloads and scale AI with confidence.

Read more on the proven business value of the Databricks and Microsoft partnership on the Microsoft Azure blog.

About Databricks

Databricks is the Data and AI company. More than 20,000 organizations worldwide — including AT&T, Bayer, BMW Group, HSBC, T-Mobile, Unilever, and 70% of the Fortune 500 — rely on Databricks Data + AI Platform to build and scale data and AI apps, analytics and agents. Headquartered in San Francisco with 30+ offices around the globe, Databricks offers a unified platform that includes Genie, Lakebase, Agent Bricks, Lakeflow, Lakehouse, and Unity Catalog. To learn more, follow Databricks on LinkedIn, X, YouTube, and Instagram.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers. The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.

 

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SOURCE Microsoft Corp.

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Harness and Kong Expand Strategic Partnership to Deliver Comprehensive API and AI Security

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43 minutes ago

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July 23, 2026

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Joint solution extends proven API gateway security to the AI era — with automated AI discovery and runtime AI protection

SAN FRANCISCO, July 23, 2026 /PRNewswire/ — Harness, the AI Software Delivery Platform™ company, and Kong Inc., a leading developer of API and AI connectivity technologies, today announced an expansion of their strategic partnership to address the growing security challenges posed by AI-driven architectures, autonomous agents, and Model Context Protocol (MCP) deployments.

According to The State of AI-Native Application Security 2025 report, as enterprises race to deploy AI at scale, 62% have no visibility into where LLMs are in use across their environment, and 74% say AI sprawl will outpace API sprawl when it comes to risk — making embedded, infrastructure-level security more critical than ever. And companies are now deploying agents into their operations at an exponentially increasing rate, making it a necessity to protect the agents themselves and the systems interacting with those agents.

The two companies are extending their joint solution from Kong API Gateway to also include Kong AI Gateway, bringing Harness’s AI security intelligence directly into the AI infrastructure layer and enabling enterprises to discover, monitor, and protect every agent, AI asset, LLM-powered service, and MCP-connected workflow that traverses it.

A Proven Foundation: Harness and Kong API Gateway

Harness and Kong have been jointly trusted by enterprises to deliver best-in-class API security for years. The existing Harness and Kong API Gateway integration provides:

Comprehensive API traffic visibility and behavioral analysis across all Kong-managed servicesReal-time detection and blocking of API threats, including OWASP API Security Top 10 risks, credential stuffing attacks, and business logic abuseContinuous sensitive data tracking to identify PII exposure and regulatory riskZero-friction deployment alongside existing Kong configurations

This new offering of the AI Gateway solution applies the same level of security depth to AI infrastructure, ensuring that security teams are not left behind as their organizations adopt AI and agentic operations.

“Our partnership with Harness has given joint customers production-grade API security that works with the way they build, not against it,” said Ken Kim, Senior Vice President, Business Development at Kong Inc. “Extending to include Kong AI Gateway is a natural next step. The same enterprises are now moving AI into production through our gateway and need the same depth of visibility and control they’ve come to rely on for their APIs for all AI traffic types including LLM, MCP, and A2A. That’s exactly what this delivers and is crucial for organizations scaling in the agentic era.”

The New Frontier: Kong AI Gateway and Harness AI Security

As enterprises accelerate AI adoption, the attack surface has fundamentally shifted. AI agents, LLM-powered microservices, and MCP-enabled integrations introduce new vectors that traditional security tools were not designed to address. Unlike traditional software, AI agents are non-deterministic — the same agent can behave differently on consecutive runs, making it impossible to secure them the way you’d secure a static API. The new Harness and Kong AI Gateway integration directly tackles these challenges across two critical domains: AI discovery and AI protection.

AI Discovery
Harness automatically inventories every AI asset, API, MCP server, tool, prompt, and resource routed through Kong AI Gateway — providing security teams with a continuously updated catalog of their AI attack surface. No manual documentation. No blind spots.

AI Protection
Harness applies behavioral analysis and anomaly detection to AI traffic in real time, identifying prompt injection attacks, data exfiltration through AI responses, jailbreaking, malicious code in prompts, and other AI-specific threats. Enterprises gain the same depth of observability and protection for their agents and AI workloads that they already rely on for traditional APIs, with full prompt and response details available for incident investigation and inline policy enforcement through Kong AI Gateway.

“Shadow AI has become the defining security blind spot for enterprises today. Traditional tools were built for static code and predictable systems, not for adaptive AI models, agent-to-agent communication, and MCP-connected workflows that evolve continuously,” said Rahul Sood, GM of Application Security at Harness. “This integration of Harness AI Security with Kong puts security intelligence directly into the connectivity layer where AI traffic flows. Joint customers now have the visibility and control they need to move fast without losing sight of what’s happening across their AI infrastructure.”

Availability

The Harness and Kong API Gateway integration is generally available today for all joint customers. The Kong AI Gateway integration, including AI Discovery and AI Protection, is also generally available now. Joint customers can contact their account team or request a demo.

About Harness
Harness is the AI Software Delivery Platform™ company, enabling engineering teams to build, test, and deliver software faster and more securely. Powered by Harness AI and the Software Delivery Knowledge Graph, the platform brings intelligent automation to every stage of the software delivery lifecycle after code — removing toil and freeing developers from manual, repetitive work. Companies like United Airlines, Morningstar, and Choice Hotels use Harness to accelerate releases by up to 75%, cut cloud costs by 60%, and achieve 10x efficiency across DevOps. Based in San Francisco, Harness is backed by Goldman Sachs, Menlo Ventures, IVP, Unusual Ventures, and Citi Ventures.

About Kong

Kong Inc., a leading developer of API and AI connectivity technologies, is building the connectivity layer of AI. Trusted by the Fortune 500® and AI-native startups alike, Kong’s unified API and AI platform enables organizations to secure, manage, accelerate, govern, and monetize the flow of intelligence across APIs and AI traffic — on any model, any cloud. For more information, visit www.konghq.com.

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SOURCE Harness

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