IBM reported a $100 million hit to its federal contracts due to cuts from the Department of Government Efficiency during the first quarter of 2025. CEO Arvind Krishna and CFO James Kavanaugh reassured investors that these cancellations, affecting 15 contracts, represent a small fraction of their $30 billion consulting backlog. They emphasized that the majority of their federal work is critical, including veterans' benefits and procurement processes. Overall, IBM's consulting revenue dipped 2% to over $5 billion in Q1, but the company remains optimistic about navigating current challenges.