IBM reported robust second-quarter operating results that beat most Q2 expectations and showed continued strength in the vendor’s hybrid-cloud strategy. Unfortunately, macro-economic conditions forced it to reign in full-year expectations, which sent its stock price tumbling.

IBM’s revenues surged more than 9% during the quarter compared to last year, hitting $15.5 billion and coming in ahead of expectations of around $15.1 billion. IBM CFO Jim Kavanaugh noted that IBM posted revenue growth across most of its operating segments during the quarter, including 12% growth in software, 18% growth in consulting services, and 25% growth in its mainframe business.

Specific to software, IBM’s Red Hat division reported a 17% increase in revenues, which it attributed to adoption of its Enterprise Linux (RHEL) and Kubernetes-based OpenShift platforms.

“Momentum behind our Red Hat practice remains strong,” Kavanaugh said during IBM’s earnings call. “We nearly doubled our Red Hat Consulting revenue in the quarter and continued solid Red Hat bookings, which now exceed $6 billion inception-to-date.”

IBM did just shake up its Red Hat leadership, announcing that Paul Cormier is moving from CEO into Red Hat’s chairman position where he will take on portfolio growth and leadership development at the open source vendor. Matt Hicks, who previously served as EVP of products and technologies, is moving into the CEO position. Both will continue reporting into IBM CEO Arvind Krishna.

While revenues surged, a handful of issues undercut IBM’s bottom-line profits to being flat year over year at $1.4 billion.

Kavanaugh cited $75 million in charges associated with the completed divesture of its health care software business and $100 million tied to its operational withdraw from Russia. A bigger impact was from the current strengthening of the U.S. dollar compared to foreign currencies.

Kavanaugh explained that the strengthening dollar resulted in a $900 million impact on the vendor’s bottom line, which was $200 million more than it expected just 90 days ago. The vendor expects that “headwind” to continue through the rest of the year.

“That’s a degradation of about a billion-and-a-half dollars from April rates, with most of that incremental impact still ahead of us in the second half,” Kavanaugh said. “Currency is one unique issue we’re dealing with – the other is the impact of exiting our Russia operation. Together these are putting some pressure on our near-term results, and we now expect free cash flow of about $10 billion for the year.”

IBM had initially forecast closer to $10.5 billion in free cash flow for the year.

That incremental difference was enough to spook forward-looking investors. IBM’s stock was trading down more than 6% early Tuesday, though it was coming off of a 52-week-high hit at the end of June.