Double-digit Software revenue growth; Free cash flow
well-exceeds full-year expectation
ARMONK,
N.Y., Jan. 29,
2025 /PRNewswire/ -- IBM (NYSE: IBM) today announced
fourth-quarter 2024 earnings results.
"We closed the year with double-digit revenue growth in Software
for the quarter, led by further acceleration in Red Hat. Clients
globally continue to turn to IBM to transform with AI. Our
generative AI book of business now stands at more than $5 billion inception-to-date, up nearly
$2 billion quarter over quarter,"
said Arvind Krishna, IBM chairman, president and chief
executive officer. "Three years ago, we laid out a vision for a
faster-growing, more-profitable IBM. I'm proud of the work the IBM
team has done to meet or exceed our commitments. With our focused
strategy, enhanced portfolio, and culture of innovation, we're
well-positioned for 2025 and beyond and expect revenue growth of at
least five percent and free cash flow of about $13.5 billion this year."
Fourth-Quarter Highlights
- Revenue
- Revenue of $17.6 billion, up 1
percent, up 2 percent at constant currency
- Software revenue up 10 percent, up 11 percent at constant
currency
- Consulting revenue down 2 percent, down 1 percent at
constant currency
- Infrastructure revenue down 8 percent, down 6 percent at
constant currency
- Profit
- Gross Profit Margin: GAAP: 59.5 percent, up 40 basis points;
Operating (Non-GAAP): 60.6 percent, up 50 basis points
Full-Year Highlights
- Revenue
- Revenue of $62.8 billion, up 1
percent, up 3 percent at constant currency
- Software revenue up 8 percent, up 9 percent at constant
currency
- Consulting revenue down 1 percent, up 1 percent at constant
currency
- Infrastructure revenue down 4 percent, down 3 percent at
constant currency
- Profit
- Gross Profit Margin: GAAP: 56.7 percent, up 120 basis
points; Operating (Non-GAAP): 57.8 percent, up 130 basis
points
- Cash Flow
- Net cash from operating activities of $13.4 billion; free cash flow of $12.7 billion
|
FOURTH-QUARTER 2024 INCOME STATEMENT
SUMMARY
|
|
|
GAAP results
include impact of one-time, non-cash pension settlement charge
(1)
|
|
|
Revenue
|
|
Gross
Profit
|
|
|
Gross
Profit
Margin
|
|
|
Pre-tax
Income (1)
|
|
Pre-tax
Income
Margin (1)
|
|
Net
Income (1)
|
|
Diluted
Earnings
Per Share
(1)
|
|
GAAP from
Continuing
Operations
|
$ 17.6
B
|
|
|
$ 10.4
B
|
|
|
59.5
|
%
|
|
$
3.3 B
|
|
|
18.8
|
%
|
|
$ 2.9 B
|
|
|
$ 3.11
|
|
|
Year/Year
|
1
|
%(2)
|
|
2
|
%
|
|
0.4
|
Pts
|
|
(12)
|
%
|
|
-2.8
|
Pts
|
|
(11)
|
%
|
|
(12)
|
%
|
|
Operating
(Non-GAAP)
|
|
|
|
$ 10.6
B
|
|
|
60.6
|
%
|
|
$
4.3 B
|
|
|
24.3
|
%
|
|
$ 3.7 B
|
|
|
$ 3.92
|
|
|
Year/Year
|
|
|
|
2
|
%
|
|
0.5
|
Pts
|
|
2
|
%
|
|
0.4
|
Pts
|
|
3
|
%
|
|
1
|
%
|
|
(1) 2024 GAAP
results include the impact of a one-time, non-cash pension
settlement charge of $0.4 billion related to the transfer of
a
portion of the company's Non-U.S.
defined benefit pension obligations and related plan assets to
third-party insurers in October 2024.
|
|
(2) 2% at
constant currency.
|
"With strong performance across our Software portfolio, we
continue to drive solid fundamentals within our business," said
James Kavanaugh, IBM senior vice
president and chief financial officer. "As a result, we generated
$12.7 billion in free cash flow,
far-outpacing our expectation for the year. Continued strength
in operating profitability and free cash flow fuels our ability
to invest for the future while returning value to shareholders
through dividends."
Segment Results for Fourth Quarter
- Software — revenues of $7.9
billion, up 10.4 percent, up 11.5 percent at constant
currency:
- Hybrid Platform & Solutions up 11 percent, up 12 percent
at constant currency
-- Red Hat up 16 percent, up 17 percent
at constant currency
-- Automation up 15 percent, up 16 percent at
constant currency
-- Data & AI up 4 percent, up 5 percent at
constant currency
-- Security up 4 percent, up 5 percent at
constant currency
- Transaction Processing up 10 percent, up 11 percent at
constant currency
- Consulting — revenues of $5.2
billion, down 2.0 percent, down 1.1 percent at constant
currency:
- Business Transformation up 1 percent, up 2 percent at
constant currency
- Technology Consulting down 7 percent, down 6 percent at
constant currency
- Application Operations down 4 percent, down 3 percent at
constant currency
- Infrastructure — revenues of $4.3
billion, down 7.6 percent, down 6.0 percent at constant
currency:
- Hybrid Infrastructure down 10 percent, down 8 percent at
constant currency
-- IBM Z down 21 percent, down 20 percent at
constant currency
-- Distributed Infrastructure flat, up 2
percent at constant currency
- Infrastructure Support down 2 percent, flat at constant
currency
- Financing — revenues of $0.2
billion, down 2.5 percent, down 0.5 percent at constant
currency
Cash Flow and Balance Sheet
In the fourth quarter, the company generated net cash from
operating activities of $4.3 billion,
down $0.1 billion year to year. IBM's
free cash flow was $6.2 billion, up
$0.1 billion year to year. The
company returned $1.5 billion to
shareholders in dividends in the fourth quarter.
For the year, the company generated net cash from operating
activities of $13.4 billion, down
$0.5 billion year to year. Net cash
from operating activities excluding IBM financing receivables was
$13.9 billion, up $1.2 billion. IBM's free cash flow was
$12.7 billion, up $1.5 billion year to year.
IBM ended the fourth quarter with $14.8
billion of cash, restricted cash and marketable securities,
up $1.3 billion from year-end 2023.
Debt, including IBM Financing debt of $12.1
billion, totaled $55.0
billion, down $1.6 billion
since year-end 2023.
Full-Year 2024 Results
|
FULL-YEAR
2024 INCOME STATEMENT SUMMARY
|
|
|
GAAP results include
impacts of one-time, non-cash pension settlement charges
(1)
|
|
|
Revenue
|
|
Gross
Profit
|
|
|
Gross
Profit
Margin
|
|
|
Pre-tax
Income (1)
|
|
Pre-tax
Income
Margin (1)
|
|
Net
Income (1)
|
|
Diluted
Earnings
Per Share
(1)
|
|
GAAP from
Continuing
Operations
|
$ 62.8
B
|
|
|
$ 35.6
B
|
|
|
56.7
|
%
|
|
$
5.8 B
|
|
|
9.2
|
%
|
|
$ 6.0 B
|
|
|
$ 6.42
|
|
|
Year/Year
|
1
|
%(2)
|
|
4
|
%
|
|
1.2
|
Pts
|
|
(33)
|
%
|
|
-4.8
|
Pts
|
|
(20)
|
%
|
|
(21)
|
%
|
|
Operating
(Non-GAAP)
|
|
|
|
$ 36.3
B
|
|
|
57.8
|
%
|
|
$ 11.2
B
|
|
|
17.9
|
%
|
|
$ 9.7 B
|
|
|
$
10.33
|
|
|
Year/Year
|
|
|
|
4
|
%
|
|
1.3
|
Pts
|
|
9
|
%
|
|
1.2
|
Pts
|
|
9
|
%
|
|
7
|
%
|
|
(1) 2024 GAAP
results include the impacts of one-time, non-cash, U.S.
and non-U.S. pension settlement charges of $3.1 billion ($2.4
billion
net of tax).
|
|
(2) 3% at
constant currency
|
Full-Year 2025 Expectations
- Revenue: The company expects full-year constant currency
revenue growth of at least 5 percent. At current foreign exchange
rates, currency is expected to be about a two-point headwind to
growth for the year.
- Free cash flow: The company expects about $13.5 billion in free cash flow for the full
year.
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; 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
For generative AI, book of business includes Software
transactional revenue, SaaS Annual Contract Value and Consulting
signings. The generative AI book of business is further defined
within Exhibit 99.2 in the Form 8-K that includes 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.
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-4q24. 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
December 31,
|
|
|
Year Ended
December 31,
|
|
|
2024
|
|
|
2023 (1)
|
|
|
2024
|
|
|
2023 (1)
|
|
|
REVENUE BY
SEGMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
$
7,924
|
|
|
$
7,179
|
|
|
$
27,085
|
|
|
$
25,011
|
|
|
Consulting
|
5,175
|
|
|
5,283
|
|
|
20,692
|
|
|
20,884
|
|
|
Infrastructure
|
4,256
|
|
|
4,604
|
|
|
14,020
|
|
|
14,593
|
|
|
Financing
|
170
|
|
|
175
|
|
|
713
|
|
|
741
|
|
|
Other
|
29
|
|
|
141
|
|
|
243
|
|
|
632
|
|
|
TOTAL
REVENUE
|
17,553
|
|
|
17,381
|
|
|
62,753
|
|
|
61,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
10,439
|
|
|
10,267
|
|
|
35,551
|
|
|
34,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
85.0
|
%
|
|
84.1
|
%
|
|
83.7
|
%
|
|
82.9
|
%
|
|
Consulting
|
28.0
|
%
|
|
28.1
|
%
|
|
27.0
|
%
|
|
26.8
|
%
|
|
Infrastructure
|
56.9
|
%
|
|
60.8
|
%
|
|
55.8
|
%
|
|
56.1
|
%
|
|
Financing
|
46.9
|
%
|
|
50.2
|
%
|
|
47.9
|
%
|
|
48.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GROSS PROFIT
MARGIN
|
59.5
|
%
|
|
59.1
|
%
|
|
56.7
|
%
|
|
55.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE AND OTHER
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
S,G&A
|
4,866
|
|
|
4,791
|
|
|
19,688
|
|
|
19,003
|
|
|
R,D&E
|
1,967
|
|
|
1,748
|
|
|
7,479
|
|
|
6,775
|
|
|
Intellectual property
and custom development income
|
(301)
|
|
|
(242)
|
|
|
(996)
|
|
|
(860)
|
|
|
Other (income) and
expense (2)
|
177
|
|
|
(193)
|
|
|
1,871
|
|
|
(914)
|
|
|
Interest
expense
|
424
|
|
|
405
|
|
|
1,712
|
|
|
1,607
|
|
|
TOTAL EXPENSE AND
OTHER INCOME
|
7,133
|
|
|
6,509
|
|
|
29,754
|
|
|
25,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
CONTINUING OPERATIONS
BEFORE INCOME
TAXES
|
3,306
|
|
|
3,759
|
|
|
5,797
|
|
|
8,690
|
|
|
Pre-tax
margin
|
18.8
|
%
|
|
21.6
|
%
|
|
9.2
|
%
|
|
14.0
|
%
|
|
Provision for/(Benefit
from) income taxes (2)
|
379
|
|
|
474
|
|
|
(218)
|
|
|
1,176
|
|
|
Effective tax
rate
|
11.5
|
%
|
|
12.6
|
%
|
|
(3.8)
|
%
|
|
13.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
CONTINUING OPERATIONS
|
$
2,927
|
|
|
$
3,285
|
|
|
$
6,015
|
|
|
$
7,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/ (loss) from
discontinued operations, net of
taxes
|
(12)
|
|
|
3
|
|
|
8
|
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
(2)
|
$
2,915
|
|
|
$
3,288
|
|
|
$
6,023
|
|
|
$
7,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE
OF COMMON STOCK (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
$
3.11
|
|
|
$
3.54
|
|
|
$
6.42
|
|
|
$
8.15
|
|
|
Discontinued
Operations
|
$
(0.01)
|
|
|
$
0.00
|
|
|
$
0.01
|
|
|
$
(0.01)
|
|
|
TOTAL
|
$
3.09
|
|
|
$
3.55
|
|
|
$
6.43
|
|
|
$
8.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
$
3.16
|
|
|
$
3.59
|
|
|
$
6.53
|
|
|
$
8.25
|
|
|
Discontinued
Operations
|
$
(0.01)
|
|
|
$
0.00
|
|
|
$
0.01
|
|
|
$
(0.01)
|
|
|
TOTAL
|
$
3.15
|
|
|
$
3.59
|
|
|
$
6.53
|
|
|
$
8.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE
NUMBER OF COMMON SHARES
OUTSTANDING (M's)
|
|
|
|
|
|
|
|
|
|
|
|
|
Assuming
Dilution
|
942.4
|
|
|
927.3
|
|
|
937.2
|
|
|
922.1
|
|
|
Basic
|
926.0
|
|
|
914.7
|
|
|
921.8
|
|
|
911.2
|
|
|
____________________
|
|
(1)
Recast to reflect January 2024 segment changes.
|
|
(2) 2024
results include the impacts of one-time, non-cash pension
settlement charges in the third quarter of $2.7 billion ($2.0
billion net of tax) in the U.S. and
fourth quarter of $0.4 billion in the non-U.S.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEET
(Unaudited)
|
|
|
(Dollars in
Millions)
|
|
At
December 31,
2024
|
|
At
December 31,
2023
|
|
ASSETS:
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
13,947
|
|
$
13,068
|
|
Restricted
cash
|
|
214
|
|
21
|
|
Marketable
securities
|
|
644
|
|
373
|
|
Notes and accounts
receivable - trade, net
|
|
6,804
|
|
7,214
|
|
Short-term financing
receivables, net
|
|
7,159
|
|
6,793
|
|
Other accounts
receivable, net
|
|
947
|
|
640
|
|
Inventories
|
|
1,289
|
|
1,161
|
|
Deferred
costs
|
|
959
|
|
998
|
|
Prepaid expenses and
other current assets
|
|
2,520
|
|
2,639
|
|
Total Current
Assets
|
|
34,482
|
|
32,908
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
5,731
|
|
5,501
|
|
Operating right-of-use
assets, net
|
|
3,197
|
|
3,220
|
|
Long-term financing
receivables, net
|
|
5,353
|
|
5,766
|
|
Prepaid pension
assets
|
|
7,492
|
|
7,506
|
|
Deferred
costs
|
|
788
|
|
842
|
|
Deferred
taxes
|
|
6,978
|
|
6,656
|
|
Goodwill
|
|
60,706
|
|
60,178
|
|
Intangibles,
net
|
|
10,660
|
|
11,036
|
|
Investments and sundry
assets
|
|
1,787
|
|
1,626
|
|
Total
Assets
|
|
$
137,175
|
|
$
135,241
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Taxes
|
|
$
2,033
|
|
$
2,270
|
|
Short-term
debt
|
|
5,089
|
|
6,426
|
|
Accounts
payable
|
|
4,032
|
|
4,132
|
|
Deferred
income
|
|
13,907
|
|
13,451
|
|
Operating lease
liabilities
|
|
768
|
|
820
|
|
Other
liabilities
|
|
7,313
|
|
7,022
|
|
Total Current
Liabilities
|
|
33,142
|
|
34,122
|
|
|
|
|
|
|
Long-term
debt
|
|
49,884
|
|
50,121
|
|
Retirement-related
obligations
|
|
9,432
|
|
10,808
|
|
Deferred
income
|
|
3,622
|
|
3,533
|
|
Operating lease
liabilities
|
|
2,655
|
|
2,568
|
|
Other
liabilities
|
|
11,048
|
|
11,475
|
|
Total
Liabilities
|
|
109,783
|
|
112,628
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
|
IBM Stockholders'
Equity:
|
|
|
|
|
|
Common stock
|
|
61,380
|
|
59,643
|
|
Retained
earnings
|
|
151,163
|
|
151,276
|
|
Treasury stock - at
cost
|
|
(169,968)
|
|
(169,624)
|
|
Accumulated other
comprehensive income/(loss)
|
|
(15,269)
|
|
(18,761)
|
|
Total IBM
Stockholders' Equity
|
|
27,307
|
|
22,533
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
86
|
|
80
|
|
Total
Equity
|
|
27,393
|
|
22,613
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
$
137,175
|
|
$
135,241
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
CASH
FLOW
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
(Dollars in
Millions)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net Income from
Operations
|
|
$
2,915
|
|
$
3,288
|
|
$
6,023
|
|
$
7,502
|
|
Pension Settlement
Charges
|
|
388
|
|
-
|
|
3,113
|
|
-
|
|
Depreciation/Amortization of Intangibles
(1)
|
|
1,112
|
|
1,152
|
|
4,667
|
|
4,395
|
|
Stock-based
Compensation
|
|
345
|
|
291
|
|
1,311
|
|
1,133
|
|
Operating assets and
liabilities/Other, net (2)
|
|
1,824
|
|
1,619
|
|
(1,238)
|
|
(332)
|
|
IBM Financing
A/R
|
|
(2,255)
|
|
(1,887)
|
|
(431)
|
|
1,233
|
|
Net Cash Provided by
Operating Activities
|
|
$
4,330
|
|
$
4,463
|
|
$
13,445
|
|
$
13,931
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures,
net of payments & proceeds (3)
|
|
(422)
|
|
(263)
|
|
(1,127)
|
|
(1,488)
|
|
Divestitures, net of
cash transferred
|
|
(7)
|
|
-
|
|
698
|
|
(4)
|
|
Acquisitions, net of
cash acquired
|
|
(541)
|
|
(137)
|
|
(3,289)
|
|
(5,082)
|
|
Marketable Securities
/ Other Investments, net
|
|
(409)
|
|
3,236
|
|
(1,218)
|
|
(496)
|
|
Net Cash Provided
by/(Used in) Investing Activities
|
|
$
(1,379)
|
|
$
2,837
|
|
$
(4,937)
|
|
$
(7,070)
|
|
|
|
|
|
|
|
|
|
|
Debt, net of payments
& proceeds
|
|
(103)
|
|
(122)
|
|
(880)
|
|
4,497
|
|
Dividends
|
|
(1,546)
|
|
(1,518)
|
|
(6,147)
|
|
(6,040)
|
|
Financing -
Other
|
|
(26)
|
|
26
|
|
(52)
|
|
(226)
|
|
Net Cash Provided
by/(Used in) Financing Activities
|
|
$
(1,675)
|
|
$
(1,615)
|
|
$
(7,079)
|
|
$
(1,769)
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate
changes on Cash
|
|
(330)
|
|
128
|
|
(359)
|
|
9
|
|
Net Change in Cash,
Cash Equivalents and Restricted Cash
|
|
$
946
|
|
$
5,814
|
|
$
1,071
|
|
$
5,101
|
|
____________________
|
|
(1) Includes
operating lease right-of-use assets amortization.
|
|
(2) The year
ended December 31, 2024 includes a $0.7 billion tax effect
associated with a one-time, non-cash, U.S. pension
settlement
charge in the third-quarter 2024.
|
|
(3) The year
ended December 31, 2024 includes proceeds of $0.4 billion from the
sale of certain QRadar SaaS assets in third-quarter
2024.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
GAAP NET INCOME TO
ADJUSTED EBITDA RECONCILIATION
(Unaudited)
|
|
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
(Dollars in
Billions)
|
|
2024
|
|
2023
|
|
Yr/Yr
|
|
2024
|
|
2023
|
|
Yr/Yr
|
|
Net Income as
reported (GAAP) (1)
|
|
$
2.9
|
|
$
3.3
|
|
$
(0.4)
|
|
$
6.0
|
|
$
7.5
|
|
$
(1.5)
|
|
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
|
|
2.9
|
|
3.3
|
|
(0.4)
|
|
6.0
|
|
7.5
|
|
(1.5)
|
|
Provision for/(Benefit
from) income taxes from continuing ops.
|
|
0.4
|
|
0.5
|
|
(0.1)
|
|
(0.2)
|
|
1.2
|
|
(1.4)
|
|
Pre-tax income from
continuing operations (GAAP)
|
|
3.3
|
|
3.8
|
|
(0.5)
|
|
5.8
|
|
8.7
|
|
(2.9)
|
|
Non-operating
adjustments (before tax)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
charges (2)
|
|
0.5
|
|
0.4
|
|
0.1
|
|
2.0
|
|
1.7
|
|
0.3
|
|
Non-operating
retirement-related costs/(income) (1)
|
|
0.5
|
|
0.0
|
|
0.5
|
|
3.5
|
|
0.0
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (non-GAAP)
pre-tax income from continuing ops.
|
|
4.3
|
|
4.2
|
|
0.1
|
|
11.2
|
|
10.3
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
expense
|
|
0.3
|
|
0.3
|
|
0.0
|
|
1.0
|
|
0.9
|
|
0.0
|
|
Depreciation/Amortization of non-acquired intangible
assets
|
|
0.7
|
|
0.7
|
|
0.0
|
|
2.8
|
|
2.8
|
|
0.1
|
|
Stock-based
compensation
|
|
0.3
|
|
0.3
|
|
0.1
|
|
1.3
|
|
1.1
|
|
0.2
|
|
Workforce rebalancing
charges
|
|
0.0
|
|
0.0
|
|
0.0
|
|
0.7
|
|
0.4
|
|
0.3
|
|
Corporate (gains) and
charges (3)
|
|
0.0
|
|
0.0
|
|
0.0
|
|
(0.6)
|
|
(0.1)
|
|
(0.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
5.6
|
|
$
5.5
|
|
$
0.1
|
|
$
16.4
|
|
$
15.5
|
|
$
0.9
|
|
____________________
|
|
(1)
2024 results include the impacts of one-time, non-cash pension
settlement charges in the third quarter of $2.7 billion ($2.0
billion net of tax) in the U.S. and fourth
quarter of $0.4 billion in the non-U.S.
|
|
(2)
Primarily consists of amortization of acquired intangible
assets.
|
|
(3)
Corporate (gains) and charges primarily consists of unique
corporate actions such as gains on divestitures and asset sales
(e.g., certain QRadar SaaS assets).
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
SEGMENT
DATA
(Unaudited)
|
|
|
|
Three Months Ended
December 31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
|
Revenue
|
|
$
7,924
|
|
|
$
5,175
|
|
|
$
4,256
|
|
|
$
170
|
|
|
Segment
Profit
|
|
$
3,102
|
|
|
$
606
|
|
|
$
1,063
|
|
|
$
94
|
|
|
Segment Profit
Margin
|
|
39.2
|
%
|
|
11.7
|
%
|
|
25.0
|
%
|
|
55.0
|
%
|
|
Change YTY
Revenue
|
|
10.4
|
%
|
|
(2.0)
|
%
|
|
(7.6)
|
%
|
|
(2.5)
|
%
|
|
Change YTY Revenue -
Constant Currency
|
|
11.5
|
%
|
|
(1.1)
|
%
|
|
(6.0)
|
%
|
|
(0.5)
|
%
|
|
|
|
Three Months Ended
December 31, 2023 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
|
Revenue
|
|
$
7,179
|
|
|
$
5,283
|
|
|
$
4,604
|
|
|
$
175
|
|
|
Segment
Profit
|
|
$
2,649
|
|
|
$
654
|
|
|
$
1,299
|
|
|
$
117
|
|
|
Segment Profit
Margin
|
|
36.9
|
%
|
|
12.4
|
%
|
|
28.2
|
%
|
|
67.0
|
%
|
|
____________________
|
|
(1)
Recast to reflect January 2024 segment changes.
|
|
|
|
Year Ended December
31, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
|
Revenue
|
|
$
27,085
|
|
|
$
20,692
|
|
|
$
14,020
|
|
|
$
713
|
|
|
Segment
Profit
|
|
$
8,684
|
|
|
$
2,054
|
|
|
$
2,450
|
|
|
$
348
|
|
|
Segment Profit
Margin
|
|
32.1
|
%
|
|
9.9
|
%
|
|
17.5
|
%
|
|
48.8
|
%
|
|
Change YTY
Revenue
|
|
8.3
|
%
|
|
(0.9)
|
%
|
|
(3.9)
|
%
|
|
(3.7)
|
%
|
|
Change YTY Revenue -
Constant Currency
|
|
9.0
|
%
|
|
0.6
|
%
|
|
(2.7)
|
%
|
|
(2.5)
|
%
|
|
|
|
Year Ended December
31, 2023 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
Millions)
|
|
Software
|
|
|
Consulting
|
|
|
Infrastructure
|
|
|
Financing
|
|
|
Revenue
|
|
$
25,011
|
|
|
$
20,884
|
|
|
$
14,593
|
|
|
$
741
|
|
|
Segment
Profit
|
|
$
7,499
|
|
|
$
2,130
|
|
|
$
2,828
|
|
|
$
373
|
|
|
Segment Profit
Margin
|
|
30.0
|
%
|
|
10.2
|
%
|
|
19.4
|
%
|
|
50.3
|
%
|
|
____________________
|
|
(1)
Recast to reflect January 2024 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
December 31, 2024
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Operating
(Non-GAAP)
|
|
|
Gross Profit
|
$
10,439
|
|
|
$
191
|
|
|
$
—
|
|
|
$
—
|
|
|
$
10,630
|
|
|
Gross Profit
Margin
|
59.5
|
%
|
|
1.1
|
pts
|
|
—
|
pts
|
|
—
|
pts
|
|
60.6
|
%
|
|
S,G&A
|
$
4,866
|
|
|
$
(305)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
4,561
|
|
|
Other (Income) &
Expense
|
177
|
|
|
(2)
|
|
|
(467)
|
|
|
—
|
|
|
(291)
|
|
|
Total Expense &
Other (Income)
|
7,133
|
|
|
(307)
|
|
|
(467)
|
|
|
—
|
|
|
6,359
|
|
|
Pre-tax Income from
Continuing Operations
|
3,306
|
|
|
498
|
|
|
467
|
|
|
—
|
|
|
4,271
|
|
|
Pre-tax Income Margin
from Continuing
Operations
|
18.8
|
%
|
|
2.8
|
pts
|
|
2.7
|
pts
|
|
—
|
pts
|
|
24.3
|
%
|
|
Provision for/(Benefit
from) Income Taxes (3)
|
$
379
|
|
|
$
123
|
|
|
$
58
|
|
|
$
21
|
|
|
$
581
|
|
|
Effective Tax
Rate
|
11.5
|
%
|
|
1.5
|
pts
|
|
0.1
|
pts
|
|
0.5
|
pts
|
|
13.6
|
%
|
|
Income from Continuing
Operations
|
$
2,927
|
|
|
$
375
|
|
|
$
408
|
|
|
$
(21)
|
|
|
$
3,690
|
|
|
Income Margin from
Continuing Operations
|
16.7
|
%
|
|
2.1
|
pts
|
|
2.3
|
pts
|
|
(0.1)
|
pts
|
|
21.0
|
%
|
|
Diluted Earnings Per
Share: Continuing
Operations
|
$
3.11
|
|
|
$
0.40
|
|
|
$
0.43
|
|
|
$
(0.02)
|
|
|
$
3.92
|
|
|
|
Three Months Ended
December 31, 2023
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Operating
(Non-GAAP)
|
|
|
Gross Profit
|
$
10,267
|
|
|
$
172
|
|
|
$
—
|
|
|
$
—
|
|
|
$
10,439
|
|
|
Gross Profit
Margin
|
59.1
|
%
|
|
1.0
|
pts
|
|
—
|
pts
|
|
—
|
pts
|
|
60.1
|
%
|
|
S,G&A
|
$
4,791
|
|
|
$
(271)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
4,520
|
|
|
Other (Income) &
Expense
|
(193)
|
|
|
12
|
|
|
22
|
|
|
—
|
|
|
(159)
|
|
|
Total Expense &
Other (Income)
|
6,509
|
|
|
(259)
|
|
|
22
|
|
|
—
|
|
|
6,272
|
|
|
Pre-tax Income from
Continuing Operations
|
3,759
|
|
|
431
|
|
|
(22)
|
|
|
—
|
|
|
4,167
|
|
|
Pre-tax Income Margin
from Continuing
Operations
|
21.6
|
%
|
|
2.5
|
pts
|
|
(0.1)
|
pts
|
|
—
|
pts
|
|
24.0
|
%
|
|
Provision for/(Benefit
from) Income Taxes (3)
|
$
474
|
|
|
$
91
|
|
|
$
19
|
|
|
$
(4)
|
|
|
$
580
|
|
|
Effective Tax
Rate
|
12.6
|
%
|
|
0.9
|
pts
|
|
0.5
|
pts
|
|
(0.1)
|
pts
|
|
13.9
|
%
|
|
Income from Continuing
Operations
|
$
3,285
|
|
|
$
339
|
|
|
$
(41)
|
|
|
$
4
|
|
|
$
3,587
|
|
|
Income Margin from
Continuing Operations
|
18.9
|
%
|
|
2.0
|
pts
|
|
(0.2)
|
pts
|
|
—
|
pts
|
|
20.6
|
%
|
|
Diluted Earnings Per
Share: Continuing
Operations
|
$
3.54
|
|
|
$
0.37
|
|
|
$
(0.04)
|
|
|
$
—
|
|
|
$
3.87
|
|
|
____________________
|
|
(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. 2023 also includes a
$12 million gain recognized 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. 2024 also includes the impact
of a one-time, non-cash, non-U.S. pension settlement charge of $0.4
billion.
|
|
(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.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
U.S. GAAP TO
OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars
in millions except per share amounts)
|
|
|
Year Ended December
31, 2024
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts (3)
|
|
|
Operating
(Non-GAAP)
|
|
|
Gross Profit
|
$
35,551
|
|
|
$
724
|
|
|
$
—
|
|
|
$
—
|
|
|
$
36,275
|
|
|
Gross Profit
Margin
|
56.7
|
%
|
|
1.2
|
pts
|
|
—
|
pts
|
|
—
|
pts
|
|
57.8
|
%
|
|
S,G&A
|
$
19,688
|
|
|
$
(1,159)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
18,529
|
|
|
Other (Income) &
Expense
|
1,871
|
|
|
(70)
|
|
|
(3,457)
|
|
|
—
|
|
|
(1,656)
|
|
|
Total Expense &
Other (Income)
|
29,754
|
|
|
(1,229)
|
|
|
(3,457)
|
|
|
—
|
|
|
25,068
|
|
|
Pre-tax Income from
Continuing Operations
|
5,797
|
|
|
1,953
|
|
|
3,457
|
|
|
—
|
|
|
11,207
|
|
|
Pre-tax Income Margin
from Continuing
Operations
|
9.2
|
%
|
|
3.1
|
pts
|
|
5.5
|
pts
|
|
—
|
pts
|
|
17.9
|
%
|
|
Provision for/(Benefit
from) Income Taxes (4)
|
$
(218)
|
|
|
$
497
|
|
|
$
790
|
|
|
$
455
|
|
|
$
1,523
|
|
|
Effective Tax
Rate
|
(3.8)
|
%
|
|
5.1
|
pts
|
|
8.2
|
pts
|
|
4.1
|
pts
|
|
13.6
|
%
|
|
Income from Continuing
Operations
|
$ 6,015
|
|
|
$
1,456
|
|
|
$
2,668
|
|
|
$
(455)
|
|
|
$
9,684
|
|
|
Income Margin from
Continuing Operations
|
9.6
|
%
|
|
2.3
|
pts
|
|
4.3
|
pts
|
|
(0.7)
|
pts
|
|
15.4
|
%
|
|
Diluted Earnings Per
Share: Continuing
Operations
|
$
6.42
|
|
|
$
1.55
|
|
|
$
2.85
|
|
|
$
(0.49)
|
|
|
$
10.33
|
|
|
|
Year Ended December
31, 2023
|
|
|
Continuing
Operations
|
|
|
GAAP
|
|
|
Acquisition-
Related
Adjustments
(1)
|
|
|
Retirement-
Related
Adjustments
(2)
|
|
|
Tax
Reform
Impacts
|
|
|
Operating
(Non-GAAP)
|
|
|
Gross Profit
|
$
34,300
|
|
|
$
631
|
|
|
$
—
|
|
|
$
—
|
|
|
$
34,931
|
|
|
Gross Profit
Margin
|
55.4
|
%
|
|
1.0
|
pts
|
|
—
|
pts
|
|
—
|
pts
|
|
56.5
|
%
|
|
S,G&A
|
$
19,003
|
|
|
$
(1,039)
|
|
|
$
—
|
|
|
$
—
|
|
|
$
17,964
|
|
|
Other (Income) &
Expense
|
(914)
|
|
|
10
|
|
|
39
|
|
|
—
|
|
|
(866)
|
|
|
Total Expense &
Other (Income)
|
25,610
|
|
|
(1,029)
|
|
|
39
|
|
|
—
|
|
|
24,620
|
|
|
Pre-tax Income from
Continuing Operations
|
8,690
|
|
|
1,660
|
|
|
(39)
|
|
|
—
|
|
|
10,311
|
|
|
Pre-tax Income Margin
from Continuing
Operations
|
14.0
|
%
|
|
2.7
|
pts
|
|
(0.1)
|
pts
|
|
—
|
pts
|
|
16.7
|
%
|
|
Provision for/(Benefit
from) Income Taxes (4)
|
$ 1,176
|
|
|
$
368
|
|
|
$
(8)
|
|
|
$
(95)
|
|
|
$
1,441
|
|
|
Effective Tax
Rate
|
13.5
|
%
|
|
1.4
|
pts
|
|
—
|
pts
|
|
(0.9)
|
pts
|
|
14.0
|
%
|
|
Income from Continuing
Operations
|
$
7,514
|
|
|
$
1,292
|
|
|
$
(30)
|
|
|
$
95
|
|
|
$
8,870
|
|
|
Income Margin from
Continuing Operations
|
12.1
|
%
|
|
2.1
|
pts
|
|
0.0
|
pts
|
|
0.2
|
pts
|
|
14.3
|
%
|
|
Diluted Earnings Per
Share: Continuing
Operations
|
$
8.15
|
|
|
$
1.40
|
|
|
$
(0.03)
|
|
|
$
0.10
|
|
|
$
9.62
|
|
|
____________________
|
|
(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 and 2023 also
include a $68 million loss and a $12 million gain, respectively,
recognized 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. 2024 also includes the impacts
of one-time, non-cash, U.S. and non-U.S. pension settlement
charges of $3.1 billion ($2.4 billion net of tax).
|
|
(3)
2024 includes a net benefit from income taxes due to the resolution
of certain tax audit matters.
|
|
(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.
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
GAAP OPERATING CASH
FLOW TO FREE CASH FLOW RECONCILIATION
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
(Dollars in
Millions)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net Cash from
Operations per GAAP
|
|
$
4,330
|
|
$
4,463
|
|
$
13,445
|
|
$
13,931
|
|
|
|
|
|
|
|
|
|
|
Less: change in IBM
Financing receivables
|
|
(2,255)
|
|
(1,887)
|
|
(431)
|
|
1,233
|
|
|
|
|
|
|
|
|
|
|
Net cash from
operating activities excl. IBM Financing receivables
|
|
6,584
|
|
6,350
|
|
13,876
|
|
12,699
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures,
net
|
|
(422)
|
|
(263)
|
|
(1,127)
|
|
(1,488)
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
|
6,163
|
|
6,087
|
|
12,749
|
|
11,210
|
|
INTERNATIONAL
BUSINESS MACHINES CORPORATION
GAAP OPERATING CASH
FLOW TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
(Dollars in
Billions)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net Cash Provided by
Operating Activities
|
|
$
4.3
|
|
$
4.5
|
|
$
13.4
|
|
$
13.9
|
|
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Net interest
expense
|
|
0.3
|
|
0.3
|
|
1.0
|
|
0.9
|
|
Provision for/(Benefit
from) income taxes from continuing operations
|
|
0.4
|
|
0.5
|
|
(0.2)
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
Less change
in:
|
|
|
|
|
|
|
|
|
|
Financing
receivables
|
|
(2.3)
|
|
(1.9)
|
|
(0.4)
|
|
1.2
|
|
Other assets and
liabilities/other, net (1)
|
|
1.7
|
|
1.6
|
|
(1.8)
|
|
(0.7)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
5.6
|
|
$
5.5
|
|
$
16.4
|
|
$
15.5
|
|
____________________
|
|
(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.
|
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SOURCE IBM
