Segments (Tables)

6 Months Ended

Jun. 30, 2023

The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on pre-tax income from continuing operations. These results are used by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments.

SEGMENT INFORMATION


(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the three months ended June 30, 2023:
Revenue	$	6,608		$	5,013		$	3,618		$	185		$	15,424
Pre-tax income from continuing operations	$	1,504		$	446		$	633		$	64		$	2,647
Revenue year-to-year change	7.2		%	4.3		%	(14.6)		%	26.2		%	0.4		%
Pre-tax income year-to-year change	9.4		%	30.1		%	(16.4)		%	(36.8)		%	2.7		%
Pre-tax income margin	22.8		%	8.9		%	17.5		%	34.9		%	17.2		%

For the three months ended June 30, 2022:
Revenue	$	6,166		$	4,809		$	4,235		$	146		$	15,355
Pre-tax income from continuing operations	$	1,375		$	343		$	757		$	102		$	2,577
Pre-tax income margin	22.3		%	7.1		%	17.9		%	69.7		%	16.8		%

Reconciliation of segment revenue and pre-tax income to IBM as reported

Reconciliations to IBM as Reported:


(Dollars in millions)
For the three months ended June 30:	2023		2022
Revenue:
Total reportable segments	$	15,424	$	15,355
Other‒divested businesses	(1)		162
Other revenue	52		18
Total revenue from continuing operations	$	15,475	$	15,535

Pre-tax income from continuing operations:
Total reportable segments	$	2,647	$	2,577
Amortization of acquired intangible assets	(389)		(458)
Acquisition-related (charges)/income	(7)		(2)
Non-operating retirement-related (costs)/income	(1)		(192)
Kyndryl-related impacts	—		(145)		*
Workforce rebalancing charges**	(117)		—
Other‒divested businesses	(1)		160
Unallocated corporate amounts and other	(133)		(219)		+
Total pre-tax income/(loss) from continuing operations	$	2,000	$	1,722

*Unrealized loss on Kyndryl retained shares and related swap. Refer to note 5, "Acquisitions & Divestitures," and note 16, "Derivative Financial Instruments," for additional information.

** Beginning in the first quarter of 2023, the company updated its measure of segment pre-tax income, consistent with its management system, to no longer allocate workforce rebalancing charges to its segments. Workforce rebalancing charges in the second quarter of 2022 of $3 million were included in the segments.

+Recast to conform to 2023 presentation.

SEGMENT INFORMATION


(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the six months ended June 30, 2023:
Revenue	$	12,529		$	9,975		$	6,716		$	380		$	29,601
Pre-tax income from continuing operations	$	2,668		$	828		$	849		$	165		$	4,510
Revenue year-to-year change	5.0		%	3.5		%	(9.9)		%	26.8		%	0.9		%
Pre-tax income year-to-year change	6.3		%	19.8		%	(11.2)		%	(11.3)		%	3.8		%
Pre-tax income margin	21.3		%	8.3		%	12.6		%	43.3		%	15.2		%

For the six months ended June 30, 2022:
Revenue	$	11,938		$	9,637		$	7,453		$	300		$	29,328
Pre-tax income from continuing operations	$	2,509		$	691		$	956		$	186		$	4,342
Pre-tax income margin	21.0		%	7.2		%	12.8		%	62.0		%	14.8		%

Reconciliations to IBM as Reported:


(Dollars in millions)
For the six months ended June 30:	2023		2022
Revenue:
Total reportable segments	$	29,601	$	29,328
Other‒divested businesses	(1)		316
Other revenue	127		88
Total consolidated revenue	$	29,727	$	29,732

Pre-tax income from continuing operations:
Total reportable segments	$	4,510	$	4,342
Amortization of acquired intangible assets	(781)		(919)
Acquisition-related charges	(10)		(9)
Non-operating retirement-related (costs)/income	4		(394)
Kyndryl-related impacts	—		(367)		*
Workforce rebalancing charges**	(376)		—
Other‒divested businesses	(5)		109
Unallocated corporate amounts	(284)		(418)		+
Total pre-tax income/(loss) from continuing operations	$	3,058	$	2,345

*Unrealized loss on Kyndryl retained shares and related swap. Refer to note 5, "Acquisitions & Divestitures," and note 16, "Derivative Financial Instruments," for additional information.

**Beginning in the first quarter of 2023, the company updated its measure of segment pre-tax income, consistent with its management system, to no longer allocate workforce rebalancing charges to its segments. Workforce rebalancing charges in the first six months of 2022 of $9 million were included in the segments.

+Recast to conform to 2023 presentation.