Segments

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segments

Segments: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 September 30, 2023:
Revenue	$	6,265		$	4,963		$	3,272		$	186		$	14,685
Pre-tax income from continuing operations	$	1,486		$	509		$	387		$	91		$	2,473
Revenue year-to-year change	7.8		%	5.6		%	(2.4)		%	6.9		%	4.6		%
Pre-tax income year-to-year change	13.7		%	10.0		%	38.3		%	16.0		%	16.2		%
Pre-tax income margin	23.7		%	10.2		%	11.8		%	49.2		%	16.8		%
For the three months ended September 30, 2022:
Revenue	$	5,811		$	4,700		$	3,352		$	174		$	14,037
Pre-tax income from continuing operations	$	1,306		$	462		$	280		$	79		$	2,128
Pre-tax income margin	22.5		%	9.8		%	8.3		%	45.4		%	15.2		%

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended September 30:	2023		2022
Revenue:
Total reportable segments	$	14,685	$	14,037
Other‒divested businesses	0		3
Other revenue	66		68
Total revenue from continuing operations	$	14,752	$	14,107
Pre-tax income from continuing operations:
Total reportable segments	$	2,473	$	2,128
Amortization of acquired intangible assets	(414)		(417)
Acquisition-related (charges)/income	(25)		(1)
Non-operating retirement-related (costs)/income	12		(6,062)		*
Kyndryl-related impacts	—		14		**
Workforce rebalancing charges+	(34)		—
Other‒divested businesses	8		0
Unallocated corporate amounts and other	(148)		(163)		++
Total pre-tax income/(loss) from continuing operations	$	1,873	$	(4,501)

*Includes a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion. See note 18, “Retirement-Related Benefits,” for additional information.

**Net impacts from 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 third quarter of 2022 of $13 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 nine months ended September 30, 2023:
Revenue	$	18,794		$	14,938		$	9,988		$	566		$	44,287
Pre-tax income from continuing operations	$	4,154		$	1,336		$	1,236		$	256		$	6,983
Revenue year-to-year change	5.9		%	4.2		%	(7.6)		%	19.5		%	2.1		%
Pre-tax income year-to-year change	8.9		%	15.8		%	0.0		%	(3.2)		%	7.9		%
Pre-tax income margin	22.1		%	8.9		%	12.4		%	45.3		%	15.8		%
For the nine months ended September 30, 2022:
Revenue	$	17,749		$	14,337		$	10,805		$	474		$	43,365
Pre-tax income from continuing operations	$	3,816		$	1,154		$	1,236		$	265		$	6,470
Pre-tax income margin	21.5		%	8.0		%	11.4		%	55.9		%	14.9		%

Reconciliations to IBM as Reported:

(Dollars in millions)
For the nine months ended September 30:	2023		2022
Revenue:
Total reportable segments	$	44,287	$	43,365
Other‒divested businesses	(1)		319
Other revenue	193		156
Total consolidated revenue	$	44,479	$	43,840
Pre-tax income from continuing operations:
Total reportable segments	$	6,983	$	6,470
Amortization of acquired intangible assets	(1,194)		(1,337)
Acquisition-related charges	(35)		(9)
Non-operating retirement-related (costs)/income	16		(6,455)		*
Kyndryl-related impacts	—		(353)		**
Workforce rebalancing charges+	(410)		—
Other‒divested businesses	4		108
Unallocated corporate amounts	(432)		(581)		++
Total pre-tax income/(loss) from continuing operations	$	4,931	$	(2,156)

*Includes a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion. See note 18, “Retirement-Related Benefits,” for additional information.

**Net impacts from Kyndryl retained shares and related swaps. 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 nine months of 2022 of $22 million were included in the segments.

++Recast to conform to 2023 presentation.