Segments

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Segments

Segments:

In the first quarter of 2024, the company made changes to its organization structure and management system to better align its portfolio with the market, increase transparency and improve segment comparability to peers. These changes did not impact the company's Consolidated Financial Statements, but did impact its reportable segments. Due to the removal of certain components of segment profitability, as described below, the company also updated the title of its segment performance metric from pre-tax income from continuing operations to segment profit.

The following table displays the segment updates:

Reportable Segment Change	Resulting Segment Implications
The Weather Company asset divestiture (1)	-	Software Segment
	+	Other-divested businesses
Security Services realignment	-	Software Segment
	+	Consulting Segment
Removal of stock-based compensation and net interest allocations from segment profitability	-	Software Segment, Consulting Segment, Infrastructure Segment, Financing Segment (2)
	+	Other

(1) The Weather Company asset divestiture closed January 31, 2024.

(2) Presentation of interest for the Financing Segment did not change.

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 and have been recast for the prior-year periods to reflect the company's segment changes described above. 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, 2024:
Revenue	$	6,739		$	5,179		$	3,645		$	169		$	15,732
Segment profit	$	2,113		$	463		$	654		$	77		$	3,306
Revenue year-to-year change	7.1		%	(0.9)		%	0.7		%	(8.3)		%	2.7		%
Segment profit year-to-year change	20.8		%	(4.0)		%	(10.7)		%	19.3		%	9.2		%
Segment profit margin	31.3		%	8.9		%	17.9		%	45.3		%	21.0		%
For the three months ended June 30, 2023: (1)
Revenue	$	6,294		$	5,226		$	3,618		$	185		$	15,322
Segment profit	$	1,749		$	483		$	732		$	64		$	3,028
Segment profit margin	27.8		%	9.2		%	20.2		%	34.8		%	19.8		%

(1) Recast to reflect January 2024 segment changes.

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended June 30:	2024		2023 (1)
Revenue:
Total reportable segments	$	15,732	$	15,322
Other‒divested businesses	0		101
Other revenue	38		52
Total revenue from continuing operations	$	15,770	$	15,475
Pre-tax income from continuing operations:
Total reportable segment profit	$	3,306	$	3,028
Amortization of acquired intangible assets	(439)		(389)
Acquisition-related (charges)/income (2)	(36)		(7)
Non-operating retirement-related (costs)/income	(98)		(1)
Stock-based compensation	(316)		(288)
Net interest excluding the Financing segment	(218)		(225)
Workforce rebalancing charges	(18)		(117)
Other‒divested businesses	(4)		23
Unallocated corporate amounts and other	41		(24)
Total pre-tax income from continuing operations	$	2,219	$	2,000

(1)Recast to reflect January 2024 segment changes.

(2)2024 includes the impact of foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, "Derivative Financial Instruments," for additional information.

SEGMENT INFORMATION

(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the six months ended June 30, 2024:
Revenue	$	12,637		$	10,365		$	6,721		$	362		$	30,085
Segment profit	$	3,612		$	888		$	965		$	168		$	5,633
Revenue year-to-year change	6.3		%	(0.6)		%	0.1		%	(4.9)		%	2.3		%
Segment profit year-to-year change	15.5		%	(2.4)		%	(7.1)		%	2.4		%	7.5		%
Segment profit margin	28.6		%	8.6		%	14.4		%	46.5		%	18.7		%
For the six months ended June 30, 2023: (1)
Revenue	$	11,885		$	10,423		$	6,716		$	380		$	29,406
Segment profit	$	3,128		$	910		$	1,039		$	164		$	5,241
Segment profit margin	26.3		%	8.7		%	15.5		%	43.2		%	17.8		%

(1) Recast to reflect January 2024 segment changes.

Reconciliations to IBM as Reported:

(Dollars in millions)
For the six months ended June 30:	2024		2023 (1)
Revenue:
Total reportable segments	$	30,085	$	29,406
Other‒divested businesses	35		195
Other revenue	111		127
Total revenue from continuing operations	$	30,231	$	29,727
Pre-tax income from continuing operations:
Total reportable segment profit	$	5,633	$	5,241
Amortization of acquired intangible assets	(866)		(781)
Acquisition-related (charges)/income (2)	(96)		(10)
Non-operating retirement-related (costs)/income	(194)		4
Stock-based compensation	(636)		(556)
Net interest excluding the Finance segment	(442)		(442)
Workforce rebalancing changes	(392)		(376)
Other‒divested businesses (3)	235		36
Unallocated corporate amounts and other	50		(57)
Total pre-tax income from continuing operations	$	3,293	$	3,058

(1)Recast to reflect January 2024 segment changes.

(2)2024 includes the impact of foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, "Derivative Financial Instruments," for additional information.

(3)2024 includes a gain on the sale of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.