Segments (Tables)

9 Months Ended

Sep. 30, 2024

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.

Revenue and pre-tax income by segment

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.


(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the three months ended September 30, 2024:
Revenue	$	6,524		$	5,152		$	3,042		$	181		$	14,900
Segment profit	$	1,969		$	559		$	422		$	86		$	3,037
Revenue year-to-year change	9.7		%	(0.5)		%	(7.0)		%	(2.5)		%	2.2		%
Segment profit year-to-year change	14.4		%	(1.2)		%	(13.8)		%	(5.9)		%	5.8		%
Segment profit margin	30.2		%	10.9		%	13.9		%	47.5		%	20.4		%

For the three months ended September 30, 2023: (1)
Revenue	$	5,947		$	5,178		$	3,272		$	186		$	14,582
Segment profit	$	1,722		$	566		$	490		$	91		$	2,869
Segment profit margin	29.0		%	10.9		%	15.0		%	49.2		%	19.7		%

(1) Recast to reflect January 2024 segment changes.


(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the nine months ended September 30, 2024:
Revenue	$	19,162		$	15,517		$	9,764		$	543		$	44,985
Segment profit	$	5,582		$	1,447		$	1,387		$	254		$	8,670
Revenue year-to-year change	7.5		%	(0.5)		%	(2.3)		%	(4.1)		%	2.3		%
Segment profit year-to-year change	15.1		%	(1.9)		%	(9.3)		%	(0.5)		%	6.9		%
Segment profit margin	29.1		%	9.3		%	14.2		%	46.9		%	19.3		%

For the nine months ended September 30, 2023: (1)
Revenue	$	17,832		$	15,601		$	9,988		$	566		$	43,988
Segment profit	$	4,850		$	1,476		$	1,529		$	256		$	8,110
Segment profit margin	27.2		%	9.5		%	15.3		%	45.2		%	18.4		%

(1) Recast to reflect January 2024 segment changes.

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 September 30:	2024		2023 (1)
Revenue:
Total reportable segments	$	14,900	$	14,582
Other‒divested businesses	0		103
Other revenue	68		66
Total revenue from continuing operations	$	14,968	$	14,752

Pre-tax income/(loss) from continuing operations:
Total reportable segment profit	$	3,037	$	2,869
Amortization of acquired intangible assets	(482)		(414)
Acquisition-related (charges)/income	(10)		(25)
Non-operating retirement-related (costs)/income (2)	(2,797)		12

Stock-based compensation	(330)		(286)
Net interest excluding the Financing segment	(265)		(262)
Workforce rebalancing charges	(306)		(34)
Other‒divested businesses	(4)		28
Unallocated corporate amounts and other (3)	355		(15)
Total pre-tax income/(loss) from continuing operations	$	(802)	$	1,873

(1)Recast to reflect January 2024 segment changes.

(2)2024 includes the impact of a one-time, non-cash pension settlement charge of $2.7 billion. Refer to note 18, "Retirement-Related Benefits," for additional information.

(3)2024 includes a gain from the sale of certain QRadar SaaS assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

Reconciliations to IBM as Reported:


(Dollars in millions)
For the nine months ended September 30:	2024		2023 (1)
Revenue:
Total reportable segments	$	44,985	$	43,988
Other‒divested businesses	35		298
Other revenue	178		193
Total revenue from continuing operations	$	45,199	$	44,479

Pre-tax income from continuing operations:
Total reportable segment profit	$	8,670	$	8,110
Amortization of acquired intangible assets	(1,348)		(1,194)
Acquisition-related (charges)/income (2)	(106)		(35)
Non-operating retirement-related (costs)/income (3)	(2,991)		16
Stock-based compensation	(966)		(843)
Net interest excluding the Finance segment	(706)		(704)
Workforce rebalancing changes	(698)		(410)

Other‒divested businesses (4)	231		63
Unallocated corporate amounts and other (5)	404		(72)
Total pre-tax income from continuing operations	$	2,491	$	4,931

(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 the impact of a one-time, non-cash pension settlement charge of $2.7 billion. Refer to note 18, "Retirement-Related Benefits," for additional information.

(4)2024 includes a gain from the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

(5)2024 includes a gain from the sale of certain QRadar SaaS assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.