Segments

3 Months Ended

Mar. 31, 2025

Segment Reporting [Abstract]

Segments

Segments:

In the first quarter of 2025, the company made changes to the reported revenue categories within its Software and Consulting reportable segments. These changes did not impact the company's Consolidated Financial Statements or its reportable 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 segment profit. The chief operating decision maker (CODM) considers budget-to-actual results of segment profit, both when evaluating the performance of and allocating resources to each of the segments as well as in developing certain compensation recommendations. The CODM reviews segment revenue, cost and profit information related to each segment, which is included in the tables below, but does not regularly review total assets by segment and therefore, such information is not presented.

Management System Segment View

(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the three months ended March 31, 2025:
Revenue	$	6,336		$	5,068		$	2,886		$	191		$	14,480
Segment cost	1,042			3,686			1,363			104			6,195
Other expenses and (income) (1)	3,447			823			1,275			19			5,564
Segment profit	$	1,847		$	558		$	248		$	69		$	2,721
Revenue year-to-year change	7.4		%	(2.3)		%	(6.2)		%	(0.8)		%	0.9		%
Segment profit year-to-year change	23.2		%	31.6		%	(20.3)		%	(25.5)		%	17.0		%
Segment profit margin	29.1		%	11.0		%	8.6		%	35.8		%	18.8		%
For the three months ended March 31, 2024:
Revenue	$	5,899		$	5,186		$	3,076		$	193		$	14,354
Segment cost	1,039			3,872			1,410			99			6,421
Other expenses and (income) (1)	3,360			889			1,355			2			5,606
Segment profit	$	1,500		$	424		$	311		$	92		$	2,327
Segment profit margin	25.4		%	8.2		%	10.1		%	47.7		%	16.2		%

(1)Other expenses and (income) by segment primarily includes:

Software – Selling, general and administrative (SG&A) expense, Research and development (R&D) expense

Consulting – SG&A expense

Infrastructure – R&D expense, SG&A expense, Intellectual property and custom development income

Financing – SG&A expense, Intercompany financing net other income

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended March 31:	2025		2024
Revenue:
Total reportable segments	$	14,480	$	14,354
Other‒divested businesses	0		35
Other revenue	61		73
Total revenue from continuing operations	$	14,541	$	14,462
Pre-tax income from continuing operations:
Total reportable segment profit	$	2,721	$	2,327
Amortization of acquired intangible assets	(495)		(428)
Acquisition-related charges	(63)		(60)
Non-operating retirement-related (costs)/income	(23)		(96)
Stock-based compensation	(401)		(320)
Net interest excluding the Financing segment	(265)		(223)
Workforce rebalancing charges	(316)		(374)
Other‒divested businesses (1)	(7)		239
Unallocated corporate amounts and other	5		9
Total pre-tax income from continuing operations	$	1,158	$	1,074

(1)2024 includes a gain from the divestiture of The Weather Company assets.

Other Reportable Segment Items

(Dollars in millions)	Software		Consulting		Infrastructure		Financing		Total Segments
For the three months ended March 31, 2025:
Depreciation (1) /amortization of non-acquired intangibles	$	121	$	21	$	266	$	1	$	409
Interest Income	—		—		—		176		176
Interest Expense	—		—		—		90		90
For the three months ended March 31, 2024:
Depreciation (1) /amortization of non-acquired intangibles	$	128	$	27	$	267	$	2	$	424
Interest Income	—		—		—		180		180
Interest Expense	—		—		—		102		102

(1)Where several segments share the use of leased or owned assets, a landlord's ownership of these assets is assigned to one segment. While depreciation expense is allocated to each user segment, it is presented consistently with the landlord's ownership; therefore, there will not be a precise correlation between segment profit and the segment depreciation reported above.

Immaterial Items

The resulting gains and (losses) from equity method investments that are attributable to the segments did not have a material effect on the financial results of the segments.