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Segments (Tables)

9 Months Ended

Sep. 30, 2025

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 September 30, 2025:
Revenue	$	7,209		$	5,324		$	3,559		$	200		$	16,292
Segment cost	1,220			3,766			1,525			109			6,619
Other expenses and (income) (1)	3,615			872			1,390			(32)			5,846
Segment profit	$	2,374		$	686		$	644		$	123		$	3,827
Revenue year-to-year change	10.5		%	3.3		%	17.0		%	10.4		%	9.3		%
Segment profit year-to-year change	20.5		%	22.6		%	52.6		%	43.2		%	26.0		%
Segment profit margin	32.9		%	12.9		%	18.1		%	61.6		%	23.5		%

For the three months ended September 30, 2024:
Revenue	$	6,524		$	5,152		$	3,042		$	181		$	14,900
Segment cost	1,093			3,688			1,370			96			6,247
Other expenses and (income) (1)	3,462			905			1,250			(1)			5,616
Segment profit	$	1,969		$	559		$	422		$	86		$	3,037
Segment profit margin	30.2		%	10.9		%	13.9		%	47.5		%	20.4		%

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

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

Consulting – SG&A expense

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

Financing – Intercompany financing net other income which reflects IBM Z product cycle dynamics, SG&A expense


(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the nine months ended September 30, 2025:
Revenue	$	20,932		$	15,706		$	10,586		$	557		$	47,782
Segment cost	3,452			11,306			4,481			303			19,542
Other expenses and (income) (1)	10,962			2,594			4,248			(116)			17,688
Segment profit	$	6,517		$	1,807		$	1,857		$	371		$	10,552
Revenue year-to-year change	9.2		%	1.2		%	8.4		%	2.7		%	6.2		%
Segment profit year-to-year change	16.8		%	24.8		%	33.9		%	45.8		%	21.7		%
Segment profit margin	31.1		%	11.5		%	17.5		%	66.5		%	22.1		%

For the nine months ended September 30, 2024:
Revenue	$	19,162		$	15,517		$	9,764		$	543		$	44,985
Segment cost	3,237			11,377			4,365			281			19,260
Other expenses and (income) (1)	10,343			2,693			4,011			7			17,055
Segment profit	$	5,582		$	1,447		$	1,387		$	254		$	8,670
Segment profit margin	29.1		%	9.3		%	14.2		%	46.9		%	19.3		%

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

Software – SG&A expense, R&D expense

Consulting – SG&A expense

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

Financing – Intercompany financing net other income which reflects IBM Z product cycle dynamics, SG&A expense

Reconciliation of segment revenue and profit to IBM as reported

Reconciliations to IBM as Reported:


(Dollars in millions)
For the three months ended September 30:	2025		2024
Revenue:
Total reportable segments	$	16,292	$	14,900
Other‒divested businesses	0		0
Other revenue (1)	38		68
Total revenue from continuing operations	$	16,331	$	14,968

Pre-tax income from continuing operations:
Total reportable segment profit	$	3,827	$	3,037
Amortization of acquired intangible assets	(561)		(482)
Acquisition-related charges	(29)		(10)
Non-operating retirement-related (costs)/income (2)	(13)		(2,797)

Stock-based compensation (3)	(430)		(330)
Net interest excluding the Financing segment	(345)		(265)
Workforce rebalancing charges (3)	(40)		(306)
Other‒divested businesses	(1)		(4)
Unallocated corporate amounts and other (4)	21		355
Total pre-tax income from continuing operations	$	2,430	$	(802)


(Dollars in millions)
For the nine months ended September 30:	2025		2024
Revenue:
Total reportable segments	$	47,782	$	44,985
Other‒divested businesses	(1)		35
Other revenue (1)	69		178
Total revenue from continuing operations	$	47,849	$	45,199

Pre-tax income from continuing operations:
Total reportable segment profit	$	10,552	$	8,670
Amortization of acquired intangible assets	(1,605)		(1,348)
Acquisition-related charges	(118)		(106)
Non-operating retirement-related (costs)/income (2)	(61)		(2,991)
Stock-based compensation (3)	(1,255)		(966)
Net interest excluding the Financing segment	(953)		(706)
Workforce rebalancing charges (3)	(372)		(698)
Other‒divested businesses (5)	(28)		231
Unallocated corporate amounts and other (4)	24		404
Total pre-tax income from continuing operations	$	6,185	$	2,491

(1)Includes reductions in revenue for the estimated residual value less related unearned income on sales-type leases, which reflects the new z17 launch in June 2025. Refer to note A, "Significant Accounting Policies," in the company's 2024 Annual Report for additional information.

(2)2024 includes the impact of a pension settlement charge of $2.7 billion. Refer to note U, "Retirement-Related Benefits," in the company's 2024 Annual Report for additional information.

(3)Excludes certain acquisition-related charges.

(4)2024 includes a gain from the sale of certain QRadar SaaS assets.

(5)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 September 30, 2025:
Depreciation (1) /amortization of non-acquired intangibles	$	133	$	20	$	296	$	1	$	451
Interest Income	—		—		—		190		190
Interest Expense	—		—		—		95		95

For the three months ended September 30, 2024:
Depreciation (1) /amortization of non-acquired intangibles	$	123	$	22	$	287	$	2	$	434
Interest Income	—		—		—		173		173
Interest Expense	—		—		—		93		93


(Dollars in millions)	Software		Consulting		Infrastructure		Financing		Total Segments
For the nine months ended September 30, 2025:
Depreciation (1) /amortization of non-acquired intangibles	$	388	$	61	$	841	$	3	$	1,293
Interest Income	—		—		—		528		528
Interest Expense	—		—		—		268		268

For the nine months ended September 30, 2024:
Depreciation (1) /amortization of non-acquired intangibles	$	386	$	75	$	822	$	7	$	1,290
Interest Income	—		—		—		516		516
Interest Expense	—		—		—		291		291

(1)Where several segments share leased or owned assets, a landlord's ownership of these assets is assigned to one segment. Depreciation expense in this table is presented consistently with this ownership view. However, from a segment profit perspective, depreciation expense is allocated to each user segment. Therefore, there is no precise correlation between the depreciation expense presented above and segment profit.