Segments (Tables)

9 Months Ended

Sep. 30, 2026

Segment Reporting [Abstract]

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. 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

($ in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the three months ended September 30, 2026:
Revenue	$	7,804		$	5,335		$	3,707		$	192		$	17,038
Segment cost	1,368			3,873			1,603			114			6,958
Other expenses and (income) (1)	3,702			810			1,389			(29)			5,871
Segment profit	$	2,734		$	653		$	715		$	108		$	4,209
Revenue year-to-year change	8.2		%	0.2		%	4.2		%	(3.9)		%	4.6		%
Segment profit year-to-year change	15.2		%	(4.8)		%	10.9		%	(12.5)		%	10.0		%
Segment profit margin	35.0		%	12.2		%	19.3		%	56.1		%	24.7		%
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
Segment profit margin	32.9		%	12.9		%	18.1		%	61.6		%	23.5		%

($ in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the nine months ended September 30, 2026:
Revenue	$	22,617		$	15,934		$	10,868		$	598		$	50,017
Segment cost	3,934			11,484			4,634			345			20,398
Other expenses and (income) (1)	11,348			2,593			4,159			(81)			18,018
Segment profit	$	7,335		$	1,858		$	2,074		$	334		$	11,601
Revenue year-to-year change	8.1		%	1.5		%	2.7		%	7.3		%	4.7		%
Segment profit year-to-year change	12.5		%	2.8		%	11.7		%	(9.9)		%	9.9		%
Segment profit margin	32.4		%	11.7		%	19.1		%	55.9		%	23.2		%
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
Segment profit margin	31.1		%	11.5		%	17.5		%	66.5		%	22.1		%

(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, Other expense, Intellectual property and custom development income

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:

($ in millions)
For the three months ended September 30:	2026		2025
Revenue:
Total reportable segments	$	17,038	$	16,292
Other revenue (1)	66		38
Total revenue from continuing operations	$	17,103	$	16,331
Pre-tax income from continuing operations:
Total reportable segment profit	$	4,209	$	3,827
Amortization of acquired intangible assets	(672)		(561)
Acquisition-related charges	(36)		(29)
Non-operating retirement-related (costs)/income	(91)		(13)
Stock-based compensation (2)	(524)		(430)
Net interest excluding the Financing segment	(414)		(345)
Workforce rebalancing charges (2)	4		(40)
Other‒divested businesses	2		(1)
Unallocated corporate amounts and other (3)	19		21
Total pre-tax income from continuing operations	$	2,497	$	2,430

($ in millions)
For the nine months ended September 30:	2026		2025
Revenue:
Total reportable segments	$	50,017	$	47,782
Other revenue (1)	165		68
Total revenue from continuing operations	$	50,182	$	47,849
Pre-tax income from continuing operations:
Total reportable segment profit	$	11,601	$	10,552
Amortization of acquired intangible assets	(1,905)		(1,605)
Acquisition-related charges	(163)		(118)
Non-operating retirement-related (costs)/income	(283)		(61)
Stock-based compensation (2)	(1,511)		(1,255)
Net interest excluding the Financing segment	(1,165)		(953)
Workforce rebalancing charges (2)	(362)		(372)
Other‒divested businesses	(3)		(28)
Unallocated corporate amounts and other (3)	155		24
Total pre-tax income from continuing operations	$	6,363	$	6,185

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

(2)Excludes certain acquisition-related charges.

(3)Includes net gains/(losses) from asset sales and equity investments.

Other reportable segment items

($ in millions)	Software		Consulting		Infrastructure		Financing		Total Segments
For the three months ended September 30, 2026:
Depreciation (1) /amortization of non-acquired intangibles	$	149	$	16	$	276	$	1	$	442
Interest Income	—		—		—		187		187
Interest Expense	—		—		—		104		104
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

($ in millions)	Software		Consulting		Infrastructure		Financing		Total Segments
For the nine months ended September 30, 2026:
Depreciation (1) /amortization of non-acquired intangibles	$	420	$	46	$	832	$	2	$	1,300
Interest Income	—		—		—		575		575
Interest Expense	—		—		—		320		320
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

(1)Where several segments share leased or owned assets, landlord 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.