Segments

3 Months Ended

Mar. 31, 2020

Segments

Segments

4. Segments:

During the first quarter of 2020, the company realigned offerings and the related management system to reflect divestitures completed in the second half of 2019 and tighter integration of certain industry-related consulting services. Accordingly, the company updated its Cloud & Cognitive Software segment, Global Business Services segment and the Other – divested businesses category in the first quarter of 2020 and recast the related historical information for consistency with the go-forward performance. Total recast revenue for full-year 2019 was approximately $0.3 billion of IBM’s total $77 billion. There was no change to the Global Technology Services, Systems or Global Financing segments, and there was no impact to IBM’s consolidated results. The following table displays the segment updates:

Management System Change	Resulting Segment Implications
Divestitures of IBM's Risk Analytics and Regulatory Offerings and Sales Performance Management Offerings	- Cloud & Cognitive Software (Cognitive Applications)
	+ Other—divested businesses
Realignment of certain industry-related consulting offerings to the Global Business Services segment	- Cloud & Cognitive Software (Cognitive Applications)
	+ Global Business Services (Consulting)

SEGMENT INFORMATION

	Cloud &			Global			Global
	Cognitive			Business			Technology						Global			Total
(Dollars in millions)	Software			Services			Services			Systems			Financing			Segments
For the three months ended March 31, 2020:
External revenue	$	5,238		$	4,136		$	6,467		$	1,368		$	299		$	17,508
Internal revenue		813			46			294			148			212			1,514
Total revenue	$	6,052		$	4,183		$	6,761		$	1,516		$	511		$	19,023
Pre-tax income/(loss) from continuing operations	$	933		$	271		$	(178)		$	(217)		$	194		$	1,003
Revenue year-to-year change		4.2	%		(1.1)	%		(5.6)	%		1.7	%		(27.6)	%		(1.9)	%
Pre-tax income year-to-year change		(47.7)	%		(9.1)	%		(164.7)	%		7.6	%		(32.7)	%		(59.0)	%
Pre-tax income/(loss) margin		15.4	%		6.5	%		(2.6)	%		(14.3)	%		37.9	%		5.3	%
For the three months ended March 31, 2019:
External revenue	$	4,967	*	$	4,155	*	$	6,875		$	1,328		$	406		$	17,731	*
Internal revenue		841			74			290			163			300			1,668
Total revenue	$	5,808	*	$	4,229	*	$	7,164		$	1,491		$	706		$	19,398	*
Pre-tax income/(loss) from continuing operations	$	1,785	*	$	298	*	$	275		$	(202)		$	288		$	2,445	*
Pre-tax income/(loss) margin		30.7	%*		7.0	%*		3.8	%		(13.5)	%		40.8	%		12.6	%*

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended March 31:	2020		2019
Revenue:
Total reportable segments	$	19,023	$	19,398	*
Other—divested businesses		18		377	*
Other revenue		44		74
Eliminations of internal transactions		(1,514)		(1,668)
Total consolidated revenue	$	17,571	$	18,182
Pre-tax income from continuing operations:
Total reportable segments	$	1,003	$	2,445	*
Amortization of acquired intangible assets		(473)		(173)
Acquisition-related (charges)/income		0		(39)
Non-operating retirement-related (costs)/income		(264)		(138)
Eliminations of internal transactions		(55)		(89)
Other—divested businesses		25		(56)	*
Unallocated corporate amounts		(284)		(67)
Total pre-tax income from continuing operations	$	(49)	$	1,883

*Recast to conform to current year presentation.