Segments

6 Months Ended

Jun. 30, 2021

Segments

Segments

4. 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 pre-tax income from continuing operations. These results are used, in part, by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments.

SEGMENT INFORMATION

	Cloud &			Global			Global
	Cognitive			Business			Technology						Global			Total
(Dollars in millions)	Software			Services			Services			Systems			Financing			Segments
For the three months ended June 30, 2021:
External revenue	$	6,098		$	4,341		$	6,342		$	1,717		$	242		$	18,740
Internal revenue		726			58			326			241			260			1,611
Total revenue	$	6,824		$	4,399		$	6,668		$	1,958		$	502		$	20,351
Pre-tax income from continuing operations	$	1,720		$	371		$	381		$	176		$	246		$	2,894
Revenue year-to-year change		5.1	%		11.5	%		0.7	%		(6.4)	%		(0.7)	%		3.5	%
Pre-tax income year-to-year change		0.7	%		2.5	%		52.3	%		(28.8)	%		39.3	%		5.5	%
Pre-tax income margin		25.2	%		8.4	%		5.7	%		9.0	%		48.9	%		14.2	%
For the three months ended June 30, 2020:
External revenue	$	5,748		$	3,890		$	6,316		$	1,852		$	265		$	18,072
Internal revenue		743			55			304			240			241			1,582
Total revenue	$	6,491		$	3,945		$	6,621		$	2,092		$	506		$	19,655
Pre-tax income from continuing operations	$	1,708		$	362		$	250		$	248		$	176		$	2,744
Pre-tax income margin		26.3	%		9.2	%		3.8	%		11.8	%		34.9	%		14.0	%

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended June 30:	2021		2020
Revenue:
Total reportable segments	$	20,351	$	19,655
Other — divested businesses		0		13
Other revenue		5		37
Eliminations of internal transactions		(1,611)		(1,582)
Total consolidated revenue	$	18,745	$	18,123
Pre-tax income from continuing operations:
Total reportable segments	$	2,894	$	2,744
Amortization of acquired intangible assets		(462)		(472)
Acquisition-related (charges)/income		(18)		(1)
Non-operating retirement-related (costs)/income		(328)		(273)
Separation-related charges		(175)		—
Elimination of internal transactions		(139)		(121)
Other — divested businesses		(15)		(22)
Unallocated corporate amounts		(205)		(283)
Total pre-tax income from continuing operations	$	1,552	$	1,571

SEGMENT INFORMATION

	Cloud &			Global			Global
	Cognitive			Business			Technology						Global			Total
(Dollars in millions)	Software			Services			Services			Systems			Financing			Segments
For the six months ended June 30, 2021:
External revenue	$	11,534		$	8,575		$	12,712		$	3,144		$	482		$	36,447
Internal revenue		1,558			113			639			430			428			3,168
Total revenue	$	13,093		$	8,688		$	13,351		$	3,574		$	910		$	39,615
Pre-tax income from continuing operations	$	3,147		$	761		$	520		$	174		$	412		$	5,015
Revenue year-to-year change		4.4	%		6.9	%		(0.2)	%		(1.0)	%		(10.5)	%		2.4	%
Pre-tax income year-to-year change		19.2	%		20.3	%		624.6	%		466.3	%		11.3	%		33.9	%
Pre-tax income margin		24.0	%		8.8	%		3.9	%		4.9	%		45.3	%		12.7	%
For the six months ended June 30, 2020:
External revenue	$	10,987		$	8,027		$	12,783		$	3,220		$	564		$	35,581
Internal revenue		1,556			101			599			388			453			3,096
Total revenue	$	12,543		$	8,128		$	13,382		$	3,608		$	1,017		$	38,677
Pre-tax income from continuing operations	$	2,641		$	633		$	72		$	31		$	370		$	3,747
Pre-tax income margin		21.1	%		7.8	%		0.5	%		0.9	%		36.4	%		9.7	%

Reconciliations to IBM as Reported:

(Dollars in millions)
For the six months ended June 30:	2021		2020
Revenue:
Total reportable segments	$	39,615	$	38,677
Other — divested businesses		1		32
Other revenue		27		81
Eliminations of internal transactions		(3,168)		(3,096)
Total consolidated revenue	$	36,474	$	35,694
Pre-tax income from continuing operations:
Total reportable segments	$	5,015	$	3,747
Amortization of acquired intangible assets		(914)		(945)
Acquisition-related (charges)/income		(34)		(2)
Non-operating retirement-related (costs)/income		(670)		(538)
Separation-related charges		(236)		—
Eliminations of internal transactions		(212)		(176)
Other — divested businesses		(24)		3
Unallocated corporate amounts		(468)		(568)
Total pre-tax income from continuing operations	$	2,457	$	1,522