Double-digit Software revenue growth; Free cash flow well-exceeds full-year expectation
IBM (NYSE: IBM) today announced fourth-quarter 2024 earnings results.
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“We closed the year with double-digit revenue growth in Software for the quarter, led by further acceleration in Red Hat. Clients globally continue to turn to IBM to transform with AI. Our generative AI book of business now stands at more than $5 billion inception-to-date, up nearly $2 billion quarter over quarter,” saidArvind Krishna, IBM chairman, president and chief executive officer. “Three years ago, we laid out a vision for a faster-growing, more-profitable IBM. I'm proud of the work the IBM team has done to meet or exceed our commitments. With our focused strategy, enhanced portfolio, and culture of innovation, we're well-positioned for 2025 and beyond and expect revenue growth of at least five percent and free cash flow of about $13.5 billion this year.”
Fourth-Quarter Highlights
— Revenue -Revenue of $17.6 billion, up 1 percent, up 2 percent at constant currency -Software revenue up 10 percent, up 11 percent at constant currency -Consulting revenue down 2 percent, down 1 percent at constant currency -Infrastructure revenue down 8 percent, down 6 percent at constant currency
— Profit -Gross Profit Margin: GAAP: 59.5 percent, up 40 basis points; Operating (Non-GAAP): 60.6 percent, up 50 basis points
Full-Year Highlights
— Revenue -Revenue of $62.8 billion, up 1 percent, up 3 percent at constant currency -Software revenue up 8 percent, up 9 percent at constant currency -Consulting revenue down 1 percent, up 1 percent at constant currency -Infrastructure revenue down 4 percent, down 3 percent at constant currency
— Profit -Gross Profit Margin: GAAP: 56.7 percent, up 120 basis points; Operating (Non-GAAP): 57.8 percent, up 130 basis points
— Cash Flow -Net cash from operating activities of $13.4 billion; free cash flow of $12.7 billion
FOURTH-QUARTER 2024 INCOME STATEMENT SUMMARYGAAP results include impact of one-time, non-cash pension settlement charge (1) Revenue Gross Gross Pre-tax Pre-tax Net Diluted Profit Profit Income (1) Income Income (1) Earnings Margin Margin (1) Per Share (1)GAAP from $ 17.6 B $ 10.4 B 59.5 % $ 3.3 B 18.8 % $ 2.9 B $ 3.11ContinuingOperationsYear/Year 1 %(2) 2 % 0.4 Pts (12) % -2.8 Pts (11) % (12) %Operating $ 10.6 B 60.6 % $ 4.3 B 24.3 % $ 3.7 B $ 3.92(Non-GAAP)Year/Year 2 % 0.5 Pts 2 % 0.4 Pts 3 % 1 %(1) 2024 GAAP results include the impact of a one-time, non-cash pension settlement charge of $0.4billion related to the transfer of aportion of the company's Non-U.S. defined benefit pension obligations and related plan assets to third-party insurers in October 2024.(2) 2% at constant currency.
“With strong performance across our Software portfolio, we continue to drive solid fundamentals within our business,” said James Kavanaugh, IBM senior vice president and chief financial officer. “As a result, we generated $12.7 billion in free cash flow, far-outpacing our expectation for the year.Continued strength in operating profitability and free cash flow fuels our ability toinvest for the future while returning value to shareholders through dividends.”
Segment Results for Fourth Quarter
— Software – revenues of $7.9 billion, up 10.4 percent, up 11.5 percent at constant currency: -Hybrid Platform & Solutions up 11 percent, up 12 percent at constant currency –Red Hat up 16 percent, up 17 percent at constant currency — Automation up 15 percent, up 16 percent at constant currency — Data & AI up 4 percent, up 5 percent at constant currency — Security up 4 percent, up 5 percent at constant currency -Transaction Processing up 10 percent, up 11 percent at constant currency
— Consulting – revenues of $5.2 billion, down 2.0 percent, down 1.1 percent at constant currency: -Business Transformation up 1 percent, up 2 percent at constant currency -Technology Consulting down 7 percent, down 6 percent at constant currency -Application Operations down 4 percent, down 3 percent at constant currency
— Infrastructure – revenues of $4.3 billion, down 7.6 percent, down 6.0 percent at constant currency: -Hybrid Infrastructure down 10 percent, down 8 percent at constant currency — IBM Z down 21 percent, down 20 percent at constant currency — Distributed Infrastructure flat, up 2 percent at constant currency -Infrastructure Support down 2 percent, flat at constant currency
— Financing – revenues of $0.2 billion, down 2.5 percent, down 0.5 percent at constant currency
Cash Flow and Balance Sheet
In the fourth quarter, the company generated net cash from operating activities of $4.3 billion, down $0.1 billion year to year. IBM's free cash flow was $6.2 billion, up $0.1 billion year to year. The company returned $1.5 billion to shareholders in dividends in the fourth quarter.
For the year, the company generated net cash from operating activities of $13.4 billion, down $0.5 billion year to year. Net cash from operating activities excluding IBM financing receivables was $13.9 billion, up $1.2 billion. IBM's free cash flow was $12.7 billion, up $1.5 billion year to year.
IBM ended the fourth quarter with $14.8 billion of cash, restricted cash and marketable securities, up $1.3 billion from year-end 2023. Debt, including IBM Financing debt of $12.1 billion, totaled $55.0 billion, down $1.6 billion since year-end 2023.
Full-Year 2024 Results
FULL-YEAR 2024 INCOME STATEMENT SUMMARYGAAP results include impacts of one-time, non-cash pension settlement charges (1) Revenue Gross Gross Pre-tax Pre-tax Net Diluted Profit Profit Income (1) Income Income (1) Earnings Margin Margin (1) Per Share (1)GAAP from $ 62.8 B $ 35.6 B 56.7 % $ 5.8 B 9.2 % $ 6.0 B $ 6.42ContinuingOperationsYear/Year 1 %(2) 4 % 1.2 Pts (33) % -4.8 Pts (20) % (21) %Operating $ 36.3 B 57.8 % $ 11.2 B 17.9 % $ 9.7 B $ 10.33(Non-GAAP)Year/Year 4 % 1.3 Pts 9 % 1.2 Pts 9 % 7 %(1) 2024 GAAP results include the impacts of one-time, non-cash, U.S. andnon-U.S. pension settlement charges of $3.1 billion ($2.4 billionnet of tax).(2) 3% at constant currency
Full-Year 2025 Expectations
— Revenue: The company expects full-year constant currency revenue growth of at least 5 percent. At current foreign exchange rates, currency is expected to be about a two-point headwind to growth for the year.
— Free cash flow: The company expects about $13.5 billion in free cash flow for the full year.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company's innovation initiatives; damage to the company's reputation; risks from investing in growth opportunities; failure of the company's intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company's ability to successfully manage acquisitions, alliances anddispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company's failure to meet growth and productivity objectives; ineffective internal controls; the company's use of accounting estimates; impairment of the company's goodwill or amortizable intangible assets; the company's ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; reliance on third-party distribution channels and ecosystems; cybersecurity and data privacy considerations; adverse effects related to climate change and environmental matters; tax matters; legal proceedings and investigatory risks; the company's pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company's Form 10-Qs, Form 10-K and in the company's other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference.
Statements in this communication regarding the strategic acquisition that are forward-looking may include projections as to closing date for the transaction, the extent of, and the time necessary to obtain, the regulatory approvals required for the transaction, the anticipated benefits of the transaction, the impact of the transaction on IBM's business, the synergies from the transaction, and the combined company's future operating results.
Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.
Presentation of Information in this Press Release
For generative AI, book of business includes Software transactional revenue, SaaS Annual Contract Value and Consulting signings. The generative AI book of business is further defined within Exhibit 99.2 in the Form 8-K that includes this press release.
In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information, which management believes provides useful information to investors:
IBM results –
— adjusting for currency (i.e., at constant currency);
— presenting operating (non-GAAP) earnings per share amounts and related income statement items;
— free cash flow;
— net cash from operating activities excluding IBM Financing receivables;
— adjusted EBITDA.
The rationale for management's use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. ET, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-4q24.Presentation charts will be available shortly before the Webcast.
Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).
Contact: IBM Sarah Meron, 347-891-1770 sarah.meron@ibm.com
Tim Davidson, 914-844-7847 tfdavids@us.ibm.com
INTERNATIONAL BUSINESS MACHINES CORPORATIONCOMPARATIVE FINANCIAL RESULTS(Unaudited; Dollars in millions except per share amounts) Three Months Ended Year Ended December 31, December 31, 2024 2023 (1) 2024 2023 (1)REVENUE BY SEGMENTSoftware $ 7,924 $ 7,179 $ 27,085 $ 25,011Consulting 5,175 5,283 20,692 20,884Infrastructure 4,256 4,604 14,020 14,593Financing 170 175 713 741Other 29 141 243 632TOTAL REVENUE 17,553 17,381 62,753 61,860GROSS PROFIT 10,439 10,267 35,551 34,300GROSS PROFIT MARGINSoftware 85.0 % 84.1 % 83.7 % 82.9 %Consulting 28.0 % 28.1 % 27.0 % 26.8 %Infrastructure 56.9 % 60.8 % 55.8 % 56.1 %Financing 46.9 % 50.2 % 47.9 % 48.1 %TOTAL GROSS PROFIT MARGIN 59.5 % 59.1 % 56.7 % 55.4 %EXPENSE AND OTHER INCOMES,G&A 4,866 4,791 19,688 19,003R,D&E 1,967 1,748 7,479 6,775Intellectual property and custom development income (301) (242) (996) (860)Other (income) and expense (2) 177 (193) 1,871 (914)Interest expense 424 405 1,712 1,607TOTAL EXPENSE AND OTHER INCOME 7,133 6,509 29,754 25,610INCOME FROM CONTINUING OPERATIONS 3,306 3,759 5,797 8,690BEFORE INCOME TAXESPre-tax margin 18.8 % 21.6 % 9.2 % 14.0 %Provision for/(Benefit from) income taxes (2) 379 474 (218) 1,176Effective tax rate 11.5 % 12.6 % (3.8) % 13.5 %INCOME FROM CONTINUING OPERATIONS $ 2,927 $ 3,285 $ 6,015 $ 7,514DISCONTINUED OPERATIONSIncome/ (loss) from discontinued operations, net of (12) 3 8 (12)taxesNET INCOME (2) $ 2,915 $ 3,288 $ 6,023 $ 7,502EARNINGS PER SHARE OF COMMON STOCK (2)Assuming DilutionContinuing Operations $ 3.11 $ 3.54 $ 6.42 $ 8.15Discontinued Operations $ (0.01) $ 0.00 $ 0.01 $ (0.01)TOTAL $ 3.09 $ 3.55 $ 6.43 $ 8.14BasicContinuing Operations $ 3.16 $ 3.59 $ 6.53 $ 8.25Discontinued Operations $ (0.01) $ 0.00 $ 0.01 $ (0.01)TOTAL $ 3.15 $ 3.59 $ 6.53 $ 8.23WEIGHTED-AVERAGE NUMBER OF COMMON SHARESOUTSTANDING (M's)Assuming Dilution 942.4 927.3 937.2 922.1Basic 926.0 914.7 921.8 911.2____________________(1) Recast to reflect January 2024 segment changes.(2) 2024 results include the impacts of one-time, non-cash pension settlement charges in the third quarter of $2.7 billion ($2.0 billion net of tax) in the U.S. andfourth quarter of $0.4 billion in the non-U.S.
INTERNATIONAL BUSINESS MACHINES CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEET(Unaudited)(Dollars in Millions) At At December 31, December 31, 2024 2023ASSETS:Current Assets:Cash and cash equivalents $ 13,947 $ 13,068Restricted cash 214 21Marketable securities 644 373Notes and accounts receivable – trade, net 6,804 7,214Short-term financing receivables, net 7,159 6,793Other accounts receivable, net 947 640Inventories 1,289 1,161Deferred costs 959 998Prepaid expenses and other current assets 2,520 2,639Total Current Assets 34,482 32,908Property, plant and equipment, net 5,731 5,501Operating right-of-use assets, net 3,197 3,220Long-term financing receivables, net 5,353 5,766Prepaid pension assets 7,492 7,506Deferred costs 788 842Deferred taxes 6,978 6,656Goodwill 60,706 60,178Intangibles, net 10,660 11,036Investments and sundry assets 1,787 1,626Total Assets $ 137,175 $ 135,241LIABILITIES:Current Liabilities:Taxes $ 2,033 $ 2,270Short-term debt 5,089 6,426Accounts payable 4,032 4,132Deferred income 13,907 13,451Operating lease liabilities 768 820Other liabilities 7,313 7,022Total Current Liabilities 33,142 34,122Long-term debt 49,884 50,121Retirement-related obligations 9,432 10,808Deferred income 3,622 3,533Operating lease liabilities 2,655 2,568Other liabilities 11,048 11,475Total Liabilities 109,783 112,628EQUITY:IBM Stockholders' Equity:Common stock 61,380 59,643Retained earnings 151,163 151,276Treasury stock – at cost (169,968) (169,624)Accumulated other comprehensive income/(loss) (15,269) (18,761)Total IBM Stockholders' Equity 27,307 22,533Noncontrolling interests 86 80Total Equity 27,393 22,613Total Liabilities and Equity $ 137,175 $ 135,241
INTERNATIONAL BUSINESS MACHINES CORPORATIONCASH FLOW(Unaudited) Three Months Ended Year Ended December 31, December 31,(Dollars in Millions) 2024 2023 2024 2023Net Income from Operations $ 2,915 $ 3,288 $ 6,023 $ 7,502Pension Settlement Charges 388 – 3,113 -Depreciation/Amortization of Intangibles (1) 1,112 1,152 4,667 4,395Stock-based Compensation 345 291 1,311 1,133Operating assets and liabilities/Other, net (2) 1,824 1,619 (1,238) (332)IBM Financing A/R (2,255) (1,887) (431) 1,233Net Cash Provided by Operating Activities $ 4,330 $ 4,463 $ 13,445 $ 13,931Capital Expenditures, net of payments & proceeds (3) (422) (263) (1,127) (1,488)Divestitures, net of cash transferred (7) – 698 (4)Acquisitions, net of cash acquired (541) (137) (3,289) (5,082)Marketable Securities / Other Investments, net (409) 3,236 (1,218) (496)Net Cash Provided by/(Used in) Investing Activities $ (1,379) $ 2,837 $ (4,937) $ (7,070)Debt, net of payments & proceeds (103) (122) (880) 4,497Dividends (1,546) (1,518) (6,147) (6,040)Financing – Other (26) 26 (52) (226)Net Cash Provided by/(Used in) Financing Activities $ (1,675) $ (1,615) $ (7,079) $ (1,769)Effect of Exchange Rate changes on Cash (330) 128 (359) 9Net Change in Cash, Cash Equivalents and Restricted Cash $ 946 $ 5,814 $ 1,071 $ 5,101____________________(1) Includes operating lease right-of-use assets amortization.(2) The year ended December 31, 2024 includes a $0.7billion tax effect associated with a one-time, non-cash, U.S. pension settlementcharge in the third-quarter 2024.(3) The year ended December 31, 2024 includes proceeds of $0.4 billion from the sale of certainQRadarSaaS assets in third-quarter 2024.
INTERNATIONAL BUSINESS MACHINES CORPORATIONGAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION(Unaudited) Three Months Ended Year Ended December 31, December 31,(Dollars in Billions) 2024 2023 Yr/Yr 2024 2023 Yr/YrNet Income as reported (GAAP) (1) $ 2.9 $ 3.3 $ (0.4) $ 6.0 $ 7.5 $ (1.5)Less: Income/(loss) from discontinued operations, net of tax 0.0 0.0 0.0 0.0 0.0 0.0Income from continuing operations 2.9 3.3 (0.4) 6.0 7.5 (1.5)Provision for/(Benefit from) income taxes from continuing ops. 0.4 0.5 (0.1) (0.2) 1.2 (1.4)Pre-tax income from continuing operations (GAAP) 3.3 3.8 (0.5) 5.8 8.7 (2.9)Non-operating adjustments (before tax)Acquisition-related charges (2) 0.5 0.4 0.1 2.0 1.7 0.3Non-operating retirement-related costs/(income) (1) 0.5 0.0 0.5 3.5 0.0 3.5Operating (non-GAAP) pre-tax income from continuing ops. 4.3 4.2 0.1 11.2 10.3 0.9Net interest expense 0.3 0.3 0.0 1.0 0.9 0.0Depreciation/Amortization of non-acquired intangible assets 0.7 0.7 0.0 2.8 2.8 0.1Stock-based compensation 0.3 0.3 0.1 1.3 1.1 0.2Workforce rebalancing charges 0.0 0.0 0.0 0.7 0.4 0.3Corporate (gains) and charges (3) 0.0 0.0 0.0 (0.6) (0.1) (0.6)Adjusted EBITDA $ 5.6 $ 5.5 $ 0.1 $ 16.4 $ 15.5 $ 0.9____________________(1) 2024 results include the impacts of one-time, non-cash pension settlement charges in the third quarter of $2.7 billion ($2.0 billion net of tax) in the U.S. and fourthquarter of $0.4 billion in the non-U.S.(2) Primarily consists of amortization of acquired intangible assets.(3) Corporate (gains) and charges primarily consists of unique corporate actions such as gains on divestitures and asset sales (e.g., certainQRadarSaaS assets).
INTERNATIONAL BUSINESS MACHINES CORPORATIONSEGMENT DATA(Unaudited) Three Months Ended December 31, 2024(Dollars in Millions) Software Consulting Infrastructure FinancingRevenue $ 7,924 $ 5,175 $ 4,256 $ 170Segment Profit $ 3,102 $ 606 $ 1,063 $ 94Segment Profit Margin 39.2 % 11.7 % 25.0 % 55.0 %Change YTY Revenue 10.4 % (2.0) % (7.6) % (2.5) %Change YTY Revenue – Constant Currency 11.5 % (1.1) % (6.0) % (0.5) % Three Months Ended December 31, 2023 (1)(Dollars in Millions) Software Consulting Infrastructure FinancingRevenue $ 7,179 $ 5,283 $ 4,604 $ 175Segment Profit $ 2,649 $ 654 $ 1,299 $ 117Segment Profit Margin 36.9 % 12.4 % 28.2 % 67.0 %____________________(1) Recast to reflect January 2024 segment changes. Year Ended December 31, 2024(Dollars in Millions) Software Consulting Infrastructure FinancingRevenue $ 27,085 $ 20,692 $ 14,020 $ 713Segment Profit $ 8,684 $ 2,054 $ 2,450 $ 348Segment Profit Margin 32.1 % 9.9 % 17.5 % 48.8 %Change YTY Revenue 8.3 % (0.9) % (3.9) % (3.7) %Change YTY Revenue – Constant Currency 9.0 % 0.6 % (2.7) % (2.5) % Year Ended December 31, 2023 (1)(Dollars in Millions) Software Consulting Infrastructure FinancingRevenue $ 25,011 $ 20,884 $ 14,593 $ 741Segment Profit $ 7,499 $ 2,130 $ 2,828 $ 373Segment Profit Margin 30.0 % 10.2 % 19.4 % 50.3 %____________________(1) Recast to reflect January 2024 segment changes.
INTERNATIONAL BUSINESS MACHINES CORPORATIONU.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION(Unaudited; Dollars in millions except per share amounts) Three Months Ended December 31, 2024 Continuing Operations GAAP Acquisition- Retirement- Tax Operating Related Related Reform (Non-GAAP) Adjustments (1) Adjustments (2) ImpactsGross Profit $ 10,439 $ 191 $ – $ – $ 10,630Gross Profit Margin 59.5 % 1.1 pts – pts – pts 60.6 %S,G&A $ 4,866 $ (305) $ – $ – $ 4,561Other (Income) & Expense 177 (2) (467) – (291)Total Expense & Other (Income) 7,133 (307) (467) – 6,359Pre-tax Income from Continuing Operations 3,306 498 467 – 4,271Pre-tax Income Margin from Continuing 18.8 % 2.8 pts 2.7 pts – pts 24.3 %OperationsProvision for/(Benefit from) Income Taxes (3) $ 379 $ 123 $ 58 $ 21 $ 581Effective Tax Rate 11.5 % 1.5 pts 0.1 pts 0.5 pts 13.6 %Income from Continuing Operations $ 2,927 $ 375 $ 408 $ (21) $ 3,690Income Margin from Continuing Operations 16.7 % 2.1 pts 2.3 pts (0.1) pts 21.0 %Diluted Earnings Per Share: Continuing $ 3.11 $ 0.40 $ 0.43 $ (0.02) $ 3.92Operations Three Months Ended December 31, 2023 Continuing Operations GAAP Acquisition- Retirement- Tax Operating Related Related Reform (Non-GAAP) Adjustments (1) Adjustments (2) ImpactsGross Profit $ 10,267 $ 172 $ – $ – $ 10,439Gross Profit Margin 59.1 % 1.0 pts – pts – pts 60.1 %S,G&A $ 4,791 $ (271) $ – $ – $ 4,520Other (Income) & Expense (193) 12 22 – (159)Total Expense & Other (Income) 6,509 (259) 22 – 6,272Pre-tax Income from Continuing Operations 3,759 431 (22) – 4,167Pre-tax Income Margin from Continuing 21.6 % 2.5 pts (0.1) pts – pts 24.0 %OperationsProvision for/(Benefit from) Income Taxes (3) $ 474 $ 91 $ 19 $ (4) $ 580Effective Tax Rate 12.6 % 0.9 pts 0.5 pts (0.1) pts 13.9 %Income from Continuing Operations $ 3,285 $ 339 $ (41) $ 4 $ 3,587Income Margin from Continuing Operations 18.9 % 2.0 pts (0.2) pts – pts 20.6 %Diluted Earnings Per Share: Continuing $ 3.54 $ 0.37 $ (0.04) $ – $ 3.87Operations____________________(1) Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related to acquisition integration and pre-closingcharges, such as financing costs. 2023 also includes a $12 million gain recognized on foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSetsand webMethodsfrom Software AG.(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements and pension insolvencycosts and other costs. 2024 also includes the impact of a one-time, non-cash, non-U.S. pension settlement charge of $0.4 billion.(3) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax income underASC740.
INTERNATIONAL BUSINESS MACHINES CORPORATIONU.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION(Unaudited; Dollars in millions except per share amounts) Year Ended December 31, 2024 Continuing Operations GAAP Acquisition- Retirement- Tax Operating Related Related Reform (Non-GAAP) Adjustments (1) Adjustments (2) Impacts (3)Gross Profit $ 35,551 $ 724 $ – $ – $ 36,275Gross Profit Margin 56.7 % 1.2 pts – pts – pts 57.8 %S,G&A $ 19,688 $ (1,159) $ – $ – $ 18,529Other (Income) & Expense 1,871 (70) (3,457) – (1,656)Total Expense & Other (Income) 29,754 (1,229) (3,457) – 25,068Pre-tax Income from Continuing Operations 5,797 1,953 3,457 – 11,207Pre-tax Income Margin from Continuing 9.2 % 3.1 pts 5.5 pts – pts 17.9 %OperationsProvision for/(Benefit from) Income Taxes (4) $ (218) $ 497 $ 790 $ 455 $ 1,523Effective Tax Rate (3.8) % 5.1 pts 8.2 pts 4.1 pts 13.6 %Income from Continuing Operations $ 6,015 $ 1,456 $ 2,668 $ (455) $ 9,684Income Margin from Continuing Operations 9.6 % 2.3 pts 4.3 pts (0.7) pts 15.4 %Diluted Earnings Per Share: Continuing $ 6.42 $ 1.55 $ 2.85 $ (0.49) $ 10.33Operations Year Ended December 31, 2023 Continuing Operations GAAP Acquisition- Retirement- Tax Operating Related Related Reform (Non-GAAP) Adjustments (1) Adjustments (2) ImpactsGross Profit $ 34,300 $ 631 $ – $ – $ 34,931Gross Profit Margin 55.4 % 1.0 pts – pts – pts 56.5 %S,G&A $ 19,003 $ (1,039) $ – $ – $ 17,964Other (Income) & Expense (914) 10 39 – (866)Total Expense & Other (Income) 25,610 (1,029) 39 – 24,620Pre-tax Income from Continuing Operations 8,690 1,660 (39) – 10,311Pre-tax Income Margin from Continuing 14.0 % 2.7 pts (0.1) pts – pts 16.7 %OperationsProvision for/(Benefit from) Income Taxes (4) $ 1,176 $ 368 $ (8) $ (95) $ 1,441Effective Tax Rate 13.5 % 1.4 pts – pts (0.9) pts 14.0 %Income from Continuing Operations $ 7,514 $ 1,292 $ (30) $ 95 $ 8,870Income Margin from Continuing Operations 12.1 % 2.1 pts 0.0 pts 0.2 pts 14.3 %Diluted Earnings Per Share: Continuing $ 8.15 $ 1.40 $ (0.03) $ 0.10 $ 9.62Operations____________________(1) Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related to acquisition integration and pre-closingcharges, such as financing costs. 2024 and 2023 also include a $68 million loss and a $12 million gain, respectively, recognized on foreign exchange derivative contracts entered into by the companyprior to the acquisition ofStreamSetsandwebMethodsfrom Software AG.(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements and pension insolvencycosts and other costs. 2024 also includes the impacts of one-time, non-cash, U.S. andnon-U.S. pension settlement charges of $3.1 billion ($2.4 billion net of tax).(3) 2024 includes a net benefit from income taxes due to the resolution of certain tax audit matters.(4) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax income under ASC740.
INTERNATIONAL BUSINESS MACHINES CORPORATIONGAAP OPERATING CASH FLOW TO FREE CASH FLOW RECONCILIATION(Unaudited) Three Months Ended Year Ended December 31, December 31,(Dollars in Millions) 2024 2023 2024 2023Net Cash from Operations per GAAP $ 4,330 $ 4,463 $ 13,445 $ 13,931Less: change in IBM Financing receivables (2,255) (1,887) (431) 1,233Net cash from operating activities excl. IBM Financing receivables 6,584 6,350 13,876 12,699Capital Expenditures, net (422) (263) (1,127) (1,488)Free Cash Flow 6,163 6,087 12,749 11,210
INTERNATIONAL BUSINESS MACHINES CORPORATIONGAAP OPERATING CASH FLOW TO ADJUSTED EBITDA RECONCILIATION(Unaudited) Three Months Ended Year Ended December 31, December 31,(Dollars in Billions) 2024 2023 2024 2023Net Cash Provided by Operating Activities $ 4.3 $ 4.5 $ 13.4 $ 13.9Add:Net interest expense 0.3 0.3 1.0 0.9Provision for/(Benefit from) income taxes from continuing operations 0.4 0.5 (0.2) 1.2Less change in:Financing receivables (2.3) (1.9) (0.4) 1.2Other assets and liabilities/other, net (1) 1.7 1.6 (1.8) (0.7)Adjusted EBITDA $ 5.6 $ 5.5 $ 16.4 $ 15.5____________________(1) Other assets and liabilities/other, net mainly consists of operating assets and liabilities/Other, net in the Cash Flow chart,workforce rebalancingcharges, non-operating impacts and corporate (gains) and charges.
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SOURCE IBM
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