IBM RELEASES FOURTH-QUARTER RESULTS
Strong, broad-based performance, led by double-digit Software and Infrastructure growth;
Double-digit growth in full-year profit and free cash flow
ARMONK, N.Y., Jan. 28, 2026 /PRNewswire/ -- IBM (NYSE: IBM) today announced fourth-quarter 2025 earnings results.
"In the fourth quarter, we delivered strong revenue growth, with double-digit Software performance. Additionally, Infrastructure continued its double-digit revenue growth with the robust adoption of the next generation of our mainframe platform. Our generative AI book of business now stands at more than $12.5 billion. This capped a strong 2025 for IBM where we exceeded expectations for revenue, profit and free cash flow," said Arvind Krishna, IBM chairman, president and chief executive officer. "We enter 2026 with momentum and in a position of strength, giving us confidence in our full-year expectations of more than 5 percent constant currency revenue growth and an increase of about $1 billion in year-over-year free cash flow."
Fourth-Quarter Highlights
Full-Year Highlights
Full-Year 2026 Expectations
FOURTH-QUARTER 2025 INCOME STATEMENT SUMMARY
Revenue
Gross
Profit
Gross
Profit
Margin
Pre-tax
Income
Pre-tax
Income
Margin
Net
Income
Diluted
Earnings
Per Share
GAAP from
Continuing
Operations
$ 19.7 B
$ 11.9 B
60.6
%
$ 4.1 B
21.0
%
$ 5.6 B
(2)
$ 5.86
(2)
Year/Year
12
% (1)
14
%
1.1
Pts
25
% (3)
2.2
Pts (3)
91
% (2,3)
88
% (2,3)
Operating
(Non-GAAP)
$ 12.2 B
61.8
%
$ 4.7 B
24.1
%
$ 4.3 B
$ 4.52
Year/Year
14
%
1.2
Pts
11
%
(0.2)
Pts
17
%
15
%
(1) 9% at constant currency.
(2) 2025 GAAP results include a benefit from income taxes primarily driven by the resolution of certain tax audit matters.
(3) GAAP YTY results include the impact of a pension settlement charge in fourth-quarter 2024.
"2025 put IBM's durability, resilience and differentiation on display. Our portfolio mix, integrated value and rapid innovation drove higher revenue growth and double-digit profit and free cash flow growth," said James Kavanaugh, IBM senior vice president and chief financial officer. "We are excited about our prospects for 2026 as our disciplined execution and unwavering focus on productivity will continue to enable us to invest in the future while returning value to shareholders."
Segment Results for Fourth Quarter
Cash Flow and Balance Sheet
In the fourth quarter, the company generated net cash from operating activities of $4.0 billion, down $0.3 billion year to year. Net cash from operating activities excluding IBM financing receivables was $8.1 billion, up $1.5 billion. IBM's free cash flow was $7.6 billion, up $1.4 billion year to year. The company returned $1.6 billion to shareholders in dividends in the fourth quarter.
For the year, the company generated net cash from operating activities of $13.2 billion, down $0.3 billion year to year. Net cash from operating activities excluding IBM financing receivables was $16.4 billion, up $2.5 billion. IBM's free cash flow was $14.7 billion, up $2.0 billion year to year.
IBM ended the fourth quarter with $14.5 billion of cash, restricted cash and marketable securities, down $0.3 billion from year-end 2024. Debt, including IBM Financing debt of $15.1 billion, totaled $61.3 billion, up $6.3 billion since year-end 2024.
Full-Year 2025 Results
FULL-YEAR 2025 INCOME STATEMENT SUMMARY
Revenue
Gross
Profit
Gross
Profit
Margin
Pre-tax
Income
Pre-tax
Income
Margin
Net
Income
Diluted
Earnings
Per Share
GAAP from
Continuing
Operations
$ 67.5 B
$ 39.3 B
58.2
%
$ 10.3 B
15.3
%
$ 10.6 B
(2)
$ 11.14
(2)
Year/Year
8
% (1)
11
%
1.5
Pts
78
% (3)
6.1
Pts (3)
76
% (2,3)
74
% (2,3)
Operating
(Non-GAAP)
$ 40.2 B
59.5
%
$ 12.7 B
18.8
%
$ 11.0 B
$ 11.59
Year/Year
11
%
1.7
Pts
13
%
1.0
Pts
14
%
12
%
(1) 6% at constant currency
(2) 2025 GAAP results include a benefit from income taxes primarily driven by the resolution of certain tax audit matters.
(3) GAAP YTY results include the impacts of pension settlement charges in the third and fourth quarters of 2024.
Dividend Declaration
The IBM board of directors approved a regular quarterly cash dividend of $1.68 per common share, to stockholders of record on February 10, 2026. With payment of the March 10, 2026 dividend, IBM will have paid consecutive quarterly dividends every year since 1916.
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 and divestitures, including integration challenges, failure to achieve objectives, the assumption or retention 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 and service quality issues; the development and use of AI and generative AI, including the company's increased offerings and use of AI-based technologies; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity, privacy, and AI considerations; adverse effects related to climate change and other 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.
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 inception to date Software transactional revenue, plus new SaaS Annual Contract Value and Consulting signings related to specific offerings. 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 —
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-4q25. 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
Tim Davidson, 914-844-7847
[email protected]
Erin McElwee, 347-920-6825
[email protected]
INTERNATIONAL BUSINESS MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Unaudited; Dollars in millions except per share amounts)
Three Months Ended
December 31,
Year Ended
December 31,
2025
2024
2025
2024
REVENUE BY SEGMENT
Software
$ 9,031
$ 7,924
$ 29,962
$ 27,085
Consulting
5,349
5,175
21,055
20,692
Infrastructure
5,132
4,256
15,718
14,020
Financing
179
170
737
713
Other
(5)
29
63
243
TOTAL REVENUE
19,686
17,553
67,535
62,753
GROSS PROFIT
11,928
10,439
39,297
35,551
GROSS PROFIT MARGIN
Software
83.4
%
85.0
%
83.5
%
83.7
%
Consulting
28.4
%
28.0
%
28.1
%
27.0
%
Infrastructure
60.6
%
56.9
%
58.6
%
55.8
%
Financing
44.1
%
46.9
%
45.3
%
47.9
%
TOTAL GROSS PROFIT MARGIN
60.6
%
59.5
%
58.2
%
56.7
%
EXPENSE AND OTHER INCOME
SG&A
5,462
4,866
20,123
19,688
R&D
2,187
1,967
8,316
7,479
Intellectual property and custom development income
(277)
(301)
(964)
(996)
Other (income) and expense (1)
(66)
177
(442)
1,871
Interest expense
478
424
1,935
1,712
TOTAL EXPENSE AND OTHER INCOME
7,784
7,133
28,968
29,754
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
4,144
3,306
10,328
5,797
Pre-tax margin
21.0
%
18.8
%
15.3
%
9.2
%
Provision for/(Benefit from) income taxes (1)
(1,435)
379
(242)
(218)
Effective tax rate
(34.6)
%
11.5
%
(2.3)
%
(3.8)
%
INCOME FROM CONTINUING OPERATIONS
$ 5,579
$ 2,927
$ 10,571
$ 6,015
DISCONTINUED OPERATIONS
Income/ (loss) from discontinued operations, net of taxes
21
(12)
22
8
NET INCOME (1)
$ 5,600
$ 2,915
$ 10,593
$ 6,023
EARNINGS PER SHARE OF COMMON STOCK (1)
Assuming Dilution
Continuing Operations
$ 5.86
$ 3.11
$ 11.14
$ 6.42
Discontinued Operations
$ 0.02
$ (0.01)
$ 0.02
$ 0.01
TOTAL
$ 5.88
$ 3.09
$ 11.17
$ 6.43
Basic
Continuing Operations
$ 5.96
$ 3.16
$ 11.34
$ 6.53
Discontinued Operations
$ 0.02
$ (0.01)
$ 0.02
$ 0.01
TOTAL
$ 5.98
$ 3.15
$ 11.36
$ 6.53
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (M's)
Assuming Dilution
952.4
942.4
948.7
937.2
Basic
936.5
926.0
932.3
921.8
____________________
(1) 2025 results include a benefit from income taxes primarily driven by the resolution of certain tax audit matters, and 2024 results include
the impacts of pension settlement charges in the third quarter of $2.7 billion ($2.0 billion net of tax) and fourth quarter of $0.4 billion.
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in Millions)
At December 31,
2025
At December 31,
2024
ASSETS:
Current Assets:
Cash and cash equivalents
$ 13,587
$ 13,947
Restricted cash
54
214
Marketable securities
830
644
Notes and accounts receivable - trade, net
8,112
6,804
Short-term financing receivables, net
Held for investment, net
7,344
6,259
Held for sale
1,131
900
Other accounts receivable, net
1,052
947
Inventories
1,220
1,289
Deferred costs
1,084
959
Prepaid expenses and other current assets
2,530
2,520
Total Current Assets
36,944
34,482
Property, plant and equipment, net
5,899
5,731
Operating right-of-use assets, net
3,129
3,197
Long-term financing receivables, net
7,708
5,353
Prepaid pension assets
7,544
7,492
Deferred costs
825
788
Deferred taxes
8,610
6,978
Goodwill
67,717
60,706
Intangibles, net
11,391
10,660
Investments and sundry assets
2,112
1,787
Total Assets
$ 151,880
$ 137,175
LIABILITIES:
Current Liabilities:
Taxes
$ 2,347
$ 2,033
Short-term debt
6,424
5,089
Accounts payable
4,756
4,032
Compensation and benefits
4,114
3,605
Deferred income
16,101
13,907
Operating lease liabilities
800
768
Other accrued expense and liabilities
4,116
3,709
Total Current Liabilities
38,658
33,142
Long-term debt
54,836
49,884
Retirement-related obligations
9,018
9,432
Deferred income
4,271
3,622
Operating lease liabilities
2,547
2,655
Other liabilities
9,810
11,048
Total Liabilities
119,139
109,783
EQUITY:
IBM Stockholders' Equity:
Common stock
63,318
61,380
Retained earnings
155,648
151,163
Treasury stock - at cost
(170,605)
(169,968)
Accumulated other comprehensive income/(loss)
(15,713)
(15,269)
Total IBM Stockholders' Equity
32,648
27,307
Noncontrolling interests
93
86
Total Equity
32,740
27,393
Total Liabilities and Equity
$ 151,880
$ 137,175
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
(Dollars in Millions)
2025
2024
2025
2024
Net Income from Operations
$ 5,600
$ 2,915
$ 10,593
$ 6,023
Pension Settlement Charges
-
388
-
3,113
Depreciation/Amortization of Intangibles (1)
1,297
1,112
5,021
4,667
Stock-based Compensation
430
345
1,715
1,311
Operating assets and liabilities/Other, net (2)
777
1,824
(978)
(1,238)
IBM Financing A/R
(4,063)
(2,255)
(3,159)
(431)
Net Cash Provided by Operating Activities
$ 4,040
$ 4,330
$ 13,193
$ 13,445
Capital Expenditures, net of payments & proceeds
(550)
(422)
(1,617)
(1,127)
Divestitures, net of cash transferred
-
(7)
(1)
698
Acquisitions, net of cash acquired
(391)
(541)
(8,294)
(3,289)
Marketable Securities / Other Investments, net
2,358
(409)
(390)
(1,218)
Net Cash Provided by/(Used in) Investing Activities
$ 1,417
$ (1,379)
$ (10,302)
$ (4,937)
Debt, net of payments & proceeds
(1,810)
(103)
2,873
(880)
Dividends
(1,573)
(1,546)
(6,255)
(6,147)
Financing - Other
(23)
(26)
(447)
(52)
Net Cash Provided by/(Used in) Financing Activities
$ (3,406)
$ (1,675)
$ (3,829)
$ (7,079)
Effect of Exchange Rate changes on Cash
(10)
(330)
418
(359)
Net Change in Cash, Cash Equivalents and Restricted Cash
$ 2,041
$ 946
$ (520)
$ 1,071
____________________
(1) Includes operating lease right-of-use assets amortization.
(2) 2025 includes a benefit from income taxes primarily driven by the resolution of certain tax audit matters, and the year ended December 31, 2024
includes a $0.7 billion tax effect associated with a pension settlement charge in the third-quarter.
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
(Dollars in Billions)
2025
2024
Yr/Yr
2025
2024
Yr/Yr
Net Income as reported (GAAP) (1)
$ 5.6
$ 2.9
$ 2.7
$ 10.6
$ 6.0
$ 4.6
Less: Income/(loss) from discontinued operations, net of tax
0.0
0.0
0.0
0.0
0.0
0.0
Income from continuing operations
5.6
2.9
2.7
10.6
6.0
4.6
Provision for/(Benefit from) income taxes from continuing ops. (1)
(1.4)
0.4
(1.8)
(0.2)
(0.2)
0.0
Pre-tax income from continuing operations (GAAP)
4.1
3.3
0.8
10.3
5.8
4.5
Non-operating adjustments (before tax)
Acquisition-related charges (2)
0.6
0.5
0.1
2.3
2.0
0.4
Non-operating retirement-related costs/(income) (1)
0.0
0.5
(0.5)
0.1
3.5
(3.4)
Operating (non-GAAP) pre-tax income from continuing ops.
4.7
4.3
0.5
12.7
11.2
1.5
Net interest expense
0.3
0.3
0.1
1.3
1.0
0.3
Depreciation/Amortization of non-acquired intangible assets
0.7
0.7
0.0
2.9
2.8
0.0
Stock-based compensation
0.4
0.3
0.1
1.7
1.3
0.4
Workforce rebalancing charges
0.3
0.0
0.3
0.7
0.7
0.0
Corporate (gains) and charges (3)
0.0
0.0
0.0
0.0
(0.6)
0.6
Adjusted EBITDA
$ 6.5
$ 5.6
$ 1.0
$ 19.2
$ 16.4
$ 2.8
____________________
(1) 2025 includes a benefit from income taxes primarily driven by the resolution of certain tax audit matters, and 2024 includes the impacts of pension
settlement charges in the third quarter of $2.7 billion ($2.0 billion net of tax) and fourth quarter of $0.4 billion.
(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., certain QRadar
SaaS assets in 2024).
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
Three Months Ended December 31, 2025
(Dollars in Millions)
Software
Consulting
Infrastructure
Financing
Revenue
$ 9,031
$ 5,349
$ 5,132
$ 179
Segment Profit
$ 3,403
$ 658
$ 1,601
$ 150
Segment Profit Margin
37.7
%
12.3
%
31.2
%
83.5
%
Change YTY Revenue
14.0
%
3.4
%
20.6
%
5.3
%
Change YTY Revenue - Constant Currency
10.7
%
1.0
%
16.6
%
2.4
%
Three Months Ended December 31, 2024
(Dollars in Millions)
Software
Consulting
Infrastructure
Financing
Revenue
$ 7,924
$ 5,175
$ 4,256
$ 170
Segment Profit
$ 3,102
$ 606
$ 1,063
$ 94
Segment Profit Margin
39.2
%
11.7
%
25.0
%
55.0
%
Year Ended December 31, 2025
(Dollars in Millions)
Software
Consulting
Infrastructure
Financing
Revenue
$ 29,962
$ 21,055
$ 15,718
$ 737
Segment Profit
$ 9,920
$ 2,464
$ 3,458
$ 521
Segment Profit Margin
33.1
%
11.7
%
22.0
%
70.7
%
Change YTY Revenue
10.6
%
1.8
%
12.1
%
3.3
%
Change YTY Revenue - Constant Currency
9.1
%
0.4
%
10.4
%
2.5
%
Year Ended December 31, 2024
(Dollars in Millions)
Software
Consulting
Infrastructure
Financing
Revenue
$ 27,085
$ 20,692
$ 14,020
$ 713
Segment Profit
$ 8,684
$ 2,054
$ 2,450
$ 348
Segment Profit Margin
32.1
%
9.9
%
17.5
%
48.8
%
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars in millions except per share amounts)
Three Months Ended December 31, 2025
Continuing Operations
GAAP
Acquisition-
Related
Adjustments (1)
Retirement-
Related
Adjustments (2)
Tax
Reform
Impacts (3)
Operating
(Non-
GAAP)
Gross Profit
$ 11,928
$ 231
$ —
$ —
$ 12,159
Gross Profit Margin
60.6
%
1.2
pts
—
pts
—
pts
61.8
%
SG&A
$ 5,462
$ (362)
$ —
$ —
$ 5,100
Other (Income) & Expense
(66)
(5)
(4)
—
(74)
Total Expense & Other (Income)
7,784
(366)
(4)
—
7,414
Pre-tax Income from Continuing Operations
4,144
597
4
—
4,745
Pre-tax Income Margin from Continuing
Operations
21.0
%
3.0
pts
0.0
pts
—
pts
24.1
%
Provision for/(Benefit from) Income Taxes (3,4)
$ (1,435)
$ 390
$ 15
$ 1,468
$ 438
Effective Tax Rate
(34.6)
%
12.6
pts
0.4
pts
30.9
pts
9.2
%
Income from Continuing Operations
$ 5,579
$ 208
$ (11)
$ (1,468)
$ 4,307
Income Margin from Continuing Operations
28.3
%
1.1
pts
(0.1)
pts
(7.5)
pts
21.9
%
Diluted Earnings Per Share: Continuing
Operations
$ 5.86
$ 0.22
$ (0.01)
$ (1.54)
$ 4.52
Three Months Ended December 31, 2024
Continuing Operations
GAAP
Acquisition-
Related
Adjustments (1)
Retirement-
Related
Adjustments (2)
Tax
Reform
Impacts
Operating
(Non-
GAAP)
Gross Profit
$ 10,439
$ 191
$ —
$ —
$ 10,630
Gross Profit Margin
59.5
%
1.1
pts
—
pts
—
pts
60.6
%
SG&A
$ 4,866
$ (305)
$ —
$ —
$ 4,561
Other (Income) & Expense
177
(2)
(467)
—
(291)
Total Expense & Other (Income)
7,133
(307)
(467)
—
6,359
Pre-tax Income from Continuing Operations
3,306
498
467
—
4,271
Pre-tax Income Margin from Continuing
Operations
18.8
%
2.8
pts
2.7
pts
—
pts
24.3
%
Provision for/(Benefit from) Income Taxes (4)
$ 379
$ 123
$ 58
$ 21
$ 581
Effective Tax Rate
11.5
%
1.5
pts
0.1
pts
0.5
pts
13.6
%
Income from Continuing Operations
$ 2,927
$ 375
$ 408
$ (21)
$ 3,690
Income Margin from Continuing Operations
16.7
%
2.1
pts
2.3
pts
(0.1)
pts
21.0
%
Diluted Earnings Per Share: Continuing
Operations
$ 3.11
$ 0.40
$ 0.43
$ (0.02)
$ 3.92
____________________
(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-closing charges, such as financing costs.
(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 insolvency costs and other costs. 2024 also includes the impact of a pension settlement charge.
(3) 2025 includes a benefit from income taxes primarily driven by 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 GAAP
pre-tax income.
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; Dollars in millions except per share amounts)
Year Ended December 31, 2025
Continuing Operations
GAAP
Acquisition-
Related
Adjustments (1)
Retirement-
Related
Adjustments (2)
Tax
Reform
Impacts (3)
Operating
(Non-
GAAP)
Gross Profit
$ 39,297
$ 888
$ —
$ —
$ 40,184
Gross Profit Margin
58.2
%
1.3
pts
—
pts
—
pts
59.5
%
SG&A
$ 20,123
$ (1,417)
$ —
$ —
$ 18,706
R&D
8,316
(4)
—
—
8,312
Other (Income) & Expense
(442)
(11)
(65)
—
(518)
Total Expense & Other (Income)
28,968
(1,432)
(65)
—
27,472
Pre-tax Income from Continuing Operations
10,328
2,320
65
—
12,713
Pre-tax Income Margin from Continuing
Operations
15.3
%
3.4
pts
0.1
pts
—
pts
18.8
%
Provision for/(Benefit from) Income Taxes (3,4)
$ (242)
$ 786
$ 15
$ 1,161
$ 1,719
Effective Tax Rate
(2.3)
%
6.6
pts
0.1
pts
9.1
pts
13.5
%
Income from Continuing Operations
$ 10,571
$ 1,534
$ 49
$ (1,161)
$ 10,993
Income Margin from Continuing Operations
15.7
%
2.3
pts
0.1
pts
(1.7)
pts
16.3
%
Diluted Earnings Per Share: Continuing
Operations
$ 11.14
$ 1.62
$ 0.05
$ (1.22)
$ 11.59
Year Ended December 31, 2024
Continuing Operations
GAAP
Acquisition-
Related
Adjustments (1)
Retirement-
Related
Adjustments (2)
Tax
Reform
Impacts (3)
Operating
(Non-
GAAP)
Gross Profit
$ 35,551
$ 724
$ —
$ —
$ 36,275
Gross Profit Margin
56.7
%
1.2
pts
—
pts
—
pts
57.8
%
SG&A
$ 19,688
$ (1,159)
$ —
$ —
$ 18,529
Other (Income) & Expense
1,871
(70)
(3,457)
—
(1,656)
Total Expense & Other (Income)
29,754
(1,229)
(3,457)
—
25,068
Pre-tax Income from Continuing Operations
5,797
1,953
3,457
—
11,207
Pre-tax Income Margin from Continuing
Operations
9.2
%
3.1
pts
5.5
pts
—
pts
17.9
%
Provision for/(Benefit from) Income Taxes (4)
$ (218)
$ 497
$ 790
$ 455
$ 1,523
Effective 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)
$ 9,684
Income Margin from Continuing Operations
9.6
%
2.3
pts
4.3
pts
(0.7)
pts
15.4
%
Diluted Earnings Per Share: Continuing
Operations
$ 6.42
$ 1.55
$ 2.85
$ (0.49)
$ 10.33
____________________
(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-closing charges, such as financing costs. 2024 also include a loss of $68 million on foreign exchange derivative contracts
entered into by the company prior to the acquisition of StreamSets and webMethods from 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 insolvency costs and other costs. 2024 also includes the impacts of pension settlement charges.
(3) 2025 and 2024 include benefits from income taxes primarily driven by 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 GAAP
pre-tax income.
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP OPERATING CASH FLOW TO FREE CASH FLOW RECONCILIATION
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
(Dollars in Millions)
2025
2024
2025
2024
Net Cash from Operations per GAAP
$ 4,040
$ 4,330
$ 13,193
$ 13,445
Less: change in IBM Financing receivables
(4,063)
(2,255)
(3,159)
(431)
Net cash from operating activities excl. IBM Financing receivables
8,104
6,584
16,352
13,876
Capital Expenditures, net
(550)
(422)
(1,617)
(1,127)
Free Cash Flow
7,553
6,163
14,734
12,749
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP OPERATING CASH FLOW TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
(Dollars in Billions)
2025
2024
2025
2024
Net Cash Provided by Operating Activities
$ 4.0
$ 4.3
$ 13.2
$ 13.4
Add:
Net interest expense
0.3
0.3
1.3
1.0
Provision for/(Benefit from) income taxes from continuing operations (1)
(1.4)
0.4
(0.2)
(0.2)
Less change in:
Financing receivables
(4.1)
(2.3)
(3.2)
(0.4)
Other assets and liabilities/other, net (2)
0.5
1.7
(1.8)
(1.8)
Adjusted EBITDA
$ 6.5
$ 5.6
$ 19.2
$ 16.4
____________________
(1) 2025 includes a benefit from income taxes primarily driven by the resolution of certain tax audit matters.
(2) Other assets and liabilities/other, net mainly consists of operating assets and liabilities/Other, net in the Cash Flow chart,
workforce rebalancing charges, non-operating impacts and corporate (gains) and charges.
SOURCE IBM