# EDGAR Filing Document

**Accession Number:** 0000051143
**File Stem:** 0000051143-25-000061
**Filing Date:** 2025-10
**Character Count:** 56074
**Document Hash:** d3574a1d64048055cb6719e6815a207d
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000051143-25-000061.hdr.sgml**: 20251022

**ACCESSION NUMBER**: 0000051143-25-000061

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20251022

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20251022

**DATE AS OF CHANGE**: 20251022

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** INTERNATIONAL BUSINESS MACHINES CORP
- **CENTRAL INDEX KEY:** 0000051143
- **STANDARD INDUSTRIAL CLASSIFICATION:** COMPUTER & OFFICE EQUIPMENT [3570]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 130871985
- **STATE OF INCORPORATION:** NY
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-02360
- **FILM NUMBER:** 251410278

**BUSINESS ADDRESS:**
- **STREET 1:** 1 NEW ORCHARD ROAD
- **CITY:** ARMONK
- **STATE:** NY
- **ZIP:** 10504
- **BUSINESS PHONE:** 9144991900

**MAIL ADDRESS:**
- **STREET 1:** 1 NEW ORCHARD RD
- **CITY:** ARMONK
- **STATE:** NY
- **ZIP:** 10504

?xml version='1.0' encoding='ASCII'? ibm-20251022

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 8-K**

**CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)**

**OF THE SECURITIES EXCHANGE ACT OF 1934**

**Date of Report:** October 22, 2025

(Date of earliest event reported)

**INTERNATIONAL BUSINESS MACHINES CORPORATION**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **New York** | **1-2360** | **13-0871985** |
| (State of Incorporation) | (Commission File Number) | (IRS employer Identification No.) |

---

---

| | |
|:---|:---|
| **One New Orchard Road**<br>**Armonk, New York** | **10504** |
| (Address of principal executive offices) | (Zip Code) |

---

**914-499-1900**

(Registrant's telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

**Securities registered pursuant to Section 12(b) of the Act:**

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading symbol(s)** | **Name of each exchange on which registered** |
| Capital stock, par value $.20 per share | IBM | New York Stock Exchange |
|  |  | NYSE Texas |
| 2.875% Notes due 2025 | IBM 25A | New York Stock Exchange |
| 0.300% Notes due 2026 | IBM 26B | New York Stock Exchange |
| 1.250% Notes due 2027 | IBM 27B | New York Stock Exchange |
| 3.375% Notes due 2027 | IBM 27F | New York Stock Exchange |
| 0.300% Notes due 2028 | IBM 28B | New York Stock Exchange |
| 1.750% Notes due 2028 | IBM 28A | New York Stock Exchange |
| 1.500% Notes due 2029 | IBM 29 | New York Stock Exchange |
| 0.875% Notes due 2030 | IBM 30A | New York Stock Exchange |
| 2.900% Notes due 2030 | IBM 30C | New York Stock Exchange |
| 1.750% Notes due 2031 | IBM 31 | New York Stock Exchange |
| 3.625% Notes due 2031 | IBM 31B | New York Stock Exchange |
| 0.650% Notes due 2032 | IBM 32A | New York Stock Exchange |
| 3.150% Notes due 2033 | IBM 33A | New York Stock Exchange |
| 1.250% Notes due 2034 | IBM 34 | New York Stock Exchange |
| 3.750% Notes due 2035 | IBM 35 | New York Stock Exchange |
| 3.450% Notes due 2037 | IBM 37 | New York Stock Exchange |
| 4.875% Notes due 2038 | IBM 38 | New York Stock Exchange |
| 1.200% Notes due 2040 | IBM 40 | New York Stock Exchange |
| 4.000% Notes due 2043 | IBM 43 | New York Stock Exchange |
| 3.800% Notes due 2045 | IBM 45A | New York Stock Exchange |
| 7.00% Debentures due 2025 | IBM 25 | New York Stock Exchange |
| 6.22% Debentures due 2027 | IBM 27 | New York Stock Exchange |
| 6.50% Debentures due 2028 | IBM 28 | New York Stock Exchange |
| 5.875% Debentures due 2032 | IBM 32D | New York Stock Exchange |
| 7.00% Debentures due 2045 | IBM 45 | New York Stock Exchange |
| 7.125% Debentures due 2096 | IBM 96 | New York Stock Exchange |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

------

**Item 2.02. Results of Operations and Financial Condition.**

The registrant's press release dated October 22, 2025, regarding its financial results for the period ended September 30, 2025, including consolidated financial statements for the period ended September 30, 2025, is Exhibit 99.1 of this Form 8-K.

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 disclosed in the attached press release certain non-GAAP information which management believes provides useful information to investors. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included in the press release, which is Exhibit 99.1 to this Form 8-K. The rationale for management's use of non-GAAP measures is included in Exhibit 99.2 to this Form 8-K.

The information in this Item 2.02, including the corresponding Exhibits 99.1 and 99.2, is being furnished with the Commission and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934.

**Item 9.01. Financial Statements and Exhibits.**

(d)Exhibits

The following exhibits are being furnished as part of this report:

---

| | |
|:---|:---|
| **Exhibit No.** | **Description of Exhibit** |
| 99.1 | <u>[Earnings Release of the Registrant, dated](ibm-20251022xex991.htm)[October 22](ibm-20251022xex991.htm)[, 2025](ibm-20251022xex991.htm)</u> |
| 99.2 | <u>[Non-GAAP Metrics and Other Financial Information](ibm-20251022xex992.htm)</u> |

---

The following exhibit is being filed as part of this report:

---

| | |
|:---|:---|
| **Exhibit No.** | **Description of Exhibit** |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL Document) |

---

IBM's web site (www.ibm.com) contains a significant amount of information about IBM, including financial and other information for investors (www.ibm.com/investor/). IBM encourages investors to visit its various web sites from time to time, as information is updated and new information is posted.

------

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: October 22, 2025 |  |  |
|  | By: | /s/ Nicolás A. Fehring |
|  |  | Nicolás A. Fehring |
|  |  | Vice President and Controller |

---

## Exhibit 99.1

**Exhibit 99.1**

**IBM RELEASES THIRD-QUARTER RESULTS**

**Acceleration in revenue growth and profit across all segments; Raises outlook for full-year revenue growth and free cash flow**

ARMONK, N.Y., October 22, 2025 . . . IBM (NYSE: IBM) today announced third-quarter 2025 earnings results.

"This quarter we accelerated performance across all of our segments, and again exceeded expectations for revenue, profit and free cash flow. Clients globally continue to leverage our technology and domain expertise to drive productivity in their operations and deliver real business value with AI. Our AI book of business now stands at more than $9.5 billion," said Arvind Krishna, IBM chairman, president and chief executive officer. "Given the strength of our business, we are raising our full-year outlook for revenue growth and free cash flow."

**Third-Quarter Highlights**

• Revenue

–Revenue of $16.3 billion, up 9 percent, up 7 percent at constant currency

–Software revenue up 10 percent, up 9 percent at constant currency

–Consulting revenue up 3 percent, up 2 percent at constant currency

–Infrastructure revenue up 17 percent, up 15 percent at constant currency

• Profit

–Gross Profit Margin: GAAP: 57.3 percent, up 1.1 points; Operating (Non-GAAP): 58.7 percent, up 1.2 points

–Pre-Tax Income Margin: GAAP: 14.9 percent, up 20.2 points; Operating (Non-GAAP): 18.6 percent, up 2.0 points

• Cash Flow

–Year to date, net cash from operating activities of $9.2 billion; free cash flow of $7.2 billion

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | **THIRD**-**QUARTER 2025 INCOME STATEMENT SUMMARY** | |
| | **Revenue** | **Revenue** | **Gross <br>Profit** | | **Gross Profit Margin** | | **Pre-tax <br>Income** | **Pre-tax <br>Income** | **Pre-tax <br>Income <br>Margin** | **Pre-tax <br>Income <br>Margin** | **Net <br>Income** | **Net <br>Income** | **Diluted <br>Earnings Per Share** | **Diluted <br>Earnings Per Share** |
| **GAAP from Continuing Operations** | $**16.3B** |  | $**9.4B** |  | **57.3** | % | $**2.4B** |  | **14.9** | % | $**1.7B** | <sup>(2)</sup> | $**1.84** | <sup>(2)</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;Year/Year | 9 | % <sup>(1)</sup> | 11 | % | 1.1 | Pts | NM | <sup>(3)</sup> | 20.2 | Pts <sup>(3)</sup> | NM | <sup>(23)</sup> | NM | <sup>(23)</sup> |
| **Operating <br>(Non-GAAP)** |  |  | $**9.6B** |  | **58.7** | % | $**3.0B** |  | **18.6** | % | $**2.5B** |  | $**2.65** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Year/Year |  |  | 11 | % | 1.2 | Pts | 22 | % | 2.0 | Pts | 17 | % | 15 | % |

---

(1) 7% at constant currency.

(2) 2025 GAAP results include a one-time, non-cash income tax charge associated with the enactment of H.R. 1 in July of 2025.

(3) GAAP YTY results include the impact of a pension settlement charge in third-quarter 2024.

NM - not meaningful

"New innovation, the strength and diversity of our portfolio, and our disciplined execution led to acceleration in revenue growth and profit in the quarter," said James Kavanaugh, IBM senior vice president and chief financial officer. "Consistent focus on the fundamentals of our business delivered double-digit growth in adjusted EBITDA, and drove another quarter of strong free cash flow, the fuel for our investments and ability to return value to shareholders."

------

**Segment Results for Third Quarter**

• *Software —* revenues of $7.2 billion, up 10 percent, up 9 percent at constant currency:

–Hybrid Cloud (Red Hat) up 14 percent, up 12 percent at constant currency

–Automation up 24 percent, up 22 percent at constant currency

–Data up 8 percent, up 7 percent at constant currency

–Transaction Processing down 1 percent, down 3 percent at constant currency

• *Consulting —* revenues of $5.3 billion, up 3 percent, up 2 percent at constant currency:

–Strategy and Technology up 2 percent, flat at constant currency

–Intelligent Operations up 5 percent, up 4 percent at constant currency

• *Infrastructure —* revenues of $3.6 billion, up 17 percent, up 15 percent at constant currency:

–Hybrid Infrastructure up 28 percent, up 26 percent at constant currency

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• IBM Z up 61 percent, up 59 percent at constant currency

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Distributed Infrastructure up 10 percent, up 8 percent at constant currency

–Infrastructure Support up 1 percent, flat at constant currency

• *Financing —* revenues of $0.2 billion, up 10 percent, up 8 percent at constant currency

**Cash Flow and Balance Sheet**

In the third quarter, the company generated net cash from operating activities of $3.1 billion, up $0.2 billion year to year. IBM's free cash flow was $2.4 billion, up $0.3 billion year to year. The company returned $1.6 billion to shareholders in dividends in the third quarter.

For the first nine months of the year, the company generated net cash from operating activities of $9.2 billion, flat year to year. IBM's free cash flow was $7.2 billion, up $0.6 billion year to year.

IBM ended the third quarter with $14.9 billion of cash, restricted cash and marketable securities, up $0.1 billion from year-end 2024. Debt, including IBM Financing debt of $11.3 billion, totaled $63.1 billion, up $8.1 billion year to date.

**Full-Year 2025 Expectations**

• Revenue: The company now expects constant currency revenue growth of more than 5 percent. At current foreign exchange rates, currency is expected to be about a one-and-a-half-point tailwind to growth for the year.

• Free cash flow: The company now expects about $14 billion in free cash flow for the full year.

**Dividend Declaration**

On October 22, 2025, the IBM board of directors approved a regular quarterly cash dividend of $1.68 per common share, to stockholders of record on November 10, 2025. With payment of the December 10, 2025 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 —

• 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-3q25. 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 |
| | tfdavids@us.ibm.com |
| | Erin McElwee, 347-920-6825 |
| | erin.mcelwee@ibm.com |

---

------

**INTERNATIONAL BUSINESS MACHINES CORPORATION**

**COMPARATIVE FINANCIAL RESULTS**

**(Unaudited; Dollars in millions except per share amounts)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>September 30,** | **Three Months Ended<br>September 30,** | **Three Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** |
| | **2025** | | **2024** | **2025** | | **2024** |
| **REVENUE BY SEGMENT** |  |  |  |  |  |  |
| Software | $7209 |  | $6524 | $20932 |  | $19162 |
| Consulting | 5324 |  | 5152 | 15706 |  | 15517 |
| Infrastructure | 3559 |  | 3042 | 10586 |  | 9764 |
| Financing | 200 |  | 181 | 557 |  | 543 |
| Other | 38 |  | 68 | 68 |  | 214 |
| **TOTAL REVENUE** | 16331 |  | 14968 | 47849 |  | 45199 |
| **GROSS PROFIT** | 9360 |  | 8420 | 27369 |  | 25112 |
| **GROSS PROFIT MARGIN** |  |  |  |  |  |  |
| Software | 83.1 | % | 83.2 | 83.5 | % | 83.1 |
| Consulting | 29.3 | % | 28.4 | 28.0 | % | 26.7 |
| Infrastructure | 57.2 | % | 55.0 | 57.7 | % | 55.3 |
| Financing | 45.6 | % | 47.2 | 45.7 | % | 48.2 |
| **TOTAL GROSS PROFIT MARGIN** | 57.3 | % | 56.3 | 57.2 | % | 55.6 |
| **EXPENSE AND OTHER INCOME** |  |  |  |  |  |  |
| SG&A | 4748 |  | 4911 | 14661 |  | 14823 |
| R&D | 2082 |  | 1876 | 6129 |  | 5512 |
| Intellectual property and custom development income | (219) |  | (238) | (687) |  | (696) |
| Other (income) and expense <sup>(1)</sup> | (173) |  | 2244 | (376) |  | 1694 |
| Interest expense | 492 |  | 429 | 1457 |  | 1288 |
| **TOTAL EXPENSE AND OTHER INCOME** | 6931 |  | 9222 | 21184 |  | 22621 |
| **INCOME/(LOSS) FROM CONTINUING OPERATIONS <br>BEFORE INCOME TAXES** | 2430 |  | (802) | 6185 |  | 2491 |
| &nbsp;&nbsp;Pre-tax margin | 14.9 | % | (5.4) | 12.9 | % | 5.5 |
| Provision for/(Benefit from) income taxes <sup>(1)</sup> | 686 |  | (485) | 1193 |  | (597) |
| &nbsp;&nbsp;Effective tax rate | 28.2 | % | 60.4 | 19.3 | % | (24.0) |
| **INCOME/(LOSS) FROM CONTINUING OPERATIONS** | $1744 |  | $(317) | $4992 |  | $3088 |
| **DISCONTINUED OPERATIONS** |  |  |  |  |  |  |
| &nbsp;&nbsp;Income/(loss) from discontinued operations, net of taxes | 0 |  | (13) | 1 |  | 21 |
| **NET INCOME/(LOSS)** <sup>(1)</sup> | $1744 |  | $(330) | $4993 |  | $3109 |
| **EARNINGS/(LOSS) PER SHARE OF COMMON STOCK** <sup>(1)</sup> |  |  |  |  |  |  |
| &nbsp;&nbsp;Assuming Dilution |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Continuing Operations | $1.84 |  | $(0.34) | $5.27 |  | $3.30 |
| &nbsp;&nbsp;&nbsp;&nbsp;Discontinued Operations | $0.00 |  | $(0.01) | $0.00 |  | $0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;TOTAL | $1.84 |  | $(0.36) | $5.27 |  | $3.32 |
| &nbsp;&nbsp;Basic |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Continuing Operations | $1.87 |  | $(0.34) | $5.36 |  | $3.36 |
| &nbsp;&nbsp;&nbsp;&nbsp;Discontinued Operations | $0.00 |  | $(0.01) | $0.00 |  | $0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;TOTAL | $1.87 |  | $(0.36) | $5.36 |  | $3.38 |
| **WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M's)** |  |  |  |  |  |  |
| &nbsp;&nbsp;Assuming Dilution | 948.9 |  | 923.6 | 947.4 |  | 935.4 |
| &nbsp;&nbsp;Basic | 933.9 |  | 923.6 | 930.9 |  | 920.3 |

---

(1) 2024 includes the impact of a pension settlement charge of $2.7 billion ($2.0 billion net of tax).

------

**INTERNATIONAL BUSINESS MACHINES CORPORATION**

**CONDENSED CONSOLIDATED BALANCE SHEET**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| **(Dollars in Millions)** | **At September 30,<br>2025** | **At December 31,<br>2024** |
| **ASSETS:** | | |
| **Current Assets:** | | |
| Cash and cash equivalents | $11569 | $13947 |
| Restricted cash | 30 | 214 |
| Marketable securities | 3286 | 644 |
| Notes and accounts receivable - trade, net | 5532 | 6804 |
| Short-term financing receivables |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Held for investment, net | 5156 | 6259 |
| &nbsp;&nbsp;&nbsp;&nbsp;Held for sale | 745 | 900 |
| Other accounts receivable, net | 1174 | 947 |
| Inventories | 1397 | 1289 |
| Deferred costs | 1113 | 959 |
| Prepaid expenses and other current assets | 2739 | 2520 |
| **Total Current Assets** | **32740** | **34482** |
| Property, plant and equipment, net | 5851 | 5731 |
| Operating right-of-use assets, net | 3223 | 3197 |
| Long-term financing receivables, net | 6258 | 5353 |
| Prepaid pension assets | 8044 | 7492 |
| Deferred costs | 768 | 788 |
| Deferred taxes | 8505 | 6978 |
| Goodwill | 67396 | 60706 |
| Intangibles, net | 11729 | 10660 |
| Investments and sundry assets | 1796 | 1787 |
| **Total Assets** | $**146312** | $**137175** |
| **LIABILITIES:** |  |  |
| **Current Liabilities:** |  |  |
| Taxes | $1663 | $2033 |
| Short-term debt | 7942 | 5089 |
| Accounts payable | 3867 | 4032 |
| Compensation and benefits | 3508 | 3605 |
| Deferred income | 13878 | 13907 |
| Operating lease liabilities | 807 | 768 |
| Other liabilities | 3477 | 3709 |
| **Total Current Liabilities** | **35142** | **33142** |
| Long-term debt | 55174 | 49884 |
| Retirement-related obligations | 9735 | 9432 |
| Deferred income | 3863 | 3622 |
| Operating lease liabilities | 2646 | 2655 |
| Other liabilities | 11762 | 11048 |
| **Total Liabilities** | **118322** | **109783** |
| **EQUITY:** |  |  |
| **IBM Stockholders' Equity:** |  |  |
| Common stock | 62819 | 61380 |
| Retained earnings | 151581 | 151163 |
| Treasury stock - at cost | (170512) | (169968) |
| Accumulated other comprehensive income/(loss) | (15983) | (15269) |
| **Total IBM Stockholders' Equity** | **27905** | **27307** |
| Noncontrolling interests | 85 | 86 |
| **Total Equity** | **27990** | **27393** |
| **Total Liabilities and Equity** | $**146312** | $**137175** |

---

------

**INTERNATIONAL BUSINESS MACHINES CORPORATION**

**CASH FLOW**

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>September 30,** | **Three Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** |
| **(Dollars in Millions)** | **2025** | **2024** | **2025** | **2024** |
| **Net Income/(Loss) from Operations** | $**1744** | $**(330)** | $**4993** | $**3109** |
| &nbsp;&nbsp;&nbsp;&nbsp;Pension Settlement Charge | - | 2725 | - | 2725 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation/Amortization of Intangibles <sup>(1)</sup> | 1283 | 1268 | 3725 | 3555 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based Compensation | 444 | 330 | 1285 | 966 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating assets and liabilities/Other, net <sup>(2)</sup> | (688) | (1984) | (1755) | (3063) |
| &nbsp;&nbsp;&nbsp;&nbsp;IBM Financing A/R | 298 | 873 | 905 | 1824 |
| **Net Cash Provided by Operating Activities** | $**3081** | $**2881** | $**9153** | $**9115** |
| &nbsp;&nbsp;&nbsp;&nbsp;Capital Expenditures, net of payments & proceeds <sup>(3)</sup> | (410) | 55 | (1067) | (705) |
| &nbsp;&nbsp;&nbsp;&nbsp;Divestitures, net of cash transferred | - | 2 | (1) | 705 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisitions, net of cash acquired | (58) | (2513) | (7903) | (2748) |
| &nbsp;&nbsp;&nbsp;&nbsp;Marketable Securities / Other Investments, net | 30 | 869 | (2748) | (810) |
| **Net Cash Provided by/(Used in) Investing Activities** | $**(437)** | $**(1587)** | $**(11719)** | $**(3558)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt, net of payments & proceeds | (1108) | (1259) | 4683 | (777) |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends | (1569) | (1542) | (4681) | (4601) |
| &nbsp;&nbsp;&nbsp;&nbsp;Financing - Other | (334) | 35 | (425) | (26) |
| **Net Cash Provided by/(Used in) Financing Activities** | $**(3012)** | $**(2766)** | $**(423)** | $**(5403)** |
| Effect of Exchange Rate changes on Cash | (59) | 207 | 429 | (29) |
| **Net Change in Cash, Cash Equivalents and Restricted Cash** | $**(426)** | $**(1264)** | $**(2561)** | $**125** |

---

(1) Includes operating lease right-of-use assets amortization.

(2) 2025 includes a one-time, non-cash income tax charge of $0.3 billion associated with the enactment of H.R. 1 in July of 2025, and 2024 includes a $0.7 billion tax benefit associated with the pension settlement charge in the third quarter.

(3) 2024 includes proceeds of $0.4 billion from the sale of certain QRadar SaaS assets in the third quarter.

------

**INTERNATIONAL BUSINESS MACHINES CORPORATION**

**GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION**

**(Unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>September 30,** | **Three Months Ended<br>September 30,** | **Three Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** |
| **(Dollars in Billions)** | **2025** | **2024** | **Yr/Yr** | **2025** | **2024** | **Yr/Yr** |
| **Net Income (Loss) as reported (GAAP)** <sup>(1)</sup> | $**1.7** | $**(0.3)** | $**2.1** | $**5.0** | $**3.1** | $**1.9** |
| Less: Income/(Loss) from discontinued operations, net of tax | <u>0.0</u> | <u>0.0</u> | <u>0.0</u> | <u>0.0</u> | <u>0.0</u> | <u>0.0</u> |
| Income/(Loss) from continuing operations | 1.7 | (0.3) | 2.1 | 5.0 | 3.1 | 1.9 |
| Provision for/(Benefit from) income taxes from continuing ops. | <u>0.7</u> | <u>(0.5)</u> | <u>1.2</u> | <u>1.2</u> | <u>(0.6)</u> | <u>1.8</u> |
| **Pre-tax income/(loss) from continuing operations (GAAP)** | **2.4** | **(0.8)** | **3.2** | **6.2** | **2.5** | **3.7** |
| Non-operating adjustments (before tax) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition-related charges <sup>(2)</sup> | 0.6 | 0.5 | 0.1 | 1.7 | 1.5 | 0.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-operating retirement-related costs/(income) <sup>(1)</sup> | <u>0.0</u> | <u>2.8</u> | <u>(2.8)</u> | <u>0.1</u> | <u>3.0</u> | <u>(2.9)</u> |
| **Operating (non-GAAP) pre-tax income from continuing ops.** | **3.0** | **2.5** | **0.5** | **8.0** | **6.9** | **1.0** |
| &nbsp;&nbsp;&nbsp;&nbsp;Net interest expense | 0.3 | 0.3 | 0.1 | 0.9 | 0.7 | 0.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation/Amortization of non-acquired intangible assets | 0.7 | 0.7 | 0.0 | 2.1 | 2.1 | 0.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 0.4 | 0.3 | 0.1 | 1.3 | 1.0 | 0.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Workforce rebalancing charges | 0.0 | 0.3 | (0.3) | 0.4 | 0.7 | (0.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate (gains) and charges <sup>(3)</sup> | <u>0.0</u> | <u>(0.4)</u> | <u>0.4</u> | <u>0.0</u> | <u>(0.6)</u> | <u>0.6</u> |
| **Adjusted EBITDA** | $**4.6** | $**3.8** | $**0.8** | $**12.7** | $**10.8** | $**1.8** |

---

(1) 2024 includes the impact of a pension settlement charge of $2.7 billion ($2.0 billion net of tax).

(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 September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** |
| **(Dollars in Millions)** | **Software** | | **Consulting** | | **Infrastructure** | | **Financing** |
| **Revenue** | $7209 |  | $5324 |  | $3559 |  | $200 |
| **Segment Profit** | $2374 |  | $686 |  | $644 |  | $123 |
| **Segment Profit Margin** | 32.9 | % | 12.9 | % | 18.1 | % | 61.6 |
| **Change YTY Revenue** | 10.5 | % | 3.3 | % | 17.0 | % | 10.4 |
| **Change YTY Revenue - Constant Currency** | 8.8 | % | 1.5 | % | 15.1 | % | 8.5 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** |
| **(Dollars in Millions)** | **Software** | | **Consulting** | | **Infrastructure** | | **Financing** |
| **Revenue** | $6524 |  | $5152 |  | $3042 |  | $181 |
| **Segment Profit** | $1969 |  | $559 |  | $422 |  | $86 |
| **Segment Profit Margin** | 30.2 | % | 10.9 | % | 13.9 | % | 47.5 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** |
| **(Dollars in Millions)** | **Software** | | **Consulting** | | **Infrastructure** | | **Financing** |
| **Revenue** | $20932 |  | $15706 |  | $10586 |  | $557 |
| **Segment Profit** | $6517 |  | $1807 |  | $1857 |  | $371 |
| **Segment Profit Margin** | 31.1 | % | 11.5 | % | 17.5 | % | 66.5 |
| **Change YTY Revenue** | 9.2 | % | 1.2 | % | 8.4 | % | 2.7 |
| **Change YTY Revenue - Constant Currency** | 8.4 | % | 0.2 | % | 7.7 | % | 2.6 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** |
| **(Dollars in Millions)** | **Software** | | **Consulting** | | **Infrastructure** | | **Financing** |
| **Revenue** | $19162 |  | $15517 |  | $9764 |  | $543 |
| **Segment Profit** | $5582 |  | $1447 |  | $1387 |  | $254 |
| **Segment Profit Margin** | 29.1 | % | 9.3 | % | 14.2 | % | 46.9 |

---

------

**INTERNATIONAL BUSINESS MACHINES CORPORATION**

**U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION**

**(Unaudited; Dollars in millions except per share amounts)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** | **Three Months Ended September 30, 2025** |
| | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** |
| | **GAAP** | | **Acquisition-**<br>**Related** <br>**Adjustments** <sup>(1)</sup> | | **Retirement-**<br>**Related** <br>**Adjustments** <sup>(2)</sup> | | **Tax** <br>**Reform** <br>**Impacts** <sup>(3)</sup> | | **Operating <br>(Non-GAAP)** |
| Gross Profit | $9360 |  | $231 |  | $— |  | $— |  | $9591 |
| Gross Profit Margin | 57.3 | % | 1.4 | pts |  | pts |  | pts | 58.7 |
| SG&A | $4748 |  | $(354) |  | $— |  | $— |  | $4394 |
| Other (Income) & Expense | (173) |  | (6) |  | (13) |  |  |  | (191) |
| Total Expense & Other (Income) | 6931 |  | (359) |  | (13) |  |  |  | 6559 |
| Pre-tax Income from Continuing Operations | 2430 |  | 590 |  | 13 |  |  |  | 3033 |
| Pre-tax Income Margin from Continuing Operations | 14.9 | % | 3.6 | pts | 0.1 | pts |  | pts | 18.6 |
| Provision for/(Benefit from) Income Taxes <sup>(4)</sup> | $686 |  | $136 |  | $3 |  | $(309) |  | $516 |
| Effective Tax Rate | 28.2 | % | (1.0) | pts | 0.0 | pts | (10.2) | pts | 17.0 |
| Income from Continuing Operations | $1744 |  | $454 |  | $10 |  | $309 |  | $2517 |
| Income Margin from Continuing Operations | 10.7 | % | 2.8 | pts | 0.1 | pts | 1.9 | pts | 15.4 |
| Diluted Earnings Per Share: Continuing Operations | $1.84 |  | $0.48 |  | $0.01 |  | $0.33 |  | $2.65 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** | **Three Months Ended September 30, 2024** |
| | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** |
| | **GAAP** | | **Acquisition-**<br>**Related** <br>**Adjustments** <sup>(1)</sup> | | **Retirement-**<br>**Related** <br>**Adjustments** <sup>(2)</sup> | | **Tax <br>Reform <br>Impacts** | | **Operating <br>(Non-GAAP)** |
| Gross Profit | $8420 |  | $192 |  | $— |  | $— |  | $8612 |
| Gross Profit Margin | 56.3 | % | 1.3 | pts |  | pts |  | pts | 57.5 |
| SG&A | $4911 |  | $(300) |  | $— |  | $— |  | $4611 |
| Other (Income) & Expense | 2244 |  |  |  | (2797) |  |  |  | (553) |
| Total Expense & Other (Income) | 9222 |  | (300) |  | (2797) |  |  |  | 6125 |
| Pre-tax Income/(Loss) from Continuing Operations | (802) |  | 492 |  | 2797 |  |  |  | 2487 |
| Pre-tax Income Margin from Continuing Operations | (5.4) | % | 3.3 | pts | 18.7 | pts |  | pts | 16.6 |
| Provision for/(Benefit from) Income Taxes <sup>(4)</sup> | $(485) |  | $119 |  | $700 |  | $(2) |  | $332 |
| Effective Tax Rate | 60.4 | % | (7.2) | pts | (39.8) | pts | (0.1) | pts | 13.4 |
| Income/(Loss) from Continuing Operations | $(317) |  | $373 |  | $2097 |  | $2 |  | $2155 |
| Income/(Loss) Margin from Continuing Operations | (2.1) | % | 2.5 | pts | 14.0 | pts | 0.0 | pts | 14.4 |
| Diluted Earnings/(Loss) Per Share: Continuing Operations <sup>(5)</sup> | $(0.34) |  | $0.40 |  | $2.27 |  | $0.00 |  | $2.30 |

---

(1)Includes amortization of acquired intangible assets, in-process R&D, transaction costs, applicable retention, 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 one-time, non-cash income tax charge associated with the enactment of H.R. 1 in July of 2025.

(4)The 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.

(5)Due to the GAAP net loss for the three months ended September 30, 2024, dilutive potential shares were excluded from the GAAP loss per share as the effect would have been antidilutive. The difference in share count resulted in an additional $(0.04) reconciling item.

------

**INTERNATIONAL BUSINESS MACHINES CORPORATION**

**U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION**

**(Unaudited; Dollars in millions except per share amounts)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** | **Nine Months Ended September 30, 2025** |
| | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** |
| | **GAAP** | | **Acquisition-**<br>**Related** <br>**Adjustments** <sup>(1)</sup> | | **Retirement-**<br>**Related** <br>**Adjustments** <sup>(2)</sup> | | **Tax** <br>**Reform** <br>**Impacts** <sup>(3)</sup> | | **Operating <br>(Non-GAAP)** |
| Gross Profit | $27369 |  | $657 |  | $— |  | $— |  | $28025 |
| Gross Profit Margin | 57.2 | % | 1.4 | pts |  | pts |  | pts | 58.6 |
| SG&A | $14661 |  | $(1055) |  | $— |  | $— |  | $13606 |
| R&D | 6129 |  | (4) |  |  |  |  |  | 6125 |
| Other (Income) & Expense | (376) |  | (7) |  | (61) |  |  |  | (444) |
| Total Expense & Other (Income) | 21184 |  | (1066) |  | (61) |  |  |  | 20058 |
| Pre-tax Income from Continuing Operations | 6185 |  | 1723 |  | 61 |  |  |  | 7968 |
| Pre-tax Income Margin from Continuing Operations | 12.9 | % | 3.6 | pts | 0.1 | pts |  | pts | 16.7 |
| Provision for/(Benefit from) Income Taxes <sup>(4)</sup> | $1193 |  | $396 |  | $0 |  | $(307) |  | $1282 |
| Effective Tax Rate | 19.3 | % | 0.8 | pts | (0.2) | pts | (3.9) | pts | 16.1 |
| Income from Continuing Operations | $4992 |  | $1326 |  | $61 |  | $307 |  | $6686 |
| Income Margin from Continuing Operations | 10.4 | % | 2.8 | pts | 0.1 | pts | 0.6 | pts | 14.0 |
| Diluted Earnings Per Share: Continuing Operations | $5.27 |  | $1.40 |  | $0.06 |  | $0.32 |  | $7.06 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** | **Nine Months Ended September 30, 2024** |
| | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** | **Continuing Operations** |
| | **GAAP** | | **Acquisition-**<br>**Related** <br>**Adjustments** <sup>(1)</sup> | | **Retirement-**<br>**Related** <br>**Adjustments** <sup>(2)</sup> | | **Tax** <br>**Reform** <br>**Impacts** <sup>(3)</sup> | | **Operating <br>(Non-GAAP)** |
| Gross Profit | $25112 |  | $533 |  | $— |  | $— |  | $25645 |
| Gross Profit Margin | 55.6 | % | 1.2 | pts |  | pts |  | pts | 56.7 |
| SG&A | $14823 |  | $(854) |  | $— |  | $— |  | $13969 |
| Other (Income) & Expense | 1694 |  | (68) |  | (2991) |  |  |  | (1364) |
| Total Expense & Other (Income) | 22621 |  | (922) |  | (2991) |  |  |  | 18709 |
| Pre-tax Income from Continuing Operations | 2491 |  | 1454 |  | 2991 |  |  |  | 6936 |
| Pre-tax Income Margin from Continuing Operations | 5.5 | % | 3.2 | pts | 6.6 | pts |  | pts | 15.3 |
| Provision for/(Benefit from) Income Taxes <sup>(4)</sup> | $(597) |  | $374 |  | $731 |  | $434 |  | $942 |
| Effective Tax Rate | (24.0) | % | 10.4 | pts | 20.9 | pts | 6.3 | pts | 13.6 |
| Income from Continuing Operations | $3088 |  | $1081 |  | $2259 |  | $(434) |  | $5994 |
| Income Margin from Continuing Operations | 6.8 | % | 2.4 | pts | 5.0 | pts | (1.0) | pts | 13.3 |
| Diluted Earnings Per Share: Continuing Operations | $3.30 |  | $1.16 |  | $2.42 |  | $(0.46) |  | $6.41 |

---

(1)Includes amortization of acquired 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 includes 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 impact of a pension settlement charge.

(3)2025 includes a one-time, non-cash income tax charge associated with the enactment of H.R. 1 in July of 2025, and 2024 includes a benefit from income taxes due to the resolution of certain tax audit matters in the first quarter.

(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<br>September 30,** | **Three Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** |
|<br>**(Dollars in Millions)** | **2025** | **2024** | **2025** | **2024** |
| **Net Cash from Operations per GAAP** | $**3081** | $**2881** | $**9153** | $**9115** |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: change in IBM Financing receivables | 298 | 873 | 905 | 1824 |
| **Net cash from operating activities excl. IBM Financing receivables** | **2783** | **2009** | **8248** | **7292** |
| &nbsp;&nbsp;&nbsp;&nbsp;Capital Expenditures, net | (410) | 55 | (1067) | (705) |
| **Free Cash Flow** | $**2373** | $**2064** | $**7181** | $**6586** |

---

------

**INTERNATIONAL BUSINESS MACHINES CORPORATION**

**GAAP OPERATING CASH FLOW TO ADJUSTED EBITDA RECONCILIATION**

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>September 30,** | **Three Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** | **Nine Months Ended<br>September 30,** |
| **(Dollars in Billions)** | **2025** | **2024** | **2025** | **2024** |
| **Net Cash Provided by Operating Activities** | $**3.1** | $**2.9** | $**9.2** | $**9.1** |
| Add: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net interest expense | 0.3 | 0.3 | 0.9 | 0.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for/(Benefit from) income taxes from continuing operations | 0.7 | (0.5) | 1.2 | (0.6) |
| Less change in: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Financing receivables | 0.3 | 0.9 | 0.9 | 1.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets and liabilities/other, net <sup>(1)</sup> | (0.8) | (2.0) | (2.3) | (3.5) |
| **Adjusted EBITDA** | $**4.6** | $**3.8** | $**12.7** | $**10.8** |

---

(1)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.

## Exhibit 99.2

**Exhibit 99.2**

**<u>Non-GAAP Metrics and Other Financial Information</u>**

<u>Operating (non-GAAP) Earnings Per Share and Related Income Statement Items</u>

In an effort to provide better transparency into the operational results of the business, supplementally, the company separates business results into operating and non-operating categories. Operating earnings from continuing operations is a non-GAAP measure that excludes the effects of certain acquisition-related charges and intangible asset amortization, expense resulting from basis differences on equity method investments, retirement-related costs and their related tax impacts. Due to the unique, non-recurring nature of the enactment of the U.S. Tax Cuts and Jobs Act (TCJA or U.S. tax reform), the company characterizes the one-time provisional charge recorded in the fourth quarter of 2017, and adjustments to that charge, as non-operating. Adjustments include the tax effect of true-ups, audit adjustments, accounting elections and new regulations or laws (e.g., H.R. 1 in July of 2025) that impact the TCJA provisions which resulted in the one-time provisional charge. For acquisitions, operating (non-GAAP) earnings exclude the amortization of acquired intangible assets and acquisition-related charges such as in-process research and development, transaction costs, applicable retention, restructuring and related expenses, tax charges related to acquisition integration and pre-closing charges, such as financing costs. These charges are excluded as they may be inconsistent in amount and timing from period to period and are significantly impacted by the size, type and frequency of the company's acquisitions. Management also characterized as non-operating expense, given its unique and temporary nature, the impact on the foreign exchange derivative contracts entered into prior to the acquisition of StreamSets and webMethods from Software AG, beginning in December 2023, to economically hedge the foreign currency exposure related to the purchase price of this acquisition. These derivative contracts expired by June 28, 2024. All other spending for acquired companies is included in both earnings from continuing operations and in operating (non-GAAP) earnings. For retirement-related costs, the company characterizes certain items as operating and others as non-operating, consistent with GAAP. The company includes defined benefit plan and nonpension postretirement benefit plan service costs, multi-employer plan costs and the cost of defined contribution plans in operating earnings. Non-operating retirement-related costs include defined benefit plan and nonpension postretirement benefit plan amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements including the impact of a settlement charge of $2.7 billion ($2.0 billion net of tax) resulting from the transfer to an insurer of a portion of the IBM Qualified Personal Pension Plan's defined benefit pension obligations and related plan assets in the third quarter of 2024 and pension insolvency costs and other costs. Non-operating retirement-related costs are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance, and the company considers these costs to be outside of the operational performance of the business.

Overall, the company believes that supplementally providing investors with a view of operating earnings as described above provides increased transparency and clarity into both the operational results of the business and the performance of the company's pension plans; improves visibility to management decisions and their impacts on operational performance; enables better comparison to peer companies; and allows the company to provide a long-term strategic view of the business going forward. In addition, these non-GAAP measures provide a perspective consistent with areas of interest the company routinely receives from investors and analysts.

<u>Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)</u>

Additionally, the company reports adjusted EBITDA which, in addition to the operating (non-GAAP) earnings adjustments described above, also excludes income/(loss) from discontinued operations, income tax expense, net interest expense, depreciation/amortization of non-acquired intangible assets including operating lease right-of-use assets, stock-based compensation, and certain other activity that is not reflective of the company's ongoing operational results such as workforce rebalancing charges and corporate gains and charges. The company uses adjusted EBITDA to measure its operating performance and believes that supplementally providing adjusted EBITDA will provide investors with additional transparency and clarity into how the company's operational profitability is driving its free cash flow results.

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<u>Free Cash Flow / Net Cash from Operating Activities Excluding IBM Financing Receivables</u>

The company uses free cash flow as a measure to evaluate its operating results, strategic investments, plan shareholder return levels and assess its ability and need to incur and service debt. The entire free cash flow amount is not necessarily available for discretionary expenditures. The company defines free cash flow as net cash from operating activities less the change in Financing receivables and net capital expenditures, including the investment in software and other asset sales (e.g., certain QRadar SaaS assets in 2024). A key objective of the Financing business is to generate strong returns on equity, and our Financing receivables are the basis for that growth. Accordingly, management considers Financing receivables as a profit-generating investment, not as working capital that should be minimized for efficiency. Therefore, management presents both free cash flow and net cash from operating activities that exclude the effect of Financing receivables. Free cash flow guidance is derived using an estimate of profit, working capital and operational cash flows. Since the company views Financing receivables as a profit-generating investment which it seeks to maximize, it is not considered when formulating guidance for free cash flow and adjusted EBITDA. As a result, the company does not estimate a GAAP net cash from operations expectation metric.

<u>Constant Currency</u>

When the company refers to growth rates at constant currency or adjusts such growth rates for currency, it is done so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of its business performance. Financial results adjusted for currency are calculated by translating current period activity in local currency using the comparable prior year period's currency conversion rate. This approach is used for countries where the functional currency is the local currency. Generally, when the dollar either strengthens or weakens against other currencies, the growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates.

**<u>Key Performance Indicators</u>**

<u>Annual Recurring Revenue (ARR):</u>

In the first quarter of 2025, the ARR calculation was updated to include all recurring revenue within the Software segment. ARR is a key performance metric management uses to assess the health and growth trajectory of our Software segment, and is calculated by using the current quarter's recurring revenue and then multiplying that value by four. This value includes the following consumption models: (1) software subscription agreements, including committed term licenses, (2) as-a-service arrangements such as SaaS and PaaS, and (3) maintenance and support contracts. ARR should be viewed independently of software revenue as this performance metric and its inputs may not represent revenue that will be recognized in future periods.

<u>Red Hat Annual Bookings:</u>

Annual bookings (or Annual Contract Value (ACV)) is a key performance metric management uses in its assessment of a customer's commitment under Red Hat subscription and services contracts and provides an indication of forward-looking Red Hat revenue trajectory. It represents the value of a contract over a 12-month period, as of the date of contract signing. Annual bookings is calculated by taking the total subscription and service contract value divided by the number of days in the contract, multiplied by 365, plus the revenue recognized in the quarter for select cloud based offerings. Annual bookings should be viewed independently of revenue as this performance metric and its inputs may not represent the amount of revenue recognized in the period. For example, the conversion of annual bookings to revenue may vary based on types of services, customer decisions, start dates, and other factors. Therefore, annual bookings is not intended to represent current period revenue or revenue that will be recognized in future periods.

<u>GenAI Book of Business:</u>

Generative AI (GenAI) book of business is a key performance metric management uses to assess the progress and growth of the company's AI strategy and offerings. It is calculated as inception to date Software transactional revenue, plus new SaaS Annual Contract Value and Consulting signings related to specific offerings. Since second-quarter 2023, approximately one-fifth of this book of business comes from Software, and the remaining four-fifths is Consulting. Our book of business reflects the value we are delivering to clients in two ways. First, we are partnering with our clients to design and scale AI solutions, whether that be leveraging AI capabilities of IBM, our partners, or a combination of both. Second, we are utilizing generative AI solutions to improve delivery by developing new ways of working and driving productivity within our client contracts. GenAI book of business should be viewed independently of revenue as this performance metric is not intended to represent current period revenue or revenue that will be recognized in future periods.

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