Table:
| ($ in millions) |  |  |  |
| --- | --- | --- | --- |
| For the year ended December 31: | 2018* | 2017* | Yr.-to-Yr. Percent/ Margin Change |
| Cloud & Cognitive Software |  |  |  |
| External gross profit | $17,224 | $16,986 | 1.4% |
| External gross profit margin | 77.6% | 78.1% | (0.5)pts. |
| Pre-tax income | $8,882 | $8,068 | 10.1% |
| Pre-tax margin | 35.0% | 32.4% | 2.6pts. |
Paragraphs:
Cloud & Cognitive Software revenue increased in 2018 compared to the prior year with growth in all three lines of business, as reported and adjusted for currency. Within Cognitive Applications, the increase was driven by strong double-digit growth in security services, while growth in Cloud & Data Platforms was led by analytics platforms and integration offerings. Transaction Processing Platforms grew with improved revenue performance sequentially in the fourth-quarter 2018 versus the third-quarter 2018 reflecting clients’ commitment to the company’s platform for the long term and the value it provides in managing mission-critical workloads. Within Cloud & Cognitive Software, cloud revenue of $3.0 billion grew 10 percent as reported and adjusted for currency compared to the prior year.
* Recast to reflect segment changes.
Gross margin in Cloud & Cognitive Software was impacted by an increased mix toward SaaS, a mix toward security services and increased royalty costs associated with IP licensing agreements compared to the prior year. Pre-tax income improvement year to year was primarily driven by operational efficiencies and mix.
Question:
What impacted the Gross margin in Cloud & Cognitive Software?
Answer: impacted by an increased mix toward SaaS, a mix toward security services and increased royalty costs associated with IP licensing agreements compared to the prior year