10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED JUNE 30, 2024

1-2360

(Commission file number)

INTERNATIONAL BUSINESS MACHINES CORPORATION

(Exact name of registrant as specified in its charter)

New York (State of incorporation)	13-0871985 (IRS employer identification number)
One New Orchard Road Armonk, New York (Address of principal executive offices)	10504 (Zip Code)

914-499-1900

(Registrant’s telephone number)

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 Chicago
1.125% Notes due 2024	IBM 24A	New York Stock Exchange
2.875% Notes due 2025	IBM 25A	New York Stock Exchange
0.950% Notes due 2025	IBM 25B	New York Stock Exchange
0.875% Notes due 2025	IBM 25C	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
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
1.250% Notes due 2034	IBM 34	New York Stock Exchange
3.750% Notes due 2035	IBM 35	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
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 (1) has filed all reports required to be filed by Section l3 or l5(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer ☐
Non-accelerated filer	☐	Smaller reporting company ☐
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 921,148,195 shares of common stock outstanding at June 30, 2024.

Index

	Page
Part I - Financial Information:
Item 1. Consolidated Financial Statements (Unaudited):
Consolidated Income Statement for the three and six months ended June 30, 2024 and 2023	3
Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2024 and 2023	4
Consolidated Balance Sheet at June 30, 2024 and December 31, 2023	5
Consolidated Statement of Cash Flows for the six months ended June 30, 2024 and 2023	7
Consolidated Statement of Equity for the three and six months ended June 30, 2024 and 2023	8
Notes to Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition	49
Item 4. Controls and Procedures	83
Part II - Other Information:
Item 1. Legal Proceedings	84
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities	84
Item 6. Exhibits	85

2

Part I - Financial Information

Item 1. Consolidated Financial Statements:

INTERNATIONAL BUSINESS MACHINES CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED INCOME STATEMENT

(UNAUDITED)

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions except per share amounts)	2024		2023		2024		2023
Revenue:
Services	$	7,405	$	7,553	$	14,876	$	15,077
Sales	8,195		7,739		14,994		14,271
Financing	169		183		361		380
Total revenue	15,770		15,475		30,231		29,727
Cost:
Services	5,126		5,294		10,365		10,604
Sales	1,607		1,587		2,988		2,910
Financing	86		93		186		203
Total cost	6,820		6,974		13,539		13,717
Gross profit	8,950		8,501		16,692		16,010
Expense and other (income):
Selling, general and administrative	4,938		4,900		9,912		9,754
Research, development and engineering	1,840		1,687		3,637		3,342
Intellectual property and custom development income	(241)		(248)		(458)		(428)
Other (income) and expense	(233)		(261)		(550)		(506)
Interest expense	427		423		859		790
Total expense and other (income)	6,730		6,501		13,399		12,952
Income from continuing operations before income taxes	2,219		2,000		3,293		3,058
Provision for/(benefit from) income taxes	389		419		(112)		543
Income from continuing operations	$	1,830	$	1,581	$	3,405	$	2,515
Income/(loss) from discontinued operations, net of tax	4		2		34		(4)
Net income	$	1,834	$	1,583	$	3,439	$	2,511
Earnings/(loss) per share of common stock:
Assuming dilution:
Continuing operations	$	1.96	$	1.72	$	3.65	$	2.74
Discontinued operations	0.00		0.00		0.04		0.00
Total	$	1.96	$	1.72	$	3.68	$	2.73
Basic:
Continuing operations	$	1.99	$	1.74	$	3.71	$	2.77
Discontinued operations	0.00		0.00		0.04		0.00
Total	$	1.99	$	1.74	$	3.74	$	2.76
Weighted-average number of common shares outstanding: (millions)
Assuming dilution	934.4		919.5		933.9		918.6
Basic	920.3		909.9		918.7		908.7

(Amounts may not add due to rounding.)

(The accompanying notes are an integral part of the financial statements.)

3

INTERNATIONAL BUSINESS MACHINES CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Net income	$	1,834	$	1,583	$	3,439	$	2,511
Other comprehensive income/(loss), before tax:
Foreign currency translation adjustments	2		116		57		29
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	1		(17)		1		(1)
Reclassification of (gains)/losses to net income	—		—		—		—
Total net changes related to available-for-sale securities	1		(17)		1		(1)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	103		178		279		149
Reclassification of (gains)/losses to net income	(42)		(30)		28		(152)
Total unrealized gains/(losses) on cash flow hedges	61		148		307		(3)
Retirement-related benefit plans:
Prior service costs/(credits)	—		—		—		—
Net (losses)/gains arising during the period	0		0		1		2
Curtailments and settlements	2		6		4		5
Amortization of prior service costs/(credits)	(2)		(2)		(4)		(4)
Amortization of net (gains)/losses	258		130		519		261
Total retirement-related benefit plans	259		134		520		263
Other comprehensive income/(loss), before tax	322		381		885		289
Income tax (expense)/benefit related to items of other comprehensive income	(153)		(101)		(442)		(48)
Other comprehensive income/(loss), net of tax	169		280		442		241
Total comprehensive income	$	2,003	$	1,863	$	3,882	$	2,751

(Amounts may not add due to rounding.)

(The accompanying notes are an integral part of the financial statements.)

4

INTERNATIONAL BUSINESS MACHINES CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

ASSETS

(Dollars in millions)	At June 30, 2024		At December 31, 2023
Assets:
Current assets:
Cash and cash equivalents	$	12,210	$	13,068
Restricted cash	2,268		21
Marketable securities	1,481		373
Notes and accounts receivable — trade (net of allowances of $129 in 2024 and $192 in 2023)	5,769		7,214
Short-term financing receivables:
Held for investment (net of allowances of $115 in 2024 and $129 in 2023)	5,075		6,102
Held for sale	723		692
Other accounts receivable (net of allowances of $36 in 2024 and $109 in 2023)	757		640
Inventory, at lower of average cost or net realizable value:
Finished goods	141		78
Work in process and raw materials	1,093		1,083
Total inventory	1,234		1,161
Deferred costs	997		998
Prepaid expenses and other current assets	2,784		2,639
Total current assets	33,299		32,908
Property, plant and equipment	17,911		18,122
Less: Accumulated depreciation	12,311		12,621
Property, plant and equipment — net	5,600		5,501
Operating right-of-use assets — net	3,130		3,220
Long-term financing receivables (net of allowances of $21 in 2024 and $27 in 2023)	5,483		5,766
Prepaid pension assets	7,630		7,506
Deferred costs	820		842
Deferred taxes	6,378		6,656
Goodwill	59,416		60,178
Intangible assets — net	10,251		11,036
Investments and sundry assets	1,840		1,626
Total assets	$	133,848	$	135,241

(Amounts may not add due to rounding.)

(The accompanying notes are an integral part of the financial statements.)

5

INTERNATIONAL BUSINESS MACHINES CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEET – (CONTINUED)

(UNAUDITED)

LIABILITIES AND EQUITY

(Dollars in millions except per share amounts)	At June 30, 2024		At December 31, 2023
Liabilities:
Current liabilities:
Taxes	$	1,691	$	2,270
Short-term debt	3,602		6,426
Accounts payable	3,631		4,132
Compensation and benefits	3,125		3,501
Deferred income	13,643		13,451
Operating lease liabilities	762		820
Other accrued expenses and liabilities	3,195		3,521
Total current liabilities	29,648		34,122
Long-term debt	52,929		50,121
Retirement and nonpension postretirement benefit obligations	10,200		10,808
Deferred income	3,489		3,533
Operating lease liabilities	2,546		2,568
Other liabilities	10,932		11,475
Total liabilities	109,745		112,628
Equity:
IBM stockholders’ equity:
Common stock, par value $0.20 per share, and additional paid-in capital	60,501		59,643
Shares authorized: 4,687,500,000
Shares issued: 2024 - 2,273,721,246
2023 - 2,266,911,160
Retained earnings	151,659		151,276
Treasury stock - at cost	(169,815)		(169,624)
Shares: 2024 - 1,352,573,051
2023 - 1,351,897,514
Accumulated other comprehensive income/(loss)	(18,319)		(18,761)
Total IBM stockholders’ equity	24,026		22,533
Noncontrolling interests	77		80
Total equity	24,103		22,613
Total liabilities and equity	$	133,848	$	135,241

(Amounts may not add due to rounding.)

(The accompanying notes are an integral part of the financial statements.)

6

INTERNATIONAL BUSINESS MACHINES CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June 30,
(Dollars in millions)	2024		2023
Cash flows from operating activities:
Net income	$	3,439	$	2,511
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation (1)	1,081		1,047
Amortization of capitalized software and acquired intangible assets	1,205		1,104
Stock-based compensation	636		556
Net (gain)/loss on divestitures, asset sales and other (2)	(280)		(19)
Changes in operating assets and liabilities, net of acquisitions/divestitures (2)	152		1,214
Net cash provided by operating activities	6,234		6,412
Cash flows from investing activities:
Payments for property, plant and equipment	(459)		(664)
Proceeds from disposition of property, plant and equipment/other	57		25
Investment in software	(358)		(305)
Acquisition of businesses, net of cash acquired	(235)		(356)
Divestitures of businesses, net of cash transferred	703		6
Purchases of marketable securities and other investments	(5,596)		(9,260)
Proceeds from disposition of marketable securities and other investments	3,917		2,600
Net cash provided by/(used in) investing activities	(1,971)		(7,953)
Cash flows from financing activities:
Proceeds from new debt	5,705		9,432
Payments to settle debt	(5,224)		(3,260)
Short-term borrowings/(repayments) less than 90 days — net	—		(3)
Common stock repurchases for tax withholdings	(350)		(240)
Financing — other	289		56
Cash dividends paid	(3,058)		(3,007)
Net cash provided by/(used in) financing activities	(2,638)		2,978
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(236)		(1)
Net change in cash, cash equivalents and restricted cash	1,389		1,436
Cash, cash equivalents and restricted cash at January 1	13,089		7,988
Cash, cash equivalents and restricted cash at June 30	$	14,478	$	9,425

(1) Includes operating lease right-of-use assets amortization expense of $0.4 billion in 2024 and $0.5 billion in 2023.

(2) Prior period has been reclassified to conform to the change in 2024 presentation.

(Amounts may not add due to rounding.)

(The accompanying notes are an integral part of the financial statements.)

7

INTERNATIONAL BUSINESS MACHINES CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF EQUITY

(UNAUDITED)

(Dollars in millions except per share amounts)	Common Stock and Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income/(Loss)		Total IBM Stockholders' Equity		Non- Controlling Interests		Total Equity
Equity - April 1, 2024	$	60,145	$	151,362	$	(169,759)	$	(18,488)	$	23,261	$	72	$	23,333
Net income plus other comprehensive income/(loss):
Net income			1,834						1,834				1,834
Other comprehensive income/(loss)							169		169				169
Total comprehensive income									$	2,003			$	2,003
Cash dividends paid — common stock ($1.67 per share)			(1,537)						(1,537)				(1,537)
Common stock issued under employee plans (2,646,967 shares)	356								356				356
Purchases (856,885 shares) and sales (755,447 shares) of treasury stock under employee plans — net			(1)		(57)				(58)				(58)
Changes in noncontrolling interests											5		5
Equity – June 30, 2024	$	60,501	$	151,659	$	(169,815)	$	(18,319)	$	24,026	$	77	$	24,103

(Dollars in millions except per share amounts)	Common Stock and Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income/(Loss)		Total IBM Stockholders' Equity		Non- Controlling Interests		Total Equity
Equity - April 1, 2023	$	58,675	$	149,253	$	(169,544)	$	(16,780)	$	21,604	$	68	$	21,672
Net income plus other comprehensive income/(loss):
Net income			1,583						1,583				1,583
Other comprehensive income/(loss)							280		280				280
Total comprehensive income									$	1,863			$	1,863
Cash dividends paid — common stock ($1.66 per share)			(1,510)						(1,510)				(1,510)
Common stock issued under employee plans (3,199,344 shares)	288								288				288
Purchases (1,098,988 shares) and sales (860,470 shares) of treasury stock under employee plans — net			(8)		(37)				(45)				(45)
Changes in noncontrolling interests											2		2
Equity - June 30, 2023	$	58,963	$	149,318	$	(169,581)	$	(16,499)	$	22,201	$	70	$	22,271

(Amounts may not add due to rounding.)

(The accompanying notes are an integral part of the financial statements.)

8

INTERNATIONAL BUSINESS MACHINES CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF EQUITY

(UNAUDITED)

(Dollars in millions except per share amounts)	Common Stock and Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income/(Loss)		Total IBM Stockholders' Equity		Non- Controlling Interests		Total Equity
Equity - January 1, 2024	$	59,643	$	151,276	$	(169,624)	$	(18,761)	$	22,533	$	80	$	22,613
Net income plus other comprehensive income/(loss):
Net income			3,439						3,439				3,439
Other comprehensive income/(loss)							442		442				442
Total comprehensive income									$	3,882			$	3,882
Cash dividends paid — common stock ($3.33 per share)			(3,058)						(3,058)				(3,058)
Common stock issued under employee plans (6,810,086 shares)	858								858				858
Purchases (1,944,555 shares) and sales (1,269,017 shares) of treasury stock under employee plans — net			3		(191)				(188)				(188)
Changes in noncontrolling interests											(3)		(3)
Equity - June 30, 2024	$	60,501	$	151,659	$	(169,815)	$	(18,319)	$	24,026	$	77	$	24,103

(Dollars in millions except per share amounts)	Common Stock and Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income/(Loss)		Total IBM Stockholders' Equity		Non- Controlling Interests		Total Equity
Equity - January 1, 2023	$	58,343	$	149,825	$	(169,484)	$	(16,740)	$	21,944	$	77	$	22,021
Net income/(loss) plus other comprehensive income/(loss):
Net income/(loss)			2,511						2,511				2,511
Other comprehensive income/(loss)							241		241				241
Total comprehensive income									$	2,751			$	2,751
Cash dividends paid — common stock ($3.31 per share)			(3,007)						(3,007)				(3,007)
Common stock issued under employee plans (5,580,271 shares)	619								619				619
Purchases (1,810,313 shares) and sales (1,144,305 shares) of treasury stock under employee plans — net			(10)		(97)				(107)				(107)
Changes in noncontrolling interests											(7)		(7)
Equity - June 30, 2023	$	58,963	$	149,318	$	(169,581)	$	(16,499)	$	22,201	$	70	$	22,271

(Amounts may not add due to rounding.)

(The accompanying notes are an integral part of the financial statements.)

9

Notes to Consolidated Financial Statements

1. Basis of Presentation:

The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial statements and footnotes are unaudited. In the opinion of the company’s management, these statements include all adjustments, which are only of a normal recurring nature, necessary to present a fair statement of the company’s results of operations, financial position and cash flows.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates.

For the three and six months ended June 30, 2024, the company reported a provision for income taxes of $389 million and a benefit from income taxes of $112 million, respectively, and the effective tax rate was 17.5 percent and (3.4) percent, respectively. The benefit from income taxes in the six months ended June 30, 2024, was primarily driven by the resolution of certain tax audit matters in the first quarter. For the three and six months ended June 30, 2023, the company reported a provision for income taxes of $419 million and $543 million, respectively, and the effective tax rate was 21.0 percent and 17.8 percent, respectively.

Noncontrolling interest amounts, included as a reduction within other (income) and expense in the Consolidated Income Statement, were not material to the consolidated results for the periods presented.

The company has supplier finance programs with third-party financial institutions where the company agrees to pay the financial institutions the stated amounts of invoices from participating suppliers on the originally invoiced maturity date, which have an average term of 90 to 120 days, consistent with the company's standard payment terms. The financial institutions offer earlier payment of the invoices at the sole discretion of the supplier for a discounted amount. The company does not provide secured legal assets or other forms of guarantees under the arrangements. The company is not a party to the arrangements between its suppliers and the financial institutions. These obligations are recognized as accounts payable in the Consolidated Balance Sheet. The obligations outstanding under these programs at June 30, 2024 and December 31, 2023 were $116 million and $101 million, respectively.

Interim results are not necessarily indicative of financial results for a full year. The information included in this Form 10-Q should be read in conjunction with the company’s 2023 Annual Report.

Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior-period amounts have been reclassified to conform to the change in current-period presentation. This is annotated where applicable.

2. Accounting Changes:

New Standards to be Implemented

Income Tax Disclosures

Standard/Description–Issuance date: December 2023. This guidance requires disaggregated disclosure of the tax rate reconciliation into eight categories, with further disaggregation required for items greater than a specific threshold. Additionally, the guidance requires the disclosure of income taxes paid disaggregated by federal, state and foreign jurisdictions.

10

Notes to Consolidated Financial Statements — (continued)

Effective Date and Adoption Considerations–The guidance is effective January 1, 2025 and early adoption is permitted. The company expects to adopt the guidance as of the effective date.

Effect on Financial Statements or Other Significant Matters–As the guidance is a change to disclosures only, it will impact the “Taxes” note within the company's annual financial statements but will not impact the consolidated financial results.

Segment Reporting Disclosures

Standard/Description–Issuance date: November 2023. This guidance requires the disclosure of significant segment expenses that are regularly provided to a company's chief operating decision maker and included within each reported measure of segment profit or loss. The company must also disclose “other segment items,” which is the difference between segment revenue less significant expenses for each reported measure of segment profit or loss, and a description of its composition. This guidance also requires all segment annual disclosures to be provided on an interim basis.

Effective Date and Adoption Considerations–The guidance is effective for annual periods beginning in 2024, and for interim periods beginning January 1, 2025, and is required to be applied on a retrospective basis to all prior periods presented. Early adoption is permitted. The company will adopt the guidance as of the effective date.

Effect on Financial Statements or Other Significant Matters–As the guidance is a change to disclosures only, it will impact the “Segments” note within the company's quarterly and annual financial statements but will not have an impact in the consolidated financial results.

Standards Implemented

Disclosures of Supplier Finance Program Obligations

Standard/Description–Issuance date: September 2022. This guidance requires an entity to provide certain interim and annual disclosures about the use of supplier finance programs in connection with the purchase of goods or services.

Effective Date and Adoption Considerations–The guidance was effective January 1, 2023 with certain annual disclosures required beginning in 2024 and early adoption was permitted. The company adopted the guidance as of the effective date.

Effect on Financial Statements or Other Significant Matters–As the guidance is a change to disclosures only, it did not have an impact in the consolidated financial results. Refer to note 1, "Basis of Presentation," for additional disclosure information.

11

Notes to Consolidated Financial Statements — (continued)

3. Revenue Recognition:

Disaggregation of Revenue

The following tables provide details of revenue by major products/service offerings and revenue by geography.

Revenue by Major Products/Service Offerings

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023 (1)		2024		2023 (1)
Hybrid Platform & Solutions	$	4,575	$	4,350	$	8,673	$	8,200
Transaction Processing	2,164		1,943		3,964		3,685
Total Software	$	6,739	$	6,294	$	12,637	$	11,885
Business Transformation	2,360		2,295		4,677		4,578
Application Operations	1,902		1,991		3,840		3,980
Technology Consulting	917		941		1,848		1,866
Total Consulting	$	5,179	$	5,226	$	10,365	$	10,423
Hybrid Infrastructure	2,360		2,260		4,163		3,969
Infrastructure Support	1,285		1,358		2,558		2,747
Total Infrastructure	$	3,645	$	3,618	$	6,721	$	6,716
Financing (2)	169		185		362		380
Other	38		152		146		321
Total revenue	$	15,770	$	15,475	$	30,231	$	29,727

(1)Recast to reflect January 2024 segment changes. Refer to note 4, "Segments," for additional information.

(2)Contains lease and loan financing arrangements which are not subject to the guidance on revenue from contracts with customers.

Revenue by Geography

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Americas	$	7,979	$	8,046	$	15,275	$	15,124
Europe/Middle East/Africa	4,722		4,602		9,035		8,933
Asia Pacific	3,069		2,827		5,922		5,670
Total	$	15,770	$	15,475	$	30,231	$	29,727

Remaining Performance Obligations

The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency.

12

Notes to Consolidated Financial Statements — (continued)

At June 30, 2024, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was approximately $56 billion. Approximately 70 percent of the amount is expected to be recognized as revenue in the subsequent two years, approximately 27 percent in the subsequent three to five years and the balance thereafter.

Revenue Recognized for Performance Obligations Satisfied (or Partially Satisfied) in Prior Periods

For the three and six months ended June 30, 2024, revenue recognized for performance obligations satisfied or partially satisfied in prior periods was immaterial.

Reconciliation of Contract Balances

The following table provides information about notes and accounts receivable–trade, contract assets and deferred income balances.

(Dollars in millions)	At June 30, 2024		At December 31, 2023
Notes and accounts receivable — trade (net of allowances of $129 in 2024 and $192 in 2023)	$	5,769	$	7,214
Contract assets (1)	$	540	$	505
Deferred income (current)	$	13,643	$	13,451
Deferred income (noncurrent)	$	3,489	$	3,533

(1)Included within prepaid expenses and other current assets in the Consolidated Balance Sheet.

The amount of revenue recognized during the six months ended June 30, 2024 that was included within the deferred income balance at December 31, 2023 was $7.4 billion and was primarily related to software and services.

The following table provides roll forwards of the notes and accounts receivable–trade allowance for expected credit losses for the six months ended June 30, 2024 and the year ended December 31, 2023.

(Dollars in millions)
January 1, 2024	Additions / (Releases)	Write-offs (1)	Foreign currency and other	June 30, 2024
$192	$(7)	$(61)	$4	$129

January 1, 2023	Additions / (Releases)	Write-offs (1)	Foreign currency and other	December 31, 2023
$233	$32	$(79)	$6	$192

(1)The majority of the write-offs during the period related to receivables which had been previously reserved.

The contract assets allowance for expected credit losses was not material in any of the periods presented.

13

Notes to Consolidated Financial Statements — (continued)

4. Segments:

In the first quarter of 2024, the company made changes to its organization structure and management system to better align its portfolio with the market, increase transparency and improve segment comparability to peers. These changes did not impact the company's Consolidated Financial Statements, but did impact its reportable segments. Due to the removal of certain components of segment profitability, as described below, the company also updated the title of its segment performance metric from pre-tax income from continuing operations to segment profit.

The following table displays the segment updates:

Reportable Segment Change	Resulting Segment Implications
The Weather Company asset divestiture (1)	-	Software Segment
	+	Other-divested businesses
Security Services realignment	-	Software Segment
	+	Consulting Segment
Removal of stock-based compensation and net interest allocations from segment profitability	-	Software Segment, Consulting Segment, Infrastructure Segment, Financing Segment (2)
	+	Other

(1) The Weather Company asset divestiture closed January 31, 2024.

(2) Presentation of interest for the Financing Segment did not change.

The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company and have been recast for the prior-year periods to reflect the company's segment changes described above. These results are used by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments.

14

Notes to Consolidated Financial Statements — (continued)

SEGMENT INFORMATION

(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the three months ended June 30, 2024:
Revenue	$	6,739		$	5,179		$	3,645		$	169		$	15,732
Segment profit	$	2,113		$	463		$	654		$	77		$	3,306
Revenue year-to-year change	7.1		%	(0.9)		%	0.7		%	(8.3)		%	2.7		%
Segment profit year-to-year change	20.8		%	(4.0)		%	(10.7)		%	19.3		%	9.2		%
Segment profit margin	31.3		%	8.9		%	17.9		%	45.3		%	21.0		%
For the three months ended June 30, 2023: (1)
Revenue	$	6,294		$	5,226		$	3,618		$	185		$	15,322
Segment profit	$	1,749		$	483		$	732		$	64		$	3,028
Segment profit margin	27.8		%	9.2		%	20.2		%	34.8		%	19.8		%

(1) Recast to reflect January 2024 segment changes.

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended June 30:	2024		2023 (1)
Revenue:
Total reportable segments	$	15,732	$	15,322
Other‒divested businesses	0		101
Other revenue	38		52
Total revenue from continuing operations	$	15,770	$	15,475
Pre-tax income from continuing operations:
Total reportable segment profit	$	3,306	$	3,028
Amortization of acquired intangible assets	(439)		(389)
Acquisition-related (charges)/income (2)	(36)		(7)
Non-operating retirement-related (costs)/income	(98)		(1)
Stock-based compensation	(316)		(288)
Net interest excluding the Financing segment	(218)		(225)
Workforce rebalancing charges	(18)		(117)
Other‒divested businesses	(4)		23
Unallocated corporate amounts and other	41		(24)
Total pre-tax income from continuing operations	$	2,219	$	2,000

(1)Recast to reflect January 2024 segment changes.

(2)2024 includes the impact of foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, "Derivative Financial Instruments," for additional information.

15

Notes to Consolidated Financial Statements — (continued)

SEGMENT INFORMATION

(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the six months ended June 30, 2024:
Revenue	$	12,637		$	10,365		$	6,721		$	362		$	30,085
Segment profit	$	3,612		$	888		$	965		$	168		$	5,633
Revenue year-to-year change	6.3		%	(0.6)		%	0.1		%	(4.9)		%	2.3		%
Segment profit year-to-year change	15.5		%	(2.4)		%	(7.1)		%	2.4		%	7.5		%
Segment profit margin	28.6		%	8.6		%	14.4		%	46.5		%	18.7		%
For the six months ended June 30, 2023: (1)
Revenue	$	11,885		$	10,423		$	6,716		$	380		$	29,406
Segment profit	$	3,128		$	910		$	1,039		$	164		$	5,241
Segment profit margin	26.3		%	8.7		%	15.5		%	43.2		%	17.8		%

(1) Recast to reflect January 2024 segment changes.

Reconciliations to IBM as Reported:

(Dollars in millions)
For the six months ended June 30:	2024		2023 (1)
Revenue:
Total reportable segments	$	30,085	$	29,406
Other‒divested businesses	35		195
Other revenue	111		127
Total revenue from continuing operations	$	30,231	$	29,727
Pre-tax income from continuing operations:
Total reportable segment profit	$	5,633	$	5,241
Amortization of acquired intangible assets	(866)		(781)
Acquisition-related (charges)/income (2)	(96)		(10)
Non-operating retirement-related (costs)/income	(194)		4
Stock-based compensation	(636)		(556)
Net interest excluding the Finance segment	(442)		(442)
Workforce rebalancing changes	(392)		(376)
Other‒divested businesses (3)	235		36
Unallocated corporate amounts and other	50		(57)
Total pre-tax income from continuing operations	$	3,293	$	3,058

(1)Recast to reflect January 2024 segment changes.

(2)2024 includes the impact of foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, "Derivative Financial Instruments," for additional information.

(3)2024 includes a gain on the sale of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

16

Notes to Consolidated Financial Statements — (continued)

5. Acquisitions & Divestitures:

Acquisitions

Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions, unless otherwise stated, were for 100 percent of the acquired business and are reported in the Consolidated Statement of Cash Flows, net of acquired cash and cash equivalents.

During the six months ended June 30, 2024, the company completed two acquisitions within the Software segment and two acquisitions within the Consulting segment at an aggregate cost of $278 million. These acquisitions are expected to enhance the company’s portfolio of products and services capabilities and further advance IBM’s hybrid cloud and AI strategy. These acquisitions did not have a material impact in the company's Consolidated Financial Statements.

At June 30, 2024, the remaining cash to be remitted by the company related to the first-half 2024 acquisitions was not material.

The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocation as of June 30, 2024.

(Dollars in millions)	Amortization Life (in years)	All Acquisitions
Current assets		$	35
Property, plant and equipment/noncurrent assets		3
Intangible assets:
Goodwill	N/A	207
Client relationships	1-7	36
Completed technology	7	37
Trademarks	3	1
Total assets acquired		$	319
Current liabilities		24
Noncurrent liabilities		16
Total liabilities assumed		$	41
Total purchase price		$	278

N/A – not applicable

The valuation of the assets acquired and liabilities assumed is subject to revision. If additional information becomes available, the company may further revise the purchase price allocation as soon as practical, but no later than one year from the acquisition date.

17

Notes to Consolidated Financial Statements — (continued)

Transactions Closed in Third-Quarter 2024 — At the time of issuance of the financial statements, the initial purchase price accounting for each of the closed acquisitions below was not complete.

On July 1, 2024, the company completed the acquisition of StreamSets and webMethods from Software AG for approximately $2.3 billion (€2.13 billion) in cash. StreamSets will add new data ingestion capabilities to IBM's data platform and webMethods will bring integration platform-as-a-service (iPaaS) capabilities to IBM's automation solutions. The acquisition will be integrated into the Software segment. Prior to the acquisition, the company entered into foreign currency derivative contracts which expired by June 28, 2024. Refer to note 16, “Derivative Financial Instruments,” for financial impacts and additional information. At June 30, 2024, $2.3 billion was held in escrow and classified as restricted cash in the Consolidated Balance Sheet in connection with the acquisition. The cash was remitted to Software AG on July 1, 2024.

On July 1, 2024, the company completed an acquisition within the Consulting segment which is not expected to have a material impact on the company's Consolidated Financial Statements.

Transactions Announced — On April 24, 2024, the company announced its intent to acquire all of the outstanding shares of HashiCorp, Inc. (HashiCorp). IBM’s and HashiCorp’s combined portfolios will help clients manage growing application and infrastructure complexity and create a comprehensive end-to-end hybrid cloud platform designed for the AI era. Under the terms of the definitive agreement, HashiCorp's shareholders on record immediately prior to the effective time on the closing date will receive $35 per share in cash, representing a total enterprise value of approximately $6.4 billion. On July 15, 2024, HashiCorp stockholders voted to approve the merger with IBM. The transaction is expected to close by the end of 2024, subject to regulatory approvals and other customary closing conditions. Upon closing, HashiCorp will be integrated into the Software segment.

Divestitures

The Weather Company Assets — On January 31, 2024, the company completed the sale of The Weather Company assets to Zephyr Buyer, L.P., a wholly-owned subsidiary of Francisco Partners (collectively, Francisco). Under the agreement, Francisco acquired The Weather Company assets from IBM for $1,100 million inclusive of $250 million of contingent consideration, of which $200 million is contingent on Francisco’s attainment of certain investment return metrics. The assets include The Weather Company's digital consumer-facing offerings, The Weather Channel mobile and cloud-based digital properties including Weather.com, Weather Underground and Storm Radar, as well as its enterprise offerings for broadcast, media, aviation, advertising technology and data solutions for other emerging industries.

Upon closing, the company received cash proceeds of $750 million and provided seller financing to Francisco in the form of a $100 million loan with a term of 7 years. The cash proceeds from the sale were included in cash from investing activities within the Consolidated Statement of Cash Flows. The seller financing is a non-cash investing activity. For the six months ended June 30, 2024, the company recognized a pre-tax gain on sale of $239 million in other (income) and expense in the Consolidated Income Statement. As discussed in note 4, “Segments,” in the first quarter of 2024, The Weather Company assets previously reported in the Software segment were moved and recast to the Other–divested businesses category.

18

Notes to Consolidated Financial Statements — (continued)

Sale of Assets

Transaction Signed — In May 2024, IBM and Palo Alto Networks (Palo Alto) entered into a definitive agreement whereby Palo Alto will acquire from IBM certain QRadar SaaS (software-as-a-service) assets including QRadar intellectual property, customer relationships and customer contracts for approximately $500 million in cash. The transaction is expected to close in the third quarter of 2024, subject to regulatory approvals and other customary closing conditions. The company expects to recognize a pre-tax gain on the sale of assets, of which the final amount is not yet determinable.

Upon closing, IBM and Palo Alto will facilitate the migration of QRadar SaaS and IBM's QRadar on-premise (on-prem) clients to Palo Alto’s Cortex XSIAM, their security operations (SOC) platform. As part of the agreement, IBM will receive incremental future cash payments from Palo Alto for QRadar on-prem clients that choose to migrate to the Cortex XSIAM platform.

Also, in connection with the sale of the QRadar SaaS assets, IBM and Palo Alto will enter into various commercial agreements pursuant to which IBM will purchase certain Palo Alto products and services and IBM will license and/or provide certain software, including SaaS, and consulting services to Palo Alto. IBM will also provide Palo Alto with transition services including support, operations and other services for QRadar SaaS customer contracts. The commercial agreements entered into during the second quarter of 2024 did not have a material impact on IBM's Consolidated Financial Statements.

At June 30, 2024, the sale of the QRadar SaaS assets met the criteria for held for sale classification. Held for sale assets of approximately $113 million, consisting primarily of intangible assets – net, and held for sale liabilities of $37 million, consisting primarily of deferred income, were included in the company’s Consolidated Balance Sheet at June 30, 2024. These held for sale assets and liabilities are reported within the company’s Software segment.

6. Other (Income) and Expense:

Components of other (income) and expense are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Other (income) and expense:
Foreign currency transaction losses/(gains) (1)	$	(140)	$	(166)	$	(345)	$	(78)
(Gains)/losses on derivative instruments (1)	140		141		427		(1)
Interest income	(217)		(201)		(427)		(371)
Net (gains)/losses from securities and investment assets	0		3		(10)		8
Retirement-related costs/(income)	98		1		194		(4)
Other (2)	(114)		(39)		(389)		(61)
Total other (income) and expense	$	(233)	$	(261)	$	(550)	$	(506)

(1)The company uses financial hedging instruments to limit specific currency risks related to foreign currency-based transactions. The hedging program does not hedge 100 percent of currency exposures and defers, versus eliminates, the impact of currency. Refer to note 16, "Derivative Financial Instruments," for additional information on foreign exchange risk.

(2)For the six months ended June 30, 2024, the company recognized a pre-tax gain of $239 million from the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

19

Notes to Consolidated Financial Statements — (continued)

7. Earnings Per Share of Common Stock:

The following tables provide the computation of basic and diluted earnings per share of common stock for the three and six months ended June 30, 2024 and 2023.

(Dollars in millions except per share amounts)
For the three months ended June 30:	2024		2023
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period	920,287,541		909,855,943
Add — Incremental shares under stock-based compensation plans	11,883,820		7,584,035
Add — Incremental shares associated with contingently issuable shares	2,226,234		2,012,519
Number of shares on which diluted earnings per share is calculated	934,397,595		919,452,496
Income from continuing operations	$	1,830	$	1,581
Income from discontinued operations, net of tax	4		2
Net income on which basic earnings per share is calculated	$	1,834	$	1,583
Income from continuing operations	$	1,830	$	1,581
Net income applicable to contingently issuable shares	—		—
Income from continuing operations on which diluted earnings per share is calculated	$	1,830	$	1,581
Income from discontinued operations, net of tax, on which diluted earnings per share is calculated	4		2
Net income on which diluted earnings per share is calculated	$	1,834	$	1,583
Earnings per share of common stock:
Assuming dilution
Continuing operations	$	1.96	$	1.72
Discontinued operations	0.00		0.00
Total	$	1.96	$	1.72
Basic
Continuing operations	$	1.99	$	1.74
Discontinued operations	0.00		0.00
Total	$	1.99	$	1.74

Stock options to purchase 2,985,594 shares and 5,541,485 shares were outstanding as of June 30, 2024 and 2023, respectively, but were not included in the computation of diluted earnings per share because the exercise price of the options during the respective period was greater than the average market price of the common shares, and therefore, the effect would have been antidilutive.

20

Notes to Consolidated Financial Statements — (continued)

(Dollars in millions except per share amounts)
For the six months ended June 30:	2024		2023
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period	918,733,160		908,691,415
Add — Incremental shares under stock-based compensation plans	13,070,105		8,096,637
Add — Incremental shares associated with contingently issuable shares	2,111,189		1,860,836
Number of shares on which diluted earnings per share is calculated	933,914,454		918,648,888
Income from continuing operations	$	3,405	$	2,515
Income/(loss) from discontinued operations, net of tax	34		(4)
Net income on which basic earnings per share is calculated	$	3,439	$	2,511
Income from continuing operations	$	3,405	$	2,515
Net income applicable to contingently issuable shares	—		—
Income from continuing operations on which diluted earnings per share is calculated	$	3,405	$	2,515
Income/(loss) from discontinued operations, net of tax, on which diluted earnings per share is calculated	34		(4)
Net income on which diluted earnings per share is calculated	$	3,439	$	2,511
Earnings/(loss) per share of common stock:
Assuming dilution
Continuing operations	$	3.65	$	2.74
Discontinued operations	0.04		0.00
Total	$	3.68	$	2.73
Basic
Continuing operations	$	3.71	$	2.77
Discontinued operations	0.04		0.00
Total	$	3.74	$	2.76

Stock options to purchase 1,523,477 shares and 3,251,207 shares (average of first and second quarter share amounts) were outstanding as of June 30, 2024 and 2023, respectively, but were not included in the computation of diluted earnings per share because the exercise price of the options during the respective period was greater than the average market price of the common shares, and therefore, the effect would have been antidilutive.

8. Financial Assets & Liabilities:

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The company classifies certain assets and liabilities based on the following fair value hierarchy:

•Level 1–Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date;

•Level 2–Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

•Level 3–Unobservable inputs for the asset or liability.

21

Notes to Consolidated Financial Statements — (continued)

When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation.

The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument.

In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value:

•Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument.

•Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market.

The company holds investments primarily in time deposits, certificates of deposit, and U.S. government debt that are designated as available-for-sale. The primary objective of the company’s cash and debt investment portfolio is to protect principal by investing in very liquid investment securities with highly rated counterparties.

The company’s standard practice is to hold all of its debt security investments classified as available-for-sale until maturity. No impairments for credit losses and no material non-credit impairments were recorded for the three and six months ended June 30, 2024 and 2023, respectively.

Certain non-financial assets such as property, plant and equipment (PP&E), operating right-of-use assets, goodwill and intangible assets are also subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for non-financial assets depend on the type of asset. There were no material impairments of non-financial assets for the three and six months ended June 30, 2024 and 2023, respectively.

22

Notes to Consolidated Financial Statements — (continued)

The following table presents the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at June 30, 2024 and December 31, 2023.

	Fair Value Hierarchy Level	At June 30, 2024				At December 31, 2023
(Dollars in millions)		Assets (6)		Liabilities (7)		Assets (6)		Liabilities (7)
Cash equivalents: (1)
Time deposits and certificates of deposit (2)	2	$	5,307	N/A		$	7,206	N/A
Money market funds	1	471		N/A		494		N/A
Total cash equivalents		$	5,778	N/A		$	7,699	N/A
Equity investments	1	—		N/A		25		N/A
Debt securities-current (2)(3)	2	1,481		N/A		373		N/A
Debt securities-noncurrent (2)(4)	2,3	108		N/A		8		N/A
Derivatives designated as hedging instruments:
Interest rate contracts	2	—		419		2		299
Foreign exchange contracts	2	402		161		131		275
Derivatives not designated as hedging instruments:
Foreign exchange contracts (5)	2	8		33		115		19
Equity contracts	2	22		10		93		—
Total		$	7,799	$	624	$	8,446	$	593

(1)Included within cash and cash equivalents in the Consolidated Balance Sheet.

(2)Available-for-sale debt securities with carrying values that approximate fair value.

(3)Term deposits and U.S. treasury bills that are reported within marketable securities in the Consolidated Balance Sheet. The June 30, 2024 balance includes proceeds from the first-quarter 2024 debt issuance. Refer to note 12, “Borrowings,” for additional information.

(4)June 30, 2024 amount includes a $100 million seller financing loan in connection with the divestiture of The Weather Company assets reported within investments and sundry assets in the Consolidated Balance Sheet. Refer to note 5, "Acquisitions & Divestitures," for additional information.

(5)December 31, 2023 asset amount includes $62 million in foreign exchange call option contracts in connection with the acquisition of StreamSets and webMethods from Software AG. There were no associated derivatives outstanding at June 30, 2024. Refer to note 16, "Derivative Financial Instruments," for additional information.

(6)The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Balance Sheet at June 30, 2024 were $424 million and $8 million, respectively, and at December 31, 2023 were $304 million and $37 million, respectively.

(7)The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Balance Sheet at June 30, 2024 were $173 million and $450 million, respectively, and at December 31, 2023 were $294 million and $299 million, respectively.

N/A – not applicable

Financial Assets and Liabilities Not Measured at Fair Value

Short-Term Receivables and Payables

Short-term receivables (excluding the current portion of long-term receivables) and other investments are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt (excluding the current portion of long-term debt) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy, except for short-term debt which would be classified as Level 2.

Loans and Long-Term Receivables

Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At June 30, 2024 and December 31, 2023, the difference between the carrying amount and estimated fair value for loans and long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy.

23

Notes to Consolidated Financial Statements — (continued)

Long-Term Debt

Fair value of publicly traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt (including long-term finance lease liabilities) for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. The carrying amount of long-term debt was $52,929 million and $50,121 million, and the estimated fair value was $49,844 million and $48,284 million at June 30, 2024 and December 31, 2023, respectively. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy.

9. Financing Receivables:

Financing receivables primarily consist of client loan and installment payment receivables (loans), investment in sales-type and direct financing leases (collectively referred to as client financing receivables) and commercial financing receivables. Loans are provided primarily to clients to finance the purchase of IBM hardware, software and services. Payment terms on these financing arrangements are for terms generally up to seven years. Investment in sales-type and direct financing leases relate principally to the company’s Infrastructure products and are for terms generally up to five years. Commercial financing receivables, which consist of both held-for-investment and held-for-sale receivables, relate primarily to working capital financing for business partners and distributors of IBM products and services. Payment terms for working capital financing generally range from 30 to 60 days.

A summary of the components of the company’s financing receivables is presented as follows:

	Client Financing Receivables
	Client Loan and Installment Payment Receivables		Investment in Sales-Type and Direct Financing
					Commercial Financing Receivables
(Dollars in millions)					Held for		Held for
At June 30, 2024	(Loans)		Leases		Investment		Sale (1)		Total
Financing receivables, gross	$	6,577	$	3,938	$	618	$	723	$	11,856
Unearned income	(500)		(401)		—		—		(901)
Unguaranteed residual value	—		464		—		—		464
Amortized cost	$	6,077	$	4,000	$	618	$	723	$	11,419
Allowance for credit losses	(75)		(57)		(5)		—		(137)
Total financing receivables, net	$	6,002	$	3,944	$	613	$	723	$	11,282
Current portion	$	2,956	$	1,507	$	613	$	723	$	5,799
Noncurrent portion	$	3,046	$	2,437	$	—	$	—	$	5,483

	Client Financing Receivables
	Client Loan and Installment Payment Receivables		Investment in Sales-Type and Direct Financing
					Commercial Financing Receivables
(Dollars in millions)					Held for		Held for
At December 31, 2023	(Loans)		Leases		Investment		Sale (1)		Total
Financing receivables, gross	$	7,060	$	4,261	$	1,160	$	692	$	13,173
Unearned income	(486)		(429)		—		—		(915)
Unguaranteed residual value	—		458		—		—		458
Amortized cost	$	6,574	$	4,290	$	1,160	$	692	$	12,716
Allowance for credit losses	(87)		(63)		(6)		—		(156)
Total financing receivables, net	$	6,486	$	4,227	$	1,155	$	692	$	12,560
Current portion	$	3,427	$	1,520	$	1,155	$	692	$	6,793
Noncurrent portion	$	3,059	$	2,707	$	—	$	—	$	5,766

(1)The carrying value of the receivables classified as held for sale approximates fair value.

24

Notes to Consolidated Financial Statements — (continued)

The company has a long-standing practice of taking mitigation actions, in certain circumstances, to transfer credit risk to third parties. These actions may include credit insurance, financial guarantees, nonrecourse secured borrowings, transfers of receivables recorded as true sales in accordance with accounting guidance or sales of equipment under operating lease. Sale of receivables arrangements are also utilized in the normal course of business as part of the company’s cash and liquidity management.

Financing receivables pledged as collateral for secured borrowings were $330 million and $232 million at June 30, 2024 and December 31, 2023, respectively. These borrowings are included in note 12, “Borrowings.”

Transfer of Financial Assets

The company has an existing agreement with a third-party investor to sell IBM short-term commercial financing receivables on a revolving basis. This agreement previously allowed for sales up to $3.0 billion. In December 2023, the company amended and renewed its agreement for a one-year term, which reduced the limit to $1.3 billion in January 2024. In addition, the company enters into agreements with third-party financial institutions to sell certain of its client financing receivables, including both loan and lease receivables, for cash proceeds. There were no material client financing receivables transferred for the six months ended June 30, 2024 and 2023.

The following table presents the total amount of commercial financing receivables transferred.

(Dollars in millions)
For the six months ended June 30:	2024		2023
Commercial financing receivables:
Receivables transferred during the period	$	3,686	$	4,345
Receivables uncollected at end of period (1)	$	786	$	928

(1)Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from business partners as of June 30, 2024 and 2023.

The transfer of these receivables qualified as true sales and therefore reduced financing receivables. The cash proceeds from the sales are included in cash flows from operating activities. For the six months ended June 30, 2024 and 2023, the net loss, including fees, associated with the transfer of commercial financial receivables was $33 million and $45 million, respectively, and is included in other (income) and expense in the Consolidated Income Statement.

Financing Receivables by Portfolio Segment

The following tables present the amortized cost basis for client financing receivables at June 30, 2024 and December 31, 2023, further segmented by three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. The commercial financing receivables portfolio segment is excluded from the tables in the sections below as the receivables are short term in nature and the current estimated risk of loss and resulting impact to the company’s financial results are not material.

(Dollars in millions)
At June 30, 2024:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,075	$	2,672	$	1,330	$	10,077
Allowance for credit losses:
Beginning balance at January 1, 2024	$	92	$	48	$	11	$	150
Write-offs	$	0	$	(1)	$	0	$	(1)
Recoveries	0		0		0		1
Additions/(releases)	(8)		(3)		0		(11)
Other (1)	(5)		(2)		0		(7)
Ending balance at June 30, 2024	$	78	$	43	$	10	$	131

(1)Primarily represents translation adjustments.

25

Notes to Consolidated Financial Statements — (continued)

(Dollars in millions)
At December 31, 2023:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,488	$	3,007	$	1,368	$	10,863
Allowance for credit losses:
Beginning balance at January 1, 2023	$	88	$	60	$	20	$	168
Write-offs	$	(9)	$	(1)	$	(8)	$	(18)
Recoveries	0		2		3		5
Additions/(releases)	5		(14)		(4)		(12)
Other (1)	7		1		(1)		8
Ending balance at December 31, 2023	$	92	$	48	$	11	$	150

(1)Primarily represents translation adjustments.

When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For the company’s policy on determining allowances for credit losses, refer to note A, “Significant Accounting Policies,” in the company’s 2023 Annual Report.

Past Due Financing Receivables

The company summarizes information about the amortized cost basis for client financing receivables, including amortized cost aged over 90 days and still accruing, billed invoices aged over 90 days and still accruing, and amortized cost not accruing.

(Dollars in millions)	Total Amortized Cost		Amortized Cost > 90 Days (1)		Amortized Cost > 90 Days and Accruing (1)		Billed Invoices > 90 Days and Accruing		Amortized Cost Not Accruing (2)
At June 30, 2024:
Americas	$	6,075	$	83	$	17	$	2	$	67
EMEA	2,672		33		4		3		29
Asia Pacific	1,330		8		0		0		7
Total client financing receivables	$	10,077	$	123	$	21	$	5	$	103

(Dollars in millions)	Total Amortized Cost		Amortized Cost > 90 Days (1)		Amortized Cost > 90 Days and Accruing (1)		Billed Invoices > 90 Days and Accruing		Amortized Cost Not Accruing (2)
At December 31, 2023:
Americas	$	6,488	$	111	$	40	$	6	$	71
EMEA	3,007		31		1		1		31
Asia Pacific	1,368		9		1		0		8
Total client financing receivables	$	10,863	$	151	$	43	$	7	$	110

(1)At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days.

(2)Of the amortized cost not accruing, there was a related allowance of $99 million and $106 million at June 30, 2024 and December 31, 2023, respectively. Financing income recognized on these receivables was immaterial for the three and six months ended June 30, 2024 and 2023, respectively.

Credit Quality Indicators

The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody’s, where available, as one of many inputs in its determination of customer credit ratings. The credit quality of the customer is evaluated based on these indicators and is assigned the same risk rating whether the receivable is a lease or a loan.

26

Notes to Consolidated Financial Statements — (continued)

The following tables present the amortized cost basis for client financing receivables by credit quality indicator at June 30, 2024 and December 31, 2023, respectively. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators reflect mitigating credit enhancement actions taken by customers which reduce the risk to IBM. Gross write-offs by vintage year at June 30, 2024 and December 31, 2023 were not material.

(Dollars in millions)	Americas				EMEA				Asia Pacific
At June 30, 2024:	Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C
Vintage year:
2024	$	1,176	$	381	$	423	$	223	$	296	$	61
2023	1,766		588		472		358		356		39
2022	1,258		168		515		262		322		34
2021	410		45		180		54		70		28
2020	88		35		52		35		58		15
2019 and prior	106		54		49		48		38		14
Total	$	4,804	$	1,271	$	1,692	$	980	$	1,139	$	191

(Dollars in millions)	Americas				EMEA				Asia Pacific
At December 31, 2023:	Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C
Vintage year:
2023	$	2,292	$	1,028	$	750	$	520	$	501	$	70
2022	1,645		268		687		374		386		42
2021	655		85		284		83		110		40
2020	205		79		106		60		97		22
2019	104		23		58		38		40		8
2018 and prior	55		50		16		30		39		12
Total	$	4,955	$	1,533	$	1,901	$	1,106	$	1,174	$	195

Modifications

The company did not have any significant modifications due to financial difficulty during the six months ended June 30, 2024 or for the year ended December 31, 2023.

10. Leases:

Accounting for Leases as a Lessor

The following table presents amounts included in the Consolidated Income Statement related to lessor activity.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Lease income — sales-type and direct financing leases:
Sales-type lease selling price	$	367	$	248	$	480	$	338
Less: Carrying value of underlying assets (1)	(66)		(61)		(94)		(91)
Gross profit	$	301	$	187	$	386	$	247
Interest income on lease receivables	69		59		138		118
Total sales-type and direct financing lease income	$	370	$	246	$	524	$	365
Lease income — operating leases	16		25		34		51
Variable lease income	18		14		38		35
Total lease income	$	404	$	284	$	596	$	451

(1)Excludes unguaranteed residual value.

27

Notes to Consolidated Financial Statements — (continued)

11. Intangible Assets Including Goodwill:

Intangible Assets

The following tables present the company's intangible asset balances by major asset class.

	At June 30, 2024
(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount (1)
Intangible asset class:
Capitalized software	$	1,528	$	(661)	$	867
Client relationships	8,976		(3,911)		5,065
Completed technology	5,719		(2,834)		2,885
Patents/trademarks	1,803		(483)		1,320
Other (2)	149		(35)		114
Total	$	18,175	$	(7,924)	$	10,251

	At December 31, 2023
(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount (1)
Intangible asset class:
Capitalized software	$	1,636	$	(762)	$	874
Client relationships	9,053		(3,500)		5,553
Completed technology	5,713		(2,510)		3,203
Patents/trademarks	1,821		(436)		1,385
Other (2)	41		(20)		22
Total	$	18,265	$	(7,229)	$	11,036

(1)Amounts as of June 30, 2024 and December 31, 2023 include a decrease in net intangible asset balances of $76 million and an increase of $50 million, respectively, due to foreign currency translation.

(2)Other intangibles are primarily acquired proprietary and non-proprietary technology licenses, data, business processes, methodologies and systems.

The net carrying amount of intangible assets decreased $786 million during the first six months of 2024, primarily due to intangible asset amortization, partially offset by additions of capitalized software and acquired intangibles. The aggregate intangible asset amortization expense was $607 million and $1,205 million for the three and six months ended June 30, 2024, respectively, compared to $556 million and $1,104 million for the three and six months ended June 30, 2023, respectively. During the six months ended June 30, 2024, the company retired $405 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount.

The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at June 30, 2024:

(Dollars in millions)	Capitalized Software		Acquired Intangibles		Total
Remainder of 2024	$	305	$	881	$	1,186
2025	351		1,724		2,075
2026	180		1,700		1,880
2027	30		1,681		1,710
2028	—		1,379		1,379
Thereafter	—		2,020		2,020

28

Notes to Consolidated Financial Statements — (continued)

Goodwill

The changes in the goodwill balances by segment for the six months ended June 30, 2024 and for the year ended December 31, 2023 were as follows:

(Dollars in millions)	Balance		Goodwill Additions		Purchase Price Adjustments				Foreign Currency Translation and Other Adjustments (1)		Balance
Segment	1/1/2024						Divestitures				6/30/2024
Software	$	46,447	$	91	$	(9)	$	—	$	(408)	$	46,120
Consulting	8,883		108		0		—		(70)		8,920
Infrastructure	4,384		8		(1)		—		(16)		4,376
Other (2)	464		—		—		(464)		—		—
Total	$	60,178	$	207	$	(11)	$	(464)	$	(494)	$	59,416

(Dollars in millions)	Balance		Goodwill Additions		Purchase Price Adjustments				Foreign Currency Translation and Other Adjustments (1)		Balance
Segment	1/1/2023						Divestitures				12/31/2023
Software (3)	$	42,712	$	3,538	$	(17)	$	—	$	214	$	46,447
Consulting (3)	8,409		403		2		—		69		8,883
Infrastructure	4,363		12		—		—		8		4,384
Other (3)	464		—		—		—		—		464
Total	$	55,949	$	3,953	$	(15)	$	—	$	291	$	60,178

(1)Primarily driven by foreign currency translation.

(2)In the first quarter of 2024, the company derecognized goodwill related to the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

(3)Recast to reflect January 2024 segment changes. Refer to note 4, "Segments," for additional information.

There were no goodwill impairment losses recorded during the six months ended June 30, 2024 or the year ended December 31, 2023 and the company has no accumulated impairment losses. Purchase price adjustments recorded during the six months ended June 30, 2024 and the year ended December 31, 2023 were related to acquisitions that were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. Net purchase price adjustments recorded in the six months ended June 30, 2024 and the year ended December 31, 2023 were not material.

12. Borrowings:

Short-Term Debt

The company's total short-term debt at June 30, 2024 and December 31, 2023 was $3,602 million and $6,426 million, respectively, and primarily consisted of current maturities of long-term debt detailed in "Long-Term Debt" below.

29

Notes to Consolidated Financial Statements — (continued)

Long-Term Debt

Pre-Swap Borrowing

		Balance		Balance
(Dollars in millions)	Maturities	6/30/2024		12/31/2023
U.S. dollar debt (weighted-average interest rate at June 30, 2024): (1)
3.4%	2024	$	1	$	5,003
5.1%	2025	1,604		1,601
3.7%	2026	5,800		5,201
3.3%	2027	4,119		3,619
5.0%	2028	1,313		1,313
3.6%	2029	3,750		3,250
2.0%	2030	1,350		1,350
4.8%	2031	500		—
4.4%	2032	1,850		1,850
4.8%	2033	750		750
4.9%	2034	1,000		—
8.0%	2038	83		83
4.5%	2039	2,745		2,745
2.9%	2040	650		650
4.0%	2042	1,107		1,107
5.3%	2044	1,000		—
7.0%	2045	27		27
4.7%	2046	650		650
4.3%	2049	3,000		3,000
3.0%	2050	750		750
4.2%	2052	1,400		1,400
5.1%	2053	650		650
5.3%	2054	1,400		—
7.1%	2096	316		316
		$	35,817	$	35,317
Euro debt (weighted-average interest rate at June 30, 2024): (1)
1.1%	2024	$	803	$	829
1.6%	2025	3,213		3,315
2.3%	2027	2,142		2,210
0.7%	2028	1,928		1,989
1.5%	2029	1,071		1,105
0.9%	2030	1,071		1,105
2.7%	2031	2,678		2,762
0.7%	2032	1,714		1,768
1.3%	2034	1,071		1,105
3.8%	2035	1,071		1,105
1.2%	2040	910		939
4.0%	2043	1,071		1,105
		$	18,745	$	19,335
Other currencies (weighted-average interest rate at June 30, 2024 in parentheses): (1)
Pound sterling (4.9%)	2038	$	948	$	955
Japanese yen (0.5%)	2024–2028	1,097		1,251
Other (12.9%)	2024–2027	327		241
		$	56,934	$	57,099
Finance lease obligations (5.0%)	2024–2034	823		499
		$	57,757	$	57,598
Less: net unamortized discount		844		838
Less: net unamortized debt issuance costs		179		154
Add: fair value adjustment (2)		(204)		(60)
		$	56,531	$	56,546
Less: current maturities		3,601		6,425
Total		$	52,929	$	50,121

(1)Includes notes, debentures, bank loans and secured borrowings.

(2)The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt’s carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates.

30

Notes to Consolidated Financial Statements — (continued)

The company’s indenture governing its debt securities and its various credit facilities each contain significant covenants which obligate the company to promptly pay principal and interest, limit the aggregate amount of secured indebtedness and sale and leaseback transactions to 10 percent of the company’s consolidated net tangible assets, and restrict the company’s ability to merge or consolidate unless certain conditions are met. The credit facilities also include a covenant on the company’s consolidated net interest expense ratio, which cannot be less than 2.20 to 1.0, as well as a cross default provision with respect to other defaulted indebtedness of at least $500 million.

The company is in compliance with its debt covenants and provides periodic certifications to its lenders. The failure to comply with its debt covenants could constitute an event of default with respect to the debt to which such provisions apply. If certain events of default were to occur, the principal and interest on the debt to which such event of default applied would become immediately due and payable.

On February 5, 2024, IBM International Capital Pte. Ltd (IIC), a wholly owned finance subsidiary of the company, issued $5.5 billion of U.S. dollar fixed rate notes (IIC Notes) in tranches with maturities ranging from 2 to 30 years and coupons ranging from 4.6 to 5.3 percent. These notes are fully and unconditionally guaranteed by the company.

IIC is a 100 percent owned finance subsidiary of IBM, as described by the SEC in Rule 13-01(a)(4)(vi) of Regulation S-X, the primary purpose of which is to borrow money to be made available for the benefit of IBM and its affiliates. The IIC Notes are fully and unconditionally guaranteed by IBM, and no other subsidiary of IBM guarantees the IIC Notes.

Pre-swap annual contractual obligations of long-term debt outstanding at June 30, 2024, were as follows:

(Dollars in millions)	Total
Remainder of 2024	$	1,291
2025	5,142
2026	6,272
2027	6,397
2028	3,887
Thereafter	34,767
Total	$	57,757

Interest on Debt

(Dollars in millions)
For the six months ended June 30:	2024		2023
Cost of financing	$	167	$	173
Interest expense	859		790
Interest capitalized	6		6
Total interest paid and accrued	$	1,032	$	969

Lines of Credit

On June 17, 2024, the company amended its $2.5 billion Three-Year Credit Agreement and $7.5 billion Five-Year Credit Agreement (the Credit Agreements) to extend the maturity dates to June 20, 2027 and June 22, 2029, respectively. The Credit Agreements permit the company and its subsidiary borrowers to borrow up to $10 billion on a revolving basis. At June 30, 2024, there were no borrowings by the company, or its subsidiaries, under these credit facilities.

31

Notes to Consolidated Financial Statements — (continued)

13. Commitments:

The company’s extended lines of credit to third-party entities include unused amounts of $1.4 billion at both June 30, 2024 and December 31, 2023. A portion of these amounts was available to the company’s business partners to support their working capital needs. In addition, the company has committed to provide future financing to its clients in connection with client purchase agreements for $1.9 billion at both June 30, 2024 and December 31, 2023. The company collectively evaluates the allowance for these arrangements using a provision methodology consistent with the portfolio of the commitments. Refer to note A, “Significant Accounting Policies,” in the company’s 2023 Annual Report for additional information. The allowance for these commitments is recorded in other liabilities in the Consolidated Balance Sheet and was not material at June 30, 2024.

The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote. The following is a description of arrangements in which the company is the guarantor.

The company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in the context of contracts entered into by the company, under which the company customarily agrees to hold the party harmless against losses arising from a breach of representations and covenants related to such matters as title to the assets sold, certain intellectual property rights, specified environmental matters, third-party performance of nonfinancial contractual obligations and certain income taxes. In each of these circumstances, payment by the company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, the procedures of which typically allow the company to challenge the other party’s claims. While indemnification provisions typically do not include a contractual maximum on the company’s payment, the company’s obligations under these agreements may be limited in terms of time and/or nature of claim, and in some instances, the company may have recourse against third parties for certain payments made by the company.

It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the company under these agreements have not had a material effect on the company’s business, financial condition or results of operations.

In addition, the company guarantees certain loans and financial commitments. The maximum potential future payment under these financial guarantees and the fair value of these guarantees recognized in the Consolidated Balance Sheet at June 30, 2024 and December 31, 2023 was not material.

Changes in the company’s warranty liability for standard warranties, which are included in other accrued expenses and liabilities and other liabilities in the Consolidated Balance Sheet, and for extended warranty contracts, which are included in deferred income in the Consolidated Balance Sheet, are presented in the following tables.

Standard Warranty Liability

(Dollars in millions)	2024		2023
Balance at January 1	$	65	$	79
Current-period accruals	38		35
Accrual adjustments to reflect actual experience	7		(14)
Charges incurred	(41)		(43)
Balance at June 30	$	70	$	57

32

Notes to Consolidated Financial Statements — (continued)

Extended Warranty Liability

(Dollars in millions)	2024		2023
Balance at January 1	$	184	$	272
Revenue deferred for new extended warranty contracts	18		20
Amortization of deferred revenue	(62)		(73)
Other (1)	(4)		(1)
Balance at June 30	$	135	$	218
Current portion	$	82	$	119
Noncurrent portion	$	52	$	99

(1)Other primarily consists of foreign currency translation adjustments.

The decrease in extended warranty liability is primarily due to the company’s shift to alternative maintenance and support offerings without a warranty element.

14. Contingencies:

As a company with a substantial employee population and with clients in more than 175 countries, IBM is involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. The company is a leader in the information technology industry and, as such, has been and will continue to be subject to claims challenging its IP rights and associated products and offerings, including claims of copyright and patent infringement and violations of trade secrets and other IP rights. In addition, the company enforces its own IP against infringement, through license negotiations, lawsuits or otherwise. Further, given the rapidly evolving external landscape of cybersecurity, AI, privacy and data protection laws, regulations and threat actors, the company and its clients have been and will continue to be subject to actions or proceedings in various jurisdictions. Also, as is typical for companies of IBM’s scope and scale, the company is party to actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, country-specific labor and employment laws, and the company’s pension, retirement and other benefit plans), as well as actions with respect to contracts, product liability, cybersecurity, data privacy, securities, foreign operations, competition law and environmental matters. These actions may be commenced by a number of different parties, including competitors, clients, current or former employees, government and regulatory agencies, stockholders and representatives of the locations in which the company does business. Some of the actions to which the company is party may involve particularly complex technical issues, and some actions may raise novel questions under the laws of the various jurisdictions in which these matters arise.

The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the quarter ended June 30, 2024 were not material to the Consolidated Financial Statements.

In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations.

With respect to certain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of losses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s experience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due to a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters.

33

Notes to Consolidated Financial Statements — (continued)

The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter.

Whether any losses, damages or remedies finally determined in any claim, suit, investigation or proceeding could reasonably have a material effect on the company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including: the timing and amount of such losses or damages; the structure and type of any such remedies; the significance of the impact any such losses, damages or remedies may have in the Consolidated Financial Statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. While the company will continue to defend itself vigorously, it is possible that the company’s business, financial condition, results of operations or cash flows could be affected in any particular period by the resolution of one or more of these matters.

The following is a summary of the more significant legal matters involving the company.

On June 8, 2021, IBM sued GlobalFoundries U.S. Inc. (GF) in New York State Supreme Court for claims including fraud and breach of contract relating to a long-term strategic relationship between IBM and GF for researching, developing, and manufacturing advanced semiconductor chips for IBM. GF walked away from its obligations and IBM is now suing to recover amounts paid to GF, and other compensatory and punitive damages, totaling more than $1.5 billion. On September 14, 2021, the court ruled on GF’s motion to dismiss. On April 7, 2022, the Appellate Division unanimously reversed the lower court’s dismissal of IBM’s fraud claim. IBM’s claims for breaches of contract, promissory estoppel, and fraud are proceeding.

On June 2, 2022, a putative class action lawsuit was filed in the United States District Court for the Southern District of New York alleging that the IBM Pension Plan miscalculated certain joint and survivor annuity pension benefits by using outdated actuarial tables in violation of the Employee Retirement Income Security Act of 1974. IBM, the Plan Administrator Committee, and the IBM Pension Plan are named as defendants. On April 4, 2024, the court dismissed the lawsuit with prejudice. On May 6, 2024, the plaintiffs appealed.

As disclosed in the Kyndryl Form 10 and subsequent Kyndryl public filings, in 2017 BMC Software, Inc. (BMC) filed suit against IBM in the United States District Court for the Southern District of Texas in a dispute involving IBM’s former managed infrastructure services business. On May 30, 2022, the trial court awarded BMC $718 million in direct damages and $718 million in punitive damages, plus interest and fees. On April 30, 2024, the United States Court of Appeals for the Fifth Circuit reversed and rendered the district court’s judgment in IBM’s favor. IBM does not believe it has any material exposure relating to this litigation. No material liability or related indemnification asset has been recorded by IBM.

The company is party to, or otherwise involved in, proceedings brought by U.S. federal or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), known as “Superfund,” or laws similar to CERCLA. Such statutes require potentially responsible parties to participate in remediation activities regardless of fault or ownership of sites. The company is also conducting environmental investigations, assessments or remediations at or in the vicinity of several current or former operating sites globally pursuant to permits, administrative orders or agreements with country, state or local environmental agencies, and is involved in lawsuits and claims concerning certain current or former operating sites.

The company is also subject to ongoing tax examinations and governmental assessments in various jurisdictions. Along with many other U.S. companies doing business in Brazil, the company is involved in various challenges with Brazilian tax authorities regarding non-income tax assessments and non-income tax litigation matters. The total potential amount related to all these matters for all applicable years is approximately $400 million. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability.

34

Notes to Consolidated Financial Statements — (continued)

15. Equity Activity:

Reclassifications and Taxes Related to Items of Other Comprehensive Income

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the three months ended June 30, 2024:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	2	$	(68)	$	(66)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	1	$	0	$	0
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	1	$	0	$	0
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	103	$	(28)	$	75
Reclassification of (gains)/losses to:
Cost of services	(9)		3		(7)
Cost of sales	(15)		5		(10)
Cost of financing	2		0		1
SG&A expense	(7)		2		(5)
Other (income) and expense	(21)		5		(16)
Interest expense	8		(2)		6
Total unrealized gains/(losses) on cash flow hedges	$	61	$	(16)	$	45
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	—	$	—
Net (losses)/gains arising during the period	0		2		2
Curtailments and settlements	2		(1)		2
Amortization of prior service costs/(credits)	(2)		0		(1)
Amortization of net (gains)/losses	258		(71)		187
Total retirement-related benefit plans	$	259	$	(69)	$	190
Other comprehensive income/(loss)	$	322	$	(153)	$	169

(1)These accumulated other comprehensive income (AOCI) components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

35

Notes to Consolidated Financial Statements — (continued)

Reclassifications and Taxes Related to Items of Other Comprehensive Income

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the three months ended June 30, 2023:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	116	$	(34)	$	82
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	(17)	$	4	$	(12)
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	(17)	$	4	$	(12)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	178	$	(48)	$	130
Reclassification of (gains)/losses to:
Cost of services	3		(1)		2
Cost of sales	(2)		1		(1)
Cost of financing	4		(1)		3
SG&A expense	(1)		0		0
Other (income) and expense	(55)		14		(41)
Interest expense	22		(5)		16
Total unrealized gains/(losses) on cash flow hedges	$	148	$	(40)	$	109
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	0	$	0
Net (losses)/gains arising during the period	0		7		7
Curtailments and settlements	6		(1)		5
Amortization of prior service costs/(credits)	(2)		1		(2)
Amortization of net (gains)/losses	130		(38)		92
Total retirement-related benefit plans	$	134	$	(31)	$	102
Other comprehensive income/(loss)	$	381	$	(101)	$	280

(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

36

Notes to Consolidated Financial Statements — (continued)

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the six months ended June 30, 2024:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	57	$	(222)	$	(165)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	1	$	0	$	1
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	1	$	0	$	1
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	279	$	(75)	$	204
Reclassification of (gains)/losses to:
Cost of services	(14)		4		(10)
Cost of sales	(27)		9		(18)
Cost of financing	3		(1)		2
SG&A expense	(10)		3		(7)
Other (income) and expense	58		(15)		44
Interest expense	17		(4)		13
Total unrealized gains/(losses) on cash flow hedges	$	307	$	(79)	$	227
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	—	$	—
Net (losses)/gains arising during the period	1		2		2
Curtailments and settlements	4		(1)		3
Amortization of prior service costs/(credits)	(4)		1		(3)
Amortization of net (gains)/losses	519		(143)		376
Total retirement-related benefit plans	$	520	$	(141)	$	379
Other comprehensive income/(loss)	$	885	$	(442)	$	442

(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

37

Notes to Consolidated Financial Statements — (continued)

Reclassifications and Taxes Related to Items of Other Comprehensive Income

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the six months ended June 30, 2023:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	29	$	22	$	52
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	(1)	$	0	$	(1)
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	(1)	$	0	$	(1)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	149	$	(41)	$	107
Reclassification of (gains)/losses to:
Cost of services	5		(1)		4
Cost of sales	(17)		5		(12)
Cost of financing	9		(2)		7
SG&A expense	(10)		3		(7)
Other (income) and expense	(181)		45		(135)
Interest expense	42		(11)		32
Total unrealized gains/(losses) on cash flow hedges	$	(3)	$	(1)	$	(4)
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	1	$	1
Net (losses)/gains arising during the period	2		7		8
Curtailments and settlements	5		(1)		4
Amortization of prior service costs/(credits)	(4)		1		(3)
Amortization of net (gains)/losses	261		(76)		185
Total retirement-related benefit plans	$	263	$	(69)	$	194
Other comprehensive income/(loss)	$	289	$	(48)	$	241

(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

38

Notes to Consolidated Financial Statements — (continued)

Accumulated Other Comprehensive Income/(Loss) (net of tax)

(Dollars in millions)	Net Unrealized Gains/(Losses) on Cash Flow Hedges		Foreign Currency Translation Adjustments (1)		Net Change Retirement- Related Benefit Plans		Net Unrealized Gains/(Losses) on Available- For-Sale Securities		Accumulated Other Comprehensive Income/ (Loss)
January 1, 2024	$	(106)	$	(3,488)	$	(15,165)	$	(1)	$	(18,761)
Other comprehensive income before reclassifications	204		(165)		2		1		42
Amount reclassified from accumulated other comprehensive income	24		—		377		—		400
Total change for the period	$	227	$	(165)	$	379	$	1	$	442
June 30, 2024	$	121	$	(3,653)	$	(14,786)	$	(1)	$	(18,319)

(Dollars in millions)	Net Unrealized Gains/(Losses) on Cash Flow Hedges		Foreign Currency Translation Adjustments (1)		Net Change Retirement- Related Benefit Plans		Net Unrealized Gains/(Losses) on Available- For-Sale Securities		Accumulated Other Comprehensive Income/ (Loss)
January 1, 2023	$	(135)	$	(3,591)	$	(13,013)	$	(1)	$	(16,740)
Other comprehensive income before reclassifications	107		52		9		(1)		167
Amount reclassified from accumulated other comprehensive income	(112)		—		185		—		74
Total change for the period	$	(4)	$	52	$	194	$	(1)	$	241
June 30, 2023	$	(139)	$	(3,539)	$	(12,819)	$	(2)	$	(16,499)

(1)Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.

16. Derivative Financial Instruments:

The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations.

In the Consolidated Balance Sheet, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. At June 30, 2024 and December 31, 2023, the amount recognized in other accounts receivables for the right to reclaim cash collateral was $56 million and $11 million, respectively. At June 30, 2024, there was no amount recognized in accounts payable for the obligation to return cash collateral. At December 31, 2023, the amount recognized in accounts payable for such obligation was $7 million. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in restricted cash in the Consolidated Balance Sheet. There was no cash collateral rehypothecated at June 30, 2024. At December 31, 2023, the amount rehypothecated was $7 million. Additionally, if derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated Balance Sheet at June 30, 2024 and December 31, 2023, the total derivative asset and liability positions each would have been reduced by $186 million and $235 million, respectively.

39

Notes to Consolidated Financial Statements — (continued)

As discussed in note 5, “Acquisitions & Divestitures,” the company completed the acquisition of StreamSets and webMethods from Software AG on July 1, 2024. In December 2023, in connection with the announcement of the acquisition, the company entered into foreign exchange call option contracts (the call options) with a total notional amount of $2.3 billion (€2.13 billion) and a total premium paid of $49 million. The call options were accounted for as non-hedge derivatives and expired on June 18, 2024 with no economic value. The company replaced the majority of the options with foreign currency forward contracts with notional values of $1.8 billion to cover the economic exposure from June 18, 2024 to June 28, 2024. For the three and six months ended June 30, 2024, the company recorded a realized loss of $18 million and $68 million, respectively, in other (income) and expense in the Consolidated Income Statement. At December 31, 2023, the fair value of the call options was $62 million, and was included in prepaid expenses and other current assets in the Consolidated Balance Sheet. There were no associated derivatives outstanding at June 30, 2024.

In its hedging programs, the company may use forward contracts, futures contracts, interest-rate swaps, cross-currency swaps, equity swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments.

A brief description of the major hedging programs, categorized by underlying risk, follows.

Interest Rate Risk

Fixed and Variable Rate Borrowings

The company issues debt in the global capital markets to fund its operations and financing business. Access to cost-effective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company may use interest-rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). At both June 30, 2024 and December 31, 2023, the total notional amount of the company’s interest-rate swaps was $6.7 billion. The weighted-average remaining maturity of these instruments at June 30, 2024 and December 31, 2023 was approximately 5.0 years and 5.5 years, respectively. These interest-rate contracts were accounted for as fair value hedges. The company did not have any cash flow hedges relating to this program outstanding at June 30, 2024 and December 31, 2023.

Forecasted Debt Issuance

The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use instruments such as forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuances. There were no instruments outstanding at June 30, 2024 and December 31, 2023.

In connection with cash flow hedges of forecasted interest payments related to the company's borrowings, the company recorded net losses (before taxes) of $113 million and $121 million at June 30, 2024 and December 31, 2023, respectively, in AOCI. The company estimates that $14 million of the deferred net losses (before taxes) on derivatives in AOCI at June 30, 2024 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying interest payments.

Foreign Exchange Risk

Long-Term Investments in Foreign Subsidiaries (Net Investment)

A large portion of the company’s foreign currency denominated debt portfolio is designated as a hedge of net investment in foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the functional currency of major foreign subsidiaries with respect to the U.S. dollar. At June 30, 2024 and December 31, 2023, the carrying value of debt designated as hedging instruments was $13.5 billion and $15.9 billion, respectively. The company also uses foreign currency derivatives for this risk management purpose. At June 30, 2024 and December 31, 2023, the total notional amount of derivative instruments designated as net investment hedges was $6.0 billion and $4.9 billion, respectively. At June 30, 2024 and December 31, 2023, the weighted-average remaining maturity of these instruments was approximately 0.2 years and 0.1 years, respectively.

40

Notes to Consolidated Financial Statements — (continued)

Anticipated Royalties and Cost Transactions

The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the company. In anticipation of these foreign currency cash flows and in view of the volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. At June 30, 2024, the maximum remaining length of time over which the company hedged its exposure is approximately two years. At June 30, 2024 and December 31, 2023, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $9.6 billion and $9.2 billion, respectively. At both June 30, 2024 and December 31, 2023, the weighted-average remaining maturity of these instruments was approximately 0.6 years.

At June 30, 2024 and December 31, 2023, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net gains (before taxes) of $312 million and $40 million, respectively, in AOCI. The company estimates that $251 million of deferred net gains (before taxes) on derivatives in AOCI at June 30, 2024 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.

Foreign Currency Denominated Borrowings

The company is exposed to exchange rate volatility on foreign currency denominated debt. To manage this risk, the company may employ forward contracts or cross-currency swaps to convert the principal, or principal and interest payments of foreign currency denominated debt to debt denominated in the functional currency of the borrowing entity. These derivatives are accounted for as cash flow hedges. At June 30, 2024, the maximum length of time remaining over which the company hedged its exposure was approximately seven years. At both June 30, 2024 and December 31, 2023, the total notional amount of derivative instruments designated as cash flow hedges of foreign-currency denominated debt was $5.2 billion.

At June 30, 2024 and December 31, 2023, in connection with previously terminated cross-currency swaps, the company recorded net losses (before taxes) of $56 million and $68 million, respectively, in AOCI, of which $18 million of deferred net losses (before taxes) is estimated to be reclassified to net income within the next 12 months.

At June 30, 2024 and December 31, 2023, in connection with forward contracts, the company has recorded net gains (before taxes) of $38 million and $23 million, respectively, in AOCI. Approximately $52 million of losses (before taxes) related to the initial forward points excluded from the assessment of hedge effectiveness is expected to be amortized to other (income) and expense within the next 12 months.

Subsidiary Cash and Foreign Currency Asset/Liability Management

The company uses its Global Treasury Centers to manage the cash of its subsidiaries. These centers principally use currency swaps to convert cash flows in a cost-effective manner. In addition, the company uses forward contracts to economically hedge, on a net basis, the foreign currency exposure of a portion of the company’s nonfunctional currency assets and liabilities. The terms of these forward and swap contracts are generally less than one year. The changes in the fair values of these contracts and of the underlying hedged exposures are generally offsetting and are recorded in other (income) and expense in the Consolidated Income Statement. At June 30, 2024 and December 31, 2023, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $7.1 billion and $6.7 billion, respectively.

Equity Risk Management

The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obligations to employees. Changes in the overall value of these employee compensation obligations are recorded in SG&A expense in the Consolidated Income Statement. Although not designated as accounting hedges, the company utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock, and are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Income Statement. At June 30, 2024 and December 31, 2023, the total notional amount of

41

Notes to Consolidated Financial Statements — (continued)

derivative instruments in economic hedges of these compensation obligations was $1.4 billion and $1.2 billion, respectively.

Cumulative Basis Adjustments for Fair Value Hedges

At June 30, 2024 and December 31, 2023, the following amounts were recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:

(Dollars in millions)	June 30, 2024		December 31, 2023
Short-term debt:
Carrying amount of the hedged item	$	—	$	(1)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities)	$	—	$	(1)
Long-term debt:
Carrying amount of the hedged item	$	(6,481)	$	(6,629)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities) (1)	$	204	$	61

(1)Includes ($177) million and ($200) million of hedging adjustments on discontinued hedging relationships at June 30, 2024 and December 31, 2023, respectively.

The Effect of Derivative Instruments in the Consolidated Income Statement

The total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are recorded and the total effect of hedge activity on these income and expense line items are as follows:

(Dollars in millions)	Total				Gains/(Losses) of Total Hedge Activity
For the three months ended June 30:	2024		2023		2024		2023
Cost of services	$	5,126	$	5,294	$	9	$	(3)
Cost of sales	$	1,607	$	1,587	$	15	$	2
Cost of financing	$	86	$	93	$	(4)	$	(3)
SG&A expense	$	4,938	$	4,900	$	11	$	43
Other (income) and expense	$	(233)	$	(261)	$	(140)	$	(141)
Interest expense	$	427	$	423	$	(19)	$	(18)

42

Notes to Consolidated Financial Statements — (continued)

	Gain (Loss) Recognized in Consolidated Income Statement
(Dollars in millions)	Consolidated Income Statement Line Item	Recognized on Derivatives				Attributable to Risk Being Hedged (2)
For the three months ended June 30:		2024		2023		2024		2023
Derivative instruments in fair value hedges: (1)
Interest rate contracts	Cost of financing	$	(8)	$	(30)	$	2	$	25
	Interest expense	(42)		(153)		10		130
Derivative instruments not designated as hedging instruments:
Foreign exchange contracts	Other (income) and expense	(161)		(196)		N/A		N/A
Equity contracts	SG&A expense	4		42		N/A		N/A
Total		$	(207)	$	(337)	$	12	$	155

	Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income
	Recognized in OCI				Consolidated Income Statement Line Item	Reclassified from AOCI				Amounts Excluded from Effectiveness Testing (3)
(Dollars in millions)
For the three months ended June 30:	2024		2023			2024		2023		2024		2023
Derivative instruments in cash flow hedges:
Interest rate contracts	$	—	$	—	Cost of financing	$	(1)	$	(1)	$	—	$	—
					Interest expense	(3)		(4)		—		—
Foreign exchange contracts					Cost of services	9		(3)		—		—
Amount included in the assessment of effectiveness	134		178		Cost of sales	15		2		—		—
Amount excluded from the assessment of effectiveness	(31)		—		Cost of financing	(1)		(3)		—		—
					SG&A expense	7		1		—		—
					Other (income) and expense	39		55		(18)		—
					Interest expense	(5)		(18)		—		—
Instruments in net investment hedges: (4)
Foreign exchange contracts	269		136		Cost of financing	—		—		4		5
					Interest expense	—		—		21		27
Total	$	372	$	313		$	61	$	30	$	6	$	32

(1)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.

(2)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.

(3)The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument.

(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.

N/A - not applicable

43

Notes to Consolidated Financial Statements — (continued)

(Dollars in millions)	Total				Gains/(Losses) of Total Hedge Activity
For the six months ended June 30:	2024		2023		2024		2023
Cost of services	$	10,365	$	10,604	$	14	$	(5)
Cost of sales	$	2,988	$	2,910	$	27	$	17
Cost of financing	$	186	$	203	$	(7)	$	(7)
SG&A expense	$	9,912	$	9,754	$	85	$	102
Other (income) and expense	$	(550)	$	(506)	$	(427)	$	1
Interest expense	$	859	$	790	$	(34)	$	(31)

	Gain (Loss) Recognized in Consolidated Income Statement
(Dollars in millions)	Consolidated Income Statement Line Item	Recognized on Derivatives				Attributable to Risk Being Hedged (2)
For the six months ended June 30:		2024		2023		2024		2023
Derivative instruments in fair value hedges: (1)
Interest rate contracts	Cost of financing	$	(35)	$	(21)	$	23	$	13
	Interest expense	(180)		(96)		120		58
Derivative instruments not designated as hedging instruments:
Foreign exchange contracts	Other (income) and expense	(368)		(180)		N/A		N/A
Equity contracts	SG&A expense	75		91		N/A		N/A
Total		$	(509)	$	(206)	$	143	$	71

	Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income
	Recognized in OCI				Consolidated Income Statement Line Item	Reclassified from AOCI				Amounts Excluded from Effectiveness Testing (3)
(Dollars in millions)
For the six months ended June 30:	2024		2023			2024		2023		2024		2023
Derivative instruments in cash flow hedges:
Interest rate contracts	$	—	$	—	Cost of financing	$	(1)	$	(2)	$	—	$	—
					Interest expense	(7)		(7)		—		—
Foreign exchange contracts					Cost of services	14		(5)		—		—
Amount included in the assessment of effectiveness	300		149		Cost of sales	27		17		—		—
Amount excluded from the assessment of effectiveness	(21)		—		Cost of financing	(2)		(8)		—		—
					SG&A expense	10		10		—		—
					Other (income) and expense	(22)		181		(37)		—
					Interest expense	(10)		(35)		—		—
Instruments in net investment hedges: (4)
Foreign exchange contracts	881		(88)		Cost of financing	—		—		8		11
					Interest expense	—		—		43		49
Total	$	1,160	$	61		$	9	$	152	$	14	$	60

(1)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.

(2)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.

(3)The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument.

(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.

N/A - not applicable

44

Notes to Consolidated Financial Statements — (continued)

For the three and six months ended June 30, 2024 and 2023, there were no material gains or losses excluded from the assessment of hedge effectiveness (for fair value or cash flow hedges), or associated with an underlying exposure that did not or was not expected to occur (for cash flow hedges); nor are there any anticipated in the normal course of business.

17. Stock-Based Compensation:

Stock-based compensation cost for stock awards and stock options is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. The following table presents total stock-based compensation cost included in income from continuing operations.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Cost	$	53	$	47	$	109	$	93
Selling, general and administrative	172		168		343		317
Research, development and engineering	90		73		183		146
Pre-tax stock-based compensation cost	$	316	$	288	$	636	$	556
Income tax benefits	(101)		(75)		(222)		(142)
Total net stock-based compensation cost	$	214	$	213	$	414	$	414

Pre-tax stock-based compensation cost for the three months ended June 30, 2024 increased $28 million compared to the corresponding period in the prior year due to increases in restricted stock units ($14 million), performance share units ($6 million), stock options ($5 million) and Employees Stock Purchase Plan (ESPP) ($3 million). The increases are primarily driven by stock-based compensation awards granted by the company as part of its annual cycles for executives and other employees.

Pre-tax stock-based compensation cost for the six months ended June 30, 2024 increased $79 million compared to the corresponding period in the prior year due to increases in restricted stock units ($42 million), performance share units ($21 million), stock options ($13 million) and ESPP ($4 million). The increases are primarily driven by stock-based compensation awards granted by the company as part of its annual cycles for executives and other employees.

Total unrecognized compensation cost related to non-vested awards at June 30, 2024 was $1.7 billion and is expected to be recognized over a weighted-average period of approximately 2.4 years.

18. Retirement-Related Benefits:

The company offers defined benefit (DB) pension plans, defined contribution plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits.

IBM U.S. Retirement Plan Changes

Effective January 1, 2024, IBM changed how it provides certain retirement-related benefits in the U.S. IBM is providing a new benefit to most U.S. employees under its existing U.S. Qualified Personal Pension Plan (Qualified PPP) called the Retirement Benefit Account (RBA). This is in place of any IBM contributions to the U.S. employees' 401(k) Plus accounts. IBM U.S. regular full-time and part-time employees with at least one year of service will participate in the RBA. Each eligible employee's RBA is credited monthly with an amount equal to five percent of their eligible pay with no employee contribution required. Under the RBA, eligible employees earn six percent interest through 2026 and starting in 2027, will earn interest equal to the 10-year U.S. Treasury Yield, subject to a three percent minimum per year through 2033. Eligible employees also received a salary increase effective January 1, 2024 for the difference between the IBM 401(k) Plus contribution percent they were previously entitled to receive and the five percent RBA pay credit. Since the RBA is a component of the Qualified PPP, it is funded by the trust for the Qualified PPP along with all other benefits in the Qualified PPP.

As a result of this change, inactive pension plan participants no longer represent substantially all of the participants in the Qualified PPP. As required by U.S. GAAP, this changed the amortization period of unrecognized actuarial losses from the average remaining life expectancy of inactive plan participants to the average remaining service period of active plan

45

Notes to Consolidated Financial Statements — (continued)

participants in 2024. Recognized actuarial losses for the U.S. Plans increased by approximately $100 million and $200 million for the three and six months ended June 30, 2024, respectively, as compared to the prior-year periods, primarily driven by the change in amortization period. There was no impact to funded status, retiree benefit payments or funding requirements of the Qualified PPP due to the change in amortization period.

The following tables provide the pre-tax cost for all retirement-related plans.

					Yr. to Yr.
(Dollars in millions)					Percent
For the three months ended June 30:	2024		2023		Change
Retirement-related plans — cost:
Defined benefit pension and defined contribution plans — cost	$	320	$	259	23.6	%
Nonpension postretirement plans — cost	30		33		(8.1)
Total	$	350	$	292	20.0	%

					Yr. to Yr.
(Dollars in millions)					Percent
For the six months ended June 30:	2024		2023		Change
Retirement-related plans — cost:
Defined benefit pension and defined contribution plans — cost	$	643	$	541	19.0	%
Nonpension postretirement plans — cost	60		65		(7.1)
Total	$	704	$	606	16.2	%

Cost/(Income) of Retirement Plans

The following tables provide the components of the cost/(income) for the company’s retirement-related benefit plans.

(Dollars in millions)	U.S. Plans				Non-U.S. Plans
For the three months ended June 30:	2024		2023		2024		2023
Service cost (1)	$	98	$	—	$	41	$	44
Interest cost (2)	254		272		264		292
Expected return on plan assets (2)	(340)		(382)		(384)		(362)
Amortization of prior service costs/(credits) (2)	—		0		5		5
Recognized actuarial losses (2)	129		27		128		101
Curtailments and settlements (2)	—		—		2		6
Multi-employer plans	—		—		3		3
Other costs/(credits) (2)	—		—		12		10
Total net periodic pension (income)/cost of defined benefit plans	$	140	$	(82)	$	71	$	99
Cost of defined contribution plans	15		151		94		91
Total defined benefit pension and defined contribution plans cost recognized in the Consolidated Income Statement	$	155	$	69	$	165	$	190

(1)Increase in U.S. Plans service cost in 2024 is due to the Qualified PPP plan changes described above.

(2)These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

46

Notes to Consolidated Financial Statements — (continued)

(Dollars in millions)	U.S. Plans				Non-U.S. Plans
For the six months ended June 30:	2024		2023		2024		2023
Service cost (1)	$	197	$	—	$	85	$	88
Interest cost (2)	508		545		532		580
Expected return on plan assets (2)	(681)		(764)		(773)		(718)
Amortization of prior service costs/(credits) (2)	—		0		11		10
Recognized actuarial losses (2)	257		55		258		203
Curtailments and settlements (2)	—		—		4		5
Multi-employer plans	—		—		6		6
Other costs/(credits) (2)	—		—		20		19
Total net periodic pension (income)/cost of defined benefit plans	$	280	$	(165)	$	143	$	194
Cost of defined contribution plans	27		323		193		188
Total defined benefit pension and defined contribution plans cost recognized in the Consolidated Income Statement	$	307	$	158	$	336	$	382

(1)Increase in U.S. Plans service cost in 2024 is due to the Qualified PPP plan changes described above.

(2)These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

Cost of Nonpension Postretirement Plans

The following tables provide the components of the cost for the company’s nonpension postretirement plans.

(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the three months ended June 30:	2024		2023		2024		2023
Service cost	$	1	$	1	$	1	$	1
Interest cost (1)	27		29		10		10
Expected return on plan assets (1)	—		—		0		(1)
Amortization of prior service costs/(credits) (1)	(7)		(7)		0		0
Recognized actuarial losses (1)	—		—		0		0
Curtailments and settlements (1)	—		—		—		—
Total nonpension postretirement plans cost recognized in the Consolidated Income Statement	$	20	$	23	$	10	$	10

(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the six months ended June 30:	2024		2023		2024		2023
Service cost	$	1	$	2	$	1	$	1
Interest cost (1)	53		58		21		19
Expected return on plan assets (1)	—		—		(1)		(1)
Amortization of prior service costs/(credits) (1)	(15)		(15)		0		0
Recognized actuarial losses (1)	—		—		0		(1)
Curtailments and settlements (1)	—		—		—		—
Total nonpension postretirement plans cost recognized in the Consolidated Income Statement	$	40	$	46	$	21	$	19

(1)These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

47

Notes to Consolidated Financial Statements — (continued)

Plan Contributions

The company does not anticipate any significant changes to the expected plan contributions in 2024 from the amounts disclosed in the 2023 Annual Report. The table below includes contributions to the following plans:

(Dollars in millions)	Plan Contributions
For the six months ended June 30:	2024		2023
U.S. nonpension postretirement benefit plan	$	110	$	134
Non-U.S. DB and multi-employer plans (1)	40		29
Total plan contributions	$	150	$	163

(1)Amounts reported net of refunds.

The U.S. nonpension postretirement benefit plan contributions in the table above were funded with U.S. Treasury Securities. Additionally, during the six months ended June 30, 2024 and 2023, the company contributed $390 million and $347 million of U.S. Treasury securities, respectively, to the Active Medical Trust. Contributions made with U.S. Treasury securities are considered a non-cash transaction.

19. Subsequent Events:

On July 29, 2024, the company announced that the Board of Directors approved a quarterly dividend of $1.67 per common share. The dividend is payable September 10, 2024 to stockholders of record on August 9, 2024.

48

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

Snapshot

Organization of Information:

In the first quarter of 2024, we made changes to our organizational structure and management system to better align our portfolio to the market, increase transparency and improve segment comparability to peers. These changes did not impact our Consolidated Financial Statements, but did impact our reportable segments. The segments are reported on a comparable basis for all periods. In addition, due to the removal of certain components of segment profitability we also updated the title of our segment performance metric from pre-tax income from continuing operations to segment profit. Refer to note 4, "Segments," for additional information on our reportable segments.

Within the tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior-period amounts have been reclassified to conform to the current period presentation. This is annotated where applicable.

Currency:

The references to “adjusted for currency” or “at constant currency” in the Management Discussion do not include operational impacts that could result from fluctuations in foreign currency rates. When we refer to growth rates at constant currency or adjust 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. Refer to “Currency Rate Fluctuations” for additional information.

Operating (non-GAAP) Earnings:

In an effort to provide better transparency into the operational results of the business, supplementally, management 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, 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 (U.S. tax reform), management characterizes the one-time provisional charge recorded in the fourth quarter of 2017 and adjustments to that charge as non-operating. Adjustments primarily include true-ups, accounting elections and any changes to regulations, laws or audit adjustments that affect the recorded one-time charge. For acquisitions, operating (non-GAAP) earnings exclude the amortization of purchased 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 our acquisitions. Given its unique and temporary nature, management has also characterized as non-operating expense, the mark-to-market impact on the foreign exchange derivative contracts entered into prior to the acquisition of StreamSets and webMethods from SoftwareAG to economically hedge the foreign currency exposure related to the purchase price of this acquisition. These derivative contracts expired by June 28, 2024. This impact was recorded in other (income) and expense in the Consolidated Income Statement and reflects the realized loss from the changes in fair value of these derivative contracts. All other spending for acquired companies is included in both earnings from continuing operations and in operating (non-GAAP) earnings. For retirement-related costs, management characterizes certain items as operating and others as non-operating, consistent with GAAP. We include 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 and

49

Management Discussion – (continued)

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 we consider these costs to be outside of the operational performance of the business.

Overall, management 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 our pension plans; improves visibility to management decisions and their impacts on operational performance; enables better comparison to peer companies; and allows us 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 we routinely receive from investors and analysts. Our reportable segment financial results reflect pre-tax operating earnings from continuing operations, consistent with our management and measurement system.

Financial Results Summary — Three Months Ended June 30

(Dollars and shares in millions except per share amounts)							Yr. to Yr. Percent/ Margin Change
For the three months ended June 30:	2024			2023
Revenue (1)	$	15,770		$	15,475		1.9	%
Gross profit margin	56.8		%	54.9		%	1.8	pts.
Total expense and other (income)	$	6,730		$	6,501		3.5	%
Income from continuing operations before income taxes	$	2,219		$	2,000		11.0	%
Provision for income taxes from continuing operations	$	389		$	419		(7.2)	%
Income from continuing operations	$	1,830		$	1,581		15.8	%
Income from continuing operations margin	11.6		%	10.2		%	1.4	pts.
Income from discontinued operations, net of tax	$	4		$	2		72.0	%
Net income	$	1,834		$	1,583		15.9	%
Earnings per share from continuing operations - assuming dilution	$	1.96		$	1.72		14.0	%
Consolidated earnings per share - assuming dilution	$	1.96		$	1.72		14.0	%
Weighted-average shares outstanding - assuming dilution	934.4			919.5			1.6	%

(1)Year-to-year revenue growth of 3.8 percent adjusted for currency.

The following table provides the company’s operating (non-GAAP) earnings for the second quarter of 2024 and 2023.

(Dollars in millions except per share amounts)					Yr. to Yr. Percent Change
For the three months ended June 30:	2024		2023
Net income as reported	$	1,834	$	1,583	15.9	%
Income from discontinued operations, net of tax	4		2		72.0
Income from continuing operations	$	1,830	$	1,581	15.8	%
Non-operating adjustments (net of tax):
Acquisition-related charges	$	362	$	308	17.3	%
Non-operating retirement-related costs/(income)	72		5		nm
U.S. tax reform impacts	12		110		(89.1)
Operating (non-GAAP) earnings (1)	$	2,275	$	2,003	13.6	%
Diluted operating (non-GAAP) earnings per share (1)	$	2.43	$	2.18	11.5	%

(1)Refer to page 81 for a more detailed reconciliation of net income to operating earnings.

nm - not meaningful

50

Management Discussion – (continued)

Macroeconomic Environment:

Our business portfolio positions us well in challenging macroeconomic times. Our diversification across geographies, industries, clients and business mix and our recurring revenue base provides some stability in revenue, profit and cash generation. Clients and partners continue to leverage technology to allow businesses to scale, drive efficiencies, fuel growth and gain competitive advantage. The short-term uncertainty caused by interest rates and inflation is leading clients to manage their discretionary spending, but the overall macroeconomic outlook for technology spending remains positive.

In the first six months of 2024, movements in global currencies continued to impact our reported year-to-year revenue and profit. We execute hedging programs which defer, but do not eliminate, the impact of currency. The (gains)/losses from these hedging programs are reflected primarily in other income and expense. Refer to “Currency Rate Fluctuations,” for additional information.

Financial Performance Summary — Three Months Ended June 30:

In the second quarter of 2024, we reported $15.8 billion in revenue, income from continuing operations of $1.8 billion and operating (non-GAAP) earnings of $2.3 billion. Diluted earnings per share from continuing operations was $1.96 as reported and $2.43 on an operating (non-GAAP) basis. We generated $2.1 billion in cash from operations and $2.6 billion in free cash flow, and delivered shareholder returns of $1.5 billion in dividends. Our second-quarter performance reflects solid revenue growth and cash flow generation, demonstrating the continued success of our hybrid cloud and AI strategy, and the strength of our diversified business model. We continued to focus on the fundamentals of our business which, combined with our cash generation, position us to continue investing in innovation and expertise across the portfolio while continuing to return value to shareholders through dividends.

Total revenue grew 1.9 percent as reported and 4 percent adjusted for currency compared to the prior-year period, led by Software and Infrastructure. Software delivered revenue growth of 7.1 percent as reported and 8.4 percent adjusted for currency, with solid growth across Hybrid Platform & Solutions and Transaction Processing, and with strong transactional performance. Hybrid Platform & Solutions revenue was up 5.2 percent as reported and 6.3 percent adjusted for currency, led by growth in Red Hat and Automation. Transaction Processing grew 11.4 percent as reported and 13.0 percent adjusted for currency, with revenue growth in both recurring and transactional software. Consulting revenue decreased 0.9 percent as reported but grew 1.8 percent adjusted for currency, reflecting continued solid demand for our large transformational offerings as clients continue to prioritize driving productivity with AI and analytics, partially offset by clients' delay in discretionary projects as they prioritized their spending. Infrastructure revenue increased 0.7 percent year to year as reported and 2.7 percent adjusted for currency, with growth in Hybrid Infrastructure reflecting continued demand across our hardware portfolio, offset by a decline in Infrastructure Support.

From a geographic perspective, Americas revenue decreased 0.8 percent as reported (0.5 percent adjusted for currency). Europe/Middle East/Africa (EMEA) increased 2.6 percent as reported and 3.2 percent adjusted for currency. Asia Pacific increased 8.6 percent as reported (17.2 percent adjusted for currency).

Gross margin of 56.8 percent increased 1.8 points year to year with continued margin expansion driven by revenue growth, portfolio mix and ongoing productivity actions. Operating (non-GAAP) gross margin of 57.8 percent increased 1.9 points compared to the prior-year period due to the same dynamics.

Total expense and other (income) increased 3.5 percent in the second quarter of 2024 versus the prior-year period primarily driven by higher spending reflecting our continued investment in portfolio innovation to drive our strategy, higher acquisition-related charges, amortization of acquired intangible assets and non-operating retirement-related cost, partially offset by the benefits from productivity actions and lower workforce rebalancing charges. Total operating (non-GAAP) expense and other (income) increased 1.2 percent year to year, driven primarily by the factors described above, excluding the higher non-operating retirement-related costs, acquisition-related charges and amortization of acquired intangible assets.

Pre-tax income from continuing operations of $2.2 billion increased 11.0 percent and pre-tax margin was 14.1 percent, an increase of 1.1 points compared to the second quarter of 2023. Performance this quarter benefited from our gross margin expansion and productivity actions partially offset by our continued investments to drive innovation. The continuing operations provision for income taxes in the second quarter of 2024 was $389 million, compared to $419 million in the

51

Management Discussion – (continued)

second quarter of 2023. Net income from continuing operations of $1.8 billion increased 15.8 percent and the net income from continuing operations margin was 11.6 percent, up 1.4 points year to year.

Operating (non-GAAP) pre-tax income from continuing operations of $2.8 billion increased 16.5 percent compared to the second quarter of 2023 and the operating (non-GAAP) pre-tax margin from continuing operations increased 2.2 points to 17.7 percent primarily driven by the combination of our revenue growth and gross margin performance and the benefits from productivity actions. The operating (non-GAAP) provision for income taxes in the second quarter of 2024 was $516 million, compared to $393 million in the second quarter of 2023. Operating (non-GAAP) net income from continuing operations of $2.3 billion increased 13.6 percent and the operating (non-GAAP) net income margin from continuing operations of 14.4 percent was up 1.5 points year to year.

Diluted earnings per share from continuing operations of $1.96 in the second quarter of 2024 increased 14.0 percent and operating (non-GAAP) diluted earnings per share of $2.43 increased 11.5 percent compared to the second quarter of 2023.

Cash provided by operating activities was $2.1 billion in the second quarter of 2024, a decrease of $0.6 billion compared to the second quarter of 2023 and free cash flow was $2.6 billion, an increase of $0.5 billion versus the prior-year period. Net cash provided by investing activities of $2.2 billion increased $2.2 billion and net cash used in financing activities of $4.5 billion increased $1.8 billion compared to the second quarter of 2023.

Financial Results Summary — Six Months Ended June 30:

(Dollars and shares in millions except per share amounts)							Yr. to Yr. Percent/ Margin Change
For the six months ended June 30:	2024			2023
Revenue (1)	$	30,231		$	29,727		1.7	%
Gross profit margin	55.2		%	53.9		%	1.4	pts.
Total expense and other (income)	$	13,399		$	12,952		3.5	%
Income from continuing operations before income taxes	$	3,293		$	3,058		7.7	%
Provision for/(benefit from) income taxes from continuing operations	$	(112)		$	543		nm
Income from continuing operations	$	3,405		$	2,515		35.4	%
Income from continuing operations margin	11.3		%	8.5		%	2.8	pts.
Income/(loss) from discontinued operations, net of tax	$	34		$	(4)		nm
Net income	$	3,439		$	2,511		37.0	%
Earnings per share from continuing operations - assuming dilution	$	3.65		$	2.74		33.2	%
Consolidated earnings per share - assuming dilution	$	3.68		$	2.73		34.8	%
Weighted-average shares outstanding - assuming dilution	933.9			918.6			1.7	%
	At 6/30/2024			At 12/31/2023
Assets	$	133,848		$	135,241		(1.0)	%
Liabilities	$	109,745		$	112,628		(2.6)	%
Equity	$	24,103		$	22,613		6.6	%

(1)Year-to-year revenue growth of 3.2 percent adjusted for currency.

nm - not meaningful

52

Management Discussion – (continued)

The following table provides the company’s operating (non-GAAP) earnings for the first six months of 2024 and 2023.

(Dollars in millions except per share amounts)					Yr. to Yr. Percent Change
For the six months ended June 30:	2024		2023
Net income as reported	$	3,439	$	2,511	37.0	%
Income/(loss) from discontinued operations, net of tax	34		(4)		nm
Income from continuing operations	$	3,405	$	2,515	35.4
Non-operating adjustments (net of tax):
Acquisition-related charges	$	707	$	613	15.4	%
Non-operating retirement-related costs/(income)	163		10		nm
U.S. tax reform impacts	(436)		115		nm
Operating (non-GAAP) earnings (1)	$	3,839	$	3,252	18.0	%
Diluted operating (non-GAAP) earnings per share (1)	$	4.11	$	3.54	16.1	%

(1)Refer to page 82 for a more detailed reconciliation of net income to operating earnings.

nm - not meaningful

Financial Performance Summary —Six Months Ended June 30:

In the first six months of 2024, we reported $30.2 billion in revenue, income from continuing operations of $3.4 billion and operating (non-GAAP) earnings of $3.8 billion. Diluted earnings per share from continuing operations was $3.65 as reported and $4.11 on an operating (non-GAAP) basis. We generated $6.2 billion in cash from operations and $4.5 billion in free cash flow, and delivered shareholder returns of $3.1 billion in dividends. Our year-to-date performance reflects our deep focus on the business fundamentals with continued revenue growth, margin expansion, cash generation and a strong balance sheet with financial flexibility to support our business.

Total revenue grew 1.7 percent as reported and 3 percent adjusted for currency compared to the prior-year period. Software delivered revenue growth of 6.3 percent as reported and 7.2 percent adjusted for currency, with solid growth in both Hybrid Platform & Solutions and Transaction Processing. Consulting revenue decreased 0.6 percent as reported but grew 1.8 percent adjusted for currency, led by strength in our Business Transformation offerings, and reflecting continued organic growth. Infrastructure revenue was flat as reported and increased 1.5 percent adjusted for currency, with growth in Hybrid Infrastructure reflecting continued demand across our hardware portfolio, offset by a decline in Infrastructure Support reflecting product cycle dynamics.

From a geographic perspective, Americas revenue increased 1.0 percent year to year as reported (1.2 percent adjusted for currency). EMEA increased 1.1 percent (0.7 percent adjusted for currency). Asia Pacific increased 4.4 percent (12.5 percent adjusted for currency).

Gross margin of 55.2 percent increased 1.4 points year to year with gross profit margin expansion across all reportable segments driven by our improving portfolio mix and productivity actions. Operating (non-GAAP) gross margin of 56.3 percent increased 1.5 points compared to the prior-year period due to the same dynamics.

Total expense and other (income) increased 3.5 percent in the first six months of 2024 versus the prior-year period primarily driven by higher spending reflecting our continued investment in portfolio innovation to drive our strategy, higher acquisition-related charges, amortization of acquired intangible assets and non-operating retirement-related cost, and the effects of currency; partially offset by the gain on the divestiture of The Weather Company assets and the benefits from productivity actions. Total operating (non-GAAP) expense and other (income) increased 1.0 percent year to year, driven primarily by the factors described above, excluding the higher non-operating retirement-related costs, acquisition-related charges and amortization of acquired intangible assets.

Pre-tax income from continuing operations of $3.3 billion increased 7.7 percent and pre-tax margin was 10.9 percent, an increase of 0.6 points versus the first half of 2023. Performance in the first six months of 2024 reflects our gross margin expansion and the benefits from productivity actions which enabled investments to drive innovation. The continuing operations benefit from income taxes for the first six months of 2024 was $112 million, compared to a provision for income taxes of $543 million for the first six months of 2023. The benefit from income taxes in the first six months of 2024

53

Management Discussion – (continued)

was primarily driven by the resolution of certain tax audit matters in the first quarter. Net income from continuing operations of $3.4 billion increased 35.4 percent and the net income from continuing operations margin was 11.3 percent, up 2.8 points year to year.

Operating (non-GAAP) pre-tax income from continuing operations of $4.4 billion increased 15.7 percent compared to the prior-year period and the operating (non-GAAP) pre-tax margin from continuing operations increased 1.8 points to 14.7 percent. The operating (non-GAAP) provision for income taxes in the first six months of 2024 was $610 million, compared to $593 million in the first six months of 2023. Operating (non-GAAP) income from continuing operations of $3.8 billion increased 18.0 percent and the operating (non-GAAP) income margin from continuing operations of 12.7 percent increased 1.8 points year to year.

Diluted earnings per share from continuing operations of $3.65 in the first six months of 2024 increased 33.2 percent and operating (non-GAAP) diluted earnings per share of $4.11 increased 16.1 percent compared to the first half of 2023.

At June 30, 2024, the balance sheet remained strong with financial flexibility to support and invest in the business. Cash and cash equivalents, restricted cash and marketable securities at June 30, 2024 of $16.0 billion increased $2.5 billion from December 31, 2023 and debt of $56.5 billion at June 30, 2024 was flat from prior-year end.

Total assets decreased $1.4 billion (increased $0.5 billion adjusted for currency) from December 31, 2023 primarily driven by increases in cash and cash equivalents, restricted cash and marketable securities; partially offset by a decrease in receivables. Total liabilities decreased $2.9 billion ($1.0 billion adjusted for currency) from December 31, 2023 primarily driven by decreases in tax liabilities and accounts payable; partially offset by an increase in deferred income. Total equity of $24.1 billion increased $1.5 billion from December 31, 2023 primarily driven by first-half 2024 net income and common stock issuances; partially offset by dividends paid.

Cash provided by operating activities was $6.2 billion in the first six months of 2024, a decrease of $0.2 billion compared to the first six months of 2023 and free cash flow was $4.5 billion, an increase of $1.1 billion versus the prior-year period. Refer to page 77 for additional information on free cash flow. Net cash used in investing activities of 2.0 billion decreased 6.0 billion and financing activities were a net use of cash of 2.6 billion in the first six months of 2024 compared to a net source of cash of $3.0 billion in the prior-year period.

54

Management Discussion – (continued)

Second Quarter in Review

Results of Continuing Operations

Segment Details

As discussed in the "Organization of Information" section, we made changes to our organizational structure and management system in the first quarter of 2024. With these changes, we revised our reportable segments and updated the title of our segment performance metric from pre-tax income from continuing operations to segment profit.

The following tables present each reportable segment’s revenue and gross margin results, followed by an analysis of the second quarter and first six months of 2024 versus the second quarter and first six months of 2023 reportable segments results. Prior-year results have been recast to reflect the January 2024 segment changes as described in note 4, "Segments."

(Dollars in millions)							Yr. to Yr. Percent/Margin Change		Yr. to Yr. Percent Change Adjusted For Currency
For the three months ended June 30:	2024			2023 (1)
Revenue:
Software	$	6,739		$	6,294		7.1	%	8.4	%
Gross margin	83.6		%	82.1		%	1.5	pts.
Consulting	5,179			5,226			(0.9)	%	1.8	%
Gross margin	26.3		%	25.9		%	0.4	pts.
Infrastructure	3,645			3,618			0.7	%	2.7	%
Gross margin	56.5		%	56.0		%	0.5	pts.
Financing	169			185			(8.3)	%	(6.6)	%
Gross margin	48.9		%	49.2		%	(0.3)	pts.
Other	38			152			(75.1)	%	(74.6)	%
Gross margin	nm			(88.8)		%	nm
Total revenue	$	15,770		$	15,475		1.9	%	3.8	%
Total gross profit	$	8,950		$	8,501		5.3	%
Total gross margin	56.8		%	54.9		%	1.8	pts.
Non-operating adjustments:
Amortization of acquired intangible assets	170			150			13.9	%
Operating (non-GAAP) gross profit	$	9,120		$	8,650		5.4	%
Operating (non-GAAP) gross margin	57.8		%	55.9		%	1.9	pts.

(1)Recast to reflect January 2024 segment changes.

nm = not meaningful

55

Management Discussion – (continued)

(Dollars in millions)							Yr. to Yr. Percent/Margin Change		Yr. to Yr. Percent Change Adjusted For Currency
For the six months ended June 30:	2024			2023 (1)
Revenue:
Software	$	12,637		$	11,885		6.3	%	7.2	%
Gross margin	83.0		%	82.3		%	0.7	pts.
Consulting	10,365			10,423			(0.6)	%	1.8	%
Gross margin	25.8		%	25.7		%	0.1	pts.
Infrastructure	6,721			6,716			0.1	%	1.5	%
Gross margin	55.4		%	54.1		%	1.4	pts.
Financing	362			380			(4.9)	%	(4.0)	%
Gross margin	48.7		%	46.5		%	2.2	pts.
Other	146			321			(54.6)	%	(54.6)	%
Gross margin	(260.7)		%	(81.5)		%	(179.2)	pts.
Total revenue	$	30,231		$	29,727		1.7	%	3.2	%
Total gross profit	$	16,692		$	16,010		4.3	%
Total gross margin	55.2		%	53.9		%	1.4	pts.
Non-operating adjustments:
Amortization of acquired intangible assets	341			298			14.4	%
Operating (non-GAAP) gross profit	$	17,033		$	16,308		4.4	%
Operating (non-GAAP) gross margin	56.3		%	54.9		%	1.5	pts.

(1)Recast to reflect January 2024 segment changes.

Software

(Dollars in millions)					Yr. to Yr. Percent Change		Yr. to Yr. Percent Change Adjusted For Currency
For the three months ended June 30:	2024		2023 (1)
Software revenue:	$	6,739	$	6,294	7.1	%	8.4	%
Hybrid Platform & Solutions	$	4,575	$	4,350	5.2	%	6.3	%
Red Hat					6.9		8.1
Automation					14.6		15.9
Data & AI					(3.0)		(2.1)
Security					2.0		3.0
Transaction Processing	2,164		1,943		11.4		13.0

(1)Recast to reflect January 2024 segment changes.

56

Management Discussion – (continued)

(Dollars in millions)					Yr. to Yr. Percent Change		Yr. to Yr. Percent Change Adjusted For Currency
For the six months ended June 30:	2024		2023 (1)
Software revenue:	$	12,637	$	11,885	6.3	%	7.2	%
Hybrid Platform & Solutions	$	8,673	$	8,200	5.8	%	6.5	%
Red Hat					7.8		8.6
Automation					13.9		14.7
Data & AI					(1.4)		(0.8)
Security					(0.2)		0.3
Transaction Processing	3,964		3,685		7.6		8.7

(1)Recast to reflect January 2024 segment changes.

Software revenue of $6,739 million increased 7.1 percent as reported (8.4 percent adjusted for currency) in the second quarter of 2024 compared to the prior-year period, driven by solid revenue growth in both Hybrid Platform & Solutions and Transaction Processing. We had strong transactional performance as clients leverage the capabilities of our AI and hybrid cloud platforms. This revenue performance also reflects the investments we have been making in Software, both organically and in acquisitions.

Hybrid Platform & Solutions revenue of $4,575 million increased 5.2 percent as reported (6.3 percent adjusted for currency) in the second quarter of 2024 compared to the prior-year period, driven primarily by growth in Red Hat and Automation. Red Hat revenue increased 6.9 percent as reported (8.1 percent adjusted for currency), with double-digit growth in OpenShift and Ansible, and solid growth in RHEL in the second quarter of 2024 compared to the prior-year period. The revenue growth within Red Hat reflects the demand for our hybrid cloud solutions, including application modernization, management automation, generative AI and virtualization. Automation revenue increased 14.6 percent as reported (15.9 percent adjusted for currency), driven by strong growth in our Software-as-a-Service subscription offerings such as AIOps and Management, which includes the revenue contribution from the Apptio acquisition which closed in the third quarter of 2023. The synergy between Apptio's FinOps offerings and our broader automation portfolio helps clients manage, optimize and automate technology spending decisions. Data & AI revenue decreased 3.0 percent as reported (2.1 percent adjusted for currency), due to a challenging year-to-year revenue performance comparison where we had strong, broad-based, double-digit revenue growth in the second quarter of 2023.

Across Hybrid Platform & Solutions, our annual recurring revenue (ARR) was $14.1 billion. ARR is a key performance metric management uses to assess the health and growth trajectory of our Hybrid Platform & Solutions business within the Software segment. The metric was updated in the first quarter of 2024 to reflect the organizational changes described in note 4, “Segments,” and to simplify the calculation. ARR 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 revenue as this performance metric and its inputs may not represent revenue that will be recognized in future periods.

Transaction Processing revenue of $2,164 million increased 11.4 percent as reported (13.0 percent adjusted for currency) in the second quarter of 2024 compared to the prior-year period, reflecting continued revenue growth in both recurring and transactional software. This growth reflects the innovation and value of our mission-critical hardware stack across IBM Z, Power and Storage systems. The performance is the result of the combination of clients' growing demand for capacity, solid renewal rates, and strong large deal performance. In addition, our new generative AI portfolio innovation, watsonx Code Assistant for Z, is resonating well with clients.

For the first six months of 2024, Software revenue of $12,637 million increased 6.3 percent as reported (7.2 percent adjusted for currency) compared to the same period in 2023, driven by solid growth in Hybrid Platform & Solutions, led by Red Hat and Automation, and Transaction Processing. This performance reflects the continued demand for the high-value capabilities within our Hybrid Platform & Solutions offerings and the value of our mission-critical software within Transaction Processing.

57

Management Discussion – (continued)

(Dollars in millions)							Yr. to Yr. Percent/ Margin Change
For the three months ended June 30:	2024			2023 (1)
Software:
Gross profit	$	5,634		$	5,167		9.0	%
Gross profit margin	83.6		%	82.1		%	1.5	pts.
Segment profit	$	2,113		$	1,749		20.8	%
Segment profit margin	31.3		%	27.8		%	3.6	pts.

(Dollars in millions)							Yr. to Yr. Percent/ Margin Change
For the six months ended June 30:	2024			2023 (1)
Software:
Gross profit	$	10,494		$	9,785		7.2	%
Gross profit margin	83.0		%	82.3		%	0.7	pts.
Segment profit	$	3,612		$	3,128		15.5	%
Segment profit margin	28.6		%	26.3		%	2.3	pts.

(1)Recast to reflect January 2024 segment changes.

Software gross profit margin increased 1.5 points to 83.6 percent in the second quarter of 2024 compared to the prior-year period. Segment profit of $2,113 million increased 20.8 percent and segment profit margin of 31.3 percent increased 3.6 points compared to the prior-year period. The segment profit growth reflects our operating leverage driven by our revenue performance and portfolio mix. The benefits of our continued productivity actions, partially offset by key investments in software innovation, also contributed to segment profit and margin expansion.

For the first six months of 2024, gross profit margin increased 0.7 points to 83.0 percent, compared to the first six months of 2023. Segment profit of $3,612 million increased 15.5 percent and segment profit margin of 28.6 percent increased 2.3 points compared to the prior-year period. The segment profit growth for the first half of 2024 was driven by the same factors described for the second quarter. The segment profit margin also included about half of a point of impact from currency.

58

Management Discussion – (continued)

Consulting

(Dollars in millions)					Yr. to Yr. Percent Change		Yr. to Yr. Percent Change Adjusted For Currency
For the three months ended June 30:	2024		2023 (1)
Consulting revenue:	$	5,179	$	5,226	(0.9)	%	1.8	%
Business Transformation	$	2,360	$	2,295	2.8	%	5.5	%
Technology Consulting	917		941		(2.5)		0.5
Application Operations	1,902		1,991		(4.5)		(1.8)

(Dollars in millions)					Yr. to Yr. Percent Change		Yr. to Yr. Percent Change Adjusted For Currency
For the six months ended June 30:	2024		2023 (1)
Consulting revenue:	$	10,365	$	10,423	(0.6)	%	1.8	%
Business Transformation	$	4,677	$	4,578	2.2	%	4.4	%
Technology Consulting	1,848		1,866		(1.0)		1.8
Application Operations	3,840		3,980		(3.5)		(1.3)

(1)Recast to reflect January 2024 segment changes.

Consulting revenue of $5,179 million decreased 0.9 percent as reported, but increased 1.8 percent adjusted for currency in the second quarter of 2024 compared to the prior-year period. We continued to have solid demand for our large transformational offerings as clients continue to prioritize driving productivity with AI and analytics. At the same time, consistent with the first quarter, we continued to see clients delay discretionary projects as they prioritized their spending. Our extensive industry and domain expertise has placed us in an early leadership role at the onset of the technology shift to generative AI. We are partnering with our clients to design and scale AI solutions by leveraging our AI capabilities and the AI capabilities of our strategic partners. We are utilizing generative AI solutions to improve delivery by developing new ways of working and driving productivity within our client contracts. Generative AI is driving the next wave of growth, acting as a catalyst for companies to grow revenue, cut costs and change the way they work. This is creating a significant opportunity for IBM, as we have both technology and consulting, which is a unique and powerful combination to help clients navigate this technology shift. In human capital businesses, we are seeing clients re-prioritize their spend on this technology transition, and there is some potential for the total addressable market to expand.

In the second quarter of 2024, Business Transformation revenue of $2,360 million increased 2.8 percent as reported (5.5 percent adjusted for currency) compared to the prior-year period, led by finance and supply chain transformations. Data transformation offerings also contributed to revenue growth in the quarter.

Technology Consulting revenue of $917 million decreased 2.5 percent as reported, but grew 0.5 percent adjusted for currency in the second quarter of 2024 compared to the prior-year period, driven by growth in application modernization services.

Application Operations revenue of $1,902 million decreased 4.5 percent as reported (1.8 percent adjusted for currency) compared to the prior-year period, reflecting a decline in on-premise custom application management projects, partially offset by growth in cloud-based application management offerings.

For the first six months of 2024, Consulting revenue of $10,365 million decreased 0.6 percent as reported, but grew 1.8 percent adjusted for currency, led by strength in our Business Transformation offerings. Business Transformation revenue grew year to year led by finance and supply chain, data and technology, and customer experience transformation projects. In our Technology Consulting business, revenue declined as reported, but grew adjusted for currency. We had declines in on-premise and cloud application development, but growth in client engagements focused on cloud modernization. Within Application Operations, we had declines in on-premise application management services, partially offset by growth in cloud application management services.

59

Management Discussion – (continued)

(Dollars in millions)							Yr. to Yr. Percent/ Margin Change
For the three months ended June 30:	2024			2023 (1)
Consulting:
Gross profit	$	1,362		$	1,353		0.7	%
Gross profit margin	26.3		%	25.9		%	0.4	pts.
Segment profit	$	463		$	483		(4.0)	%
Segment profit margin	8.9		%	9.2		%	(0.3)	pts.

(Dollars in millions)							Yr. to Yr. Percent/ Margin Change
For the six months ended June 30:	2024			2023 (1)
Consulting:
Gross profit	$	2,676		$	2,678		(0.1)	%
Gross profit margin	25.8		%	25.7		%	0.1	pts.
Segment profit	$	888		$	910		(2.4)	%
Segment profit margin	8.6		%	8.7		%	(0.2)	pts.

(1)Recast to reflect January 2024 segment changes.

In the second quarter of 2024, Consulting gross profit margin of 26.3 percent increased 0.4 points on a year-to-year basis. Segment profit of $463 million decreased 4.0 percent and segment profit margin of 8.9 percent decreased 0.3 points year to year. The gross profit margin expansion was driven by productivity and pricing actions we have taken, partially offset by continued labor inflation which is also reflected in the modest decline in segment profit margin.

For the first six months of 2024, Consulting gross profit margin of 25.8 percent increased 0.1 points compared to the prior-year period. Segment profit of $888 million decreased 2.4 percent and segment profit margin of 8.6 percent decreased 0.2 points in the first six months of 2024 compared to the prior-year period. The six-month margin performance was driven by the same factors as described above for the second quarter. The segment profit margin also included about half of a point of impact from currency.

Consulting Signings and Book-to-Bill

(Dollars in millions)					Yr. to Yr. Percent Change		Yr. to Yr. Percent Change Adjusted For Currency
For the three months ended June 30:	2024		2023 (1)
Total Consulting signings	$	5,678	$	5,946	(4.5)	%	(2.5)	%

(Dollars in millions)					Yr. to Yr. Percent Change		Yr. to Yr. Percent Change Adjusted For Currency
For the six months ended June 30:	2024		2023 (1)
Total Consulting signings	$	11,189	$	11,328	(1.2)	%	0.7	%

(1)Recast to reflect January 2024 segment changes.

In the second quarter of 2024, Consulting signings decreased 4.5 percent as reported and 2.5 percent adjusted for currency. While discretionary spending constraints impacted our small engagement performance in the second-quarter 2024, we had solid demand for large engagements across finance and supply chain transformation, cloud modernization and application development. Our book-to-bill ratio for the trailing twelve-months remains over 1.15. Book-to-bill represents the ratio of IBM Consulting signings to its revenue over the same period. The metric is a useful indicator of the demand of our business over time.

60

Management Discussion – (continued)

Signings are management’s initial estimate of the value of a client’s commitment under a services contract within IBM Consulting. There are no third-party standards or requirements governing the calculation of signings. The calculation used by management involves estimates and judgments to gauge the extent of a client’s commitment, including the type and duration of the agreement, and the presence of termination charges or wind-down costs.

Contract extensions and increases in scope are treated as signings only to the extent of the incremental new value. Total signings can vary over time due to a variety of factors including, but not limited to, the timing of signing a small number of larger contracts. Signings associated with an acquisition will be recognized on a prospective basis.

Management believes the estimated values of signings disclosed provide an indication of our forward-looking revenue. Signings are used to monitor the performance of the business and viewed as useful information for management and shareholders. The conversion of signings into revenue may vary based on the types of services and solutions, contract duration, customer decisions, and other factors, which may include, but are not limited to, the macroeconomic environment.

Infrastructure

(Dollars in millions)					Yr. to Yr. Percent Change		Yr. to Yr. Percent Change Adjusted For Currency
For the three months ended June 30:	2024		2023
Infrastructure revenue:	$	3,645	$	3,618	0.7	%	2.7	%
Hybrid Infrastructure	$	2,360	$	2,260	4.4	%	6.1	%
IBM Z					6.0		7.6
Distributed Infrastructure					3.3		5.0
Infrastructure Support	1,285		1,358		(5.4)		(2.9)

(Dollars in millions)					Yr. to Yr. Percent Change		Yr. to Yr. Percent Change Adjusted For Currency
For the six months ended June 30:	2024		2023
Infrastructure revenue:	$	6,721	$	6,716	0.1	%	1.5	%
Hybrid Infrastructure	$	4,163	$	3,969	4.9	%	6.2	%
IBM Z					5.2		6.5
Distributed Infrastructure					4.6		6.0
Infrastructure Support	2,558		2,747		(6.9)		(5.1)

Infrastructure revenue of $3,645 million increased 0.7 percent as reported and 2.7 percent adjusted for currency in the second quarter of 2024 compared to the prior-year period, with strong growth in Hybrid Infrastructure, partially offset by a decline in Infrastructure Support.

Hybrid Infrastructure revenue of $2,360 million increased 4.4 percent as reported and 6.1 percent adjusted for currency in the second quarter of 2024 compared to the prior-year period. Within Hybrid Infrastructure, we had strong and broad-based revenue growth across our hardware platforms, led by IBM Z which increased 6.0 percent as reported and 7.6 percent adjusted for currency. We are now more than two years into the z16 cycle and the revenue performance continues to outperform prior cycles. Our clients have increasing demands for workloads given rapid business expansion, the complex regulatory environment and increasing cybersecurity threats and attacks. IBM Z addresses these client needs with the combination of cloud-native development for hybrid cloud, embedded AI at scale, quantum-safe security, energy efficiency and strong reliability and scalability. IBM Z remains an enduring platform for mission-critical workloads, driving both hardware and related software, storage and services adoption. Distributed Infrastructure revenue increased 3.3 percent as reported and 5.0 percent adjusted for currency, driven primarily by strong growth in Power and Storage systems. Within Power, revenue growth was driven by demand for data intensive workloads on Power10, led by SAP Hana. Storage revenue performance was driven by growth in high-end storage tied to the z16 cycle and solutions tailored to protect, manage and access data for scaling generative AI.

61

Management Discussion – (continued)

Infrastructure Support revenue of $1,285 million decreased 5.4 percent as reported (2.9 percent adjusted for currency) in the second quarter of 2024 compared to the prior-year period, driven by volume decline in support of non-IBM equipment and IBM product cycle dynamics.

For the first six months of 2024, Infrastructure revenue of $6,721 million was flat as reported and increased 1.5 percent adjusted for currency compared to the prior-year period, driven by year-to-year growth in Hybrid Infrastructure partially offset by declines in Infrastructure Support. Within Hybrid Infrastructure, we had solid revenue growth in IBM Z and strong growth in Power and Storage systems within Distributed Infrastructure. The revenue decline in Infrastructure Support for the first six months of 2024 was driven by the same dynamics as the second quarter.

(Dollars in millions)							Yr. to Yr. Percent/ Margin Change
For the three months ended June 30:	2024			2023 (1)
Infrastructure:
Gross profit	$	2,060		$	2,025		1.7	%
Gross profit margin	56.5		%	56.0		%	0.5	pts.
Segment profit	$	654		$	732		(10.7)	%
Segment profit margin	17.9		%	20.2		%	(2.3)	pts.

(Dollars in millions)							Yr. to Yr. Percent/ Margin Change
For the six months ended June 30:	2024			2023 (1)
Infrastructure:
Gross profit	$	3,726		$	3,631		2.6	%
Gross profit margin	55.4		%	54.1		%	1.4	pts.
Segment profit	$	965		$	1,039		(7.1)	%
Segment profit margin	14.4		%	15.5		%	(1.1)	pts.

(1)Recast to reflect January 2024 segment changes.

Infrastructure gross profit margin of 56.5 percent increased 0.5 points in the second quarter of 2024 compared to the prior-year period, with solid margin expansion in Hybrid Infrastructure and Infrastructure Support. The increase in margin within Hybrid Infrastructure was driven primarily by margin expansion within Distributed Infrastructure, driven by Power systems, and portfolio mix to IBM Z. In the second quarter of 2024, Infrastructure segment profit of $654 million decreased 10.7 percent and segment profit margin of 17.9 percent decreased 2.3 points compared to the prior-year period. The year-to-year decrease in segment profit and margin reflects key investments we are making in the business across areas such as AI, hybrid cloud and quantum, partially offset by the benefits from productivity actions we have taken. The segment profit margin included approximately 1 point of impact from currency.

For the first six months of 2024, gross profit margin of 55.4 percent increased 1.4 points compared to the prior-year period, driven by margin expansion in Hybrid Infrastructure and Infrastructure Support. Infrastructure profit of $965 million decreased 7.1 percent and segment profit margin of 14.4 percent decreased 1.1 points in the first six months of 2024 compared to the prior-year period. This performance reflects the same factors described in the second-quarter performance, which were partially offset by higher IP and custom development income year to year. The segment profit margin also included approximately 1 point of impact from currency.

Financing

Refer to pages 78 through 80 for a discussion of Financing’s segment results.

62

Management Discussion – (continued)

Geographic Revenue

In addition to the revenue presentation by reportable segment, we also measure revenue performance on a geographic basis.

(Dollars in millions)					Yr. to Yr. Percent Change		Yr. to Yr. Percent Change Adjusted For Currency
For the three months ended June 30:	2024		2023
Total Revenue	$	15,770	$	15,475	1.9	%	3.8	%
Americas	$	7,979	$	8,046	(0.8)	%	(0.5)	%
Europe/Middle East/Africa (EMEA)	4,722		4,602		2.6		3.2
Asia Pacific	3,069		2,827		8.6		17.2

(Dollars in millions)					Yr. to Yr. Percent Change		Yr. to Yr. Percent Change Adjusted For Currency
For the six months ended June 30:	2024		2023
Total Revenue	$	30,231	$	29,727	1.7	%	3.2	%
Americas	$	15,275	$	15,124	1.0	%	1.2	%
Europe/Middle East/Africa (EMEA)	9,035		8,933		1.1		0.7
Asia Pacific	5,922		5,670		4.4		12.5

Geographic revenue performance for the three months ended June 30, 2024:

Americas revenue of $7,979 million decreased 0.8 percent as reported and 0.5 percent adjusted for currency in the second quarter of 2024 compared to the prior-year period. The U.S. increased 2.6 percent. Canada decreased 6.2 percent as reported and 4.4 percent adjusted for currency. Latin America decreased 19.9 percent as reported and 18.4 percent adjusted for currency, with Brazil decreasing 22.8 percent as reported and 20.0 percent adjusted for currency.

In EMEA, total revenue of $4,722 million increased 2.6 percent as reported and 3.2 percent adjusted for currency. Italy and Germany increased 4.6 percent and 3.5 percent, respectively, as reported, and 5.6 percent and 4.6 percent, respectively, adjusted for currency. France and the UK decreased 9.0 percent and 0.3 percent, respectively, as reported, and 8.1 percent and 1.1 percent, respectively, adjusted for currency.

Asia Pacific revenue of $3,069 million increased 8.6 percent as reported and 17.2 percent adjusted for currency. Japan increased 11.2 percent as reported and 26.2 percent adjusted for currency. Australia and India increased 13.7 percent and 11.9 percent, respectively, as reported, and 15.1 percent and 13.5 percent, respectively, adjusted for currency. China decreased 4.3 percent as reported and 2.3 percent adjusted for currency.

Geographic revenue performance for the six months ended June 30, 2024:

Americas revenue of $15,275 million increased 1.0 percent as reported and 1.2 percent adjusted for currency. The U.S. increased 3.0 percent compared to the prior-year period. Canada decreased 6.3 percent as reported and 5.6 percent adjusted for currency. Latin America decreased 6.5 percent as reported and 5.2 percent adjusted for currency, with Brazil decreasing 9.0 percent as reported and 8.8 percent adjusted for currency.

In EMEA, total revenue of $9,035 million increased 1.1 percent as reported and 0.7 percent adjusted for currency. Germany and Italy increased 3.8 percent and 3.2 percent, respectively, both as reported and adjusted for currency. The UK increased 1.9 percent as reported, but decreased 0.6 percent adjusted for currency. France decreased 3.5 percent both as reported and adjusted for currency.

Asia Pacific revenue of $5,922 million increased 4.4 percent as reported and 12.5 percent adjusted for currency. Japan increased 7.1 percent as reported and 20.9 percent adjusted for currency. India and Australia increased 8.7 percent and 3.0 percent, respectively, as reported, and 10.0 percent and 5.5 percent, respectively, adjusted for currency. China decreased 5.0 percent as reported and 2.3 percent adjusted for currency.

63

Management Discussion – (continued)

Expense

Total Expense and Other (Income)

(Dollars in millions)							Yr. to Yr. Percent Change
For the three months ended June 30:	2024			2023
Total expense and other (income)	$	6,730		$	6,501		3.5	%
Non-operating adjustments:
Amortization of acquired intangible assets	$	(268)		$	(239)		12.2	%
Acquisition-related charges	(36)			(7)			nm
Non-operating retirement-related (costs)/income	(98)			(1)			nm
Operating (non-GAAP) expense and other (income)	$	6,328		$	6,254		1.2	%
Total expense-to-revenue ratio	42.7		%	42.0		%	0.7	pts.
Operating (non-GAAP) expense-to-revenue ratio	40.1		%	40.4		%	(0.3)	pts.

(Dollars in millions)							Yr. to Yr. Percent Change
For the six months ended June 30:	2024			2023
Total expense and other (income)	$	13,399		$	12,952		3.5	%
Non-operating adjustments:
Amortization of acquired intangible assets	$	(526)		$	(483)		8.8	%
Acquisition-related charges	(96)			(10)			nm
Non-operating retirement-related (costs)/income	(194)			4			nm
Operating (non-GAAP) expense and other (income)	$	12,584		$	12,463		1.0	%
Total expense-to-revenue ratio	44.3		%	43.6		%	0.8	pts.
Operating (non-GAAP) expense-to-revenue ratio	41.6		%	41.9		%	(0.3)	pts.

nm - not meaningful

For additional information regarding total expense and other (income) for both expense presentations, refer to the following analyses by category.

64

Management Discussion – (continued)

Selling, General and Administrative Expense

(Dollars in millions)					Yr. to Yr. Percent Change
For the three months ended June 30:	2024		2023
Selling, general and administrative expense:
Selling, general and administrative — other	$	4,121	$	3,991	3.3	%
Advertising and promotional expense	354		372		(5.0)
Workforce rebalancing charges	20		117		(82.7)
Amortization of acquired intangible assets	268		239		12.3
Stock-based compensation	172		168		2.3
Provision for/(benefit from) expected credit loss expense	2		14		(85.4)
Total selling, general and administrative expense	$	4,938	$	4,900	0.8	%
Non-operating adjustments:
Amortization of acquired intangible assets	$	(268)	$	(239)	12.3	%
Acquisition-related charges	(18)		(7)		176.4
Operating (non-GAAP) selling, general and administrative expense	$	4,651	$	4,655	(0.1)	%

(Dollars in millions)					Yr. to Yr. Percent Change
For the six months ended June 30:	2024		2023
Selling, general and administrative expense:
Selling, general and administrative — other	$	8,036	$	7,877	2.0	%
Advertising and promotional expense	633		687		(7.9)
Workforce rebalancing charges	396		376		5.3
Amortization of acquired intangible assets	526		482		9.0
Stock-based compensation	343		317		8.2
Provision for/(benefit from) expected credit loss expense	(21)		16		nm
Total selling, general and administrative expense	$	9,912	$	9,754	1.6	%
Non-operating adjustments:
Amortization of acquired intangible assets	$	(526)	$	(482)	9.0	%
Acquisition-related charges	(28)		(9)		213.8
Operating (non-GAAP) selling, general and administrative expense	$	9,358	$	9,263	1.0	%

nm - not meaningful

Total selling, general and administrative (SG&A) expense increased 0.8 percent in the second quarter of 2024 versus the prior-year period driven primarily by the following factors:

•Higher spending, which includes operating expenses of acquired businesses, as a result of our continued investment to drive our hybrid cloud and AI strategy; and

•Higher acquisition-related charges and amortization of acquired intangible assets (1 point); partially offset by

•Benefits from productivity actions;

•Lower workforce rebalancing charges (2 points); and

•The effects of currency (1 point).

Operating (non-GAAP) SG&A expense was flat year to year primarily driven by the same factors above excluding the higher acquisition-related charges and amortization of acquired intangible assets.

65

Management Discussion – (continued)

Total SG&A expense increased 1.6 percent in the first six months of 2024 versus the prior-year period driven primarily by the following factors:

•Higher spending, which includes expenses from acquired businesses, as a result of our continued investment to drive our hybrid cloud and AI strategy; and

•Higher acquisition-related charges and amortization of acquired intangible assets (1 point); partially offset by

•Benefits from productivity actions; and

•The effects of currency (1 point).

Operating (non-GAAP) SG&A expense increased 1.0 percent year to year primarily driven by the same factors above excluding the higher acquisition-related charges and amortization of acquired intangible assets.

Expected credit loss expense was a benefit of $21 million in the first six months of 2024 compared to a provision of $16 million in the prior-year period. The year-to-year change was primarily driven by lower reserve requirements in the current year. Refer to "Receivables and Allowances" section on page 72 for additional information.

Research, Development and Engineering

(Dollars in millions)					Yr. to Yr. Percent Change
For the three months ended June 30:	2024		2023
Research, development and engineering expense	$	1,840	$	1,687	9.1	%

(Dollars in millions)					Yr. to Yr. Percent Change
For the six months ended June 30:	2024		2023
Research, development and engineering expense	$	3,637	$	3,342	8.8	%

Research, development and engineering (RD&E) expense increased 9.1 percent and 8.8 percent year to year in the second quarter and first six months of 2024, respectively. RD&E expense increased year to year primarily driven by investments to drive innovation in AI, hybrid cloud and quantum, as well as in Infrastructure ahead of our next IBM Z cycle in 2025.

Intellectual Property and Custom Development Income

(Dollars in millions)					Yr. to Yr. Percent Change
For the three months ended June 30:	2024		2023
Intellectual property and custom development income:
Intellectual property income (1) (2)	$	77	$	129	(40.6)	%
Custom development income	165		119		37.9
Total	$	241	$	248	(2.8)	%

(1)Includes licensing, royalty-based fees and sales.

(2)Prior period has been reclassified to conform to the change in 2024 presentation.

66

Management Discussion – (continued)

(Dollars in millions)					Yr. to Yr. Percent Change
For the six months ended June 30:	2024		2023
Intellectual property and custom development income:
Intellectual property income (1) (2)	$	149	$	193	(23.0)	%
Custom development income	309		235		31.5
Total	$	458	$	428	6.9	%

(1)Includes licensing, royalty-based fees and sales.

(2)Prior period has been reclassified to conform to the change in 2024 presentation.

Total intellectual property and custom development income decreased 2.8 percent year to year in the second quarter, and increased 6.9 percent in the first six months of 2024 compared to the prior-year period. The increase in the first six months of 2024 was primarily driven by joint development and licensing agreements with a Japanese consortium to leverage our intellectual property and expertise on advanced semiconductors.

The timing and amount of licensing and sales of IP may vary significantly from period to period depending upon the timing of licensing agreements, economic conditions, industry consolidation and the timing of new patents and know-how development.

Other (Income) and Expense

(Dollars in millions)					Yr. to Yr. Percent Change
For the three months ended June 30:	2024		2023
Other (income) and expense:
Foreign currency transaction losses/(gains)	$	(140)	$	(166)	(15.9)	%
(Gains)/losses on derivative instruments (1)	140		141		(0.8)
Interest income	(217)		(201)		7.7
Net (gains)/losses from securities and investment assets	0		3		nm
Retirement-related costs/(income)	98		1		nm
Other	(114)		(39)		193.5
Total other (income) and expense	$	(233)	$	(261)	(10.6)	%
Non-operating adjustments:
Amortization of acquired intangible assets	$	—	$	0	(100.0)	%
Acquisition-related charges (1)	(18)		0		nm
Non-operating retirement-related (costs)/income	(98)		(1)		nm
Operating (non-GAAP) other (income) and expense	$	(349)	$	(262)	33.1	%

(1)2024 includes the realized loss recognized on foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, “Derivative Financial Instruments,” for additional information.

nm - not meaningful

67

Management Discussion – (continued)

(Dollars in millions)					Yr. to Yr. Percent Change
For the six months ended June 30:	2024		2023
Other (income) and expense:
Foreign currency transaction losses/(gains)	$	(345)	$	(78)	nm
(Gains)/losses on derivative instruments (1)	427		(1)		nm
Interest income	(427)		(371)		15.2	%
Net (gains)/losses from securities and investment assets	(10)		8		nm
Retirement-related costs/(income)	194		(4)		nm
Other	(389)		(61)		nm
Total other (income) and expense	$	(550)	$	(506)	8.8	%
Non-operating adjustments:
Amortization of acquired intangible assets	$	—	$	(1)	(100.0)	%
Acquisition-related charges (1)	(68)		(1)		nm
Non-operating retirement-related (costs)/income	(194)		4		nm
Operating (non-GAAP) other (income) and expense	$	(812)	$	(504)	61.2	%

(1)2024 includes the realized loss recognized on foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, “Derivative Financial Instruments,” for additional information.

nm - not meaningful

Total other (income) and expense was income of $233 million in the second quarter of 2024 and decreased $28 million compared to the prior-year period. The year-to-year change was primarily driven by:

•Higher non-operating retirement-related cost of $97 million primarily driven by an increase in recognized actuarial losses of the Qualified PPP due to the change in amortization period as described in note 18, "Retirement-Related Benefits," partially offset by lower interest costs; partially offset by

•Higher gains on land/building dispositions and sale of intangibles ($54 million) included in “Other”; and

•Higher interest income ($15 million) primarily driven by a higher average cash balance in the current year.

Operating (non-GAAP) other (income) and expense was income of $349 million in the second quarter of 2024 and increased $87 million compared to the prior-year period. The year-to-year change was primarily driven by the factors described above, excluding the higher non-operating retirement-related costs.

Total other (income) and expense was income of $550 million in the first six months of 2024 and increased $44 million compared to the prior-year period. The year-to-year change was primarily driven by:

•Higher gains on divestitures ($214 million) primarily driven by the divestiture of The Weather Company assets (included in “Other” in the table above). Refer to note 5, "Acquisitions & Divestitures," for additional information; and

•Higher gains on land/building dispositions and sale of intangibles ($77 million) included in “Other”; and

•Higher interest income ($56 million) primarily driven by a higher average cash balance in the current year; partially offset by

•Higher non-operating retirement-related cost of $198 million primarily driven by the change in amortization period as described in note 18, "Retirement-Related Benefits," partially offset by lower interest costs; and

•Net exchange losses (including derivative instruments) of $82 million in the current year versus net exchange gains of $79 million in the prior year.

68

Management Discussion – (continued)

Operating (non-GAAP) other (income) and expense was income of $812 million in the first six months of 2024 and increased $308 million compared to the prior-year period. The year-to-year change was primarily driven by the factors described above, excluding the higher non-operating retirement-related costs.

Interest Expense

(Dollars in millions)					Yr. to Yr. Percent Change
For the three months ended June 30:	2024		2023
Interest expense	$	427	$	423	1.0	%

(Dollars in millions)					Yr. to Yr. Percent Change
For the six months ended June 30:	2024		2023
Interest expense	$	859	$	790	8.7	%

Interest expense increased $4 million and $69 million year to year in the second quarter and first six months of 2024, respectively. Interest expense is presented in cost of financing in the Consolidated Income Statement if the related external borrowings are to support the Financing external business. Overall interest expense (excluding capitalized interest) for the second quarter and first six months of 2024 was $509 million and $1,026 million, respectively, an increase of $3 million and $63 million, respectively, compared to the prior-year periods. The year-to-year dynamics for both the second quarter and first six months of 2024 were primarily driven by higher average interest rates and a higher average debt balance in the current year.

Retirement-Related Plans

The following tables provide the total pre-tax cost for all retirement-related plans. The operating cost amounts are included in the Consolidated Income Statement within the caption (e.g., Cost, SG&A, RD&E) relating to the job function of the plan participants. The non-operating cost amounts are included in other (income) and expense.

(Dollars in millions)					Yr. to Yr. Percent Change
For the three months ended June 30:	2024		2023
Retirement-related plans — cost:
Service cost	$	141	$	46	208.8	%
Multi-employer plans	3		3		1.7
Cost of defined contribution plans	109		242		(55.1)
Total operating costs	$	252	$	291	(13.2)	%
Interest cost	$	555	$	604	(8.1)	%
Expected return on plan assets	(725)		(745)		(2.6)
Recognized actuarial losses	256		128		99.8
Amortization of prior service costs/(credits)	(2)		(2)		(13.8)
Curtailments/settlements	2		6		(60.6)
Other costs	12		10		17.0
Total non-operating costs/(income)	$	98	$	1	nm
Total retirement-related plans — cost	$	350	$	292	20.0	%

nm - not meaningful

69

Management Discussion – (continued)

(Dollars in millions)					Yr. to Yr. Percent Change
For the six months ended June 30:	2024		2023
Retirement-related plans — cost:
Service cost	$	284	$	92	209.2	%
Multi-employer plans	6		6		1.4
Cost of defined contribution plans	220		511		(57.1)
Total operating costs	$	510	$	610	(16.4)	%
Interest cost	$	1,113	$	1,203	(7.5)	%
Expected return on plan assets	(1,455)		(1,484)		(1.9)
Recognized actuarial losses	515		257		99.9
Amortization of prior service costs/(credits)	(4)		(4)		(17.5)
Curtailments/settlements	4		5		(11.4)
Other costs	20		19		7.6
Total non-operating costs/(income)	$	194	$	(4)	nm
Total retirement-related plans — cost	$	704	$	606	16.2	%

nm - not meaningful

Total pre-tax retirement-related plan cost increased by $58 million compared to the second quarter of 2023, primarily driven by an increase in recognized actuarial losses ($128 million) and higher service cost ($95 million), partially offset by lower cost of defined contribution plans ($134 million) and lower interest costs ($49 million). Total cost for the first six months of 2024 increased by $98 million compared to the first six months of 2023, primarily driven by an increase in recognized actuarial losses ($257 million) and higher service cost ($192 million), partially offset by lower cost of defined contribution plans ($292 million) and lower interest costs ($90 million).

As described in the “Operating (non-GAAP) Earnings” section, management characterizes certain retirement-related costs as operating and others as non-operating. Utilizing this characterization, operating retirement-related costs in the second quarter of 2024 were $252 million, a decrease of $38 million compared to the second quarter of 2023. The decrease was primarily driven by lower cost of defined contribution plans ($134 million), partially offset by higher service cost ($95 million) due to the U.S. retirement plan changes. For the first six months of 2024, operating retirement-related costs were $510 million, a decrease of $100 million compared to the prior-year period, primarily driven by lower cost of defined contribution plans ($292 million), partially offset by higher service cost ($192 million) due to U.S. retirement plan changes. Including the related employee salary increase effective January 1, 2024, the net impact to our operating costs from the U.S. retirement plan changes was immaterial for the three and six months ended June 30, 2024. Refer to note 18, "Retirement-Related Benefits," for additional information. Non-operating costs/(income) of $98 million in the second quarter of 2024 increased $97 million year to year and for the first six months of 2024 was $194 million of cost compared to $4 million of income in the prior-year period. The year-to-year changes were primarily driven by an increase in recognized actuarial losses, due to the change in amortization period of the Qualified PPP as described in note 18, "Retirement-Related Benefits," partially offset by lower interest costs.

Taxes

The continuing operations provision for income taxes in the second quarter of 2024 was $389 million, compared to $419 million in the second quarter of 2023. The operating (non-GAAP) provision for income taxes in the second quarter of 2024 was $516 million, compared to $393 million in the second quarter of 2023.

The continuing operations benefit from income taxes in the first six months of 2024 was $112 million, compared to a provision for income taxes of $543 million in the first six months of 2023. The benefit from income taxes in the first six months of 2024 was primarily driven by the resolution of certain tax audit matters in the first quarter. The operating (non-GAAP) provision for income taxes in the first six months of 2024 was $610 million, compared to $593 million in the first six months of 2023.

70

Management Discussion – (continued)

IBM’s tax provision and effective tax rate are impacted by recurring factors including the geographical mix of income before taxes, incentives, changes in unrecognized tax benefits and discrete tax events, such as the settlement of income tax audits and changes in or new interpretations of tax laws. The GAAP tax provision and effective tax rate could also be affected by adjustments to the previously recorded charges for U.S. tax reform attributable to any changes in law, new regulations and guidance, and audit adjustments, among others.

During the fourth quarter of 2020, the U.S. Internal Revenue Service (IRS) concluded its examination of the company’s U.S. income tax returns for 2013 and 2014 and issued a final Revenue Agent’s Report (RAR) proposing adjustments related to certain cross-border transactions that occurred in 2013. The company filed its IRS Appeals protest in the first quarter of 2021, and in October of 2023, the IRS issued a revised RAR. These adjustments, if sustained, would increase the company’s income subject to tax by approximately $4.2 billion, with tax calculated at the relevant federal income tax rate. The company continues to strongly disagree with the IRS position and will pursue resolution at IRS Appeals and then court, if necessary. In the first quarter of 2024, the IRS concluded its examination of the company's U.S. income tax returns for 2015 and 2016 and issued a final RAR proposing adjustments related to certain cross-border transactions that occurred in 2015. The proposed adjustments, if sustained, would increase the company’s income subject to tax by approximately $1.2 billion, with tax calculated at the relevant federal income tax rate. The company strongly disagrees with the IRS position and filed its IRS Appeals protest in the second quarter of 2024. In the fourth quarter of 2021, the IRS commenced its audit of the company’s U.S. tax returns for 2017 and 2018. The company anticipates that this audit will be completed in 2024. With respect to major U.S. state and foreign taxing jurisdictions, the company is generally no longer subject to tax examinations for years prior to 2016. The company is no longer subject to income tax examination of its U.S. federal tax return for years prior to 2013. The open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as it relates to the amount and/or timing of income, deductions, and tax credits. Although the outcome of tax audits is always uncertain, the company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that are expected to result for these years.

The company is involved in a number of income tax-related matters in India challenging tax assessments issued by the India Tax Authorities. As of June 30, 2024, the company had recorded $584 million as prepaid income taxes in India. A significant portion of this balance represents cash tax deposits paid over time to protect the company’s right to appeal various income tax assessments made by the India Tax Authorities. Although the outcome of tax audits is always uncertain, the company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that are expected to result for these years.

The amount of unrecognized tax benefits at June 30, 2024 is $8,398 million which can be reduced by $595 million associated with timing adjustments, potential transfer pricing adjustments, and state income taxes. The net amount of $7,803 million, if recognized, would favorably affect the company’s effective tax rate.

Financial Position

Dynamics

Our balance sheet at June 30, 2024 continues to provide us with financial flexibility to support and invest in the business.

Cash and cash equivalents, restricted cash and marketable securities at June 30, 2024 were $15,959 million, an increase of $2,497 million compared to December 31, 2023, including restricted cash held in escrow in connection with the acquisition of StreamSets and webMethods from Software AG which was remitted on July 1, 2024. Total debt of $56,531 million at June 30, 2024 was flat compared to December 31, 2023. We continue to manage our debt levels while being acquisitive and without sacrificing investments in our business.

In the first six months of 2024, we generated $6,234 million in cash from operating activities, a decrease of $179 million compared to the first six months of 2023. Our free cash flow for the six months ended June 30, 2024 was $4,522 million, an increase of $1,081 million versus the prior year. Refer to pages 76 through 77 for additional information on free cash flow. Our cash generation enables us to continue investing in innovation and expertise across the portfolio, while returning value to shareholders through dividends. We returned $3,058 million to shareholders through dividends in the first half of 2024.

Our pension plans were well funded at the end of 2023, with worldwide qualified plans funded at 111 percent. Overall pension funded status as of the end of June 2024 was fairly consistent with year-end 2023. We expect contributions for all

71

Management Discussion – (continued)

retirement-related plans to be approximately $1.5 billion in 2024, a decrease of approximately $0.3 billion compared to 2023.

IBM Working Capital

(Dollars in millions)	At June 30, 2024		At December 31, 2023
Current assets	$	33,299	$	32,908
Current liabilities	29,648		34,122
Working capital	$	3,651	$	(1,214)
Current ratio	1.12:1		0.96:1

Working capital increased $4,865 million from the year-end 2023 position. Current assets increased $391 million ($1,097 million adjusted for currency) primarily in cash and cash equivalents, restricted cash, and marketable securities; partially offset by a decrease in receivables mainly from collections of seasonally higher year-end balances. Current liabilities decreased $4,474 million ($3,808 million adjusted for currency) due to declines in short-term debt mainly due to maturities, taxes payable, and accounts payable, partially offset by an increase in deferred income.

Receivables and Allowances

Roll Forward of Total IBM Receivables Allowance for Credit Losses

(Dollars in millions)
January 1, 2024	Additions / (Releases) (1)	Write-offs (2)(3)	Foreign currency and other (3)	June 30, 2024
$457	$(19)	$(125)	$(11)	$302

(1)Additions/(Releases) for allowance for credit losses are recorded in expense.

(2)Refer to note A, “Significant Accounting Policies,” in our 2023 Annual Report for additional information regarding allowance for credit loss write-offs.

(3)Includes activity related to discontinued operations.

Excluding receivables classified as held for sale, the total IBM receivables provision coverage was 1.7 percent at June 30, 2024, a decrease of 50 basis points compared to December 31, 2023. The decrease in coverage is due to declines in reserves primarily driven by write-offs; partially offset by the overall decrease in total receivables. The write-offs during the six months ended June 30, 2024 were primarily driven by receivables from discontinued operations which had been previously reserved and were written off in the first quarter. Refer to Financing's "Financial Position" on page 79 for additional details regarding the Financing segment receivables and allowances.

Noncurrent Assets and Liabilities

(Dollars in millions)	At June 30, 2024		At December 31, 2023
Noncurrent assets	$	100,548	$	102,333
Long-term debt	$	52,929	$	50,121
Noncurrent liabilities (excluding debt)	$	27,168	$	28,385

The decrease in noncurrent assets of $1,785 million ($559 million adjusted for currency) is primarily due to a decrease in intangible assets driven by amortization.

Long-term debt increased $2,808 million ($3,411 million adjusted for currency) primarily driven by our first-quarter debt issuances; partially offset by reclassifications to short-term debt to reflect upcoming maturities.

Noncurrent liabilities (excluding debt) decreased $1,217 million ($571 million adjusted for currency) primarily driven by a decrease in income tax reserves from the resolution of certain tax audit matters in the first quarter and a decrease in retirement and nonpension postretirement benefit obligations.

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Management Discussion – (continued)

Debt

Our funding requirements are continually monitored as we execute our strategies to manage the overall asset and liability profile. Additionally, we maintain sufficient flexibility to access global funding sources as needed.

(Dollars in millions)	At June 30, 2024		At December 31, 2023
Total debt	$	56,531	$	56,547
Financing segment debt (1)	$	11,112	$	11,879
Non-Financing debt	$	45,420	$	44,668

(1)Refer to Financing’s “Financial Position” on page 79 for additional details.

Total debt of $56,531 million decreased $16 million (increased $607 million adjusted for currency) from December 31, 2023, primarily driven by maturities of $5,224 million and currency impacts; partially offset by proceeds from issuances of $5,705 million.

Non-Financing debt of $45,420 million increased $752 million ($1,201 million adjusted for currency) from December 31, 2023, primarily due to first-quarter debt issuances; partially offset by maturities.

Financing segment debt of $11,112 million decreased $768 million ($594 million adjusted for currency) from December 31, 2023, primarily due to lower funding requirements associated with financing receivables.

Financing provides financing solutions predominantly for IBM’s external client assets, and the debt used to fund Financing assets is primarily composed of intercompany loans. Total debt changes generally correspond with the level of client and commercial financing receivables, the level of cash and cash equivalents, the change in intercompany and external payables and the change in intercompany investment from IBM. The terms of the intercompany loans are set by the company to substantially match the term, currency and interest rate variability underlying the financing receivable. The Financing debt-to-equity ratio remained at 9.0 to 1 at June 30, 2024.

Interest expense relating to debt supporting Financing’s external client and internal business is included in the “Financing Results of Operations” and in note 4, “Segments.” In the Consolidated Income Statement, the external debt-related interest expense supporting Financing’s internal financing to the company is classified as interest expense.

Equity

Total equity increased $1,490 million from December 31, 2023, primarily driven by an increase from net income of $3,439 million and common stock of $858 million; partially offset by dividends paid of $3,058 million.

Cash Flow

Our cash flows from operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows on page 7, are summarized in the table below. These amounts also include the cash flows associated with the Financing business.

(Dollars in millions)
For the six months ended June 30:	2024		2023
Net cash provided by/(used in):
Operating activities	$	6,234	$	6,412
Investing activities	(1,971)		(7,953)
Financing activities	(2,638)		2,978
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(236)		(1)
Net change in cash, cash equivalents and restricted cash	$	1,389	$	1,436

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Management Discussion – (continued)

Net cash provided by operating activities decreased $179 million as compared to the first six months of 2023. This was due to a decrease in cash provided by financing receivables; partially offset by performance-related improvements within net income. Changes in operating assets and liabilities, net of acquisitions/divestitures in the Consolidated Statement of Cash Flows also includes the reduction of tax reserves mainly in the first-quarter 2024 which is reflected as a non-cash adjustment to reconcile net income/(loss) to cash from operating activities.

Net cash used in investing activities decreased $5,982 million mainly driven by a decrease in net cash used in marketable securities and other investments and an increase in cash provided by divestitures from the sale of The Weather Company assets in the first quarter of 2024.

Financing activities were a net use of cash of $2,638 million in the first six months of 2024 compared to a net source of cash of $2,978 million in the first six months of 2023 primarily driven by a lower level of net debt issuances in the current-year period.

Looking Forward

Technology has proven to be a fundamental source of competitive advantage. Continued demand for technology will serve as a major driving force behind global economic and business growth as businesses look to scale, offer better services, drive efficiencies and seize new market opportunities. AI-driven productivity, in particular, continues to be a top priority for businesses for both cost reductions and new revenue opportunities.

Enterprise AI continues to gain traction. In 2024, we anticipate more clients moving from experimenting to deploying AI at scale to unlock productivity. We believe our comprehensive AI strategy is well positioned to help clients scale AI. It has been a year since we introduced watsonx and our generative AI strategy to the market. We have infused AI across the business. From the tools clients use to manage and optimize their hybrid cloud environments, to our platform products across watsonx.ai, .data and .gov, to Infrastructure and Consulting, you can find AI innovation in all of our segments. For example, in Software, our broad suite of automation products such as Apptio and watsonx Orchestrate are leveraging AI. Red Hat is bringing AI to the platform with innovation such as OpenShift AI and RHEL AI. In Transaction Processing we are experiencing early momentum in watsonx Code Assistant for Z. In Infrastructure, IBM Z is equipped with real time AI inferencing capabilities. In Consulting, our experts are helping clients design and implement AI strategies and are also leveraging AI technologies in the delivery of those services.

We are committed to an open innovation ecosystem around AI, to help our clients maximize flexibility and leverage skills and IBM with Red Hat can be a key driver of open-source AI. We recently announced that we open-sourced IBM’s Granite family of large language models and we see parallels to how Linux became dominant in the enterprise server space as a result of the speed and innovation offered by open source. Red Hat and IBM also launched InstructLab to evolve and improve AI models. Our partner ecosystem remains essential to both AI and hybrid cloud growth and we continue to progress strategic partnerships with industry leaders. In May, IBM and Palo Alto Networks announced a partnership to deliver AI-powered security solutions using watsonx. As part of this, Palo Alto is acquiring certain IBM QRadar SaaS assets, and we are partnering to offer seamless migration for QRadar customers to XSIAM. The cash proceeds from the sale of QRadar SaaS assets will be reflected in free cash flow, as they will be included in cash from investing activities within proceeds from disposition of PP&E, other, in the Consolidated Statement of Cash Flows. These proceeds are expected to be largely offset by structural actions to address stranded costs, representing a modest net benefit to free cash flow in the second half of 2024. This transaction is expected to close in the third quarter of 2024, subject to regulatory approvals and other customary closing conditions.

We continue to invest in emerging technologies, bringing new innovations to market. In early April 2024, we installed a Quantum System One, the first IBM quantum system on a college campus anywhere in the world. This installation will advance research in critical areas such as energy, storage, materials science and financial modeling. As we remain focused on portfolio optimization, we closed the sale of The Weather Company assets in January. To complement our portfolio, we completed four acquisitions in the first half of 2024, and on July 1, 2024, we completed the acquisition of the StreamSets and webMethods assets from Software AG. This acquisition brings together leading capabilities in integration, API management and data ingestion.

On April 24, 2024, we announced our intent to acquire all of the outstanding shares of HashiCorp. The combination of IBM’s and HashiCorp’s combined portfolios will help clients manage growing application and infrastructure complexity and create a comprehensive end-to-end hybrid cloud platform designed for the AI era. Under the terms of the definitive agreement, HashiCorp shareholders on record immediately prior to the effective time on the closing date will receive $35

74

Management Discussion – (continued)

per share in cash, representing a total enterprise value of approximately $6.4 billion. On July 15, 2024, HashiCorp stockholders voted to approve the merger with IBM. The transaction is expected to close by the end of 2024, subject to regulatory approvals and other customary closing conditions. Upon closing, HashiCorp will be integrated into the Software segment.

In the first six months of 2024, we continued to invest organically and inorganically, bring new products and innovation to market, expand our ecosystem and drive productivity across our business. Our first half performance is another proof point of this progress. We are a more focused business that has delivered sustained revenue growth and strong cash generation – a business well positioned for the future.

Retirement-Related Plans

Our pension plans are well funded. Contributions for all retirement-related plans are expected to be approximately $1.5 billion in 2024, of which $0.2 billion generally relates to legally required contributions to non-U.S. defined benefit and multi-employer plans. The expected decrease of $0.3 billion in total contributions for 2024 is primarily driven by ongoing dynamics of our retirement-related plans, including the change in U.S. retirement-related benefits described in note 18, "Retirement-Related Benefits." We expect 2024 pre-tax retirement-related plan cost to be approximately $1.5 billion, an increase of approximately $0.3 billion compared to 2023. Within total retirement-related plan cost, operating retirement-related plan cost is expected to be approximately $1.1 billion, a decrease of approximately $0.1 billion compared to 2023. Non-operating retirement-related plan cost is expected to be approximately $0.4 billion, an increase of approximately $0.5 billion compared to 2023, primarily driven by higher recognized actuarial losses; partially offset by lower interest cost.

Currency Rate Fluctuations

Changes in the relative values of non-U.S. currencies to the USD affect our financial results and financial position. At June 30, 2024, currency changes resulted in assets and liabilities denominated in local currencies being translated into fewer dollars than at year-end 2023. We use financial hedging instruments to limit specific currency risks related to foreign currency-based transactions.

Movements in currency, and the fact that we do not hedge 100 percent of our currency exposures, will result in a currency impact to our revenues, profit and cash flows throughout 2024. We execute a hedging program which defers, versus eliminates, the volatility of currency impacts on our financial results. During periods of sustained movements in currency, the marketplace and competition adjust to the changing rates over time.

We translate revenue, cost and expense in our non-U.S. operations at current exchange rates in the reported period. References to “adjusted for currency” or “constant currency” reflect adjustments based upon a simple mathematical formula. However, this constant currency methodology that we utilize to disclose this information does not incorporate any operational actions that management could take to mitigate fluctuating currency rates.

Based on the currency rate movements in the second quarter of 2024, revenue from continuing operations increased 1.9 percent as reported and 4 percent at constant currency compared to the prior year. In the first six months of 2024, revenue from continuing operations increased 1.7 percent as reported and 3 percent at constant currency, compared to the same period in 2023. In the second quarter of 2024, currency translation and hedging negatively impacted year-to-year pre-tax income growth and operating (non-GAAP) pre-tax income growth each by approximately $100 million. In the first six months of 2024, currency translation and hedging negatively impacted year-to-year pre-tax income growth and operating (non-GAAP) pre-tax income growth by approximately $300 million and $250 million, respectively. From a segment perspective, in the second quarter of 2024, currency translation and hedging negatively impacted our Infrastructure segment profit margin year-to-year growth by approximately one point. In the first six months of 2024, currency translation and hedging impacted our Infrastructure segment profit margin year-to-year growth by approximately one point, and Software and Consulting by about half of a point each.We view these amounts as a theoretical maximum impact to our as-reported financial results. Hedging and certain underlying foreign currency transaction gains and losses are allocated to our segment results. Considering the operational responses mentioned above, movements of exchange rates, and the nature and timing of hedging instruments, it is difficult to predict future currency impacts on any particular period.

For non-U.S. subsidiaries and branches that operate in U.S. dollars or whose economic environment is highly inflationary, translation adjustments are reflected in results of operations. Generally, we manage currency risk in these entities by linking prices and contracts to U.S. dollars.

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Management Discussion – (continued)

Liquidity and Capital Resources

In our 2023 Annual Report, on pages 30 to 32, there is a discussion of our liquidity including two tables that present three years of data. The table presented on page 30 includes net cash from operating activities, cash and cash equivalents, restricted cash and short-term marketable securities, and the size of our global credit facilities for each of the past three years. For the six months ended, or at, as applicable, June 30, 2024, those amounts are $6.2 billion of net cash from operating activities, $16.0 billion of cash and cash equivalents, restricted cash and short-term marketable securities and $10.0 billion in global credit facilities, respectively. While we have no current plans to draw on these credit facilities, they are available as back-up liquidity. On June 17, 2024, the company amended its $2.5 billion Three-Year Credit Agreement and $7.5 billion Five-Year Credit Agreement (the Credit Agreements) to extend the maturity dates to June 20, 2027 and June 22, 2029, respectively. Refer to note 12, “Borrowings,” for additional details on these credit facilities.

The major rating agencies' ratings on our debt securities at June 30, 2024 appear in the following table and remain unchanged from March 31, 2024.

IBM Ratings:	Standard and Poor's	Moody’s Investors Service	Fitch Ratings
Senior long-term debt	A-	A3	A-
Commercial paper	A-2	Prime-2	F1

We have financial flexibility, supported by our strong liquidity position and cash flows, to operate at a single A credit rating. At June 30, 2024, our debt level was flat from December 31, 2023 driven by maturities and currency impacts; partially offset by proceeds from issuances.

We do not have “ratings trigger” provisions in our debt covenants or documentation, which would allow the holders to declare an event of default and seek to accelerate payments thereunder in the event of a change in credit rating. Our debt covenants are well within the required levels. Our contractual agreements governing derivative instruments contain standard market clauses which can trigger the termination of the agreement if our credit rating were to fall below investment grade. At June 30, 2024, the fair value of those instruments that were in a liability position was $624 million, before any applicable netting, and this position is subject to fluctuations in fair value period to period based on the level of our outstanding instruments and market conditions. We have no other contractual arrangements that, in the event of a change in credit rating, would result in a material adverse effect on our financial position or liquidity.

We prepare our Consolidated Statement of Cash Flows in accordance with applicable accounting standards for cash flow presentation on page 7 of this Form 10-Q and highlight causes and events underlying sources and uses of cash in that format on page 73. For the purpose of running its business, IBM manages, monitors and analyzes cash flows in a different manner.

Management uses free cash flow as a measure to evaluate its operating results, plan shareholder return levels, strategic investments and assess its ability and need to incur and service debt. The entire free cash flow amount is not necessarily available for discretionary expenditures. We define 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. 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 includes presentations of both free cash flow and net cash from operating activities that exclude the effect of Financing receivables.

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Management Discussion – (continued)

The following is management’s view of cash flows for the first six months of 2024 and 2023 prepared in a manner consistent with the description above.

(Dollars in millions)
For the six months ended June 30:	2024		2023
Net cash from operating activities per GAAP	$	6,234	$	6,412
Less: change in Financing receivables	951		2,028
Net cash from operating activities, excluding Financing receivables	$	5,283	$	4,385
Capital expenditures, net	(761)		(944)
Free cash flow	$	4,522	$	3,441
Acquisitions	(235)		(356)
Divestitures	703		6
Dividends	(3,058)		(3,007)
Non-Financing debt	1,076		8,514
Other (includes Financing net receivables and Financing debt)	(510)		(1,109)
Change in cash, cash equivalents, restricted cash and short-term marketable securities	$	2,497	$	7,489

In the first six months of 2024, we generated $4.5 billion in free cash flow, an increase of $1.1 billion versus the prior-year period. The increase was primarily driven by performance-related improvements within net income and $0.2 billion from timing of capital expenditures.

Events that could temporarily change the historical cash flow dynamics discussed previously and in our 2023 Annual Report include significant changes in operating results, material changes in geographic sources of cash, unexpected adverse impacts from litigation, future pension funding requirements, periods of severe downturn in the capital markets or the timing of tax payments. Whether any litigation has such an adverse impact will depend on a number of variables, which are more completely described in note 14, “Contingencies,” in this Form 10-Q. With respect to pension funding, we expect to make legally mandated pension plan contributions to certain non-U.S. defined benefit plans of approximately $200 million in 2024. Contributions related to all retirement-related plans are expected to be approximately $1.5 billion in 2024. Refer to "Retirement-Related Plans" for additional information. Financial market performance could increase the legally mandated minimum contributions in certain non-U.S. countries that require more frequent remeasurement of the funded status. We are not quantifying any further impact from pension funding because it is not possible to predict future movements in the capital markets or changes in pension plan funding regulations. In 2024, we are not legally required to make any contributions to the U.S. defined benefit pension plans.

Our cash flows are sufficient to fund our current operations and obligations, including investing and financing activities such as dividends and debt service. When additional requirements arise, we have several liquidity options available. These options may include the ability to borrow additional funds at reasonable interest rates and utilizing our committed global credit facilities. Our overall shareholder payout remains at a comfortable level and we remain fully committed to our long-standing dividend policy.

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Management Discussion – (continued)

Financing

Financing is a reportable segment that facilitates IBM clients’ acquisition of hardware, software and services by providing financing solutions, while generating solid returns on equity.

Results of Operations

(Dollars in millions)					Yr. to Yr. Percent Change
For the three months ended June 30:	2024		2023
Revenue	$	169	$	185	(8.3)	%
Segment profit (1)	$	77	$	64	19.3	%

(Dollars in millions)					Yr. to Yr. Percent Change
For the six months ended June 30:	2024		2023
Revenue	$	362	$	380	(4.9)	%
Segment profit (1)	$	168	$	164	2.4	%

(1)Prior-year amounts recast to reflect January 2024 segment changes.

For the three months ended June 30, 2024, financing revenue decreased 8.3 percent as reported (6.6 percent adjusted for currency) compared to the prior-year period. For the six months ended June 30, 2024, financing revenue decreased 4.9 percent as reported (4.0 percent adjusted for currency) compared to the prior-year period. These declines were primarily driven by a reduction in used equipment sales.

Financing segment profit increased 19.3 percent to $77 million in the second quarter of 2024, compared to the prior-year period and the segment profit margin of 45.3 percent increased 10.5 points year to year. The increase in segment profit was primarily driven by lower unallocated credit loss reserve requirements. For the six months ended June 30, 2024, Financing segment profit increased 2.4 percent to $168 million compared to the prior-year period and the segment profit margin of 46.5 percent increased 3.3 points year to year. The increase in segment profit was primarily driven by lower unallocated reserve requirements in the current year partially offset by settlements on non-accrual assets in the prior year.

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Management Discussion – (continued)

Financial Position

(Dollars in millions)	At June 30, 2024		At December 31, 2023
Cash and cash equivalents	$	412	$	555
Client financing receivables:
Net investment in sales-type and direct financing leases (1)	3,951		4,237
Client loans	6,002		6,486
Total client financing receivables	$	9,953	$	10,723
Commercial financing receivables:
Held for investment	613		1,155
Held for sale	723		692
Other receivables	15		26
Total external receivables (2)	$	11,303	$	12,596
Intercompany assets (3)	1,019		963
Other assets	217		294
Total assets	$	12,951	$	14,409
Debt (4)	$	11,112	$	11,879
Other liabilities (5) (6)	608		1,205
Total liabilities (5)	$	11,720	$	13,085
Total equity (5)	$	1,232	$	1,324
Total liabilities and equity	$	12,951	$	14,409

(1)Includes deferred initial direct costs which are expensed in IBM’s consolidated financial results.

(2)The change in total external receivables of $1.3 billion and the $1.0 billion change in Financing segment’s receivables disclosed in the free cash flow presentation on page 77 is primarily attributable to currency impacts.

(3)Total amount is eliminated for purposes of IBM’s consolidated financial results and therefore does not appear in the Consolidated Balance Sheet.

(4)Financing segment debt is primarily composed of intercompany loans.

(5)Prior-year amounts recast to reflect January 2024 segment change. Other liabilities have been reclassified to conform to the change in 2024 presentation.

(6)Includes intercompany payables of $0.4 billion at December 31, 2023. There were no intercompany payables outstanding at June 30, 2024. These intercompany payables were eliminated for purposes of IBM’s consolidated financial results.

Financing Segment Receivables and Allowances

The following table presents external Financing segment receivables excluding receivables classified as held for sale, and immaterial miscellaneous receivables.

(Dollars in millions)	At June 30, 2024			At December 31, 2023
Amortized cost (1)	$	10,702		$	12,034
Specific allowance for credit losses	104			111
Unallocated allowance for credit losses	32			45
Total allowance for credit losses	137			156
Net financing receivables	$	10,566		$	11,878
Allowance for credit losses coverage	1.3		%	1.3		%

(1)Includes deferred initial direct costs which are expensed in IBM’s consolidated financial results.

The percentage of Financing segment receivables reserved was 1.3 percent at both June 30, 2024 and December 31, 2023.

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Management Discussion – (continued)

We continue to apply our rigorous credit policies. Approximately 75 percent of the total external portfolio was with investment grade clients, an increase of 3 points as compared to December 31, 2023. This investment grade percentage is based on the credit ratings of the companies in the portfolio and reflects certain mitigation actions taken to reduce the risk to IBM.

For additional information relating to the company's credit quality and mitigation actions, including sales of receivables, refer to note 9, “Financing Receivables.”

Return on Equity Calculation

	For Three Months Ended June 30,						For Six Months Ended June 30,
(Dollars in millions)	2024			2023 (1)			2024			2023 (1)
Numerator:
Financing after-tax segment profit (2)	$	62		$	53		$	137		$	135
Annualized after-tax segment profit (A)	$	250		$	210		$	275		$	270
Denominator:
Average Financing equity (B) (3)	$	1,167		$	1,172		$	1,219		$	1,259
Financing return on equity (A)/(B)	21.4		%	17.9		%	22.5		%	21.4		%

(1)Prior-year amounts recast to reflect January 2024 segment changes.

(2)Calculated based upon an estimated tax rate, which is a function of IBM’s provision for income taxes determined on a consolidated basis.

(3)Average of the ending equity for Financing for the last two quarters and three quarters, for the three months ended June 30 and for the six months ended June 30, respectively.

Return on equity was 21.4 percent compared to 17.9 percent for the three months ended June 30, 2024, and 2023, respectively. The increase was driven by an increase in net income. Return on equity was 22.5 percent compared to 21.4 percent for the six months ended June 30, 2024, and 2023, respectively. The increase was primarily driven by a lower average equity balance and an increase in net income.

Residual Value

The following table presents the recorded amount of unguaranteed residual value for sales-type and direct financing leases at June 30, 2024 and December 31, 2023. In addition, the table presents the run out of when the unguaranteed residual value assigned to equipment on leases at June 30, 2024 is expected to be returned to the company. The unguaranteed residual value for operating leases at June 30, 2024 and December 31, 2023 was not material. For additional information related to the company's residual value, refer to note A, "Significant Accounting Policies," in the company's 2023 Annual Report.

Unguaranteed Residual Value

	At December 31, 2023		At June 30, 2024		Estimated Run Out of June 30, 2024 Balance
(Dollars in millions)					2024		2025		2026		2027 and Beyond
Sales-type and direct financing leases	$	458	$	464	$	30	$	136	$	121	$	176

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Management Discussion – (continued)

GAAP Reconciliation

The tables below provide a reconciliation of our income statement results as reported under GAAP to our operating earnings presentation which is a non-GAAP measure. Management’s calculation of operating (non-GAAP) earnings, as presented, may differ from similarly titled measures reported by other companies. Refer to the “Operating (non-GAAP) Earnings” section for management’s rationale for presenting operating earnings information.

(Dollars in millions except per share amounts)	GAAP			Acquisition- Related Adjustments			Retirement- Related Adjustments			U.S. Tax Reform Impacts			Operating (non-GAAP)
For the three months ended June 30, 2024:
Gross profit	$	8,950		$	170		$	—		$	—		$	9,120
Gross profit margin	56.8		%	1.1		pts.	—		pts.	—		pts.	57.8		%
SG&A	$	4,938		$	(286)		$	—		$	—		$	4,651
Other (income) and expense (1)	$	(233)		$	(18)		$	(98)		$	—		$	(349)
Total expense and other (income)	$	6,730		$	(304)		$	(98)		$	—		$	6,328
Pre-tax income from continuing operations	$	2,219		$	474		$	98		$	—		$	2,792
Pre-tax margin from continuing operations	14.1		%	3.0		pts.	0.6		pts.	—		pts.	17.7		%
Provision for income taxes (2)	$	389		$	113		$	26		$	(12)		$	516
Effective tax rate	17.5		%	1.1		pts.	0.3		pts.	(0.4)		pts.	18.5		%
Income from continuing operations	$	1,830		$	362		$	72		$	12		$	2,275
Income margin from continuing operations	11.6		%	2.3		pts.	0.5		pts.	0.1		pts.	14.4		%
Diluted earnings per share from continuing operations	$	1.96		$	0.39		$	0.08		$	0.01		$	2.43

(Dollars in millions except per share amounts)	GAAP			Acquisition- Related Adjustments			Retirement- Related Adjustments			U.S. Tax Reform Impacts			Operating (non-GAAP)
For the three months ended June 30, 2023:
Gross profit	$	8,501		$	150		$	—		$	—		$	8,650
Gross profit margin	54.9		%	1.0		pts.	—		pts.	—		pts.	55.9		%
SG&A	$	4,900		$	(245)		$	—		$	—		$	4,655
Other (income) and expense	$	(261)		$	0		$	(1)		$	—		$	(262)
Total expense and other (income)	$	6,501		$	(246)		$	(1)		$	—		$	6,254
Pre-tax income from continuing operations	$	2,000		$	395		$	1		$	—		$	2,396
Pre-tax margin from continuing operations	12.9		%	2.6		pts.	0.0		pts.	—		pts.	15.5		%
Provision for income taxes (2)	$	419		$	87		$	(3)		$	(110)		$	393
Effective tax rate	21.0		%	0.2		pts.	(0.2)		pts.	(4.6)		pts.	16.4		%
Income from continuing operations	$	1,581		$	308		$	5		$	110		$	2,003
Income margin from continuing operations	10.2		%	2.0		pts.	0.0		pts.	0.7		pts.	12.9		%
Diluted earnings per share from continuing operations	$	1.72		$	0.34		$	0.00		$	0.12		$	2.18

(1)Acquisition-Related Adjustments in 2024 includes a realized loss of $18 million on foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, “Derivative Financial Instruments,” for additional information.

(2)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 which employs an annual effective tax rate method to the results.

81

Management Discussion – (continued)

(Dollars in millions except per share amounts)	GAAP			Acquisition- Related Adjustments			Retirement- Related Adjustments			U.S. Tax Reform Impacts (1)			Operating (non-GAAP)
For the six months ended June 30, 2024:
Gross profit	$	16,692		$	341		$	—		$	—		$	17,033
Gross profit margin	55.2		%	1.1		pts.	—		pts.	—		pts.	56.3		%
SG&A	$	9,912		$	(554)		$	—		$	—		$	9,358
Other (income) and expense (2)	$	(550)		$	(68)		$	(194)		$	—		$	(812)
Total expense and other (income)	$	13,399		$	(622)		$	(194)		$	—		$	12,584
Pre-tax income from continuing operations	$	3,293		$	963		$	194		$	—		$	4,449
Pre-tax margin from continuing operations	10.9		%	3.2		pts.	0.6		pts.	—		pts.	14.7		%
Provision for/(benefit from) income taxes (3)	$	(112)		$	255		$	31		$	436		$	610
Effective tax rate	(3.4)		%	6.5		pts.	0.9		pts.	9.8		pts.	13.7		%
Income from continuing operations	$	3,405		$	707		$	163		$	(436)		$	3,839
Income margin from continuing operations	11.3		%	2.3		pts.	0.5		pts.	(1.4)		pts.	12.7		%
Diluted earnings per share from continuing operations	$	3.65		$	0.76		$	0.17		$	(0.47)		$	4.11

(Dollars in millions except per share amounts)	GAAP			Acquisition- Related Adjustments			Retirement- Related Adjustments			U.S. Tax Reform Impacts			Operating (non-GAAP)
For the six months ended June 30, 2023:
Gross profit	$	16,010		$	298		$	—		$	—		$	16,308
Gross profit margin	53.9		%	1.0		pts.	—		pts.	—		pts.	54.9		%
SG&A	$	9,754		$	(491)		$	—		$	—		$	9,263
Other (income) and expense	$	(506)		$	(2)		$	4		$	—		$	(504)
Total expense and other (income)	$	12,952		$	(493)		$	4		$	—		$	12,463
Pre-tax income from continuing operations	$	3,058		$	791		$	(4)		$	—		$	3,845
Pre-tax margin from continuing operations	10.3		%	2.7		pts.	0.0		pts.	—		pts.	12.9		%
Provision for income taxes (3)	$	543		$	178		$	(14)		$	(115)		$	593
Effective tax rate	17.8		%	1.0		pts.	(0.3)		pts.	(3.0)		pts.	15.4		%
Income from continuing operations	$	2,515		$	613		$	10		$	115		$	3,252
Income margin from continuing operations	8.5		%	2.1		pts.	0.0		pts.	0.4		pts.	10.9		%
Diluted earnings per share from continuing operations	$	2.74		$	0.67		$	0.01		$	0.13		$	3.54

(1)2024 includes a benefit from income taxes due to the resolution of certain tax audit matters in the first quarter.

(2)Acquisition-Related Adjustments in 2024 includes a realized 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. Refer to note 16, “Derivative Financial Instruments,” for additional information.

(3)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 which employs an annual effective tax rate method to the results.

82

Management Discussion – (continued)

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this Form 10-Q 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 dispositions, 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; potential failure of the separation of Kyndryl Holdings, Inc. to qualify for tax-free treatment; 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 Form 10-Q 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.

Item 4. Controls and Procedures

The company’s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the company’s disclosure controls and procedures were effective as of the end of the period covered by this report. There has been no change in the company’s internal control over financial reporting that occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

83

Part II — Other Information

Item 1. Legal Proceedings

Refer to note 14, “Contingencies,” in this Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities

The following table provides information relating to the company’s repurchase of common stock for the second quarter of 2024.

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under The Program (1)
April 1, 2024 - April 30, 2024	—	$	—	—	$	2,007,611,768
May 1, 2024 - May 31, 2024	—	$	—	—	$	2,007,611,768
June 1, 2024 - June 30, 2024	—	$	—	—	$	2,007,611,768
Total	—	$	—	—

(1)On October 30, 2018, the Board of Directors authorized $4.0 billion in funds for use in the company’s common stock repurchase program. The company stated that it would repurchase shares on the open market or in private transactions depending on market conditions. The common stock repurchase program does not have an expiration date. This table does not include shares tendered to satisfy the exercise price in connection with cashless exercises of employee stock options or shares tendered to satisfy tax withholding obligations in connection with employee equity awards. The company suspended its share repurchase program at the time of the Red Hat closing in 2019.

84

Item 6. Exhibits

Exhibit Number
10.1	Terms and Conditions of IBM LTPP Equity Awards, effective April 1, 2024.
22	Subsidiary Issuer of Guaranteed Securities, filed as Exhibit 22 for the quarter ended March 31, 2024, is hereby incorporated by reference.
31.1	Certification by principal executive officer pursuant to Rule 13A-14(a) or 15D-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by principal financial officer pursuant to Rule 13A-14(a) or 15D-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document – the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

85

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 thereunto duly authorized.

		International Business Machines Corporation
		(Registrant)
Date:	July 30, 2024
		By:	/s/ Nicolás A. Fehring
			Nicolás A. Fehring
			Vice President and Controller

86

EX-10.1

Exhibit 10.1 IBM TERMS AND CONDITIONS OF YOUR EQUITY AWARD: EFFECTIVE April 1, 2024

Equity Awards: April 1, 2024 Page 2 of 17 Terms and Conditions of Your Equity Award Table of Contents Introduction ............................................................................................... 3 How to Use This Document ......................................................................... 3 Definition of Terms ..................................................................................... 4 Provisions that apply to all Award types and all countries ............................ 6 Provisions that apply to specific Award types for all countries ..................... 8 a. Restricted Stock Units (“RSUs”) including Cash-Settled RSUs and Retention RSUs (“RRSUs”) ................................................................................ 8 i. All RSUs ........................................................................................................... 8 ii. RSUs Other Than Cash-Settled RSUs and Cash-Settled RRSUs .................. 10 iii. Cash-Settled RSUs including Cash-Settled RRSUs ..................................... 10 b. Restricted Stock ................................................................................... 10 c. Stock Options (“Options”) and Stock Appreciation Rights (“SARs”) ........ 12 i. All Option and SAR Awards .......................................................................... 12 ii. All SAR Awards ................................................................................................ 14 d. Performance Share Units (“PSUs”) .................................................................. 15 Provisions that apply to specific countries ........................................................... 17 a. Israel ............................................................................................................. 17 b. United States .................................................................................................. 17

Equity Awards: April 1, 2024 Page 3 of 17 Terms and Conditions of Your Equity Award Introduction This document provides you with the terms and conditions of your Award that are in addition to the terms and conditions contained in your Equity Award Agreement for your specific Award. Also, your Award is subject to the terms and conditions in the governing plan document; the applicable document is indicated in your Equity Award Agreement and can be found at http://w3.ibm.com/hr/exec/comp/eq_prospectus.html. As an Award recipient, you can see a personalized summary of all your outstanding equity grants in the “Personal statement” section of the IBM executive compensation web site (http://w3.ibm.com/hr/exec/comp). This site also contains other information about long- term incentive awards, including copies of the prospectus the governing plan document. If you have additional questions, click on the AskHR Chatbot. How to Use This Document Terms and conditions that apply to all awards in all countries can be found on page 6. Review these in addition to any award- or country-specific terms and conditions that may be listed. Once you have reviewed these general terms, check in your Equity Award Agreement for any award-specific and/or country-specific terms that apply to your Award.

Equity Awards: April 1, 2024 Page 4 of 17 Terms and Conditions of Your Equity Award: Definition of Terms The following are defined terms from the Long-Term Performance Plan, your Equity Award Agreement, or this Terms and Conditions document. These are provided for your information. In addition to this document, see the Plan prospectus and your Equity Award Agreement for more details. “Awards” -- The grant of any form of stock option, stock appreciation right, stock or cash award, whether granted singly, in combination or in tandem, to a Participant pursuant to such terms, conditions, performance requirements, limitations and restrictions as the Committee may establish in order to fulfill the objectives of the Plan. "Board" -- The Board of Directors of International Business Machines Corporation ("IBM"). "Capital Stock" -- Authorized and issued or unissued Capital Stock of IBM, at such par value as may be established from time to time. “Committee” -- The committee designated by the Board to administer the Plan. "Company" -- IBM and its affiliates and subsidiaries including subsidiaries of subsidiaries and partnerships and other business ventures in which IBM has an equity interest. “Engage in or Associate with” includes, without limitation, engagement or association as a sole proprietor, owner, employer, director, partner, principal, joint venture, associate, employee, member, consultant, or contractor. This also includes beneficial ownership of five percent (5%) or more of any class of outstanding stock of a competitor of the Company following the termination of your employment with the Company. “Equity Award Agreement” -- The document provided to the Participant which provides the grant details. "Fair Market Value" -- The average of the high and low prices of Capital Stock on the New York Stock Exchange for the date in question, provided that, if no sales of Capital Stock were made on said exchange on that date, the average of the high and low prices of Capital Stock as reported for the most recent preceding day on which sales of Capital Stock were made on said exchange. "Participant" -- An individual to whom an Award has been made under the Plan. Awards may be made to any employee of, or any other individual providing services to, the Company. However, incentive stock options may be granted only to individuals who are

Equity Awards: April 1, 2024 Page 5 of 17 employed by IBM or by a subsidiary corporation (within the meaning of section 424(f) of the Code) of IBM, including a subsidiary that becomes such after the adoption of the Plan. “Performance Team” -- For purposes of the Plan, the Performance Team refers to the team of IBM’s senior leaders who run IBM Business Units or geographies, including the chairman and CEO. The CEO selects and invites these senior leaders to join the Performance Team. “Plan” -- Any IBM Long-Term Performance Plan. “Termination of Employment” -- For the purposes of determining when you cease to be an employee for the cancellation of any Award, refer to the Termination of Employment provision(s) in your Equity Award Agreement.

Equity Awards: April 1, 2024 Page 6 of 17 Terms and Conditions of Your Equity Award: Provisions that apply to all Award types and all countries The following terms apply to all countries and for all Award types (Restricted Stock Units, Cash-Settled Restricted Stock Units, Restricted Stock, Stock Options, Stock Appreciation Rights and Performance Share Units). Cancellation and Rescission All determinations regarding enforcement, waiver or modification of the cancellation and rescission and other provisions of the Plan and your Equity Award Agreement (including the provisions relating to Termination of Employment, death and disability) shall be made in IBM’s sole discretion. Determinations made under your Equity Award Agreement and the Plan need not be uniform and may be made selectively among individuals, whether or not such individuals are similarly situated. You agree that the cancellation and rescission provisions of the Plan and your Equity Award Agreement are reasonable and agree not to challenge the reasonableness of such provisions, even where forfeiture of your Award is the penalty for violation. Engaging in Detrimental Activity (as defined in the Plan) during employment or after your employment relationship has ended may result in cancellation or rescission of your Award. The cancellation and rescission provisions of the Plan may be triggered by your acceptance of an offer to Engage in or Associate with any business which is or becomes competitive with the Company, or your engagement in competitive activities after your employment relationship with IBM has ended if: (i) on or prior to the grant date stated in your latest Equity Award Agreement you have entered into a Noncompetition Agreement with IBM; or (ii) the Award is a Retention Restricted Stock Unit award. Notwithstanding the above, the cancellation and rescission provisions of the Plan will apply to all Awards if during your employment with IBM you engage in any Detrimental Activity, including competitive activities, described in Section 13(a) of the Plan. For the avoidance of doubt: (a) all other cancellation and rescission provisions of the Plan will apply to all Awards if after your employment relationship has ended with IBM but during the Rescission Period you engage in any Detrimental Activity described in Section 13(a) (excluding Section 13(a)(i)) of the Plan; and (b) the cancellation and rescission provisions of the Plan will apply to all Awards if during your employment with IBM you engage in any Detrimental Activity, including competitive activities, described in Section 13(a)of the Plan. Jurisdiction, Governing Law, Expenses, Taxes and Administration Your Equity Award Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to its conflict of law rules. You agree that any action or proceeding with respect to your Equity Award Agreement shall

Equity Awards: April 1, 2024 Page 7 of 17 be brought exclusively in the state and federal courts sitting in New York County or, Westchester County, New York. You agree to the personal jurisdiction thereof, and irrevocably waive any objection to the venue of such action, including any objection that the action has been brought in an inconvenient forum. If any court of competent jurisdiction finds any provision of your Equity Award Agreement, or portion thereof, to be unenforceable, that provision shall be enforced to the maximum extent permissible so as to effect the intent of the parties, and the remainder of your Equity Award Agreement shall continue in full force and effect. If you or the Company brings an action to enforce your Equity Award Agreement and the Company prevails, you will pay all costs and expenses incurred by the Company in connection with that action and in connection with collection, including reasonable attorneys’ fees. If the Company, in its sole discretion, determines that it has incurred or will incur any obligation to withhold taxes as a result of your Award, without limiting the Company’s rights under Section 9 of the Plan, the Company may withhold the number of shares that it determines is required to satisfy such liability and/or the Company may withhold amounts from other compensation to the extent required to satisfy such liability under federal, state, provincial, local, foreign or other tax laws. To the extent that such amounts are not withheld, the Company may require you to pay to the Company any amount demanded by the Company for the purpose of satisfying such liability. If the Company changes the vendor engaged to administer the Plan, you consent to moving all of the shares you have received under the Plan that is in an account with such vendor (including unvested and previously vested shares), to the new vendor that the Company engages to administer the Plan. Such consent will remain in effect unless and until revoked in writing by you.

Equity Awards: April 1, 2024 Page 8 of 17 Terms and Conditions of Your Equity Award: Provisions that apply to specific Award types for all countries a. Restricted Stock Units (“RSUs”) including Cash-Settled RSUs and Retention RSUs (“RRSUs”) All references in this document to RSUs include RRSUs, unless explicitly stated otherwise i. All RSUs Termination of Employment including Death, Disability and Leave of Absence Termination of Employment In the event you cease to be an employee for any reason (other than on account of death or are disabled as described in Section 12 of the Plan) prior to the Vesting Date(s) set in your Equity Award Agreement, all then unvested RSUs, including RRSUs, under your Award shall be canceled. However, your unvested and/or outstanding RSUs, but not RRSUs, will continue to vest upon the Termination of Employment (other than for cause, including due to violation of the Business Conduct Guidelines or other Company policy) if all of the following criteria are met:  You are either (i) determined to be a member of the Performance Team or any successor team thereto; or (ii) if not a member of the Performance Team, are designated by the Company as a Band A executive or a comparable band thereto, at the time of Termination of Employment;  You have completed at least one year of active service since the award date of grant;  You have reached age 55 with 15 years of service at the time of Termination of Employment (age 60 with 15 years of service for the Chairman and CEO); and  Appropriate senior management, the Committee or the Board, as appropriate, do not exercise their discretion to cancel or otherwise limit the vesting of the RSUs. Death or Disability Upon your death all RSUs covered by this Agreement shall vest immediately and your Vesting Date shall be your date of death. If you are disabled as described in Section 12 of the Plan, your RSUs shall continue to vest according to the terms of your Award.

Equity Awards: April 1, 2024 Page 9 of 17 Leave of Absence In the event of a management approved leave of absence, any unvested RSUs shall continue to vest as if you were an active employee of the Company, subject to the terms in this document and your Equity Award Agreement. If you return to active status, your unvested RSUs will continue to vest in accordance with the terms in this document and your Equity Award Agreement. If you do not return to active status after your leave and terminate employment, the rules for Termination of Employment described above will apply to your RSUs. Dividend Equivalents IBM shall not pay dividend equivalents on cash-settled or stock-settled unvested RSU awards.

Equity Awards: April 1, 2024 Page 10 of 17 Terms and Conditions of Your Equity Award: Provisions that apply to specific Award types for all countries ii. RSUs Other Than Cash-Settled RSUs and Cash-Settled RRSUs Settlement of Award Subject to (a) Sections 12 and 13 of the Plan; (b) the section "Termination of Employment including Death, Disability and Leave of Absence" above; and (c) the Termination of Employment provision in your Equity Award Agreement, upon the Vesting Date(s), or as soon thereafter as may be practicable but in no event later than March 15 of the following calendar year, IBM shall make a payment to Participant in shares of Capital Stock equal to the number of vested RSUs, subject to any applicable tax withholding requirements as described in Section 9 of the Plan, and the respective RSUs shall thereupon be canceled. RSUs are not shares of Capital Stock and do not convey any stockholder rights. iii. Cash-Settled RSUs including Cash-Settled RRSUs Settlement of Award Subject to (a) Sections 12 and 13 of the Plan; (b) the section entitled "Termination of Employment including Death, Disability and Leave of Absence" above; and (c) the Termination of Employment provision in your Equity Award Agreement, upon the Vesting Date(s), or as soon thereafter as may be practicable but in no event later than March 15 of the following calendar year, the Company shall make a payment to Participant in cash equal to the Fair Market Value of the vested RSUs, subject to any applicable tax withholding requirements as described in Section 9 of the Plan, and the respective RSUs shall thereupon be canceled. Fair Market Value will be calculated in your home country currency at the exchange rate on the applicable Vesting Date using a commercially reasonable measure of exchange rate. RSUs are not shares of Capital Stock and do not convey any stockholder rights. b. Restricted Stock Settlement of Award Subject to (a) Sections 12 and 13 of the Plan; (b) the section "Termination of Employment including Death, Disability or Leave of Absence" below; and (c) the Termination of Employment provision in your Equity Award Agreement, upon the Vesting Date(s), or as soon thereafter as may be practicable but in no event later than March 15 of the following calendar year, the shares of Restricted Stock awarded under your Equity Award Agreement will be deliverable to you, subject to any applicable tax withholding requirements as described in Section 9 of the Plan.

Equity Awards: April 1, 2024 Page 11 of 17 Terms and Conditions of Your Equity Award: Provisions that apply to specific Award types for all countries Termination of Employment including Death, Disability and Leave of Absence Termination of Employment In the event you cease to be an employee for any reason (other than on account of death or you are disabled as described in Section 12 of the Plan) prior to the Vesting Date(s) in your Equity Award Agreement, all then unvested shares of Restricted Stock under your Award shall be canceled (unless your Equity Award Agreement provides otherwise). Death or Disability Upon your death all unvested shares of Restricted Stock covered by your Equity Award Agreement shall vest immediately and your Vesting Date shall be your date of death. If you are disabled as described in Section 12 of the Plan, your unvested shares of Restricted Stock shall continue to vest according to the terms of your Equity Award Agreement. Leave of Absence In the event of a management approved leave of absence, any unvested shares of Restricted Stock shall continue to vest as if you were an active employee of the Company, subject to the terms in this document and your Equity Award Agreement. If you return to active status, your unvested shares of Restricted Stock will continue to vest in accordance with the terms in this document and your Equity Award Agreement. Dividends and Other Rights During the period that the Restricted Stock is held by IBM hereunder, such stock will remain on the books of IBM in your name, may be voted by you, and any applicable dividends shall be paid to you. Shares issued in stock splits or similar events which relate to Restricted Stock then held by IBM in your name shall be issued in your name but shall be held by IBM under the terms hereof. Transferability Shares of Restricted Stock awarded under your Equity Award Agreement cannot be sold, assigned, transferred, pledged or otherwise encumbered prior to the vesting of your Award as set forth in your Equity Award Agreement and any such sale, assignment, transfer, pledge or encumbrance, or any attempt thereof, shall be void.

Equity Awards: April 1, 2024 Page 12 of 17 Terms and Conditions of Your Equity Award: Provisions that apply to specific Award types for all countries c. Stock Options (“Options”) and Stock Appreciation Rights (“SARs”) i. All Option and SAR Awards Termination of Employment including Death, Disability and Leave of Absence Termination of Employment In the event you cease to be an employee for any reason (other than on account of death or are disabled as described in Section 12 of the Plan):  Any Options or SARs that are not exercisable as of your Termination of Employment shall be canceled immediately (unless your Equity Award Agreement provides otherwise), and  Any Options or SARs that are exercisable as of the date your employment terminates will remain exercisable for 90 days (not three months) after the date of Termination of Employment, after which any unexercised Options or SARs are canceled; provided, however, when your employment with the Company terminates (other than for cause, including due to violation of the Business Conduct Guidelines or other Company policy) after you have attained age 55 and completed at least 15 years of service with the Company at the time of termination, any Options or SARs that are exercisable as of your Termination of Employment shall remain exercisable for the full term as in your Equity Award Agreement (unless your Equity Award Agreement provides otherwise).  However, provided you are not terminated for cause, including due to violation of the Business Conduct Guidelines or other Company policy, your unvested Options or SARs will continue to vest upon Termination of Employment, and Options or SARs that are exercisable upon Termination of Employment or become exercisable in the future shall remain exercisable for the full term as stated in your Equity Award Agreement (unless your Equity Award Agreement provides otherwise), if all of the following criteria are met:  You are either (i) determined to be a member of the Performance Team or any successor team thereto, or (ii) if not a member of the Performance Team are designated by the Company as a Band A Executive or a comparable band thereto, at the time of Termination of Employment;  You have completed at least one year of active service since the award date of grant;  You have reached age 55 with 15 years of service at the time of Termination of Employment (age 60 with 15 years of service for the Chairman and CEO); and

Equity Awards: April 1, 2024 Page 13 of 17  Appropriate senior management, the Committee or the Board, as appropriate, do not exercise their discretion to cancel or otherwise limit the vesting or exercisability of the Options or SARs. Death or Disability In the event of your death, all Options or SARs shall become fully exercisable and remain exercisable for their full term. In the event you are disabled (as described in Section 12 of the Plan), any unvested Options or SARs shall continue to vest and be exercisable.

Equity Awards: April 1, 2024 Page 14 of 17 Terms and Conditions of Your Equity Award: Provisions that apply to specific Award types for all countries Leave of Absence In the event of a management approved leave of absence, any unvested Options or SARs shall continue to vest and be exercisable as if you were an active employee of the Company, subject to the terms in this document and your Equity Award Agreement. If you return to active status, your Options or SARs will continue to vest and be exercisable in accordance with their terms. If you do not return to active status,  Your unvested Options or SARs will be canceled immediately; and  Your vested Options or SARs will remain exercisable for 90 days (not three months) after the date of termination of employment; provided, however, if your employment terminates (other than for cause, including due to violation of the Business Conduct Guidelines or other Company policy) after you have attained age 55 and completed at least 15 years of service with the Company at the time of termination, any Options or SARs that are exercisable as of the date of your Termination of Employment shall remain exercisable for the full term as in your Equity Award Agreement (unless your Equity Award Agreement provides otherwise). Termination of Employment for Cause If your employment terminates for cause, including due to violation of the Business Conduct Guidelines or other Company policy all not exercisable Options or SARs are canceled immediately. ii. All SAR Awards Settlement of Award Upon exercise, the Company shall deliver an aggregate amount, in cash, equal to the excess of the Fair Market Value of a share of Capital Stock on the date of exercise over the Exercise Price set forth in your Equity Award Agreement multiplied by the number of SARs exercised, subject to any applicable tax withholding requirements as described in Section 9 of the Plan. The value of the Award will be calculated in your home country currency at the exchange rate on the date the Award becomes fully vested using a commercially reasonable measure of exchange rate.

Equity Awards: April 1, 2024 Page 15 of 17 Terms and Conditions of Your Equity Award: Provisions that apply to specific Award types for all countries d. Performance Share Units (“PSUs”) Termination of Employment, including Death and Disability, and Leave of Absence Termination of Employment If you cease to be an employee for any reason (other than on account of death or are disabled as described in Section 12 of the Plan) before the end of the applicable PSU Performance Period), all PSUs are canceled immediately. However, if at the time that you cease to be an employee (provided you are not terminated for cause, including due to violation of the Business Conduct Guidelines or other Company policy), you have attained age 55, completed at least 15 years of service with the Company, and completed at least one year of active service during the PSU Performance Period (as set forth in your Equity Award Agreement), the PSUs granted hereunder shall be paid out on the Date of Payout (as set forth in your Equity Award Agreement) in an amount that will be prorated for the time that you work as an active employee during the PSU Performance Period, and adjusted for the performance score determined for the entire applicable performance period(s). However, provided you are not terminated for cause, including due to violation of the Business Conduct Guidelines or other Company policy, your unvested PSUs will continue to vest if all of the following criteria are met at the time you cease to be an active employee:  You are either (i) determined to be a member of the Performance Team or any successor team thereto; or (ii) if not a member of the Performance Team, are designated by the Company as a Band A executive or a comparable band thereto;  You have completed at least one year of active service during the PSU Performance Period (as set forth in your Equity Award Agreement);  You have reached age 55 with 15 years of service (age 60 with 15 years of service for the Chairman and CEO);  The Committee has certified that all performance conditions have been met; and  Appropriate senior management, the Committee or the Board, as appropriate, do not exercise their discretion to cancel or otherwise limit the payout. Death or Disability Prior to the Date of Payout, (i) in the event of your death or (ii) if you are disabled (as described in Section 12 of the Plan), all PSUs shall continue to vest according to the terms of your Equity Award Agreement and the PSUs will be paid on the Date of Payout, based on IBM performance, if applicable, over the entire applicable Performance Period(s).

Equity Awards: April 1, 2024 Page 16 of 17 Leave of Absence In the event of a management approved leave of absence, any unvested PSUs shall continue to vest as if you were an active employee of the Company, subject to the terms in this document and your Equity Award Agreement. If you return to active status, your unvested PSUs will continue to vest in accordance with the terms in this document and your Equity Award Agreement. If you do not return to active status after your leave and terminate employment, the rules for Termination of Employment described above will apply to your PSUs. Termination of Employment for Cause If your employment terminates for cause prior to the Date of Payout (set forth in your Equity Award Agreement), including due to violation of the Business Conduct Guidelines or other Company policy, all outstanding PSUs are canceled immediately.

Equity Awards: April 1, 2024 Page 17 of 17 Terms and Conditions of Your Equity Award: Provisions that apply to specific countries a. Israel i. All Awards Data Privacy In addition to the data privacy provisions in your Equity Award Agreement, you agree that data, including your personal data, necessary to administer this Award may be exchanged among IBM and its subsidiaries and affiliates as necessary (including transferring such data out of the country of origin both in and out of the EEA), and with any vendor engaged by IBM to administer this Award. b. United States i. All Awards Nothing in the Plan prospectus, your Equity Award Agreement or this Document affects your rights, immunities, or obligations under any federal, state, or local law, including under the Defend Trade Secrets Act of 2016, as described in Company policies, or prohibits you from reporting possible violations of law or regulation to a government agency, as protected by law. If you are, and have been for at least 30 days immediately preceding, a resident of, or an employee in Massachusetts at the time of the termination of your employment with IBM, cancellation and rescission provisions of the Plan will not apply if you engage in competitive activities after your employment relationship has ended with IBM. For the avoidance of doubt, cancellation and rescission provisions of the Plan will apply if you engage in (1) any Detrimental Activity prior to your employment relationship ending with IBM or (2) any Detrimental Activity described in Section 13(a) of the Plan other than engaging in competitive activities after your employment relationship has ended with IBM.

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13A-14(a) OR 15D-14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Arvind Krishna, certify that:

1.I have reviewed this quarterly report on Form 10-Q of International Business Machines Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2024

/s/ Arvind Krishna

Arvind Krishna

Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13A-14(a) OR 15D-14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, James J. Kavanaugh, certify that:

1.I have reviewed this quarterly report on Form 10-Q of International Business Machines Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2024

/s/ James J. Kavanaugh

James J. Kavanaugh

Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

INTERNATIONAL BUSINESS MACHINES CORPORATION

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of International Business Machines Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Arvind Krishna, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Arvind Krishna

Arvind Krishna

Chairman and Chief Executive Officer

July 30, 2024

A signed original of this written statement required by Section 906 has been provided to IBM and will be retained by IBM and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

INTERNATIONAL BUSINESS MACHINES CORPORATION

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of International Business Machines Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James J. Kavanaugh, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James J. Kavanaugh

James J. Kavanaugh

Senior Vice President and Chief Financial Officer

July 30, 2024

A signed original of this written statement required by Section 906 has been provided to IBM and will be retained by IBM and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover	6 Months Ended
	Jun. 30, 2024 shares
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Entity File Number	1-2360
Entity Registrant Name	INTERNATIONAL BUSINESS MACHINES CORPORATION
Entity Incorporation, State or Country Code	NY
Entity Tax Identification Number	13-0871985
Entity Address, Address Line One	One New Orchard Road
Entity Address, City or Town	Armonk
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10504
City Area Code	914
Local Phone Number	499-1900
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	921,148,195
Entity Central Index Key	0000051143
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
NEW YORK STOCK EXCHANGE, INC. | Common Stock
Document Information [Line Items]
Title of 12(b) Security	Capital stock, par value $.20 per share
Trading Symbol	IBM
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 1.125% Notes due 2024
Document Information [Line Items]
Title of 12(b) Security	1.125% Notes due 2024
Trading Symbol	IBM 24A
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 2.875% Notes due 2025
Document Information [Line Items]
Title of 12(b) Security	2.875% Notes due 2025
Trading Symbol	IBM 25A
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 0.950% Notes due 2025
Document Information [Line Items]
Title of 12(b) Security	0.950% Notes due 2025
Trading Symbol	IBM 25B
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 0.875% Notes due 2025
Document Information [Line Items]
Title of 12(b) Security	0.875% Notes due 2025
Trading Symbol	IBM 25C
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 0.300% Notes due 2026
Document Information [Line Items]
Title of 12(b) Security	0.300% Notes due 2026
Trading Symbol	IBM 26B
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 1.250% Notes due 2027
Document Information [Line Items]
Title of 12(b) Security	1.250% Notes due 2027
Trading Symbol	IBM 27B
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 3.375% Notes due 2027
Document Information [Line Items]
Title of 12(b) Security	3.375% Notes due 2027
Trading Symbol	IBM 27F
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 0.300% Notes due 2028
Document Information [Line Items]
Title of 12(b) Security	0.300% Notes due 2028
Trading Symbol	IBM 28B
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 1.750% Notes due 2028
Document Information [Line Items]
Title of 12(b) Security	1.750% Notes due 2028
Trading Symbol	IBM 28A
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 1.500% Notes due 2029
Document Information [Line Items]
Title of 12(b) Security	1.500% Notes due 2029
Trading Symbol	IBM 29
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 0.875% Notes due 2030
Document Information [Line Items]
Title of 12(b) Security	0.875% Notes due 2030
Trading Symbol	IBM 30A
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 1.750% Notes due 2031
Document Information [Line Items]
Title of 12(b) Security	1.750% Notes due 2031
Trading Symbol	IBM 31
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 3.625% Notes due 2031
Document Information [Line Items]
Title of 12(b) Security	3.625% Notes due 2031
Trading Symbol	IBM 31B
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 0.650% Notes due 2032
Document Information [Line Items]
Title of 12(b) Security	0.650% Notes due 2032
Trading Symbol	IBM 32A
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 1.250% Notes due 2034
Document Information [Line Items]
Title of 12(b) Security	1.250% Notes due 2034
Trading Symbol	IBM 34
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 3.750% Notes due 2035
Document Information [Line Items]
Title of 12(b) Security	3.750% Notes due 2035
Trading Symbol	IBM 35
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 4.875% Notes due 2038
Document Information [Line Items]
Title of 12(b) Security	4.875% Notes due 2038
Trading Symbol	IBM 38
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 1.200% Notes due 2040
Document Information [Line Items]
Title of 12(b) Security	1.200% Notes due 2040
Trading Symbol	IBM 40
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 4.000% Notes due 2043
Document Information [Line Items]
Title of 12(b) Security	4.000% Notes due 2043
Trading Symbol	IBM 43
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 7.00% Debentures due 2025
Document Information [Line Items]
Title of 12(b) Security	7.00% Debentures due 2025
Trading Symbol	IBM 25
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 6.22% Debentures due 2027
Document Information [Line Items]
Title of 12(b) Security	6.22% Debentures due 2027
Trading Symbol	IBM 27
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 6.50% Debentures due 2028
Document Information [Line Items]
Title of 12(b) Security	6.50% Debentures due 2028
Trading Symbol	IBM 28
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 5.875% Debentures due 2032
Document Information [Line Items]
Title of 12(b) Security	5.875% Debentures due 2032
Trading Symbol	IBM 32D
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 7.00% Debentures due 2045
Document Information [Line Items]
Title of 12(b) Security	7.00% Debentures due 2045
Trading Symbol	IBM 45
Security Exchange Name	NYSE
NEW YORK STOCK EXCHANGE, INC. | 7.125% Debentures due 2096
Document Information [Line Items]
Title of 12(b) Security	7.125% Debentures due 2096
Trading Symbol	IBM 96
Security Exchange Name	NYSE
NYSE CHICAGO, INC. | Common Stock
Document Information [Line Items]
Title of 12(b) Security	Capital stock, par value $.20 per share
Trading Symbol	IBM
Security Exchange Name	CHX

XML

CONSOLIDATED INCOME STATEMENT - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue	$ 15,770	$ 15,475	$ 30,231	$ 29,727
Cost	6,820	6,974	13,539	13,717
Gross profit	8,950	8,501	16,692	16,010
Expense and other (income):
Selling, general and administrative	4,938	4,900	9,912	9,754
Research, development and engineering	1,840	1,687	3,637	3,342
Intellectual property and custom development income	(241)	(248)	(458)	(428)
Other (income) and expense	(233)	(261)	(550)	(506)
Interest expense	427	423	859	790
Total expense and other (income)	6,730	6,501	13,399	12,952
Income from continuing operations before income taxes	2,219	2,000	3,293	3,058
Provision for/(benefit from) income taxes	389	419	(112)	543
Income from continuing operations	1,830	1,581	3,405	2,515
Income/(loss) from discontinued operations, net of tax	4	2	34	(4)
Net income	$ 1,834	$ 1,583	$ 3,439	$ 2,511
Assuming dilution:
Continuing operations (in dollars per share)	$ 1.96	$ 1.72	$ 3.65	$ 2.74
Discontinued operations (in dollars per share)	0.00	0.00	0.04	0.00
Total (in dollars per share)	1.96	1.72	3.68	2.73
Basic:
Continuing operations (in dollars per share)	1.99	1.74	3.71	2.77
Discontinued operations (in dollars per share)	0.00	0.00	0.04	0.00
Total (in dollars per share)	$ 1.99	$ 1.74	$ 3.74	$ 2.76
Weighted-average number of common shares outstanding:
Assuming dilution (in shares)	934,397,595	919,452,496	933,914,454	918,648,888
Basic (in shares)	920,287,541	909,855,943	918,733,160	908,691,415
Services
Revenue	$ 7,405	$ 7,553	$ 14,876	$ 15,077
Cost	5,126	5,294	10,365	10,604
Sales
Revenue	8,195	7,739	14,994	14,271
Cost	1,607	1,587	2,988	2,910
Financing
Revenue	169	183	361	380
Cost	$ 86	$ 93	$ 186	$ 203

XML

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Statement of Comprehensive Income [Abstract]
Net income	$ 1,834	$ 1,583	$ 3,439	$ 2,511
Other comprehensive income/(loss), before tax:
Foreign currency translation adjustments	2	116	57	29
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	1	(17)	1	(1)
Reclassification of (gains)/losses to net income	0	0	0	0
Total net changes related to available-for-sale securities	1	(17)	1	(1)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	103	178	279	149
Reclassification of (gains)/losses to net income	(42)	(30)	28	(152)
Total unrealized gains/(losses) on cash flow hedges	61	148	307	(3)
Retirement-related benefit plans:
Prior service costs/(credits)	0	0	0	0
Net (losses)/gains arising during the period	0	0	1	2
Curtailments and settlements	2	6	4	5
Amortization of prior service costs/(credits)	(2)	(2)	(4)	(4)
Amortization of net (gains)/losses	258	130	519	261
Total retirement-related benefit plans	259	134	520	263
Other comprehensive income/(loss), before tax	322	381	885	289
Income tax (expense)/benefit related to items of other comprehensive income	(153)	(101)	(442)	(48)
Other comprehensive income/(loss), net of tax	169	280	442	241
Total comprehensive income	$ 2,003	$ 1,863	$ 3,882	$ 2,751

XML

CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 12,210	$ 13,068
Restricted cash	2,268	21
Marketable securities	1,481	373
Notes and accounts receivable — trade (net of allowances of $129 in 2024 and $192 in 2023)	5,769	7,214
Short-term financing receivables:
Held for investment (net of allowances of $115 in 2024 and $129 in 2023)	5,075	6,102
Held for sale	723	692
Other accounts receivable (net of allowances of $36 in 2024 and $109 in 2023)	757	640
Inventory, at lower of average cost or net realizable value:
Finished goods	141	78
Work in process and raw materials	1,093	1,083
Total inventory	1,234	1,161
Deferred costs	997	998
Prepaid expenses and other current assets	2,784	2,639
Total current assets	33,299	32,908
Property, plant and equipment	17,911	18,122
Less: Accumulated depreciation	12,311	12,621
Property, plant and equipment — net	5,600	5,501
Operating right-of-use assets — net	3,130	3,220
Long-term financing receivables (net of allowances of $21 in 2024 and $27 in 2023)	5,483	5,766
Prepaid pension assets	7,630	7,506
Deferred costs	820	842
Deferred taxes	6,378	6,656
Goodwill	59,416	60,178
Intangible assets — net	10,251	11,036
Investments and sundry assets	1,840	1,626
Total assets	133,848	135,241
Current liabilities:
Taxes	1,691	2,270
Short-term debt	3,602	6,426
Accounts payable	3,631	4,132
Compensation and benefits	3,125	3,501
Deferred income	13,643	13,451
Operating lease liabilities	762	820
Other accrued expenses and liabilities	3,195	3,521
Total current liabilities	29,648	34,122
Long-term debt	52,929	50,121
Retirement and nonpension postretirement benefit obligations	10,200	10,808
Deferred income	3,489	3,533
Operating lease liabilities	2,546	2,568
Other liabilities	10,932	11,475
Total liabilities	109,745	112,628
IBM stockholders’ equity:
Common stock	60,501	59,643
Retained earnings	151,659	151,276
Treasury stock - at cost	(169,815)	(169,624)
Accumulated other comprehensive income/(loss)	(18,319)	(18,761)
Total IBM stockholders’ equity	24,026	22,533
Noncontrolling interests	77	80
Total equity	24,103	22,613
Total liabilities and equity	$ 133,848	$ 135,241

XML

CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Notes and accounts receivable - trade, allowances	$ 129	$ 192
Short-term financing receivables, allowances	115	129
Other accounts receivable, allowances	36	109
Long-term financing receivables, allowances	$ 21	$ 27
Common stock, par value (in dollars per share)	$ 0.20	$ 0.20
Common stock, shares authorized (in shares)	4,687,500,000	4,687,500,000
Common stock, shares issued (in shares)	2,273,721,246	2,266,911,160
Treasury stock, shares (in shares)	1,352,573,051	1,351,897,514

XML

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2024	Jun. 30, 2023
Cash flows from operating activities:
Net income		$ 3,439	$ 2,511
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	[1]	1,081	1,047
Amortization of capitalized software and acquired intangible assets		1,205	1,104
Stock-based compensation		636	556
Net (gain)/loss on divestitures, asset sales and other	[2]	(280)	(19)
Changes in operating assets and liabilities, net of acquisitions/divestitures	[2]	152	1,214
Net cash provided by operating activities		6,234	6,412
Cash flows from investing activities:
Payments for property, plant and equipment		(459)	(664)
Proceeds from disposition of property, plant and equipment/other		57	25
Investment in software		(358)	(305)
Acquisition of businesses, net of cash acquired		(235)	(356)
Divestitures of businesses, net of cash transferred		703	6
Purchases of marketable securities and other investments		(5,596)	(9,260)
Proceeds from disposition of marketable securities and other investments		3,917	2,600
Net cash provided by/(used in) investing activities		(1,971)	(7,953)
Cash flows from financing activities:
Proceeds from new debt		5,705	9,432
Payments to settle debt		(5,224)	(3,260)
Short-term borrowings/(repayments) less than 90 days — net		0	(3)
Common stock repurchases for tax withholdings		(350)	(240)
Financing — other		289	56
Cash dividends paid		(3,058)	(3,007)
Net cash provided by/(used in) financing activities		(2,638)	2,978
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(236)	(1)
Net change in cash, cash equivalents and restricted cash		1,389	1,436
Cash, cash equivalents and restricted cash at January 1		13,089	7,988
Cash, cash equivalents and restricted cash at June 30		$ 14,478	$ 9,425

[1] Includes operating lease right-of-use assets amortization expense of $0.4 billion in 2024 and $0.5 billion in 2023.

[2] Prior period has been reclassified to conform to the change in 2024 presentation.

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CONSOLIDATED STATEMENT OF CASH FLOWS (Parenthetical) - USD ($) $ in Billions	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Statement of Financial Position [Abstract]
Operating lease right-of-use assets amortization expense	$ 0.4	$ 0.5

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CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Millions	Total	Total IBM Stockholders' Equity	Common Stock and Additional Paid-in Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income/(Loss)	Non- Controlling Interests
Balance at the beginning of the period at Dec. 31, 2022	$ 22,021	$ 21,944	$ 58,343	$ 149,825	$ (169,484)	$ (16,740)	$ 77
Net income plus other comprehensive income/(loss):
Net income	2,511	2,511		2,511
Other comprehensive income/(loss)	241	241				241
Total comprehensive income	2,751	2,751
Cash dividends paid - common stock	(3,007)	(3,007)		(3,007)
Common stock issued under employee plans	619	619	619
Purchases and sales of treasury stock under employee plans - net	(107)	(107)		(10)	(97)
Changes in noncontrolling interests	(7)						(7)
Balance at the end of the period at Jun. 30, 2023	22,271	22,201	58,963	149,318	(169,581)	(16,499)	70
Balance at the beginning of the period at Mar. 31, 2023	21,672	21,604	58,675	149,253	(169,544)	(16,780)	68
Net income plus other comprehensive income/(loss):
Net income	1,583	1,583		1,583
Other comprehensive income/(loss)	280	280				280
Total comprehensive income	1,863	1,863
Cash dividends paid - common stock	(1,510)	(1,510)		(1,510)
Common stock issued under employee plans	288	288	288
Purchases and sales of treasury stock under employee plans - net	(45)	(45)		(8)	(37)
Changes in noncontrolling interests	2						2
Balance at the end of the period at Jun. 30, 2023	22,271	22,201	58,963	149,318	(169,581)	(16,499)	70
Balance at the beginning of the period at Dec. 31, 2023	22,613	22,533	59,643	151,276	(169,624)	(18,761)	80
Net income plus other comprehensive income/(loss):
Net income	3,439	3,439		3,439
Other comprehensive income/(loss)	442	442				442
Total comprehensive income	3,882	3,882
Cash dividends paid - common stock	(3,058)	(3,058)		(3,058)
Common stock issued under employee plans	858	858	858
Purchases and sales of treasury stock under employee plans - net	(188)	(188)		3	(191)
Changes in noncontrolling interests	(3)						(3)
Balance at the end of the period at Jun. 30, 2024	24,103	24,026	60,501	151,659	(169,815)	(18,319)	77
Balance at the beginning of the period at Mar. 31, 2024	23,333	23,261	60,145	151,362	(169,759)	(18,488)	72
Net income plus other comprehensive income/(loss):
Net income	1,834	1,834		1,834
Other comprehensive income/(loss)	169	169				169
Total comprehensive income	2,003	2,003
Cash dividends paid - common stock	(1,537)	(1,537)		(1,537)
Common stock issued under employee plans	356	356	356
Purchases and sales of treasury stock under employee plans - net	(58)	(58)		(1)	(57)
Changes in noncontrolling interests	5						5
Balance at the end of the period at Jun. 30, 2024	$ 24,103	$ 24,026	$ 60,501	$ 151,659	$ (169,815)	$ (18,319)	$ 77

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CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Statement of Stockholders' Equity [Abstract]
Cash dividend per common share (in dollars per share)	$ 1.67	$ 1.66	$ 3.33	$ 3.31
Common stock issued under employee plans (in shares)	2,646,967	3,199,344	6,810,086	5,580,271
Purchases of treasury stock under employee plans (in shares)	856,885	1,098,988	1,944,555	1,810,313
Sales of treasury stock under employee plans (in shares)	755,447	860,470	1,269,017	1,144,305

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Basis of Presentation

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation:

The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial statements and footnotes are unaudited. In the opinion of the company’s management, these statements include all adjustments, which are only of a normal recurring nature, necessary to present a fair statement of the company’s results of operations, financial position and cash flows.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates.

For the three and six months ended June 30, 2024, the company reported a provision for income taxes of $389 million and a benefit from income taxes of $112 million, respectively, and the effective tax rate was 17.5 percent and (3.4) percent, respectively. The benefit from income taxes in the six months ended June 30, 2024, was primarily driven by the resolution of certain tax audit matters in the first quarter. For the three and six months ended June 30, 2023, the company reported a provision for income taxes of $419 million and $543 million, respectively, and the effective tax rate was 21.0 percent and 17.8 percent, respectively.

Noncontrolling interest amounts, included as a reduction within other (income) and expense in the Consolidated Income Statement, were not material to the consolidated results for the periods presented.

The company has supplier finance programs with third-party financial institutions where the company agrees to pay the financial institutions the stated amounts of invoices from participating suppliers on the originally invoiced maturity date, which have an average term of 90 to 120 days, consistent with the company's standard payment terms. The financial institutions offer earlier payment of the invoices at the sole discretion of the supplier for a discounted amount. The company does not provide secured legal assets or other forms of guarantees under the arrangements. The company is not a party to the arrangements between its suppliers and the financial institutions. These obligations are recognized as accounts payable in the Consolidated Balance Sheet. The obligations outstanding under these programs at June 30, 2024 and December 31, 2023 were $116 million and $101 million, respectively.

Interim results are not necessarily indicative of financial results for a full year. The information included in this Form 10-Q should be read in conjunction with the company’s 2023 Annual Report.

Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior-period amounts have been reclassified to conform to the change in current-period presentation. This is annotated where applicable.

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Accounting Changes

6 Months Ended

Jun. 30, 2024

Accounting Changes and Error Corrections [Abstract]

Accounting Changes

Accounting Changes:

New Standards to be Implemented

Income Tax Disclosures

Standard/Description–Issuance date: December 2023. This guidance requires disaggregated disclosure of the tax rate reconciliation into eight categories, with further disaggregation required for items greater than a specific threshold. Additionally, the guidance requires the disclosure of income taxes paid disaggregated by federal, state and foreign jurisdictions.

Effective Date and Adoption Considerations–The guidance is effective January 1, 2025 and early adoption is permitted. The company expects to adopt the guidance as of the effective date.

Effect on Financial Statements or Other Significant Matters–As the guidance is a change to disclosures only, it will impact the “Taxes” note within the company's annual financial statements but will not impact the consolidated financial results.

Segment Reporting Disclosures

Standard/Description–Issuance date: November 2023. This guidance requires the disclosure of significant segment expenses that are regularly provided to a company's chief operating decision maker and included within each reported measure of segment profit or loss. The company must also disclose “other segment items,” which is the difference between segment revenue less significant expenses for each reported measure of segment profit or loss, and a description of its composition. This guidance also requires all segment annual disclosures to be provided on an interim basis.

Effective Date and Adoption Considerations–The guidance is effective for annual periods beginning in 2024, and for interim periods beginning January 1, 2025, and is required to be applied on a retrospective basis to all prior periods presented. Early adoption is permitted. The company will adopt the guidance as of the effective date.

Effect on Financial Statements or Other Significant Matters–As the guidance is a change to disclosures only, it will impact the “Segments” note within the company's quarterly and annual financial statements but will not have an impact in the consolidated financial results.

Standards Implemented

Disclosures of Supplier Finance Program Obligations

Standard/Description–Issuance date: September 2022. This guidance requires an entity to provide certain interim and annual disclosures about the use of supplier finance programs in connection with the purchase of goods or services.

Effective Date and Adoption Considerations–The guidance was effective January 1, 2023 with certain annual disclosures required beginning in 2024 and early adoption was permitted. The company adopted the guidance as of the effective date.

Effect on Financial Statements or Other Significant Matters–As the guidance is a change to disclosures only, it did not have an impact in the consolidated financial results. Refer to note 1, "Basis of Presentation," for additional disclosure information.

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Revenue Recognition

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition:

Disaggregation of Revenue

The following tables provide details of revenue by major products/service offerings and revenue by geography.

Revenue by Major Products/Service Offerings

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023 (1)		2024		2023 (1)
Hybrid Platform & Solutions	$	4,575	$	4,350	$	8,673	$	8,200
Transaction Processing	2,164		1,943		3,964		3,685
Total Software	$	6,739	$	6,294	$	12,637	$	11,885
Business Transformation	2,360		2,295		4,677		4,578
Application Operations	1,902		1,991		3,840		3,980
Technology Consulting	917		941		1,848		1,866
Total Consulting	$	5,179	$	5,226	$	10,365	$	10,423
Hybrid Infrastructure	2,360		2,260		4,163		3,969
Infrastructure Support	1,285		1,358		2,558		2,747
Total Infrastructure	$	3,645	$	3,618	$	6,721	$	6,716
Financing (2)	169		185		362		380
Other	38		152		146		321
Total revenue	$	15,770	$	15,475	$	30,231	$	29,727

(1)Recast to reflect January 2024 segment changes. Refer to note 4, "Segments," for additional information.

(2)Contains lease and loan financing arrangements which are not subject to the guidance on revenue from contracts with customers.

Revenue by Geography

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Americas	$	7,979	$	8,046	$	15,275	$	15,124
Europe/Middle East/Africa	4,722		4,602		9,035		8,933
Asia Pacific	3,069		2,827		5,922		5,670
Total	$	15,770	$	15,475	$	30,231	$	29,727

Remaining Performance Obligations

The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency.

At June 30, 2024, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was approximately $56 billion. Approximately 70 percent of the amount is expected to be recognized as revenue in the subsequent two years, approximately 27 percent in the subsequent three to five years and the balance thereafter.

Revenue Recognized for Performance Obligations Satisfied (or Partially Satisfied) in Prior Periods

For the three and six months ended June 30, 2024, revenue recognized for performance obligations satisfied or partially satisfied in prior periods was immaterial.

Reconciliation of Contract Balances

The following table provides information about notes and accounts receivable–trade, contract assets and deferred income balances.

(Dollars in millions)	At June 30, 2024		At December 31, 2023
Notes and accounts receivable — trade (net of allowances of $129 in 2024 and $192 in 2023)	$	5,769	$	7,214
Contract assets (1)	$	540	$	505
Deferred income (current)	$	13,643	$	13,451
Deferred income (noncurrent)	$	3,489	$	3,533

(1)Included within prepaid expenses and other current assets in the Consolidated Balance Sheet.

The amount of revenue recognized during the six months ended June 30, 2024 that was included within the deferred income balance at December 31, 2023 was $7.4 billion and was primarily related to software and services.

The following table provides roll forwards of the notes and accounts receivable–trade allowance for expected credit losses for the six months ended June 30, 2024 and the year ended December 31, 2023.

(Dollars in millions)
January 1, 2024	Additions / (Releases)	Write-offs (1)	Foreign currency and other	June 30, 2024
$192	$(7)	$(61)	$4	$129

January 1, 2023	Additions / (Releases)	Write-offs (1)	Foreign currency and other	December 31, 2023
$233	$32	$(79)	$6	$192

(1)The majority of the write-offs during the period related to receivables which had been previously reserved.

The contract assets allowance for expected credit losses was not material in any of the periods presented.

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Segments

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Segments

Segments:

In the first quarter of 2024, the company made changes to its organization structure and management system to better align its portfolio with the market, increase transparency and improve segment comparability to peers. These changes did not impact the company's Consolidated Financial Statements, but did impact its reportable segments. Due to the removal of certain components of segment profitability, as described below, the company also updated the title of its segment performance metric from pre-tax income from continuing operations to segment profit.

The following table displays the segment updates:

Reportable Segment Change	Resulting Segment Implications
The Weather Company asset divestiture (1)	-	Software Segment
	+	Other-divested businesses
Security Services realignment	-	Software Segment
	+	Consulting Segment
Removal of stock-based compensation and net interest allocations from segment profitability	-	Software Segment, Consulting Segment, Infrastructure Segment, Financing Segment (2)
	+	Other

(1) The Weather Company asset divestiture closed January 31, 2024.

(2) Presentation of interest for the Financing Segment did not change.

The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company and have been recast for the prior-year periods to reflect the company's segment changes described above. These results are used by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments.

SEGMENT INFORMATION

(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the three months ended June 30, 2024:
Revenue	$	6,739		$	5,179		$	3,645		$	169		$	15,732
Segment profit	$	2,113		$	463		$	654		$	77		$	3,306
Revenue year-to-year change	7.1		%	(0.9)		%	0.7		%	(8.3)		%	2.7		%
Segment profit year-to-year change	20.8		%	(4.0)		%	(10.7)		%	19.3		%	9.2		%
Segment profit margin	31.3		%	8.9		%	17.9		%	45.3		%	21.0		%
For the three months ended June 30, 2023: (1)
Revenue	$	6,294		$	5,226		$	3,618		$	185		$	15,322
Segment profit	$	1,749		$	483		$	732		$	64		$	3,028
Segment profit margin	27.8		%	9.2		%	20.2		%	34.8		%	19.8		%

(1) Recast to reflect January 2024 segment changes.

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended June 30:	2024		2023 (1)
Revenue:
Total reportable segments	$	15,732	$	15,322
Other‒divested businesses	0		101
Other revenue	38		52
Total revenue from continuing operations	$	15,770	$	15,475
Pre-tax income from continuing operations:
Total reportable segment profit	$	3,306	$	3,028
Amortization of acquired intangible assets	(439)		(389)
Acquisition-related (charges)/income (2)	(36)		(7)
Non-operating retirement-related (costs)/income	(98)		(1)
Stock-based compensation	(316)		(288)
Net interest excluding the Financing segment	(218)		(225)
Workforce rebalancing charges	(18)		(117)
Other‒divested businesses	(4)		23
Unallocated corporate amounts and other	41		(24)
Total pre-tax income from continuing operations	$	2,219	$	2,000

(1)Recast to reflect January 2024 segment changes.

(2)2024 includes the impact of foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, "Derivative Financial Instruments," for additional information.

SEGMENT INFORMATION

(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the six months ended June 30, 2024:
Revenue	$	12,637		$	10,365		$	6,721		$	362		$	30,085
Segment profit	$	3,612		$	888		$	965		$	168		$	5,633
Revenue year-to-year change	6.3		%	(0.6)		%	0.1		%	(4.9)		%	2.3		%
Segment profit year-to-year change	15.5		%	(2.4)		%	(7.1)		%	2.4		%	7.5		%
Segment profit margin	28.6		%	8.6		%	14.4		%	46.5		%	18.7		%
For the six months ended June 30, 2023: (1)
Revenue	$	11,885		$	10,423		$	6,716		$	380		$	29,406
Segment profit	$	3,128		$	910		$	1,039		$	164		$	5,241
Segment profit margin	26.3		%	8.7		%	15.5		%	43.2		%	17.8		%

(1) Recast to reflect January 2024 segment changes.

Reconciliations to IBM as Reported:

(Dollars in millions)
For the six months ended June 30:	2024		2023 (1)
Revenue:
Total reportable segments	$	30,085	$	29,406
Other‒divested businesses	35		195
Other revenue	111		127
Total revenue from continuing operations	$	30,231	$	29,727
Pre-tax income from continuing operations:
Total reportable segment profit	$	5,633	$	5,241
Amortization of acquired intangible assets	(866)		(781)
Acquisition-related (charges)/income (2)	(96)		(10)
Non-operating retirement-related (costs)/income	(194)		4
Stock-based compensation	(636)		(556)
Net interest excluding the Finance segment	(442)		(442)
Workforce rebalancing changes	(392)		(376)
Other‒divested businesses (3)	235		36
Unallocated corporate amounts and other	50		(57)
Total pre-tax income from continuing operations	$	3,293	$	3,058

(1)Recast to reflect January 2024 segment changes.

(2)2024 includes the impact of foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, "Derivative Financial Instruments," for additional information.

(3)2024 includes a gain on the sale of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

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Acquisitions & Divestitures

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Acquisitions & Divestitures

Acquisitions & Divestitures:

Acquisitions

Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions, unless otherwise stated, were for 100 percent of the acquired business and are reported in the Consolidated Statement of Cash Flows, net of acquired cash and cash equivalents.

During the six months ended June 30, 2024, the company completed two acquisitions within the Software segment and two acquisitions within the Consulting segment at an aggregate cost of $278 million. These acquisitions are expected to enhance the company’s portfolio of products and services capabilities and further advance IBM’s hybrid cloud and AI strategy. These acquisitions did not have a material impact in the company's Consolidated Financial Statements.

At June 30, 2024, the remaining cash to be remitted by the company related to the first-half 2024 acquisitions was not material.

The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocation as of June 30, 2024.

(Dollars in millions)	Amortization Life (in years)	All Acquisitions
Current assets		$	35
Property, plant and equipment/noncurrent assets		3
Intangible assets:
Goodwill	N/A	207
Client relationships	1-7	36
Completed technology	7	37
Trademarks	3	1
Total assets acquired		$	319
Current liabilities		24
Noncurrent liabilities		16
Total liabilities assumed		$	41
Total purchase price		$	278

N/A – not applicable

The valuation of the assets acquired and liabilities assumed is subject to revision. If additional information becomes available, the company may further revise the purchase price allocation as soon as practical, but no later than one year from the acquisition date.

Transactions Closed in Third-Quarter 2024 — At the time of issuance of the financial statements, the initial purchase price accounting for each of the closed acquisitions below was not complete.

On July 1, 2024, the company completed the acquisition of StreamSets and webMethods from Software AG for approximately $2.3 billion (€2.13 billion) in cash. StreamSets will add new data ingestion capabilities to IBM's data platform and webMethods will bring integration platform-as-a-service (iPaaS) capabilities to IBM's automation solutions. The acquisition will be integrated into the Software segment. Prior to the acquisition, the company entered into foreign currency derivative contracts which expired by June 28, 2024. Refer to note 16, “Derivative Financial Instruments,” for financial impacts and additional information. At June 30, 2024, $2.3 billion was held in escrow and classified as restricted cash in the Consolidated Balance Sheet in connection with the acquisition. The cash was remitted to Software AG on July 1, 2024.

On July 1, 2024, the company completed an acquisition within the Consulting segment which is not expected to have a material impact on the company's Consolidated Financial Statements.

Transactions Announced — On April 24, 2024, the company announced its intent to acquire all of the outstanding shares of HashiCorp, Inc. (HashiCorp). IBM’s and HashiCorp’s combined portfolios will help clients manage growing application and infrastructure complexity and create a comprehensive end-to-end hybrid cloud platform designed for the AI era. Under the terms of the definitive agreement, HashiCorp's shareholders on record immediately prior to the effective time on the closing date will receive $35 per share in cash, representing a total enterprise value of approximately $6.4 billion. On July 15, 2024, HashiCorp stockholders voted to approve the merger with IBM. The transaction is expected to close by the end of 2024, subject to regulatory approvals and other customary closing conditions. Upon closing, HashiCorp will be integrated into the Software segment.

Divestitures

The Weather Company Assets — On January 31, 2024, the company completed the sale of The Weather Company assets to Zephyr Buyer, L.P., a wholly-owned subsidiary of Francisco Partners (collectively, Francisco). Under the agreement, Francisco acquired The Weather Company assets from IBM for $1,100 million inclusive of $250 million of contingent consideration, of which $200 million is contingent on Francisco’s attainment of certain investment return metrics. The assets include The Weather Company's digital consumer-facing offerings, The Weather Channel mobile and cloud-based digital properties including Weather.com, Weather Underground and Storm Radar, as well as its enterprise offerings for broadcast, media, aviation, advertising technology and data solutions for other emerging industries.

Upon closing, the company received cash proceeds of $750 million and provided seller financing to Francisco in the form of a $100 million loan with a term of 7 years. The cash proceeds from the sale were included in cash from investing activities within the Consolidated Statement of Cash Flows. The seller financing is a non-cash investing activity. For the six months ended June 30, 2024, the company recognized a pre-tax gain on sale of $239 million in other (income) and expense in the Consolidated Income Statement. As discussed in note 4, “Segments,” in the first quarter of 2024, The Weather Company assets previously reported in the Software segment were moved and recast to the Other–divested businesses category.

Sale of Assets

Transaction Signed — In May 2024, IBM and Palo Alto Networks (Palo Alto) entered into a definitive agreement whereby Palo Alto will acquire from IBM certain QRadar SaaS (software-as-a-service) assets including QRadar intellectual property, customer relationships and customer contracts for approximately $500 million in cash. The transaction is expected to close in the third quarter of 2024, subject to regulatory approvals and other customary closing conditions. The company expects to recognize a pre-tax gain on the sale of assets, of which the final amount is not yet determinable.

Upon closing, IBM and Palo Alto will facilitate the migration of QRadar SaaS and IBM's QRadar on-premise (on-prem) clients to Palo Alto’s Cortex XSIAM, their security operations (SOC) platform. As part of the agreement, IBM will receive incremental future cash payments from Palo Alto for QRadar on-prem clients that choose to migrate to the Cortex XSIAM platform.

Also, in connection with the sale of the QRadar SaaS assets, IBM and Palo Alto will enter into various commercial agreements pursuant to which IBM will purchase certain Palo Alto products and services and IBM will license and/or provide certain software, including SaaS, and consulting services to Palo Alto. IBM will also provide Palo Alto with transition services including support, operations and other services for QRadar SaaS customer contracts. The commercial agreements entered into during the second quarter of 2024 did not have a material impact on IBM's Consolidated Financial Statements.

At June 30, 2024, the sale of the QRadar SaaS assets met the criteria for held for sale classification. Held for sale assets of approximately $113 million, consisting primarily of intangible assets – net, and held for sale liabilities of $37 million, consisting primarily of deferred income, were included in the company’s Consolidated Balance Sheet at June 30, 2024. These held for sale assets and liabilities are reported within the company’s Software segment.

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Other (Income) and Expense

6 Months Ended

Jun. 30, 2024

Other Income and Expenses [Abstract]

Other (Income) and Expense

Other (Income) and Expense:

Components of other (income) and expense are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Other (income) and expense:
Foreign currency transaction losses/(gains) (1)	$	(140)	$	(166)	$	(345)	$	(78)
(Gains)/losses on derivative instruments (1)	140		141		427		(1)
Interest income	(217)		(201)		(427)		(371)
Net (gains)/losses from securities and investment assets	0		3		(10)		8
Retirement-related costs/(income)	98		1		194		(4)
Other (2)	(114)		(39)		(389)		(61)
Total other (income) and expense	$	(233)	$	(261)	$	(550)	$	(506)

(1)The company uses financial hedging instruments to limit specific currency risks related to foreign currency-based transactions. The hedging program does not hedge 100 percent of currency exposures and defers, versus eliminates, the impact of currency. Refer to note 16, "Derivative Financial Instruments," for additional information on foreign exchange risk.

(2)For the six months ended June 30, 2024, the company recognized a pre-tax gain of $239 million from the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

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Earnings Per Share of Common Stock

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Earnings Per Share of Common Stock

Earnings Per Share of Common Stock:

The following tables provide the computation of basic and diluted earnings per share of common stock for the three and six months ended June 30, 2024 and 2023.

(Dollars in millions except per share amounts)
For the three months ended June 30:	2024		2023
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period	920,287,541		909,855,943
Add — Incremental shares under stock-based compensation plans	11,883,820		7,584,035
Add — Incremental shares associated with contingently issuable shares	2,226,234		2,012,519
Number of shares on which diluted earnings per share is calculated	934,397,595		919,452,496
Income from continuing operations	$	1,830	$	1,581
Income from discontinued operations, net of tax	4		2
Net income on which basic earnings per share is calculated	$	1,834	$	1,583
Income from continuing operations	$	1,830	$	1,581
Net income applicable to contingently issuable shares	—		—
Income from continuing operations on which diluted earnings per share is calculated	$	1,830	$	1,581
Income from discontinued operations, net of tax, on which diluted earnings per share is calculated	4		2
Net income on which diluted earnings per share is calculated	$	1,834	$	1,583
Earnings per share of common stock:
Assuming dilution
Continuing operations	$	1.96	$	1.72
Discontinued operations	0.00		0.00
Total	$	1.96	$	1.72
Basic
Continuing operations	$	1.99	$	1.74
Discontinued operations	0.00		0.00
Total	$	1.99	$	1.74

Stock options to purchase 2,985,594 shares and 5,541,485 shares were outstanding as of June 30, 2024 and 2023, respectively, but were not included in the computation of diluted earnings per share because the exercise price of the options during the respective period was greater than the average market price of the common shares, and therefore, the effect would have been antidilutive.

(Dollars in millions except per share amounts)
For the six months ended June 30:	2024		2023
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period	918,733,160		908,691,415
Add — Incremental shares under stock-based compensation plans	13,070,105		8,096,637
Add — Incremental shares associated with contingently issuable shares	2,111,189		1,860,836
Number of shares on which diluted earnings per share is calculated	933,914,454		918,648,888
Income from continuing operations	$	3,405	$	2,515
Income/(loss) from discontinued operations, net of tax	34		(4)
Net income on which basic earnings per share is calculated	$	3,439	$	2,511
Income from continuing operations	$	3,405	$	2,515
Net income applicable to contingently issuable shares	—		—
Income from continuing operations on which diluted earnings per share is calculated	$	3,405	$	2,515
Income/(loss) from discontinued operations, net of tax, on which diluted earnings per share is calculated	34		(4)
Net income on which diluted earnings per share is calculated	$	3,439	$	2,511
Earnings/(loss) per share of common stock:
Assuming dilution
Continuing operations	$	3.65	$	2.74
Discontinued operations	0.04		0.00
Total	$	3.68	$	2.73
Basic
Continuing operations	$	3.71	$	2.77
Discontinued operations	0.04		0.00
Total	$	3.74	$	2.76

Stock options to purchase 1,523,477 shares and 3,251,207 shares (average of first and second quarter share amounts) were outstanding as of June 30, 2024 and 2023, respectively, but were not included in the computation of diluted earnings per share because the exercise price of the options during the respective period was greater than the average market price of the common shares, and therefore, the effect would have been antidilutive.

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Financial Assets & Liabilities

6 Months Ended

Jun. 30, 2024

Investments, All Other Investments [Abstract]

Financial Assets & Liabilities

Financial Assets & Liabilities:

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The company classifies certain assets and liabilities based on the following fair value hierarchy:

•Level 1–Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date;

•Level 2–Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

•Level 3–Unobservable inputs for the asset or liability.

When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation.

The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument.

In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value:

•Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument.

•Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market.

The company holds investments primarily in time deposits, certificates of deposit, and U.S. government debt that are designated as available-for-sale. The primary objective of the company’s cash and debt investment portfolio is to protect principal by investing in very liquid investment securities with highly rated counterparties.

The company’s standard practice is to hold all of its debt security investments classified as available-for-sale until maturity. No impairments for credit losses and no material non-credit impairments were recorded for the three and six months ended June 30, 2024 and 2023, respectively.

Certain non-financial assets such as property, plant and equipment (PP&E), operating right-of-use assets, goodwill and intangible assets are also subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for non-financial assets depend on the type of asset. There were no material impairments of non-financial assets for the three and six months ended June 30, 2024 and 2023, respectively.

The following table presents the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at June 30, 2024 and December 31, 2023.

	Fair Value Hierarchy Level	At June 30, 2024				At December 31, 2023
(Dollars in millions)		Assets (6)		Liabilities (7)		Assets (6)		Liabilities (7)
Cash equivalents: (1)
Time deposits and certificates of deposit (2)	2	$	5,307	N/A		$	7,206	N/A
Money market funds	1	471		N/A		494		N/A
Total cash equivalents		$	5,778	N/A		$	7,699	N/A
Equity investments	1	—		N/A		25		N/A
Debt securities-current (2)(3)	2	1,481		N/A		373		N/A
Debt securities-noncurrent (2)(4)	2,3	108		N/A		8		N/A
Derivatives designated as hedging instruments:
Interest rate contracts	2	—		419		2		299
Foreign exchange contracts	2	402		161		131		275
Derivatives not designated as hedging instruments:
Foreign exchange contracts (5)	2	8		33		115		19
Equity contracts	2	22		10		93		—
Total		$	7,799	$	624	$	8,446	$	593

(1)Included within cash and cash equivalents in the Consolidated Balance Sheet.

(2)Available-for-sale debt securities with carrying values that approximate fair value.

(3)Term deposits and U.S. treasury bills that are reported within marketable securities in the Consolidated Balance Sheet. The June 30, 2024 balance includes proceeds from the first-quarter 2024 debt issuance. Refer to note 12, “Borrowings,” for additional information.

(4)June 30, 2024 amount includes a $100 million seller financing loan in connection with the divestiture of The Weather Company assets reported within investments and sundry assets in the Consolidated Balance Sheet. Refer to note 5, "Acquisitions & Divestitures," for additional information.

(5)December 31, 2023 asset amount includes $62 million in foreign exchange call option contracts in connection with the acquisition of StreamSets and webMethods from Software AG. There were no associated derivatives outstanding at June 30, 2024. Refer to note 16, "Derivative Financial Instruments," for additional information.

(6)The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Balance Sheet at June 30, 2024 were $424 million and $8 million, respectively, and at December 31, 2023 were $304 million and $37 million, respectively.

(7)The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Balance Sheet at June 30, 2024 were $173 million and $450 million, respectively, and at December 31, 2023 were $294 million and $299 million, respectively.

N/A – not applicable

Financial Assets and Liabilities Not Measured at Fair Value

Short-Term Receivables and Payables

Short-term receivables (excluding the current portion of long-term receivables) and other investments are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt (excluding the current portion of long-term debt) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy, except for short-term debt which would be classified as Level 2.

Loans and Long-Term Receivables

Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At June 30, 2024 and December 31, 2023, the difference between the carrying amount and estimated fair value for loans and long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy.

Long-Term Debt

Fair value of publicly traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt (including long-term finance lease liabilities) for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. The carrying amount of long-term debt was $52,929 million and $50,121 million, and the estimated fair value was $49,844 million and $48,284 million at June 30, 2024 and December 31, 2023, respectively. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy.

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Financing Receivables

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

Financing Receivables

Financing Receivables:

Financing receivables primarily consist of client loan and installment payment receivables (loans), investment in sales-type and direct financing leases (collectively referred to as client financing receivables) and commercial financing receivables. Loans are provided primarily to clients to finance the purchase of IBM hardware, software and services. Payment terms on these financing arrangements are for terms generally up to seven years. Investment in sales-type and direct financing leases relate principally to the company’s Infrastructure products and are for terms generally up to five years. Commercial financing receivables, which consist of both held-for-investment and held-for-sale receivables, relate primarily to working capital financing for business partners and distributors of IBM products and services. Payment terms for working capital financing generally range from 30 to 60 days.

A summary of the components of the company’s financing receivables is presented as follows:

	Client Financing Receivables
	Client Loan and Installment Payment Receivables		Investment in Sales-Type and Direct Financing
					Commercial Financing Receivables
(Dollars in millions)					Held for		Held for
At June 30, 2024	(Loans)		Leases		Investment		Sale (1)		Total
Financing receivables, gross	$	6,577	$	3,938	$	618	$	723	$	11,856
Unearned income	(500)		(401)		—		—		(901)
Unguaranteed residual value	—		464		—		—		464
Amortized cost	$	6,077	$	4,000	$	618	$	723	$	11,419
Allowance for credit losses	(75)		(57)		(5)		—		(137)
Total financing receivables, net	$	6,002	$	3,944	$	613	$	723	$	11,282
Current portion	$	2,956	$	1,507	$	613	$	723	$	5,799
Noncurrent portion	$	3,046	$	2,437	$	—	$	—	$	5,483

	Client Financing Receivables
	Client Loan and Installment Payment Receivables		Investment in Sales-Type and Direct Financing
					Commercial Financing Receivables
(Dollars in millions)					Held for		Held for
At December 31, 2023	(Loans)		Leases		Investment		Sale (1)		Total
Financing receivables, gross	$	7,060	$	4,261	$	1,160	$	692	$	13,173
Unearned income	(486)		(429)		—		—		(915)
Unguaranteed residual value	—		458		—		—		458
Amortized cost	$	6,574	$	4,290	$	1,160	$	692	$	12,716
Allowance for credit losses	(87)		(63)		(6)		—		(156)
Total financing receivables, net	$	6,486	$	4,227	$	1,155	$	692	$	12,560
Current portion	$	3,427	$	1,520	$	1,155	$	692	$	6,793
Noncurrent portion	$	3,059	$	2,707	$	—	$	—	$	5,766

(1)The carrying value of the receivables classified as held for sale approximates fair value.

The company has a long-standing practice of taking mitigation actions, in certain circumstances, to transfer credit risk to third parties. These actions may include credit insurance, financial guarantees, nonrecourse secured borrowings, transfers of receivables recorded as true sales in accordance with accounting guidance or sales of equipment under operating lease. Sale of receivables arrangements are also utilized in the normal course of business as part of the company’s cash and liquidity management.

Financing receivables pledged as collateral for secured borrowings were $330 million and $232 million at June 30, 2024 and December 31, 2023, respectively. These borrowings are included in note 12, “Borrowings.”

Transfer of Financial Assets

The company has an existing agreement with a third-party investor to sell IBM short-term commercial financing receivables on a revolving basis. This agreement previously allowed for sales up to $3.0 billion. In December 2023, the company amended and renewed its agreement for a one-year term, which reduced the limit to $1.3 billion in January 2024. In addition, the company enters into agreements with third-party financial institutions to sell certain of its client financing receivables, including both loan and lease receivables, for cash proceeds. There were no material client financing receivables transferred for the six months ended June 30, 2024 and 2023.

The following table presents the total amount of commercial financing receivables transferred.

(Dollars in millions)
For the six months ended June 30:	2024		2023
Commercial financing receivables:
Receivables transferred during the period	$	3,686	$	4,345
Receivables uncollected at end of period (1)	$	786	$	928

(1)Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from business partners as of June 30, 2024 and 2023.

The transfer of these receivables qualified as true sales and therefore reduced financing receivables. The cash proceeds from the sales are included in cash flows from operating activities. For the six months ended June 30, 2024 and 2023, the net loss, including fees, associated with the transfer of commercial financial receivables was $33 million and $45 million, respectively, and is included in other (income) and expense in the Consolidated Income Statement.

Financing Receivables by Portfolio Segment

The following tables present the amortized cost basis for client financing receivables at June 30, 2024 and December 31, 2023, further segmented by three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. The commercial financing receivables portfolio segment is excluded from the tables in the sections below as the receivables are short term in nature and the current estimated risk of loss and resulting impact to the company’s financial results are not material.

(Dollars in millions)
At June 30, 2024:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,075	$	2,672	$	1,330	$	10,077
Allowance for credit losses:
Beginning balance at January 1, 2024	$	92	$	48	$	11	$	150
Write-offs	$	0	$	(1)	$	0	$	(1)
Recoveries	0		0		0		1
Additions/(releases)	(8)		(3)		0		(11)
Other (1)	(5)		(2)		0		(7)
Ending balance at June 30, 2024	$	78	$	43	$	10	$	131

(1)Primarily represents translation adjustments.

(Dollars in millions)
At December 31, 2023:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,488	$	3,007	$	1,368	$	10,863
Allowance for credit losses:
Beginning balance at January 1, 2023	$	88	$	60	$	20	$	168
Write-offs	$	(9)	$	(1)	$	(8)	$	(18)
Recoveries	0		2		3		5
Additions/(releases)	5		(14)		(4)		(12)
Other (1)	7		1		(1)		8
Ending balance at December 31, 2023	$	92	$	48	$	11	$	150

(1)Primarily represents translation adjustments.

When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For the company’s policy on determining allowances for credit losses, refer to note A, “Significant Accounting Policies,” in the company’s 2023 Annual Report.

Past Due Financing Receivables

The company summarizes information about the amortized cost basis for client financing receivables, including amortized cost aged over 90 days and still accruing, billed invoices aged over 90 days and still accruing, and amortized cost not accruing.

(Dollars in millions)	Total Amortized Cost		Amortized Cost > 90 Days (1)		Amortized Cost > 90 Days and Accruing (1)		Billed Invoices > 90 Days and Accruing		Amortized Cost Not Accruing (2)
At June 30, 2024:
Americas	$	6,075	$	83	$	17	$	2	$	67
EMEA	2,672		33		4		3		29
Asia Pacific	1,330		8		0		0		7
Total client financing receivables	$	10,077	$	123	$	21	$	5	$	103

(Dollars in millions)	Total Amortized Cost		Amortized Cost > 90 Days (1)		Amortized Cost > 90 Days and Accruing (1)		Billed Invoices > 90 Days and Accruing		Amortized Cost Not Accruing (2)
At December 31, 2023:
Americas	$	6,488	$	111	$	40	$	6	$	71
EMEA	3,007		31		1		1		31
Asia Pacific	1,368		9		1		0		8
Total client financing receivables	$	10,863	$	151	$	43	$	7	$	110

(1)At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days.

(2)Of the amortized cost not accruing, there was a related allowance of $99 million and $106 million at June 30, 2024 and December 31, 2023, respectively. Financing income recognized on these receivables was immaterial for the three and six months ended June 30, 2024 and 2023, respectively.

Credit Quality Indicators

The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody’s, where available, as one of many inputs in its determination of customer credit ratings. The credit quality of the customer is evaluated based on these indicators and is assigned the same risk rating whether the receivable is a lease or a loan.

The following tables present the amortized cost basis for client financing receivables by credit quality indicator at June 30, 2024 and December 31, 2023, respectively. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators reflect mitigating credit enhancement actions taken by customers which reduce the risk to IBM. Gross write-offs by vintage year at June 30, 2024 and December 31, 2023 were not material.

(Dollars in millions)	Americas				EMEA				Asia Pacific
At June 30, 2024:	Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C
Vintage year:
2024	$	1,176	$	381	$	423	$	223	$	296	$	61
2023	1,766		588		472		358		356		39
2022	1,258		168		515		262		322		34
2021	410		45		180		54		70		28
2020	88		35		52		35		58		15
2019 and prior	106		54		49		48		38		14
Total	$	4,804	$	1,271	$	1,692	$	980	$	1,139	$	191

(Dollars in millions)	Americas				EMEA				Asia Pacific
At December 31, 2023:	Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C
Vintage year:
2023	$	2,292	$	1,028	$	750	$	520	$	501	$	70
2022	1,645		268		687		374		386		42
2021	655		85		284		83		110		40
2020	205		79		106		60		97		22
2019	104		23		58		38		40		8
2018 and prior	55		50		16		30		39		12
Total	$	4,955	$	1,533	$	1,901	$	1,106	$	1,174	$	195

Modifications

The company did not have any significant modifications due to financial difficulty during the six months ended June 30, 2024 or for the year ended December 31, 2023.

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Leases

6 Months Ended

Jun. 30, 2024

Leases [Abstract]

Leases

Leases:

Accounting for Leases as a Lessor

The following table presents amounts included in the Consolidated Income Statement related to lessor activity.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Lease income — sales-type and direct financing leases:
Sales-type lease selling price	$	367	$	248	$	480	$	338
Less: Carrying value of underlying assets (1)	(66)		(61)		(94)		(91)
Gross profit	$	301	$	187	$	386	$	247
Interest income on lease receivables	69		59		138		118
Total sales-type and direct financing lease income	$	370	$	246	$	524	$	365
Lease income — operating leases	16		25		34		51
Variable lease income	18		14		38		35
Total lease income	$	404	$	284	$	596	$	451

(1)Excludes unguaranteed residual value.

Leases

Leases:

Accounting for Leases as a Lessor

The following table presents amounts included in the Consolidated Income Statement related to lessor activity.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Lease income — sales-type and direct financing leases:
Sales-type lease selling price	$	367	$	248	$	480	$	338
Less: Carrying value of underlying assets (1)	(66)		(61)		(94)		(91)
Gross profit	$	301	$	187	$	386	$	247
Interest income on lease receivables	69		59		138		118
Total sales-type and direct financing lease income	$	370	$	246	$	524	$	365
Lease income — operating leases	16		25		34		51
Variable lease income	18		14		38		35
Total lease income	$	404	$	284	$	596	$	451

(1)Excludes unguaranteed residual value.

Leases

Leases:

Accounting for Leases as a Lessor

The following table presents amounts included in the Consolidated Income Statement related to lessor activity.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Lease income — sales-type and direct financing leases:
Sales-type lease selling price	$	367	$	248	$	480	$	338
Less: Carrying value of underlying assets (1)	(66)		(61)		(94)		(91)
Gross profit	$	301	$	187	$	386	$	247
Interest income on lease receivables	69		59		138		118
Total sales-type and direct financing lease income	$	370	$	246	$	524	$	365
Lease income — operating leases	16		25		34		51
Variable lease income	18		14		38		35
Total lease income	$	404	$	284	$	596	$	451

(1)Excludes unguaranteed residual value.

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Intangible Assets Including Goodwill

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Including Goodwill

Intangible Assets Including Goodwill:

Intangible Assets

The following tables present the company's intangible asset balances by major asset class.

	At June 30, 2024
(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount (1)
Intangible asset class:
Capitalized software	$	1,528	$	(661)	$	867
Client relationships	8,976		(3,911)		5,065
Completed technology	5,719		(2,834)		2,885
Patents/trademarks	1,803		(483)		1,320
Other (2)	149		(35)		114
Total	$	18,175	$	(7,924)	$	10,251

	At December 31, 2023
(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount (1)
Intangible asset class:
Capitalized software	$	1,636	$	(762)	$	874
Client relationships	9,053		(3,500)		5,553
Completed technology	5,713		(2,510)		3,203
Patents/trademarks	1,821		(436)		1,385
Other (2)	41		(20)		22
Total	$	18,265	$	(7,229)	$	11,036

(1)Amounts as of June 30, 2024 and December 31, 2023 include a decrease in net intangible asset balances of $76 million and an increase of $50 million, respectively, due to foreign currency translation.

(2)Other intangibles are primarily acquired proprietary and non-proprietary technology licenses, data, business processes, methodologies and systems.

The net carrying amount of intangible assets decreased $786 million during the first six months of 2024, primarily due to intangible asset amortization, partially offset by additions of capitalized software and acquired intangibles. The aggregate intangible asset amortization expense was $607 million and $1,205 million for the three and six months ended June 30, 2024, respectively, compared to $556 million and $1,104 million for the three and six months ended June 30, 2023, respectively. During the six months ended June 30, 2024, the company retired $405 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization by this amount.

The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at June 30, 2024:

(Dollars in millions)	Capitalized Software		Acquired Intangibles		Total
Remainder of 2024	$	305	$	881	$	1,186
2025	351		1,724		2,075
2026	180		1,700		1,880
2027	30		1,681		1,710
2028	—		1,379		1,379
Thereafter	—		2,020		2,020

Goodwill

The changes in the goodwill balances by segment for the six months ended June 30, 2024 and for the year ended December 31, 2023 were as follows:

(Dollars in millions)	Balance		Goodwill Additions		Purchase Price Adjustments				Foreign Currency Translation and Other Adjustments (1)		Balance
Segment	1/1/2024						Divestitures				6/30/2024
Software	$	46,447	$	91	$	(9)	$	—	$	(408)	$	46,120
Consulting	8,883		108		0		—		(70)		8,920
Infrastructure	4,384		8		(1)		—		(16)		4,376
Other (2)	464		—		—		(464)		—		—
Total	$	60,178	$	207	$	(11)	$	(464)	$	(494)	$	59,416

(Dollars in millions)	Balance		Goodwill Additions		Purchase Price Adjustments				Foreign Currency Translation and Other Adjustments (1)		Balance
Segment	1/1/2023						Divestitures				12/31/2023
Software (3)	$	42,712	$	3,538	$	(17)	$	—	$	214	$	46,447
Consulting (3)	8,409		403		2		—		69		8,883
Infrastructure	4,363		12		—		—		8		4,384
Other (3)	464		—		—		—		—		464
Total	$	55,949	$	3,953	$	(15)	$	—	$	291	$	60,178

(1)Primarily driven by foreign currency translation.

(2)In the first quarter of 2024, the company derecognized goodwill related to the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

(3)Recast to reflect January 2024 segment changes. Refer to note 4, "Segments," for additional information.

There were no goodwill impairment losses recorded during the six months ended June 30, 2024 or the year ended December 31, 2023 and the company has no accumulated impairment losses. Purchase price adjustments recorded during the six months ended June 30, 2024 and the year ended December 31, 2023 were related to acquisitions that were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available. Net purchase price adjustments recorded in the six months ended June 30, 2024 and the year ended December 31, 2023 were not material.

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Borrowings

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Borrowings

Borrowings:

Short-Term Debt

The company's total short-term debt at June 30, 2024 and December 31, 2023 was $3,602 million and $6,426 million, respectively, and primarily consisted of current maturities of long-term debt detailed in "Long-Term Debt" below.

Long-Term Debt

Pre-Swap Borrowing

		Balance		Balance
(Dollars in millions)	Maturities	6/30/2024		12/31/2023
U.S. dollar debt (weighted-average interest rate at June 30, 2024): (1)
3.4%	2024	$	1	$	5,003
5.1%	2025	1,604		1,601
3.7%	2026	5,800		5,201
3.3%	2027	4,119		3,619
5.0%	2028	1,313		1,313
3.6%	2029	3,750		3,250
2.0%	2030	1,350		1,350
4.8%	2031	500		—
4.4%	2032	1,850		1,850
4.8%	2033	750		750
4.9%	2034	1,000		—
8.0%	2038	83		83
4.5%	2039	2,745		2,745
2.9%	2040	650		650
4.0%	2042	1,107		1,107
5.3%	2044	1,000		—
7.0%	2045	27		27
4.7%	2046	650		650
4.3%	2049	3,000		3,000
3.0%	2050	750		750
4.2%	2052	1,400		1,400
5.1%	2053	650		650
5.3%	2054	1,400		—
7.1%	2096	316		316
		$	35,817	$	35,317
Euro debt (weighted-average interest rate at June 30, 2024): (1)
1.1%	2024	$	803	$	829
1.6%	2025	3,213		3,315
2.3%	2027	2,142		2,210
0.7%	2028	1,928		1,989
1.5%	2029	1,071		1,105
0.9%	2030	1,071		1,105
2.7%	2031	2,678		2,762
0.7%	2032	1,714		1,768
1.3%	2034	1,071		1,105
3.8%	2035	1,071		1,105
1.2%	2040	910		939
4.0%	2043	1,071		1,105
		$	18,745	$	19,335
Other currencies (weighted-average interest rate at June 30, 2024 in parentheses): (1)
Pound sterling (4.9%)	2038	$	948	$	955
Japanese yen (0.5%)	2024–2028	1,097		1,251
Other (12.9%)	2024–2027	327		241
		$	56,934	$	57,099
Finance lease obligations (5.0%)	2024–2034	823		499
		$	57,757	$	57,598
Less: net unamortized discount		844		838
Less: net unamortized debt issuance costs		179		154
Add: fair value adjustment (2)		(204)		(60)
		$	56,531	$	56,546
Less: current maturities		3,601		6,425
Total		$	52,929	$	50,121

(1)Includes notes, debentures, bank loans and secured borrowings.

(2)The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt’s carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates.

The company’s indenture governing its debt securities and its various credit facilities each contain significant covenants which obligate the company to promptly pay principal and interest, limit the aggregate amount of secured indebtedness and sale and leaseback transactions to 10 percent of the company’s consolidated net tangible assets, and restrict the company’s ability to merge or consolidate unless certain conditions are met. The credit facilities also include a covenant on the company’s consolidated net interest expense ratio, which cannot be less than 2.20 to 1.0, as well as a cross default provision with respect to other defaulted indebtedness of at least $500 million.

The company is in compliance with its debt covenants and provides periodic certifications to its lenders. The failure to comply with its debt covenants could constitute an event of default with respect to the debt to which such provisions apply. If certain events of default were to occur, the principal and interest on the debt to which such event of default applied would become immediately due and payable.

On February 5, 2024, IBM International Capital Pte. Ltd (IIC), a wholly owned finance subsidiary of the company, issued $5.5 billion of U.S. dollar fixed rate notes (IIC Notes) in tranches with maturities ranging from 2 to 30 years and coupons ranging from 4.6 to 5.3 percent. These notes are fully and unconditionally guaranteed by the company.

IIC is a 100 percent owned finance subsidiary of IBM, as described by the SEC in Rule 13-01(a)(4)(vi) of Regulation S-X, the primary purpose of which is to borrow money to be made available for the benefit of IBM and its affiliates. The IIC Notes are fully and unconditionally guaranteed by IBM, and no other subsidiary of IBM guarantees the IIC Notes.

Pre-swap annual contractual obligations of long-term debt outstanding at June 30, 2024, were as follows:

(Dollars in millions)	Total
Remainder of 2024	$	1,291
2025	5,142
2026	6,272
2027	6,397
2028	3,887
Thereafter	34,767
Total	$	57,757

Interest on Debt

(Dollars in millions)
For the six months ended June 30:	2024		2023
Cost of financing	$	167	$	173
Interest expense	859		790
Interest capitalized	6		6
Total interest paid and accrued	$	1,032	$	969

Lines of Credit

On June 17, 2024, the company amended its $2.5 billion Three-Year Credit Agreement and $7.5 billion Five-Year Credit Agreement (the Credit Agreements) to extend the maturity dates to June 20, 2027 and June 22, 2029, respectively. The Credit Agreements permit the company and its subsidiary borrowers to borrow up to $10 billion on a revolving basis. At June 30, 2024, there were no borrowings by the company, or its subsidiaries, under these credit facilities.

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Commitments

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments

Commitments:

The company’s extended lines of credit to third-party entities include unused amounts of $1.4 billion at both June 30, 2024 and December 31, 2023. A portion of these amounts was available to the company’s business partners to support their working capital needs. In addition, the company has committed to provide future financing to its clients in connection with client purchase agreements for $1.9 billion at both June 30, 2024 and December 31, 2023. The company collectively evaluates the allowance for these arrangements using a provision methodology consistent with the portfolio of the commitments. Refer to note A, “Significant Accounting Policies,” in the company’s 2023 Annual Report for additional information. The allowance for these commitments is recorded in other liabilities in the Consolidated Balance Sheet and was not material at June 30, 2024.

The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote. The following is a description of arrangements in which the company is the guarantor.

The company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in the context of contracts entered into by the company, under which the company customarily agrees to hold the party harmless against losses arising from a breach of representations and covenants related to such matters as title to the assets sold, certain intellectual property rights, specified environmental matters, third-party performance of nonfinancial contractual obligations and certain income taxes. In each of these circumstances, payment by the company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, the procedures of which typically allow the company to challenge the other party’s claims. While indemnification provisions typically do not include a contractual maximum on the company’s payment, the company’s obligations under these agreements may be limited in terms of time and/or nature of claim, and in some instances, the company may have recourse against third parties for certain payments made by the company.

It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the company under these agreements have not had a material effect on the company’s business, financial condition or results of operations.

In addition, the company guarantees certain loans and financial commitments. The maximum potential future payment under these financial guarantees and the fair value of these guarantees recognized in the Consolidated Balance Sheet at June 30, 2024 and December 31, 2023 was not material.

Changes in the company’s warranty liability for standard warranties, which are included in other accrued expenses and liabilities and other liabilities in the Consolidated Balance Sheet, and for extended warranty contracts, which are included in deferred income in the Consolidated Balance Sheet, are presented in the following tables.

Standard Warranty Liability

(Dollars in millions)	2024		2023
Balance at January 1	$	65	$	79
Current-period accruals	38		35
Accrual adjustments to reflect actual experience	7		(14)
Charges incurred	(41)		(43)
Balance at June 30	$	70	$	57

Extended Warranty Liability

(Dollars in millions)	2024		2023
Balance at January 1	$	184	$	272
Revenue deferred for new extended warranty contracts	18		20
Amortization of deferred revenue	(62)		(73)
Other (1)	(4)		(1)
Balance at June 30	$	135	$	218
Current portion	$	82	$	119
Noncurrent portion	$	52	$	99

(1)Other primarily consists of foreign currency translation adjustments.

The decrease in extended warranty liability is primarily due to the company’s shift to alternative maintenance and support offerings without a warranty element.

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Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies:

As a company with a substantial employee population and with clients in more than 175 countries, IBM is involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. The company is a leader in the information technology industry and, as such, has been and will continue to be subject to claims challenging its IP rights and associated products and offerings, including claims of copyright and patent infringement and violations of trade secrets and other IP rights. In addition, the company enforces its own IP against infringement, through license negotiations, lawsuits or otherwise. Further, given the rapidly evolving external landscape of cybersecurity, AI, privacy and data protection laws, regulations and threat actors, the company and its clients have been and will continue to be subject to actions or proceedings in various jurisdictions. Also, as is typical for companies of IBM’s scope and scale, the company is party to actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, country-specific labor and employment laws, and the company’s pension, retirement and other benefit plans), as well as actions with respect to contracts, product liability, cybersecurity, data privacy, securities, foreign operations, competition law and environmental matters. These actions may be commenced by a number of different parties, including competitors, clients, current or former employees, government and regulatory agencies, stockholders and representatives of the locations in which the company does business. Some of the actions to which the company is party may involve particularly complex technical issues, and some actions may raise novel questions under the laws of the various jurisdictions in which these matters arise.

The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the quarter ended June 30, 2024 were not material to the Consolidated Financial Statements.

In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations.

With respect to certain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of losses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s experience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due to a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters.

The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter.

Whether any losses, damages or remedies finally determined in any claim, suit, investigation or proceeding could reasonably have a material effect on the company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including: the timing and amount of such losses or damages; the structure and type of any such remedies; the significance of the impact any such losses, damages or remedies may have in the Consolidated Financial Statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. While the company will continue to defend itself vigorously, it is possible that the company’s business, financial condition, results of operations or cash flows could be affected in any particular period by the resolution of one or more of these matters.

The following is a summary of the more significant legal matters involving the company.

On June 8, 2021, IBM sued GlobalFoundries U.S. Inc. (GF) in New York State Supreme Court for claims including fraud and breach of contract relating to a long-term strategic relationship between IBM and GF for researching, developing, and manufacturing advanced semiconductor chips for IBM. GF walked away from its obligations and IBM is now suing to recover amounts paid to GF, and other compensatory and punitive damages, totaling more than $1.5 billion. On September 14, 2021, the court ruled on GF’s motion to dismiss. On April 7, 2022, the Appellate Division unanimously reversed the lower court’s dismissal of IBM’s fraud claim. IBM’s claims for breaches of contract, promissory estoppel, and fraud are proceeding.

On June 2, 2022, a putative class action lawsuit was filed in the United States District Court for the Southern District of New York alleging that the IBM Pension Plan miscalculated certain joint and survivor annuity pension benefits by using outdated actuarial tables in violation of the Employee Retirement Income Security Act of 1974. IBM, the Plan Administrator Committee, and the IBM Pension Plan are named as defendants. On April 4, 2024, the court dismissed the lawsuit with prejudice. On May 6, 2024, the plaintiffs appealed.

As disclosed in the Kyndryl Form 10 and subsequent Kyndryl public filings, in 2017 BMC Software, Inc. (BMC) filed suit against IBM in the United States District Court for the Southern District of Texas in a dispute involving IBM’s former managed infrastructure services business. On May 30, 2022, the trial court awarded BMC $718 million in direct damages and $718 million in punitive damages, plus interest and fees. On April 30, 2024, the United States Court of Appeals for the Fifth Circuit reversed and rendered the district court’s judgment in IBM’s favor. IBM does not believe it has any material exposure relating to this litigation. No material liability or related indemnification asset has been recorded by IBM.

The company is party to, or otherwise involved in, proceedings brought by U.S. federal or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), known as “Superfund,” or laws similar to CERCLA. Such statutes require potentially responsible parties to participate in remediation activities regardless of fault or ownership of sites. The company is also conducting environmental investigations, assessments or remediations at or in the vicinity of several current or former operating sites globally pursuant to permits, administrative orders or agreements with country, state or local environmental agencies, and is involved in lawsuits and claims concerning certain current or former operating sites.

The company is also subject to ongoing tax examinations and governmental assessments in various jurisdictions. Along with many other U.S. companies doing business in Brazil, the company is involved in various challenges with Brazilian tax authorities regarding non-income tax assessments and non-income tax litigation matters. The total potential amount related to all these matters for all applicable years is approximately $400 million. The company believes it will prevail on these matters and that this amount is not a meaningful indicator of liability.

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Equity Activity

6 Months Ended

Jun. 30, 2024

Stockholders' Equity Note [Abstract]

Equity Activity

Equity Activity:

Reclassifications and Taxes Related to Items of Other Comprehensive Income

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the three months ended June 30, 2024:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	2	$	(68)	$	(66)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	1	$	0	$	0
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	1	$	0	$	0
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	103	$	(28)	$	75
Reclassification of (gains)/losses to:
Cost of services	(9)		3		(7)
Cost of sales	(15)		5		(10)
Cost of financing	2		0		1
SG&A expense	(7)		2		(5)
Other (income) and expense	(21)		5		(16)
Interest expense	8		(2)		6
Total unrealized gains/(losses) on cash flow hedges	$	61	$	(16)	$	45
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	—	$	—
Net (losses)/gains arising during the period	0		2		2
Curtailments and settlements	2		(1)		2
Amortization of prior service costs/(credits)	(2)		0		(1)
Amortization of net (gains)/losses	258		(71)		187
Total retirement-related benefit plans	$	259	$	(69)	$	190
Other comprehensive income/(loss)	$	322	$	(153)	$	169

(1)These accumulated other comprehensive income (AOCI) components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

Reclassifications and Taxes Related to Items of Other Comprehensive Income

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the three months ended June 30, 2023:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	116	$	(34)	$	82
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	(17)	$	4	$	(12)
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	(17)	$	4	$	(12)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	178	$	(48)	$	130
Reclassification of (gains)/losses to:
Cost of services	3		(1)		2
Cost of sales	(2)		1		(1)
Cost of financing	4		(1)		3
SG&A expense	(1)		0		0
Other (income) and expense	(55)		14		(41)
Interest expense	22		(5)		16
Total unrealized gains/(losses) on cash flow hedges	$	148	$	(40)	$	109
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	0	$	0
Net (losses)/gains arising during the period	0		7		7
Curtailments and settlements	6		(1)		5
Amortization of prior service costs/(credits)	(2)		1		(2)
Amortization of net (gains)/losses	130		(38)		92
Total retirement-related benefit plans	$	134	$	(31)	$	102
Other comprehensive income/(loss)	$	381	$	(101)	$	280

(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the six months ended June 30, 2024:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	57	$	(222)	$	(165)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	1	$	0	$	1
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	1	$	0	$	1
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	279	$	(75)	$	204
Reclassification of (gains)/losses to:
Cost of services	(14)		4		(10)
Cost of sales	(27)		9		(18)
Cost of financing	3		(1)		2
SG&A expense	(10)		3		(7)
Other (income) and expense	58		(15)		44
Interest expense	17		(4)		13
Total unrealized gains/(losses) on cash flow hedges	$	307	$	(79)	$	227
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	—	$	—
Net (losses)/gains arising during the period	1		2		2
Curtailments and settlements	4		(1)		3
Amortization of prior service costs/(credits)	(4)		1		(3)
Amortization of net (gains)/losses	519		(143)		376
Total retirement-related benefit plans	$	520	$	(141)	$	379
Other comprehensive income/(loss)	$	885	$	(442)	$	442

(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

Reclassifications and Taxes Related to Items of Other Comprehensive Income

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the six months ended June 30, 2023:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	29	$	22	$	52
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	(1)	$	0	$	(1)
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	(1)	$	0	$	(1)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	149	$	(41)	$	107
Reclassification of (gains)/losses to:
Cost of services	5		(1)		4
Cost of sales	(17)		5		(12)
Cost of financing	9		(2)		7
SG&A expense	(10)		3		(7)
Other (income) and expense	(181)		45		(135)
Interest expense	42		(11)		32
Total unrealized gains/(losses) on cash flow hedges	$	(3)	$	(1)	$	(4)
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	1	$	1
Net (losses)/gains arising during the period	2		7		8
Curtailments and settlements	5		(1)		4
Amortization of prior service costs/(credits)	(4)		1		(3)
Amortization of net (gains)/losses	261		(76)		185
Total retirement-related benefit plans	$	263	$	(69)	$	194
Other comprehensive income/(loss)	$	289	$	(48)	$	241

(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

Accumulated Other Comprehensive Income/(Loss) (net of tax)

(Dollars in millions)	Net Unrealized Gains/(Losses) on Cash Flow Hedges		Foreign Currency Translation Adjustments (1)		Net Change Retirement- Related Benefit Plans		Net Unrealized Gains/(Losses) on Available- For-Sale Securities		Accumulated Other Comprehensive Income/ (Loss)
January 1, 2024	$	(106)	$	(3,488)	$	(15,165)	$	(1)	$	(18,761)
Other comprehensive income before reclassifications	204		(165)		2		1		42
Amount reclassified from accumulated other comprehensive income	24		—		377		—		400
Total change for the period	$	227	$	(165)	$	379	$	1	$	442
June 30, 2024	$	121	$	(3,653)	$	(14,786)	$	(1)	$	(18,319)

(Dollars in millions)	Net Unrealized Gains/(Losses) on Cash Flow Hedges		Foreign Currency Translation Adjustments (1)		Net Change Retirement- Related Benefit Plans		Net Unrealized Gains/(Losses) on Available- For-Sale Securities		Accumulated Other Comprehensive Income/ (Loss)
January 1, 2023	$	(135)	$	(3,591)	$	(13,013)	$	(1)	$	(16,740)
Other comprehensive income before reclassifications	107		52		9		(1)		167
Amount reclassified from accumulated other comprehensive income	(112)		—		185		—		74
Total change for the period	$	(4)	$	52	$	194	$	(1)	$	241
June 30, 2023	$	(139)	$	(3,539)	$	(12,819)	$	(2)	$	(16,499)

(1)Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments:

The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations.

In the Consolidated Balance Sheet, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments. At June 30, 2024 and December 31, 2023, the amount recognized in other accounts receivables for the right to reclaim cash collateral was $56 million and $11 million, respectively. At June 30, 2024, there was no amount recognized in accounts payable for the obligation to return cash collateral. At December 31, 2023, the amount recognized in accounts payable for such obligation was $7 million. The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in restricted cash in the Consolidated Balance Sheet. There was no cash collateral rehypothecated at June 30, 2024. At December 31, 2023, the amount rehypothecated was $7 million. Additionally, if derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated Balance Sheet at June 30, 2024 and December 31, 2023, the total derivative asset and liability positions each would have been reduced by $186 million and $235 million, respectively.

As discussed in note 5, “Acquisitions & Divestitures,” the company completed the acquisition of StreamSets and webMethods from Software AG on July 1, 2024. In December 2023, in connection with the announcement of the acquisition, the company entered into foreign exchange call option contracts (the call options) with a total notional amount of $2.3 billion (€2.13 billion) and a total premium paid of $49 million. The call options were accounted for as non-hedge derivatives and expired on June 18, 2024 with no economic value. The company replaced the majority of the options with foreign currency forward contracts with notional values of $1.8 billion to cover the economic exposure from June 18, 2024 to June 28, 2024. For the three and six months ended June 30, 2024, the company recorded a realized loss of $18 million and $68 million, respectively, in other (income) and expense in the Consolidated Income Statement. At December 31, 2023, the fair value of the call options was $62 million, and was included in prepaid expenses and other current assets in the Consolidated Balance Sheet. There were no associated derivatives outstanding at June 30, 2024.

In its hedging programs, the company may use forward contracts, futures contracts, interest-rate swaps, cross-currency swaps, equity swaps, and options depending upon the underlying exposure. The company is not a party to leveraged derivative instruments.

A brief description of the major hedging programs, categorized by underlying risk, follows.

Interest Rate Risk

Fixed and Variable Rate Borrowings

The company issues debt in the global capital markets to fund its operations and financing business. Access to cost-effective financing can result in interest rate mismatches with the underlying assets. To manage these mismatches and to reduce overall interest cost, the company may use interest-rate swaps to convert specific fixed-rate debt issuances into variable-rate debt (i.e., fair value hedges) and to convert specific variable-rate debt issuances into fixed-rate debt (i.e., cash flow hedges). At both June 30, 2024 and December 31, 2023, the total notional amount of the company’s interest-rate swaps was $6.7 billion. The weighted-average remaining maturity of these instruments at June 30, 2024 and December 31, 2023 was approximately 5.0 years and 5.5 years, respectively. These interest-rate contracts were accounted for as fair value hedges. The company did not have any cash flow hedges relating to this program outstanding at June 30, 2024 and December 31, 2023.

Forecasted Debt Issuance

The company is exposed to interest rate volatility on future debt issuances. To manage this risk, the company may use instruments such as forward starting interest-rate swaps to lock in the rate on the interest payments related to the forecasted debt issuances. There were no instruments outstanding at June 30, 2024 and December 31, 2023.

In connection with cash flow hedges of forecasted interest payments related to the company's borrowings, the company recorded net losses (before taxes) of $113 million and $121 million at June 30, 2024 and December 31, 2023, respectively, in AOCI. The company estimates that $14 million of the deferred net losses (before taxes) on derivatives in AOCI at June 30, 2024 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying interest payments.

Foreign Exchange Risk

Long-Term Investments in Foreign Subsidiaries (Net Investment)

A large portion of the company’s foreign currency denominated debt portfolio is designated as a hedge of net investment in foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the functional currency of major foreign subsidiaries with respect to the U.S. dollar. At June 30, 2024 and December 31, 2023, the carrying value of debt designated as hedging instruments was $13.5 billion and $15.9 billion, respectively. The company also uses foreign currency derivatives for this risk management purpose. At June 30, 2024 and December 31, 2023, the total notional amount of derivative instruments designated as net investment hedges was $6.0 billion and $4.9 billion, respectively. At June 30, 2024 and December 31, 2023, the weighted-average remaining maturity of these instruments was approximately 0.2 years and 0.1 years, respectively.

Anticipated Royalties and Cost Transactions

The company’s operations generate significant nonfunctional currency, third-party vendor payments and intercompany payments for royalties and goods and services among the company’s non-U.S. subsidiaries and with the company. In anticipation of these foreign currency cash flows and in view of the volatility of the currency markets, the company selectively employs foreign exchange forward contracts to manage its currency risk. These forward contracts are accounted for as cash flow hedges. At June 30, 2024, the maximum remaining length of time over which the company hedged its exposure is approximately two years. At June 30, 2024 and December 31, 2023, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions was $9.6 billion and $9.2 billion, respectively. At both June 30, 2024 and December 31, 2023, the weighted-average remaining maturity of these instruments was approximately 0.6 years.

At June 30, 2024 and December 31, 2023, in connection with cash flow hedges of anticipated royalties and cost transactions, the company recorded net gains (before taxes) of $312 million and $40 million, respectively, in AOCI. The company estimates that $251 million of deferred net gains (before taxes) on derivatives in AOCI at June 30, 2024 will be reclassified to net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.

Foreign Currency Denominated Borrowings

The company is exposed to exchange rate volatility on foreign currency denominated debt. To manage this risk, the company may employ forward contracts or cross-currency swaps to convert the principal, or principal and interest payments of foreign currency denominated debt to debt denominated in the functional currency of the borrowing entity. These derivatives are accounted for as cash flow hedges. At June 30, 2024, the maximum length of time remaining over which the company hedged its exposure was approximately seven years. At both June 30, 2024 and December 31, 2023, the total notional amount of derivative instruments designated as cash flow hedges of foreign-currency denominated debt was $5.2 billion.

At June 30, 2024 and December 31, 2023, in connection with previously terminated cross-currency swaps, the company recorded net losses (before taxes) of $56 million and $68 million, respectively, in AOCI, of which $18 million of deferred net losses (before taxes) is estimated to be reclassified to net income within the next 12 months.

At June 30, 2024 and December 31, 2023, in connection with forward contracts, the company has recorded net gains (before taxes) of $38 million and $23 million, respectively, in AOCI. Approximately $52 million of losses (before taxes) related to the initial forward points excluded from the assessment of hedge effectiveness is expected to be amortized to other (income) and expense within the next 12 months.

Subsidiary Cash and Foreign Currency Asset/Liability Management

The company uses its Global Treasury Centers to manage the cash of its subsidiaries. These centers principally use currency swaps to convert cash flows in a cost-effective manner. In addition, the company uses forward contracts to economically hedge, on a net basis, the foreign currency exposure of a portion of the company’s nonfunctional currency assets and liabilities. The terms of these forward and swap contracts are generally less than one year. The changes in the fair values of these contracts and of the underlying hedged exposures are generally offsetting and are recorded in other (income) and expense in the Consolidated Income Statement. At June 30, 2024 and December 31, 2023, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $7.1 billion and $6.7 billion, respectively.

Equity Risk Management

The company is exposed to market price changes in certain broad market indices and in the company’s own stock primarily related to certain obligations to employees. Changes in the overall value of these employee compensation obligations are recorded in SG&A expense in the Consolidated Income Statement. Although not designated as accounting hedges, the company utilizes derivatives, including equity swaps and futures, to economically hedge the exposures related to its employee compensation obligations. The derivatives are linked to the total return on certain broad market indices or the total return on the company’s common stock, and are recorded at fair value with gains or losses also reported in SG&A expense in the Consolidated Income Statement. At June 30, 2024 and December 31, 2023, the total notional amount of

derivative instruments in economic hedges of these compensation obligations was $1.4 billion and $1.2 billion, respectively.

Cumulative Basis Adjustments for Fair Value Hedges

At June 30, 2024 and December 31, 2023, the following amounts were recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:

(Dollars in millions)	June 30, 2024		December 31, 2023
Short-term debt:
Carrying amount of the hedged item	$	—	$	(1)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities)	$	—	$	(1)
Long-term debt:
Carrying amount of the hedged item	$	(6,481)	$	(6,629)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities) (1)	$	204	$	61

(1)Includes ($177) million and ($200) million of hedging adjustments on discontinued hedging relationships at June 30, 2024 and December 31, 2023, respectively.

The Effect of Derivative Instruments in the Consolidated Income Statement

The total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are recorded and the total effect of hedge activity on these income and expense line items are as follows:

(Dollars in millions)	Total				Gains/(Losses) of Total Hedge Activity
For the three months ended June 30:	2024		2023		2024		2023
Cost of services	$	5,126	$	5,294	$	9	$	(3)
Cost of sales	$	1,607	$	1,587	$	15	$	2
Cost of financing	$	86	$	93	$	(4)	$	(3)
SG&A expense	$	4,938	$	4,900	$	11	$	43
Other (income) and expense	$	(233)	$	(261)	$	(140)	$	(141)
Interest expense	$	427	$	423	$	(19)	$	(18)

	Gain (Loss) Recognized in Consolidated Income Statement
(Dollars in millions)	Consolidated Income Statement Line Item	Recognized on Derivatives				Attributable to Risk Being Hedged (2)
For the three months ended June 30:		2024		2023		2024		2023
Derivative instruments in fair value hedges: (1)
Interest rate contracts	Cost of financing	$	(8)	$	(30)	$	2	$	25
	Interest expense	(42)		(153)		10		130
Derivative instruments not designated as hedging instruments:
Foreign exchange contracts	Other (income) and expense	(161)		(196)		N/A		N/A
Equity contracts	SG&A expense	4		42		N/A		N/A
Total		$	(207)	$	(337)	$	12	$	155

	Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income
	Recognized in OCI				Consolidated Income Statement Line Item	Reclassified from AOCI				Amounts Excluded from Effectiveness Testing (3)
(Dollars in millions)
For the three months ended June 30:	2024		2023			2024		2023		2024		2023
Derivative instruments in cash flow hedges:
Interest rate contracts	$	—	$	—	Cost of financing	$	(1)	$	(1)	$	—	$	—
					Interest expense	(3)		(4)		—		—
Foreign exchange contracts					Cost of services	9		(3)		—		—
Amount included in the assessment of effectiveness	134		178		Cost of sales	15		2		—		—
Amount excluded from the assessment of effectiveness	(31)		—		Cost of financing	(1)		(3)		—		—
					SG&A expense	7		1		—		—
					Other (income) and expense	39		55		(18)		—
					Interest expense	(5)		(18)		—		—
Instruments in net investment hedges: (4)
Foreign exchange contracts	269		136		Cost of financing	—		—		4		5
					Interest expense	—		—		21		27
Total	$	372	$	313		$	61	$	30	$	6	$	32

(1)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.

(2)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.

(3)The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument.

(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.

N/A - not applicable

(Dollars in millions)	Total				Gains/(Losses) of Total Hedge Activity
For the six months ended June 30:	2024		2023		2024		2023
Cost of services	$	10,365	$	10,604	$	14	$	(5)
Cost of sales	$	2,988	$	2,910	$	27	$	17
Cost of financing	$	186	$	203	$	(7)	$	(7)
SG&A expense	$	9,912	$	9,754	$	85	$	102
Other (income) and expense	$	(550)	$	(506)	$	(427)	$	1
Interest expense	$	859	$	790	$	(34)	$	(31)

	Gain (Loss) Recognized in Consolidated Income Statement
(Dollars in millions)	Consolidated Income Statement Line Item	Recognized on Derivatives				Attributable to Risk Being Hedged (2)
For the six months ended June 30:		2024		2023		2024		2023
Derivative instruments in fair value hedges: (1)
Interest rate contracts	Cost of financing	$	(35)	$	(21)	$	23	$	13
	Interest expense	(180)		(96)		120		58
Derivative instruments not designated as hedging instruments:
Foreign exchange contracts	Other (income) and expense	(368)		(180)		N/A		N/A
Equity contracts	SG&A expense	75		91		N/A		N/A
Total		$	(509)	$	(206)	$	143	$	71

	Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income
	Recognized in OCI				Consolidated Income Statement Line Item	Reclassified from AOCI				Amounts Excluded from Effectiveness Testing (3)
(Dollars in millions)
For the six months ended June 30:	2024		2023			2024		2023		2024		2023
Derivative instruments in cash flow hedges:
Interest rate contracts	$	—	$	—	Cost of financing	$	(1)	$	(2)	$	—	$	—
					Interest expense	(7)		(7)		—		—
Foreign exchange contracts					Cost of services	14		(5)		—		—
Amount included in the assessment of effectiveness	300		149		Cost of sales	27		17		—		—
Amount excluded from the assessment of effectiveness	(21)		—		Cost of financing	(2)		(8)		—		—
					SG&A expense	10		10		—		—
					Other (income) and expense	(22)		181		(37)		—
					Interest expense	(10)		(35)		—		—
Instruments in net investment hedges: (4)
Foreign exchange contracts	881		(88)		Cost of financing	—		—		8		11
					Interest expense	—		—		43		49
Total	$	1,160	$	61		$	9	$	152	$	14	$	60

(1)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.

(2)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.

(3)The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument.

(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.

N/A - not applicable

For the three and six months ended June 30, 2024 and 2023, there were no material gains or losses excluded from the assessment of hedge effectiveness (for fair value or cash flow hedges), or associated with an underlying exposure that did not or was not expected to occur (for cash flow hedges); nor are there any anticipated in the normal course of business.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation:

Stock-based compensation cost for stock awards and stock options is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. The following table presents total stock-based compensation cost included in income from continuing operations.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Cost	$	53	$	47	$	109	$	93
Selling, general and administrative	172		168		343		317
Research, development and engineering	90		73		183		146
Pre-tax stock-based compensation cost	$	316	$	288	$	636	$	556
Income tax benefits	(101)		(75)		(222)		(142)
Total net stock-based compensation cost	$	214	$	213	$	414	$	414

Pre-tax stock-based compensation cost for the three months ended June 30, 2024 increased $28 million compared to the corresponding period in the prior year due to increases in restricted stock units ($14 million), performance share units ($6 million), stock options ($5 million) and Employees Stock Purchase Plan (ESPP) ($3 million). The increases are primarily driven by stock-based compensation awards granted by the company as part of its annual cycles for executives and other employees.

Pre-tax stock-based compensation cost for the six months ended June 30, 2024 increased $79 million compared to the corresponding period in the prior year due to increases in restricted stock units ($42 million), performance share units ($21 million), stock options ($13 million) and ESPP ($4 million). The increases are primarily driven by stock-based compensation awards granted by the company as part of its annual cycles for executives and other employees.

Total unrecognized compensation cost related to non-vested awards at June 30, 2024 was $1.7 billion and is expected to be recognized over a weighted-average period of approximately 2.4 years.

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Retirement-Related Benefits

6 Months Ended

Jun. 30, 2024

Retirement Benefits [Abstract]

Retirement-Related Benefits

Retirement-Related Benefits:

The company offers defined benefit (DB) pension plans, defined contribution plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits.

IBM U.S. Retirement Plan Changes

Effective January 1, 2024, IBM changed how it provides certain retirement-related benefits in the U.S. IBM is providing a new benefit to most U.S. employees under its existing U.S. Qualified Personal Pension Plan (Qualified PPP) called the Retirement Benefit Account (RBA). This is in place of any IBM contributions to the U.S. employees' 401(k) Plus accounts. IBM U.S. regular full-time and part-time employees with at least one year of service will participate in the RBA. Each eligible employee's RBA is credited monthly with an amount equal to five percent of their eligible pay with no employee contribution required. Under the RBA, eligible employees earn six percent interest through 2026 and starting in 2027, will earn interest equal to the 10-year U.S. Treasury Yield, subject to a three percent minimum per year through 2033. Eligible employees also received a salary increase effective January 1, 2024 for the difference between the IBM 401(k) Plus contribution percent they were previously entitled to receive and the five percent RBA pay credit. Since the RBA is a component of the Qualified PPP, it is funded by the trust for the Qualified PPP along with all other benefits in the Qualified PPP.

As a result of this change, inactive pension plan participants no longer represent substantially all of the participants in the Qualified PPP. As required by U.S. GAAP, this changed the amortization period of unrecognized actuarial losses from the average remaining life expectancy of inactive plan participants to the average remaining service period of active plan

participants in 2024. Recognized actuarial losses for the U.S. Plans increased by approximately $100 million and $200 million for the three and six months ended June 30, 2024, respectively, as compared to the prior-year periods, primarily driven by the change in amortization period. There was no impact to funded status, retiree benefit payments or funding requirements of the Qualified PPP due to the change in amortization period.

The following tables provide the pre-tax cost for all retirement-related plans.

					Yr. to Yr.
(Dollars in millions)					Percent
For the three months ended June 30:	2024		2023		Change
Retirement-related plans — cost:
Defined benefit pension and defined contribution plans — cost	$	320	$	259	23.6	%
Nonpension postretirement plans — cost	30		33		(8.1)
Total	$	350	$	292	20.0	%

					Yr. to Yr.
(Dollars in millions)					Percent
For the six months ended June 30:	2024		2023		Change
Retirement-related plans — cost:
Defined benefit pension and defined contribution plans — cost	$	643	$	541	19.0	%
Nonpension postretirement plans — cost	60		65		(7.1)
Total	$	704	$	606	16.2	%

Cost/(Income) of Retirement Plans

The following tables provide the components of the cost/(income) for the company’s retirement-related benefit plans.

(Dollars in millions)	U.S. Plans				Non-U.S. Plans
For the three months ended June 30:	2024		2023		2024		2023
Service cost (1)	$	98	$	—	$	41	$	44
Interest cost (2)	254		272		264		292
Expected return on plan assets (2)	(340)		(382)		(384)		(362)
Amortization of prior service costs/(credits) (2)	—		0		5		5
Recognized actuarial losses (2)	129		27		128		101
Curtailments and settlements (2)	—		—		2		6
Multi-employer plans	—		—		3		3
Other costs/(credits) (2)	—		—		12		10
Total net periodic pension (income)/cost of defined benefit plans	$	140	$	(82)	$	71	$	99
Cost of defined contribution plans	15		151		94		91
Total defined benefit pension and defined contribution plans cost recognized in the Consolidated Income Statement	$	155	$	69	$	165	$	190

(1)Increase in U.S. Plans service cost in 2024 is due to the Qualified PPP plan changes described above.

(2)These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

(Dollars in millions)	U.S. Plans				Non-U.S. Plans
For the six months ended June 30:	2024		2023		2024		2023
Service cost (1)	$	197	$	—	$	85	$	88
Interest cost (2)	508		545		532		580
Expected return on plan assets (2)	(681)		(764)		(773)		(718)
Amortization of prior service costs/(credits) (2)	—		0		11		10
Recognized actuarial losses (2)	257		55		258		203
Curtailments and settlements (2)	—		—		4		5
Multi-employer plans	—		—		6		6
Other costs/(credits) (2)	—		—		20		19
Total net periodic pension (income)/cost of defined benefit plans	$	280	$	(165)	$	143	$	194
Cost of defined contribution plans	27		323		193		188
Total defined benefit pension and defined contribution plans cost recognized in the Consolidated Income Statement	$	307	$	158	$	336	$	382

(1)Increase in U.S. Plans service cost in 2024 is due to the Qualified PPP plan changes described above.

(2)These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

Cost of Nonpension Postretirement Plans

The following tables provide the components of the cost for the company’s nonpension postretirement plans.

(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the three months ended June 30:	2024		2023		2024		2023
Service cost	$	1	$	1	$	1	$	1
Interest cost (1)	27		29		10		10
Expected return on plan assets (1)	—		—		0		(1)
Amortization of prior service costs/(credits) (1)	(7)		(7)		0		0
Recognized actuarial losses (1)	—		—		0		0
Curtailments and settlements (1)	—		—		—		—
Total nonpension postretirement plans cost recognized in the Consolidated Income Statement	$	20	$	23	$	10	$	10

(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the six months ended June 30:	2024		2023		2024		2023
Service cost	$	1	$	2	$	1	$	1
Interest cost (1)	53		58		21		19
Expected return on plan assets (1)	—		—		(1)		(1)
Amortization of prior service costs/(credits) (1)	(15)		(15)		0		0
Recognized actuarial losses (1)	—		—		0		(1)
Curtailments and settlements (1)	—		—		—		—
Total nonpension postretirement plans cost recognized in the Consolidated Income Statement	$	40	$	46	$	21	$	19

(1)These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

Plan Contributions

The company does not anticipate any significant changes to the expected plan contributions in 2024 from the amounts disclosed in the 2023 Annual Report. The table below includes contributions to the following plans:

(Dollars in millions)	Plan Contributions
For the six months ended June 30:	2024		2023
U.S. nonpension postretirement benefit plan	$	110	$	134
Non-U.S. DB and multi-employer plans (1)	40		29
Total plan contributions	$	150	$	163

(1)Amounts reported net of refunds.

The U.S. nonpension postretirement benefit plan contributions in the table above were funded with U.S. Treasury Securities. Additionally, during the six months ended June 30, 2024 and 2023, the company contributed $390 million and $347 million of U.S. Treasury securities, respectively, to the Active Medical Trust. Contributions made with U.S. Treasury securities are considered a non-cash transaction.

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Subsequent Events

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events:

On July 29, 2024, the company announced that the Board of Directors approved a quarterly dividend of $1.67 per common share. The dividend is payable September 10, 2024 to stockholders of record on August 9, 2024.

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Accounting Changes (Policies)

6 Months Ended

Jun. 30, 2024

Accounting Changes and Error Corrections [Abstract]

Basis of Presentation

The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial statements and footnotes are unaudited. In the opinion of the company’s management, these statements include all adjustments, which are only of a normal recurring nature, necessary to present a fair statement of the company’s results of operations, financial position and cash flows.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates.

For the three and six months ended June 30, 2024, the company reported a provision for income taxes of $389 million and a benefit from income taxes of $112 million, respectively, and the effective tax rate was 17.5 percent and (3.4) percent, respectively. The benefit from income taxes in the six months ended June 30, 2024, was primarily driven by the resolution of certain tax audit matters in the first quarter. For the three and six months ended June 30, 2023, the company reported a provision for income taxes of $419 million and $543 million, respectively, and the effective tax rate was 21.0 percent and 17.8 percent, respectively.

Noncontrolling interest amounts, included as a reduction within other (income) and expense in the Consolidated Income Statement, were not material to the consolidated results for the periods presented.

The company has supplier finance programs with third-party financial institutions where the company agrees to pay the financial institutions the stated amounts of invoices from participating suppliers on the originally invoiced maturity date, which have an average term of 90 to 120 days, consistent with the company's standard payment terms. The financial institutions offer earlier payment of the invoices at the sole discretion of the supplier for a discounted amount. The company does not provide secured legal assets or other forms of guarantees under the arrangements. The company is not a party to the arrangements between its suppliers and the financial institutions. These obligations are recognized as accounts payable in the Consolidated Balance Sheet. The obligations outstanding under these programs at June 30, 2024 and December 31, 2023 were $116 million and $101 million, respectively.

Interim results are not necessarily indicative of financial results for a full year. The information included in this Form 10-Q should be read in conjunction with the company’s 2023 Annual Report.

Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior-period amounts have been reclassified to conform to the change in current-period presentation. This is annotated where applicable.

New Standards to be Implemented and Standards Implemented

New Standards to be Implemented

Income Tax Disclosures

Standard/Description–Issuance date: December 2023. This guidance requires disaggregated disclosure of the tax rate reconciliation into eight categories, with further disaggregation required for items greater than a specific threshold. Additionally, the guidance requires the disclosure of income taxes paid disaggregated by federal, state and foreign jurisdictions.

Effective Date and Adoption Considerations–The guidance is effective January 1, 2025 and early adoption is permitted. The company expects to adopt the guidance as of the effective date.

Effect on Financial Statements or Other Significant Matters–As the guidance is a change to disclosures only, it will impact the “Taxes” note within the company's annual financial statements but will not impact the consolidated financial results.

Segment Reporting Disclosures

Standard/Description–Issuance date: November 2023. This guidance requires the disclosure of significant segment expenses that are regularly provided to a company's chief operating decision maker and included within each reported measure of segment profit or loss. The company must also disclose “other segment items,” which is the difference between segment revenue less significant expenses for each reported measure of segment profit or loss, and a description of its composition. This guidance also requires all segment annual disclosures to be provided on an interim basis.

Effective Date and Adoption Considerations–The guidance is effective for annual periods beginning in 2024, and for interim periods beginning January 1, 2025, and is required to be applied on a retrospective basis to all prior periods presented. Early adoption is permitted. The company will adopt the guidance as of the effective date.

Effect on Financial Statements or Other Significant Matters–As the guidance is a change to disclosures only, it will impact the “Segments” note within the company's quarterly and annual financial statements but will not have an impact in the consolidated financial results.

Standards Implemented

Disclosures of Supplier Finance Program Obligations

Standard/Description–Issuance date: September 2022. This guidance requires an entity to provide certain interim and annual disclosures about the use of supplier finance programs in connection with the purchase of goods or services.

Effective Date and Adoption Considerations–The guidance was effective January 1, 2023 with certain annual disclosures required beginning in 2024 and early adoption was permitted. The company adopted the guidance as of the effective date.

Effect on Financial Statements or Other Significant Matters–As the guidance is a change to disclosures only, it did not have an impact in the consolidated financial results. Refer to note 1, "Basis of Presentation," for additional disclosure information.

Remaining Performance Obligations

Remaining Performance Obligations

The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency.

Segments

In the first quarter of 2024, the company made changes to its organization structure and management system to better align its portfolio with the market, increase transparency and improve segment comparability to peers. These changes did not impact the company's Consolidated Financial Statements, but did impact its reportable segments. Due to the removal of certain components of segment profitability, as described below, the company also updated the title of its segment performance metric from pre-tax income from continuing operations to segment profit.

The following table displays the segment updates:

Reportable Segment Change	Resulting Segment Implications
The Weather Company asset divestiture (1)	-	Software Segment
	+	Other-divested businesses
Security Services realignment	-	Software Segment
	+	Consulting Segment
Removal of stock-based compensation and net interest allocations from segment profitability	-	Software Segment, Consulting Segment, Infrastructure Segment, Financing Segment (2)
	+	Other

(1) The Weather Company asset divestiture closed January 31, 2024.

(2) Presentation of interest for the Financing Segment did not change.

The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company and have been recast for the prior-year periods to reflect the company's segment changes described above. These results are used by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments.

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The company classifies certain assets and liabilities based on the following fair value hierarchy:

•Level 1–Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date;

•Level 2–Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

•Level 3–Unobservable inputs for the asset or liability.

When available, the company uses unadjusted quoted market prices in active markets to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation.

The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. For derivatives and debt securities, the company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument.

In determining the fair value of financial instruments, the company considers certain market valuation adjustments to the “base valuations” calculated using the methodologies described below for several parameters that market participants would consider in determining fair value:

•Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument.

•Credit risk adjustments are applied to reflect the company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the company’s own credit risk as observed in the credit default swap market.

The company holds investments primarily in time deposits, certificates of deposit, and U.S. government debt that are designated as available-for-sale. The primary objective of the company’s cash and debt investment portfolio is to protect principal by investing in very liquid investment securities with highly rated counterparties.

The company’s standard practice is to hold all of its debt security investments classified as available-for-sale until maturity. No impairments for credit losses and no material non-credit impairments were recorded for the three and six months ended June 30, 2024 and 2023, respectively.

Certain non-financial assets such as property, plant and equipment (PP&E), operating right-of-use assets, goodwill and intangible assets are also subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for non-financial assets depend on the type of asset. There were no material impairments of non-financial assets for the three and six months ended June 30, 2024 and 2023, respectively.

Financial Assets and Liabilities Not Measured at Fair Value

Financial Assets and Liabilities Not Measured at Fair Value

Short-Term Receivables and Payables

Short-term receivables (excluding the current portion of long-term receivables) and other investments are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt (excluding the current portion of long-term debt) are financial liabilities with carrying values that approximate fair value. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy, except for short-term debt which would be classified as Level 2.

Loans and Long-Term Receivables

Fair values are based on discounted future cash flows using current interest rates offered for similar loans to clients with similar credit ratings for the same remaining maturities. At June 30, 2024 and December 31, 2023, the difference between the carrying amount and estimated fair value for loans and long-term receivables was immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy.

Long-Term Debt

Fair value of publicly traded long-term debt is based on quoted market prices for the identical liability when traded as an asset in an active market. For other long-term debt (including long-term finance lease liabilities) for which a quoted market price is not available, an expected present value technique that uses rates currently available to the company for debt with similar terms and remaining maturities is used to estimate fair value. The carrying amount of long-term debt was $52,929 million and $50,121 million, and the estimated fair value was $49,844 million and $48,284 million at June 30, 2024 and December 31, 2023, respectively. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy.

Financing Receivables

Financing receivables primarily consist of client loan and installment payment receivables (loans), investment in sales-type and direct financing leases (collectively referred to as client financing receivables) and commercial financing receivables. Loans are provided primarily to clients to finance the purchase of IBM hardware, software and services. Payment terms on these financing arrangements are for terms generally up to seven years. Investment in sales-type and direct financing leases relate principally to the company’s Infrastructure products and are for terms generally up to five years. Commercial financing receivables, which consist of both held-for-investment and held-for-sale receivables, relate primarily to working capital financing for business partners and distributors of IBM products and services. Payment terms for working capital financing generally range from 30 to 60 days.

When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For the company’s policy on determining allowances for credit losses, refer to note A, “Significant Accounting Policies,” in the company’s 2023 Annual Report.

Commitments

The company collectively evaluates the allowance for these arrangements using a provision methodology consistent with the portfolio of the commitments. Refer to note A, “Significant Accounting Policies,” in the company’s 2023 Annual Report for additional information.The company has applied the guidance requiring a guarantor to disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s performance is remote.

Contingencies

The company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the quarter ended June 30, 2024 were not material to the Consolidated Financial Statements.

In accordance with the relevant accounting guidance, the company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer and employee relations considerations.

With respect to certain of the claims, suits, investigations and proceedings discussed herein, the company believes at this time that the likelihood of any material loss is remote, given, for example, the procedural status, court rulings, and/or the strength of the company’s defenses in those matters. With respect to the remaining claims, suits, investigations and proceedings discussed in this note, except as specifically discussed herein, the company is unable to provide estimates of reasonably possible losses or range of losses, including losses in excess of amounts accrued, if any, for the following reasons. Claims, suits, investigations and proceedings are inherently uncertain, and it is not possible to predict the ultimate outcome of these matters. It is the company’s experience that damage amounts claimed in litigation against it are unreliable and unrelated to possible outcomes, and as such are not meaningful indicators of the company’s potential liability. Further, the company is unable to provide such an estimate due to a number of other factors with respect to these claims, suits, investigations and proceedings, including considerations of the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters.

The company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate), to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter.

Derivative Financial Instruments

The company operates in multiple functional currencies and is a significant lender and borrower in the global markets. In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations, and to a lesser extent equity and commodity price changes and client credit risk. The company limits these risks by following established risk management policies and procedures, including the use of derivatives, and, where cost effective, financing with debt in the currencies in which assets are denominated. For interest rate exposures, derivatives are used to better align rate movements between the interest rates associated with the company’s lease and other financial assets and the interest rates associated with its financing debt. Derivatives are also used to manage the related cost of debt. For foreign currency exposures, derivatives are used to better manage the cash flow volatility arising from foreign exchange rate fluctuations.

Offsetting Derivatives

In the Consolidated Balance Sheet, the company does not offset derivative assets against liabilities in master netting arrangements nor does it offset receivables or payables recognized upon payment or receipt of cash collateral against the fair values of the related derivative instruments.The company restricts the use of cash collateral received to rehypothecation, and therefore reports it in restricted cash in the Consolidated Balance Sheet.

Derivatives, Methods of Accounting, Hedge Effectiveness

The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument.

Stock-Based Compensation

Stock-based compensation cost for stock awards and stock options is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period.

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Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Schedule of disaggregation of revenue

The following tables provide details of revenue by major products/service offerings and revenue by geography.

Revenue by Major Products/Service Offerings

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023 (1)		2024		2023 (1)
Hybrid Platform & Solutions	$	4,575	$	4,350	$	8,673	$	8,200
Transaction Processing	2,164		1,943		3,964		3,685
Total Software	$	6,739	$	6,294	$	12,637	$	11,885
Business Transformation	2,360		2,295		4,677		4,578
Application Operations	1,902		1,991		3,840		3,980
Technology Consulting	917		941		1,848		1,866
Total Consulting	$	5,179	$	5,226	$	10,365	$	10,423
Hybrid Infrastructure	2,360		2,260		4,163		3,969
Infrastructure Support	1,285		1,358		2,558		2,747
Total Infrastructure	$	3,645	$	3,618	$	6,721	$	6,716
Financing (2)	169		185		362		380
Other	38		152		146		321
Total revenue	$	15,770	$	15,475	$	30,231	$	29,727

(1)Recast to reflect January 2024 segment changes. Refer to note 4, "Segments," for additional information.

(2)Contains lease and loan financing arrangements which are not subject to the guidance on revenue from contracts with customers.

Schedule of disaggregation of revenue by geography

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Americas	$	7,979	$	8,046	$	15,275	$	15,124
Europe/Middle East/Africa	4,722		4,602		9,035		8,933
Asia Pacific	3,069		2,827		5,922		5,670
Total	$	15,770	$	15,475	$	30,231	$	29,727

Schedule of reconciliation of contract balances

The following table provides information about notes and accounts receivable–trade, contract assets and deferred income balances.

(Dollars in millions)	At June 30, 2024		At December 31, 2023
Notes and accounts receivable — trade (net of allowances of $129 in 2024 and $192 in 2023)	$	5,769	$	7,214
Contract assets (1)	$	540	$	505
Deferred income (current)	$	13,643	$	13,451
Deferred income (noncurrent)	$	3,489	$	3,533

(1)Included within prepaid expenses and other current assets in the Consolidated Balance Sheet.

Schedule of notes and accounts receivable - trade allowance for credit losses

The following table provides roll forwards of the notes and accounts receivable–trade allowance for expected credit losses for the six months ended June 30, 2024 and the year ended December 31, 2023.

(Dollars in millions)
January 1, 2024	Additions / (Releases)	Write-offs (1)	Foreign currency and other	June 30, 2024
$192	$(7)	$(61)	$4	$129

January 1, 2023	Additions / (Releases)	Write-offs (1)	Foreign currency and other	December 31, 2023
$233	$32	$(79)	$6	$192

(1)The majority of the write-offs during the period related to receivables which had been previously reserved.

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Segments (Tables)

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Schedule of segment updates

The following table displays the segment updates:

Reportable Segment Change	Resulting Segment Implications
The Weather Company asset divestiture (1)	-	Software Segment
	+	Other-divested businesses
Security Services realignment	-	Software Segment
	+	Consulting Segment
Removal of stock-based compensation and net interest allocations from segment profitability	-	Software Segment, Consulting Segment, Infrastructure Segment, Financing Segment (2)
	+	Other

(1) The Weather Company asset divestiture closed January 31, 2024.

(2) Presentation of interest for the Financing Segment did not change.

Revenue and pre-tax income by segment

The following tables reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company and have been recast for the prior-year periods to reflect the company's segment changes described above. These results are used by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments.

(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the three months ended June 30, 2024:
Revenue	$	6,739		$	5,179		$	3,645		$	169		$	15,732
Segment profit	$	2,113		$	463		$	654		$	77		$	3,306
Revenue year-to-year change	7.1		%	(0.9)		%	0.7		%	(8.3)		%	2.7		%
Segment profit year-to-year change	20.8		%	(4.0)		%	(10.7)		%	19.3		%	9.2		%
Segment profit margin	31.3		%	8.9		%	17.9		%	45.3		%	21.0		%
For the three months ended June 30, 2023: (1)
Revenue	$	6,294		$	5,226		$	3,618		$	185		$	15,322
Segment profit	$	1,749		$	483		$	732		$	64		$	3,028
Segment profit margin	27.8		%	9.2		%	20.2		%	34.8		%	19.8		%

(1) Recast to reflect January 2024 segment changes.

(Dollars in millions)	Software			Consulting			Infrastructure			Financing			Total Segments
For the six months ended June 30, 2024:
Revenue	$	12,637		$	10,365		$	6,721		$	362		$	30,085
Segment profit	$	3,612		$	888		$	965		$	168		$	5,633
Revenue year-to-year change	6.3		%	(0.6)		%	0.1		%	(4.9)		%	2.3		%
Segment profit year-to-year change	15.5		%	(2.4)		%	(7.1)		%	2.4		%	7.5		%
Segment profit margin	28.6		%	8.6		%	14.4		%	46.5		%	18.7		%
For the six months ended June 30, 2023: (1)
Revenue	$	11,885		$	10,423		$	6,716		$	380		$	29,406
Segment profit	$	3,128		$	910		$	1,039		$	164		$	5,241
Segment profit margin	26.3		%	8.7		%	15.5		%	43.2		%	17.8		%

(1) Recast to reflect January 2024 segment changes.

Reconciliation of segment revenue and pre-tax income to IBM as reported

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended June 30:	2024		2023 (1)
Revenue:
Total reportable segments	$	15,732	$	15,322
Other‒divested businesses	0		101
Other revenue	38		52
Total revenue from continuing operations	$	15,770	$	15,475
Pre-tax income from continuing operations:
Total reportable segment profit	$	3,306	$	3,028
Amortization of acquired intangible assets	(439)		(389)
Acquisition-related (charges)/income (2)	(36)		(7)
Non-operating retirement-related (costs)/income	(98)		(1)
Stock-based compensation	(316)		(288)
Net interest excluding the Financing segment	(218)		(225)
Workforce rebalancing charges	(18)		(117)
Other‒divested businesses	(4)		23
Unallocated corporate amounts and other	41		(24)
Total pre-tax income from continuing operations	$	2,219	$	2,000

(1)Recast to reflect January 2024 segment changes.

(2)2024 includes the impact of foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, "Derivative Financial Instruments," for additional information.

Reconciliations to IBM as Reported:

(Dollars in millions)
For the six months ended June 30:	2024		2023 (1)
Revenue:
Total reportable segments	$	30,085	$	29,406
Other‒divested businesses	35		195
Other revenue	111		127
Total revenue from continuing operations	$	30,231	$	29,727
Pre-tax income from continuing operations:
Total reportable segment profit	$	5,633	$	5,241
Amortization of acquired intangible assets	(866)		(781)
Acquisition-related (charges)/income (2)	(96)		(10)
Non-operating retirement-related (costs)/income	(194)		4
Stock-based compensation	(636)		(556)
Net interest excluding the Finance segment	(442)		(442)
Workforce rebalancing changes	(392)		(376)
Other‒divested businesses (3)	235		36
Unallocated corporate amounts and other	50		(57)
Total pre-tax income from continuing operations	$	3,293	$	3,058

(1)Recast to reflect January 2024 segment changes.

(2)2024 includes the impact of foreign exchange derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. Refer to note 16, "Derivative Financial Instruments," for additional information.

(3)2024 includes a gain on the sale of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

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Acquisitions & Divestitures (Tables)

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Business acquisition, purchase price allocation

The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocation as of June 30, 2024.

(Dollars in millions)	Amortization Life (in years)	All Acquisitions
Current assets		$	35
Property, plant and equipment/noncurrent assets		3
Intangible assets:
Goodwill	N/A	207
Client relationships	1-7	36
Completed technology	7	37
Trademarks	3	1
Total assets acquired		$	319
Current liabilities		24
Noncurrent liabilities		16
Total liabilities assumed		$	41
Total purchase price		$	278

N/A – not applicable

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Other (Income) and Expense (Tables)

6 Months Ended

Jun. 30, 2024

Other Income and Expenses [Abstract]

Schedule of components of other income and expense

Components of other (income) and expense are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Other (income) and expense:
Foreign currency transaction losses/(gains) (1)	$	(140)	$	(166)	$	(345)	$	(78)
(Gains)/losses on derivative instruments (1)	140		141		427		(1)
Interest income	(217)		(201)		(427)		(371)
Net (gains)/losses from securities and investment assets	0		3		(10)		8
Retirement-related costs/(income)	98		1		194		(4)
Other (2)	(114)		(39)		(389)		(61)
Total other (income) and expense	$	(233)	$	(261)	$	(550)	$	(506)

(1)The company uses financial hedging instruments to limit specific currency risks related to foreign currency-based transactions. The hedging program does not hedge 100 percent of currency exposures and defers, versus eliminates, the impact of currency. Refer to note 16, "Derivative Financial Instruments," for additional information on foreign exchange risk.

(2)For the six months ended June 30, 2024, the company recognized a pre-tax gain of $239 million from the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

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Earnings Per Share of Common Stock (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Computation of basic and diluted earnings/(loss) per share

The following tables provide the computation of basic and diluted earnings per share of common stock for the three and six months ended June 30, 2024 and 2023.

(Dollars in millions except per share amounts)
For the three months ended June 30:	2024		2023
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period	920,287,541		909,855,943
Add — Incremental shares under stock-based compensation plans	11,883,820		7,584,035
Add — Incremental shares associated with contingently issuable shares	2,226,234		2,012,519
Number of shares on which diluted earnings per share is calculated	934,397,595		919,452,496
Income from continuing operations	$	1,830	$	1,581
Income from discontinued operations, net of tax	4		2
Net income on which basic earnings per share is calculated	$	1,834	$	1,583
Income from continuing operations	$	1,830	$	1,581
Net income applicable to contingently issuable shares	—		—
Income from continuing operations on which diluted earnings per share is calculated	$	1,830	$	1,581
Income from discontinued operations, net of tax, on which diluted earnings per share is calculated	4		2
Net income on which diluted earnings per share is calculated	$	1,834	$	1,583
Earnings per share of common stock:
Assuming dilution
Continuing operations	$	1.96	$	1.72
Discontinued operations	0.00		0.00
Total	$	1.96	$	1.72
Basic
Continuing operations	$	1.99	$	1.74
Discontinued operations	0.00		0.00
Total	$	1.99	$	1.74

(Dollars in millions except per share amounts)
For the six months ended June 30:	2024		2023
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period	918,733,160		908,691,415
Add — Incremental shares under stock-based compensation plans	13,070,105		8,096,637
Add — Incremental shares associated with contingently issuable shares	2,111,189		1,860,836
Number of shares on which diluted earnings per share is calculated	933,914,454		918,648,888
Income from continuing operations	$	3,405	$	2,515
Income/(loss) from discontinued operations, net of tax	34		(4)
Net income on which basic earnings per share is calculated	$	3,439	$	2,511
Income from continuing operations	$	3,405	$	2,515
Net income applicable to contingently issuable shares	—		—
Income from continuing operations on which diluted earnings per share is calculated	$	3,405	$	2,515
Income/(loss) from discontinued operations, net of tax, on which diluted earnings per share is calculated	34		(4)
Net income on which diluted earnings per share is calculated	$	3,439	$	2,511
Earnings/(loss) per share of common stock:
Assuming dilution
Continuing operations	$	3.65	$	2.74
Discontinued operations	0.04		0.00
Total	$	3.68	$	2.73
Basic
Continuing operations	$	3.71	$	2.77
Discontinued operations	0.04		0.00
Total	$	3.74	$	2.76

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Financial Assets & Liabilities (Tables)

6 Months Ended

Jun. 30, 2024

Investments, All Other Investments [Abstract]

Financial assets and financial liabilities measured at fair value on a recurring basis

The following table presents the company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at June 30, 2024 and December 31, 2023.

	Fair Value Hierarchy Level	At June 30, 2024				At December 31, 2023
(Dollars in millions)		Assets (6)		Liabilities (7)		Assets (6)		Liabilities (7)
Cash equivalents: (1)
Time deposits and certificates of deposit (2)	2	$	5,307	N/A		$	7,206	N/A
Money market funds	1	471		N/A		494		N/A
Total cash equivalents		$	5,778	N/A		$	7,699	N/A
Equity investments	1	—		N/A		25		N/A
Debt securities-current (2)(3)	2	1,481		N/A		373		N/A
Debt securities-noncurrent (2)(4)	2,3	108		N/A		8		N/A
Derivatives designated as hedging instruments:
Interest rate contracts	2	—		419		2		299
Foreign exchange contracts	2	402		161		131		275
Derivatives not designated as hedging instruments:
Foreign exchange contracts (5)	2	8		33		115		19
Equity contracts	2	22		10		93		—
Total		$	7,799	$	624	$	8,446	$	593

(1)Included within cash and cash equivalents in the Consolidated Balance Sheet.

(2)Available-for-sale debt securities with carrying values that approximate fair value.

(3)Term deposits and U.S. treasury bills that are reported within marketable securities in the Consolidated Balance Sheet. The June 30, 2024 balance includes proceeds from the first-quarter 2024 debt issuance. Refer to note 12, “Borrowings,” for additional information.

(4)June 30, 2024 amount includes a $100 million seller financing loan in connection with the divestiture of The Weather Company assets reported within investments and sundry assets in the Consolidated Balance Sheet. Refer to note 5, "Acquisitions & Divestitures," for additional information.

(5)December 31, 2023 asset amount includes $62 million in foreign exchange call option contracts in connection with the acquisition of StreamSets and webMethods from Software AG. There were no associated derivatives outstanding at June 30, 2024. Refer to note 16, "Derivative Financial Instruments," for additional information.

(6)The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Balance Sheet at June 30, 2024 were $424 million and $8 million, respectively, and at December 31, 2023 were $304 million and $37 million, respectively.

(7)The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Balance Sheet at June 30, 2024 were $173 million and $450 million, respectively, and at December 31, 2023 were $294 million and $299 million, respectively.

N/A – not applicable

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Financing Receivables (Tables)

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

Summary of the components of financing receivables

A summary of the components of the company’s financing receivables is presented as follows:

	Client Financing Receivables
	Client Loan and Installment Payment Receivables		Investment in Sales-Type and Direct Financing
					Commercial Financing Receivables
(Dollars in millions)					Held for		Held for
At June 30, 2024	(Loans)		Leases		Investment		Sale (1)		Total
Financing receivables, gross	$	6,577	$	3,938	$	618	$	723	$	11,856
Unearned income	(500)		(401)		—		—		(901)
Unguaranteed residual value	—		464		—		—		464
Amortized cost	$	6,077	$	4,000	$	618	$	723	$	11,419
Allowance for credit losses	(75)		(57)		(5)		—		(137)
Total financing receivables, net	$	6,002	$	3,944	$	613	$	723	$	11,282
Current portion	$	2,956	$	1,507	$	613	$	723	$	5,799
Noncurrent portion	$	3,046	$	2,437	$	—	$	—	$	5,483

	Client Financing Receivables
	Client Loan and Installment Payment Receivables		Investment in Sales-Type and Direct Financing
					Commercial Financing Receivables
(Dollars in millions)					Held for		Held for
At December 31, 2023	(Loans)		Leases		Investment		Sale (1)		Total
Financing receivables, gross	$	7,060	$	4,261	$	1,160	$	692	$	13,173
Unearned income	(486)		(429)		—		—		(915)
Unguaranteed residual value	—		458		—		—		458
Amortized cost	$	6,574	$	4,290	$	1,160	$	692	$	12,716
Allowance for credit losses	(87)		(63)		(6)		—		(156)
Total financing receivables, net	$	6,486	$	4,227	$	1,155	$	692	$	12,560
Current portion	$	3,427	$	1,520	$	1,155	$	692	$	6,793
Noncurrent portion	$	3,059	$	2,707	$	—	$	—	$	5,766

(1)The carrying value of the receivables classified as held for sale approximates fair value.

Schedule of transfer of commercial financing assets

The following table presents the total amount of commercial financing receivables transferred.

(Dollars in millions)
For the six months ended June 30:	2024		2023
Commercial financing receivables:
Receivables transferred during the period	$	3,686	$	4,345
Receivables uncollected at end of period (1)	$	786	$	928

(1)Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from business partners as of June 30, 2024 and 2023.

Schedule of client financing receivables and allowance for credit losses by class

The following tables present the amortized cost basis for client financing receivables at June 30, 2024 and December 31, 2023, further segmented by three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. The commercial financing receivables portfolio segment is excluded from the tables in the sections below as the receivables are short term in nature and the current estimated risk of loss and resulting impact to the company’s financial results are not material.

(Dollars in millions)
At June 30, 2024:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,075	$	2,672	$	1,330	$	10,077
Allowance for credit losses:
Beginning balance at January 1, 2024	$	92	$	48	$	11	$	150
Write-offs	$	0	$	(1)	$	0	$	(1)
Recoveries	0		0		0		1
Additions/(releases)	(8)		(3)		0		(11)
Other (1)	(5)		(2)		0		(7)
Ending balance at June 30, 2024	$	78	$	43	$	10	$	131

(1)Primarily represents translation adjustments.

(Dollars in millions)
At December 31, 2023:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,488	$	3,007	$	1,368	$	10,863
Allowance for credit losses:
Beginning balance at January 1, 2023	$	88	$	60	$	20	$	168
Write-offs	$	(9)	$	(1)	$	(8)	$	(18)
Recoveries	0		2		3		5
Additions/(releases)	5		(14)		(4)		(12)
Other (1)	7		1		(1)		8
Ending balance at December 31, 2023	$	92	$	48	$	11	$	150

(1)Primarily represents translation adjustments.

Schedule of past due client financing receivables

(Dollars in millions)	Total Amortized Cost		Amortized Cost > 90 Days (1)		Amortized Cost > 90 Days and Accruing (1)		Billed Invoices > 90 Days and Accruing		Amortized Cost Not Accruing (2)
At June 30, 2024:
Americas	$	6,075	$	83	$	17	$	2	$	67
EMEA	2,672		33		4		3		29
Asia Pacific	1,330		8		0		0		7
Total client financing receivables	$	10,077	$	123	$	21	$	5	$	103

(Dollars in millions)	Total Amortized Cost		Amortized Cost > 90 Days (1)		Amortized Cost > 90 Days and Accruing (1)		Billed Invoices > 90 Days and Accruing		Amortized Cost Not Accruing (2)
At December 31, 2023:
Americas	$	6,488	$	111	$	40	$	6	$	71
EMEA	3,007		31		1		1		31
Asia Pacific	1,368		9		1		0		8
Total client financing receivables	$	10,863	$	151	$	43	$	7	$	110

(1)At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days.

(2)Of the amortized cost not accruing, there was a related allowance of $99 million and $106 million at June 30, 2024 and December 31, 2023, respectively. Financing income recognized on these receivables was immaterial for the three and six months ended June 30, 2024 and 2023, respectively.

Schedule of amortized cost by credit quality indicator

The following tables present the amortized cost basis for client financing receivables by credit quality indicator at June 30, 2024 and December 31, 2023, respectively. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators reflect mitigating credit enhancement actions taken by customers which reduce the risk to IBM. Gross write-offs by vintage year at June 30, 2024 and December 31, 2023 were not material.

(Dollars in millions)	Americas				EMEA				Asia Pacific
At June 30, 2024:	Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C
Vintage year:
2024	$	1,176	$	381	$	423	$	223	$	296	$	61
2023	1,766		588		472		358		356		39
2022	1,258		168		515		262		322		34
2021	410		45		180		54		70		28
2020	88		35		52		35		58		15
2019 and prior	106		54		49		48		38		14
Total	$	4,804	$	1,271	$	1,692	$	980	$	1,139	$	191

(Dollars in millions)	Americas				EMEA				Asia Pacific
At December 31, 2023:	Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C
Vintage year:
2023	$	2,292	$	1,028	$	750	$	520	$	501	$	70
2022	1,645		268		687		374		386		42
2021	655		85		284		83		110		40
2020	205		79		106		60		97		22
2019	104		23		58		38		40		8
2018 and prior	55		50		16		30		39		12
Total	$	4,955	$	1,533	$	1,901	$	1,106	$	1,174	$	195

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Leases (Tables)

6 Months Ended

Jun. 30, 2024

Leases [Abstract]

Schedule of amounts included in the Consolidated Income Statement related to lessor activity

The following table presents amounts included in the Consolidated Income Statement related to lessor activity.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Lease income — sales-type and direct financing leases:
Sales-type lease selling price	$	367	$	248	$	480	$	338
Less: Carrying value of underlying assets (1)	(66)		(61)		(94)		(91)
Gross profit	$	301	$	187	$	386	$	247
Interest income on lease receivables	69		59		138		118
Total sales-type and direct financing lease income	$	370	$	246	$	524	$	365
Lease income — operating leases	16		25		34		51
Variable lease income	18		14		38		35
Total lease income	$	404	$	284	$	596	$	451

(1)Excludes unguaranteed residual value.

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Intangible Assets Including Goodwill (Tables)

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible asset balances by major asset class

The following tables present the company's intangible asset balances by major asset class.

	At June 30, 2024
(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount (1)
Intangible asset class:
Capitalized software	$	1,528	$	(661)	$	867
Client relationships	8,976		(3,911)		5,065
Completed technology	5,719		(2,834)		2,885
Patents/trademarks	1,803		(483)		1,320
Other (2)	149		(35)		114
Total	$	18,175	$	(7,924)	$	10,251

	At December 31, 2023
(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount (1)
Intangible asset class:
Capitalized software	$	1,636	$	(762)	$	874
Client relationships	9,053		(3,500)		5,553
Completed technology	5,713		(2,510)		3,203
Patents/trademarks	1,821		(436)		1,385
Other (2)	41		(20)		22
Total	$	18,265	$	(7,229)	$	11,036

(1)Amounts as of June 30, 2024 and December 31, 2023 include a decrease in net intangible asset balances of $76 million and an increase of $50 million, respectively, due to foreign currency translation.

(2)Other intangibles are primarily acquired proprietary and non-proprietary technology licenses, data, business processes, methodologies and systems.

Intangible assets, future amortization expense

The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at June 30, 2024:

(Dollars in millions)	Capitalized Software		Acquired Intangibles		Total
Remainder of 2024	$	305	$	881	$	1,186
2025	351		1,724		2,075
2026	180		1,700		1,880
2027	30		1,681		1,710
2028	—		1,379		1,379
Thereafter	—		2,020		2,020

Changes in goodwill balances by reportable segment

The changes in the goodwill balances by segment for the six months ended June 30, 2024 and for the year ended December 31, 2023 were as follows:

(Dollars in millions)	Balance		Goodwill Additions		Purchase Price Adjustments				Foreign Currency Translation and Other Adjustments (1)		Balance
Segment	1/1/2024						Divestitures				6/30/2024
Software	$	46,447	$	91	$	(9)	$	—	$	(408)	$	46,120
Consulting	8,883		108		0		—		(70)		8,920
Infrastructure	4,384		8		(1)		—		(16)		4,376
Other (2)	464		—		—		(464)		—		—
Total	$	60,178	$	207	$	(11)	$	(464)	$	(494)	$	59,416

(Dollars in millions)	Balance		Goodwill Additions		Purchase Price Adjustments				Foreign Currency Translation and Other Adjustments (1)		Balance
Segment	1/1/2023						Divestitures				12/31/2023
Software (3)	$	42,712	$	3,538	$	(17)	$	—	$	214	$	46,447
Consulting (3)	8,409		403		2		—		69		8,883
Infrastructure	4,363		12		—		—		8		4,384
Other (3)	464		—		—		—		—		464
Total	$	55,949	$	3,953	$	(15)	$	—	$	291	$	60,178

(1)Primarily driven by foreign currency translation.

(2)In the first quarter of 2024, the company derecognized goodwill related to the divestiture of The Weather Company assets. Refer to note 5, "Acquisitions & Divestitures," for additional information.

(3)Recast to reflect January 2024 segment changes. Refer to note 4, "Segments," for additional information.

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Borrowings (Tables)

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Long-Term Debt

Pre-Swap Borrowing

		Balance		Balance
(Dollars in millions)	Maturities	6/30/2024		12/31/2023
U.S. dollar debt (weighted-average interest rate at June 30, 2024): (1)
3.4%	2024	$	1	$	5,003
5.1%	2025	1,604		1,601
3.7%	2026	5,800		5,201
3.3%	2027	4,119		3,619
5.0%	2028	1,313		1,313
3.6%	2029	3,750		3,250
2.0%	2030	1,350		1,350
4.8%	2031	500		—
4.4%	2032	1,850		1,850
4.8%	2033	750		750
4.9%	2034	1,000		—
8.0%	2038	83		83
4.5%	2039	2,745		2,745
2.9%	2040	650		650
4.0%	2042	1,107		1,107
5.3%	2044	1,000		—
7.0%	2045	27		27
4.7%	2046	650		650
4.3%	2049	3,000		3,000
3.0%	2050	750		750
4.2%	2052	1,400		1,400
5.1%	2053	650		650
5.3%	2054	1,400		—
7.1%	2096	316		316
		$	35,817	$	35,317
Euro debt (weighted-average interest rate at June 30, 2024): (1)
1.1%	2024	$	803	$	829
1.6%	2025	3,213		3,315
2.3%	2027	2,142		2,210
0.7%	2028	1,928		1,989
1.5%	2029	1,071		1,105
0.9%	2030	1,071		1,105
2.7%	2031	2,678		2,762
0.7%	2032	1,714		1,768
1.3%	2034	1,071		1,105
3.8%	2035	1,071		1,105
1.2%	2040	910		939
4.0%	2043	1,071		1,105
		$	18,745	$	19,335
Other currencies (weighted-average interest rate at June 30, 2024 in parentheses): (1)
Pound sterling (4.9%)	2038	$	948	$	955
Japanese yen (0.5%)	2024–2028	1,097		1,251
Other (12.9%)	2024–2027	327		241
		$	56,934	$	57,099
Finance lease obligations (5.0%)	2024–2034	823		499
		$	57,757	$	57,598
Less: net unamortized discount		844		838
Less: net unamortized debt issuance costs		179		154
Add: fair value adjustment (2)		(204)		(60)
		$	56,531	$	56,546
Less: current maturities		3,601		6,425
Total		$	52,929	$	50,121

(1)Includes notes, debentures, bank loans and secured borrowings.

(2)The portion of the company’s fixed-rate debt obligations that is hedged is reflected in the Consolidated Balance Sheet as an amount equal to the sum of the debt’s carrying value and a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates.

Pre-swap annual contractual obligations of long-term debt outstanding

Pre-swap annual contractual obligations of long-term debt outstanding at June 30, 2024, were as follows:

(Dollars in millions)	Total
Remainder of 2024	$	1,291
2025	5,142
2026	6,272
2027	6,397
2028	3,887
Thereafter	34,767
Total	$	57,757

Interest on Debt

(Dollars in millions)
For the six months ended June 30:	2024		2023
Cost of financing	$	167	$	173
Interest expense	859		790
Interest capitalized	6		6
Total interest paid and accrued	$	1,032	$	969

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Commitments (Tables)

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Changes in warranty liabilities

Changes in the company’s warranty liability for standard warranties, which are included in other accrued expenses and liabilities and other liabilities in the Consolidated Balance Sheet, and for extended warranty contracts, which are included in deferred income in the Consolidated Balance Sheet, are presented in the following tables.

Standard Warranty Liability

(Dollars in millions)	2024		2023
Balance at January 1	$	65	$	79
Current-period accruals	38		35
Accrual adjustments to reflect actual experience	7		(14)
Charges incurred	(41)		(43)
Balance at June 30	$	70	$	57

Extended Warranty Liability

(Dollars in millions)	2024		2023
Balance at January 1	$	184	$	272
Revenue deferred for new extended warranty contracts	18		20
Amortization of deferred revenue	(62)		(73)
Other (1)	(4)		(1)
Balance at June 30	$	135	$	218
Current portion	$	82	$	119
Noncurrent portion	$	52	$	99

(1)Other primarily consists of foreign currency translation adjustments.

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Equity Activity (Tables)

6 Months Ended

Jun. 30, 2024

Stockholders' Equity Note [Abstract]

Reclassifications and taxes related to items of other comprehensive income

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the three months ended June 30, 2024:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	2	$	(68)	$	(66)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	1	$	0	$	0
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	1	$	0	$	0
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	103	$	(28)	$	75
Reclassification of (gains)/losses to:
Cost of services	(9)		3		(7)
Cost of sales	(15)		5		(10)
Cost of financing	2		0		1
SG&A expense	(7)		2		(5)
Other (income) and expense	(21)		5		(16)
Interest expense	8		(2)		6
Total unrealized gains/(losses) on cash flow hedges	$	61	$	(16)	$	45
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	—	$	—
Net (losses)/gains arising during the period	0		2		2
Curtailments and settlements	2		(1)		2
Amortization of prior service costs/(credits)	(2)		0		(1)
Amortization of net (gains)/losses	258		(71)		187
Total retirement-related benefit plans	$	259	$	(69)	$	190
Other comprehensive income/(loss)	$	322	$	(153)	$	169

(1)These accumulated other comprehensive income (AOCI) components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the three months ended June 30, 2023:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	116	$	(34)	$	82
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	(17)	$	4	$	(12)
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	(17)	$	4	$	(12)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	178	$	(48)	$	130
Reclassification of (gains)/losses to:
Cost of services	3		(1)		2
Cost of sales	(2)		1		(1)
Cost of financing	4		(1)		3
SG&A expense	(1)		0		0
Other (income) and expense	(55)		14		(41)
Interest expense	22		(5)		16
Total unrealized gains/(losses) on cash flow hedges	$	148	$	(40)	$	109
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	0	$	0
Net (losses)/gains arising during the period	0		7		7
Curtailments and settlements	6		(1)		5
Amortization of prior service costs/(credits)	(2)		1		(2)
Amortization of net (gains)/losses	130		(38)		92
Total retirement-related benefit plans	$	134	$	(31)	$	102
Other comprehensive income/(loss)	$	381	$	(101)	$	280

(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the six months ended June 30, 2024:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	57	$	(222)	$	(165)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	1	$	0	$	1
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	1	$	0	$	1
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	279	$	(75)	$	204
Reclassification of (gains)/losses to:
Cost of services	(14)		4		(10)
Cost of sales	(27)		9		(18)
Cost of financing	3		(1)		2
SG&A expense	(10)		3		(7)
Other (income) and expense	58		(15)		44
Interest expense	17		(4)		13
Total unrealized gains/(losses) on cash flow hedges	$	307	$	(79)	$	227
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	—	$	—
Net (losses)/gains arising during the period	1		2		2
Curtailments and settlements	4		(1)		3
Amortization of prior service costs/(credits)	(4)		1		(3)
Amortization of net (gains)/losses	519		(143)		376
Total retirement-related benefit plans	$	520	$	(141)	$	379
Other comprehensive income/(loss)	$	885	$	(442)	$	442

(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

(Dollars in millions)	Before Tax Amount		Tax (Expense)/ Benefit		Net of Tax Amount
For the six months ended June 30, 2023:
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	29	$	22	$	52
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	(1)	$	0	$	(1)
Reclassification of (gains)/losses to other (income) and expense	—		—		—
Total net changes related to available-for-sale securities	$	(1)	$	0	$	(1)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	149	$	(41)	$	107
Reclassification of (gains)/losses to:
Cost of services	5		(1)		4
Cost of sales	(17)		5		(12)
Cost of financing	9		(2)		7
SG&A expense	(10)		3		(7)
Other (income) and expense	(181)		45		(135)
Interest expense	42		(11)		32
Total unrealized gains/(losses) on cash flow hedges	$	(3)	$	(1)	$	(4)
Retirement-related benefit plans: (1)
Prior service costs/(credits)	$	—	$	1	$	1
Net (losses)/gains arising during the period	2		7		8
Curtailments and settlements	5		(1)		4
Amortization of prior service costs/(credits)	(4)		1		(3)
Amortization of net (gains)/losses	261		(76)		185
Total retirement-related benefit plans	$	263	$	(69)	$	194
Other comprehensive income/(loss)	$	289	$	(48)	$	241

(1)These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “Retirement-Related Benefits,” for additional information.

Accumulated other comprehensive income/(loss) (net of tax)

(Dollars in millions)	Net Unrealized Gains/(Losses) on Cash Flow Hedges		Foreign Currency Translation Adjustments (1)		Net Change Retirement- Related Benefit Plans		Net Unrealized Gains/(Losses) on Available- For-Sale Securities		Accumulated Other Comprehensive Income/ (Loss)
January 1, 2024	$	(106)	$	(3,488)	$	(15,165)	$	(1)	$	(18,761)
Other comprehensive income before reclassifications	204		(165)		2		1		42
Amount reclassified from accumulated other comprehensive income	24		—		377		—		400
Total change for the period	$	227	$	(165)	$	379	$	1	$	442
June 30, 2024	$	121	$	(3,653)	$	(14,786)	$	(1)	$	(18,319)

(Dollars in millions)	Net Unrealized Gains/(Losses) on Cash Flow Hedges		Foreign Currency Translation Adjustments (1)		Net Change Retirement- Related Benefit Plans		Net Unrealized Gains/(Losses) on Available- For-Sale Securities		Accumulated Other Comprehensive Income/ (Loss)
January 1, 2023	$	(135)	$	(3,591)	$	(13,013)	$	(1)	$	(16,740)
Other comprehensive income before reclassifications	107		52		9		(1)		167
Amount reclassified from accumulated other comprehensive income	(112)		—		185		—		74
Total change for the period	$	(4)	$	52	$	194	$	(1)	$	241
June 30, 2023	$	(139)	$	(3,539)	$	(12,819)	$	(2)	$	(16,499)

(1)Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Amounts related to cumulative basis adjustments for fair value hedges

At June 30, 2024 and December 31, 2023, the following amounts were recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:

(Dollars in millions)	June 30, 2024		December 31, 2023
Short-term debt:
Carrying amount of the hedged item	$	—	$	(1)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities)	$	—	$	(1)
Long-term debt:
Carrying amount of the hedged item	$	(6,481)	$	(6,629)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities) (1)	$	204	$	61

(1)Includes ($177) million and ($200) million of hedging adjustments on discontinued hedging relationships at June 30, 2024 and December 31, 2023, respectively.

Effect of derivative instruments in the Consolidated Income Statement

The total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are recorded and the total effect of hedge activity on these income and expense line items are as follows:

(Dollars in millions)	Total				Gains/(Losses) of Total Hedge Activity
For the three months ended June 30:	2024		2023		2024		2023
Cost of services	$	5,126	$	5,294	$	9	$	(3)
Cost of sales	$	1,607	$	1,587	$	15	$	2
Cost of financing	$	86	$	93	$	(4)	$	(3)
SG&A expense	$	4,938	$	4,900	$	11	$	43
Other (income) and expense	$	(233)	$	(261)	$	(140)	$	(141)
Interest expense	$	427	$	423	$	(19)	$	(18)

	Gain (Loss) Recognized in Consolidated Income Statement
(Dollars in millions)	Consolidated Income Statement Line Item	Recognized on Derivatives				Attributable to Risk Being Hedged (2)
For the three months ended June 30:		2024		2023		2024		2023
Derivative instruments in fair value hedges: (1)
Interest rate contracts	Cost of financing	$	(8)	$	(30)	$	2	$	25
	Interest expense	(42)		(153)		10		130
Derivative instruments not designated as hedging instruments:
Foreign exchange contracts	Other (income) and expense	(161)		(196)		N/A		N/A
Equity contracts	SG&A expense	4		42		N/A		N/A
Total		$	(207)	$	(337)	$	12	$	155

	Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income
	Recognized in OCI				Consolidated Income Statement Line Item	Reclassified from AOCI				Amounts Excluded from Effectiveness Testing (3)
(Dollars in millions)
For the three months ended June 30:	2024		2023			2024		2023		2024		2023
Derivative instruments in cash flow hedges:
Interest rate contracts	$	—	$	—	Cost of financing	$	(1)	$	(1)	$	—	$	—
					Interest expense	(3)		(4)		—		—
Foreign exchange contracts					Cost of services	9		(3)		—		—
Amount included in the assessment of effectiveness	134		178		Cost of sales	15		2		—		—
Amount excluded from the assessment of effectiveness	(31)		—		Cost of financing	(1)		(3)		—		—
					SG&A expense	7		1		—		—
					Other (income) and expense	39		55		(18)		—
					Interest expense	(5)		(18)		—		—
Instruments in net investment hedges: (4)
Foreign exchange contracts	269		136		Cost of financing	—		—		4		5
					Interest expense	—		—		21		27
Total	$	372	$	313		$	61	$	30	$	6	$	32

(1)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.

(2)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.

(3)The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument.

(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.

N/A - not applicable

(Dollars in millions)	Total				Gains/(Losses) of Total Hedge Activity
For the six months ended June 30:	2024		2023		2024		2023
Cost of services	$	10,365	$	10,604	$	14	$	(5)
Cost of sales	$	2,988	$	2,910	$	27	$	17
Cost of financing	$	186	$	203	$	(7)	$	(7)
SG&A expense	$	9,912	$	9,754	$	85	$	102
Other (income) and expense	$	(550)	$	(506)	$	(427)	$	1
Interest expense	$	859	$	790	$	(34)	$	(31)

	Gain (Loss) Recognized in Consolidated Income Statement
(Dollars in millions)	Consolidated Income Statement Line Item	Recognized on Derivatives				Attributable to Risk Being Hedged (2)
For the six months ended June 30:		2024		2023		2024		2023
Derivative instruments in fair value hedges: (1)
Interest rate contracts	Cost of financing	$	(35)	$	(21)	$	23	$	13
	Interest expense	(180)		(96)		120		58
Derivative instruments not designated as hedging instruments:
Foreign exchange contracts	Other (income) and expense	(368)		(180)		N/A		N/A
Equity contracts	SG&A expense	75		91		N/A		N/A
Total		$	(509)	$	(206)	$	143	$	71

	Gain (Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income
	Recognized in OCI				Consolidated Income Statement Line Item	Reclassified from AOCI				Amounts Excluded from Effectiveness Testing (3)
(Dollars in millions)
For the six months ended June 30:	2024		2023			2024		2023		2024		2023
Derivative instruments in cash flow hedges:
Interest rate contracts	$	—	$	—	Cost of financing	$	(1)	$	(2)	$	—	$	—
					Interest expense	(7)		(7)		—		—
Foreign exchange contracts					Cost of services	14		(5)		—		—
Amount included in the assessment of effectiveness	300		149		Cost of sales	27		17		—		—
Amount excluded from the assessment of effectiveness	(21)		—		Cost of financing	(2)		(8)		—		—
					SG&A expense	10		10		—		—
					Other (income) and expense	(22)		181		(37)		—
					Interest expense	(10)		(35)		—		—
Instruments in net investment hedges: (4)
Foreign exchange contracts	881		(88)		Cost of financing	—		—		8		11
					Interest expense	—		—		43		49
Total	$	1,160	$	61		$	9	$	152	$	14	$	60

(1)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.

(2)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.

(3)The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing for net investment hedges in net income each period. For cash flow hedges of foreign currency denominated debt, the amounts excluded from effectiveness testing are amortized to net income over the life of the hedging instrument.

(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.

N/A - not applicable

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-based compensation cost included in income from continuing operations

The following table presents total stock-based compensation cost included in income from continuing operations.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Cost	$	53	$	47	$	109	$	93
Selling, general and administrative	172		168		343		317
Research, development and engineering	90		73		183		146
Pre-tax stock-based compensation cost	$	316	$	288	$	636	$	556
Income tax benefits	(101)		(75)		(222)		(142)
Total net stock-based compensation cost	$	214	$	213	$	414	$	414

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Retirement-Related Benefits (Tables)

6 Months Ended

Jun. 30, 2024

Retirement Benefits [Abstract]

Pre-tax cost for all retirement-related plans

The following tables provide the pre-tax cost for all retirement-related plans.

					Yr. to Yr.
(Dollars in millions)					Percent
For the three months ended June 30:	2024		2023		Change
Retirement-related plans — cost:
Defined benefit pension and defined contribution plans — cost	$	320	$	259	23.6	%
Nonpension postretirement plans — cost	30		33		(8.1)
Total	$	350	$	292	20.0	%

					Yr. to Yr.
(Dollars in millions)					Percent
For the six months ended June 30:	2024		2023		Change
Retirement-related plans — cost:
Defined benefit pension and defined contribution plans — cost	$	643	$	541	19.0	%
Nonpension postretirement plans — cost	60		65		(7.1)
Total	$	704	$	606	16.2	%

Components of net periodic (income)/cost of the company's retirement-related benefit plans

The following tables provide the components of the cost/(income) for the company’s retirement-related benefit plans.

(Dollars in millions)	U.S. Plans				Non-U.S. Plans
For the three months ended June 30:	2024		2023		2024		2023
Service cost (1)	$	98	$	—	$	41	$	44
Interest cost (2)	254		272		264		292
Expected return on plan assets (2)	(340)		(382)		(384)		(362)
Amortization of prior service costs/(credits) (2)	—		0		5		5
Recognized actuarial losses (2)	129		27		128		101
Curtailments and settlements (2)	—		—		2		6
Multi-employer plans	—		—		3		3
Other costs/(credits) (2)	—		—		12		10
Total net periodic pension (income)/cost of defined benefit plans	$	140	$	(82)	$	71	$	99
Cost of defined contribution plans	15		151		94		91
Total defined benefit pension and defined contribution plans cost recognized in the Consolidated Income Statement	$	155	$	69	$	165	$	190

(1)Increase in U.S. Plans service cost in 2024 is due to the Qualified PPP plan changes described above.

(2)These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

(Dollars in millions)	U.S. Plans				Non-U.S. Plans
For the six months ended June 30:	2024		2023		2024		2023
Service cost (1)	$	197	$	—	$	85	$	88
Interest cost (2)	508		545		532		580
Expected return on plan assets (2)	(681)		(764)		(773)		(718)
Amortization of prior service costs/(credits) (2)	—		0		11		10
Recognized actuarial losses (2)	257		55		258		203
Curtailments and settlements (2)	—		—		4		5
Multi-employer plans	—		—		6		6
Other costs/(credits) (2)	—		—		20		19
Total net periodic pension (income)/cost of defined benefit plans	$	280	$	(165)	$	143	$	194
Cost of defined contribution plans	27		323		193		188
Total defined benefit pension and defined contribution plans cost recognized in the Consolidated Income Statement	$	307	$	158	$	336	$	382

(1)Increase in U.S. Plans service cost in 2024 is due to the Qualified PPP plan changes described above.

(2)These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

Components of the cost/(income) for the company's nonpension postretirement plans

The following tables provide the components of the cost for the company’s nonpension postretirement plans.

(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the three months ended June 30:	2024		2023		2024		2023
Service cost	$	1	$	1	$	1	$	1
Interest cost (1)	27		29		10		10
Expected return on plan assets (1)	—		—		0		(1)
Amortization of prior service costs/(credits) (1)	(7)		(7)		0		0
Recognized actuarial losses (1)	—		—		0		0
Curtailments and settlements (1)	—		—		—		—
Total nonpension postretirement plans cost recognized in the Consolidated Income Statement	$	20	$	23	$	10	$	10

(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the six months ended June 30:	2024		2023		2024		2023
Service cost	$	1	$	2	$	1	$	1
Interest cost (1)	53		58		21		19
Expected return on plan assets (1)	—		—		(1)		(1)
Amortization of prior service costs/(credits) (1)	(15)		(15)		0		0
Recognized actuarial losses (1)	—		—		0		(1)
Curtailments and settlements (1)	—		—		—		—
Total nonpension postretirement plans cost recognized in the Consolidated Income Statement	$	40	$	46	$	21	$	19

(1)These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

Schedule of contributions

The table below includes contributions to the following plans:

(Dollars in millions)	Plan Contributions
For the six months ended June 30:	2024		2023
U.S. nonpension postretirement benefit plan	$	110	$	134
Non-U.S. DB and multi-employer plans (1)	40		29
Total plan contributions	$	150	$	163

(1)Amounts reported net of refunds.

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Basis of Presentation - Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Provision for/(benefit from) income taxes	$ 389	$ 419	$ (112)	$ 543
Effective tax rate	17.50%	21.00%	(3.40%)	17.80%

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Basis of Presentation - Supplier Finance Programs (Details) - Commitment With Third Party Financial Institution - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Other Commitments [Line Items]
Contractual obligation	$ 116	$ 101
Minimum
Other Commitments [Line Items]
Contractual obligation average payment term duration	90 days
Maximum
Other Commitments [Line Items]
Contractual obligation average payment term duration	120 days

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Revenue Recognition - Disaggregation of Revenue by Major Products and Service Offerings (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue by Major Products/Service Offerings
Total Revenue	$ 15,770	$ 15,475	$ 30,231	$ 29,727
Operating Segments
Revenue by Major Products/Service Offerings
Total Revenue	15,732	15,322	30,085	29,406
Other
Revenue by Major Products/Service Offerings
Revenue	38	152	146	321
Software | Operating Segments
Revenue by Major Products/Service Offerings
Total Revenue	6,739	6,294	12,637	11,885
Consulting | Operating Segments
Revenue by Major Products/Service Offerings
Total Revenue	5,179	5,226	10,365	10,423
Infrastructure | Operating Segments
Revenue by Major Products/Service Offerings
Total Revenue	3,645	3,618	6,721	6,716
Financing | Operating Segments
Revenue by Major Products/Service Offerings
Total Revenue	169	185	362	380
Hybrid Platform & Solutions | Software | Operating Segments
Revenue by Major Products/Service Offerings
Revenue	4,575	4,350	8,673	8,200
Transaction Processing | Software | Operating Segments
Revenue by Major Products/Service Offerings
Revenue	2,164	1,943	3,964	3,685
Business Transformation | Consulting | Operating Segments
Revenue by Major Products/Service Offerings
Revenue	2,360	2,295	4,677	4,578
Application Operations | Consulting | Operating Segments
Revenue by Major Products/Service Offerings
Revenue	1,902	1,991	3,840	3,980
Technology Consulting | Consulting | Operating Segments
Revenue by Major Products/Service Offerings
Revenue	917	941	1,848	1,866
Hybrid Infrastructure | Infrastructure | Operating Segments
Revenue by Major Products/Service Offerings
Revenue	2,360	2,260	4,163	3,969
Infrastructure Support | Infrastructure | Operating Segments
Revenue by Major Products/Service Offerings
Revenue	$ 1,285	$ 1,358	$ 2,558	$ 2,747

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Revenue Recognition - Disaggregation of Revenue by Geography (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue by Geography
Revenue	$ 15,770	$ 15,475	$ 30,231	$ 29,727
Americas
Revenue by Geography
Revenue	7,979	8,046	15,275	15,124
Europe/Middle East/Africa
Revenue by Geography
Revenue	4,722	4,602	9,035	8,933
Asia Pacific
Revenue by Geography
Revenue	$ 3,069	$ 2,827	$ 5,922	$ 5,670

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Revenue Recognition - Remaining Performance Obligations (Details) $ in Billions	6 Months Ended
	Jun. 30, 2024 USD ($)
Remaining Performance Obligations
Practical expedient, remaining performance obligations	true
Remaining performance obligations related to customer contracts that are unsatisfied or partially unsatisfied	$ 56
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01
Remaining Performance Obligations
Percentage of remaining performance obligation expected to be recognized	70.00%
Duration of expected recognition period for remaining performance obligation	2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01
Remaining Performance Obligations
Percentage of remaining performance obligation expected to be recognized	27.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01 | Minimum
Remaining Performance Obligations
Duration of expected recognition period for remaining performance obligation	3 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01 | Maximum
Remaining Performance Obligations
Duration of expected recognition period for remaining performance obligation	5 years

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Revenue Recognition - Reconciliation of Contract Balances (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Reconciliation of Contract Balances
Notes and accounts receivable — trade (net of allowances of $129 in 2024 and $192 in 2023)	$ 5,769	$ 7,214
Notes and accounts receivable - trade, allowances	129	192
Contract assets	540	505
Deferred income (current)	13,643	13,451
Deferred income (noncurrent)	3,489	$ 3,533
Revenue recognized that was included in deferred income at the beginning of the period	$ 7,400

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Revenue Recognition - Trade Allowance for Credit Losses (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Roll forward of notes and accounts receivable - trade allowance for credit losses
Allowance for Credit Loss, Beginning Balance	$ 192	$ 233
Additions / (Releases)	(7)	32
Write-offs	(61)	(79)
Foreign currency and other	4	6
Allowance for Credit Loss, Ending Balance	$ 129	$ 192

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Segments - Results of Continuing Operations (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Segment Information
Revenue	$ 15,770	$ 15,475	$ 30,231	$ 29,727
Segment profit	2,219	2,000	3,293	3,058
Operating Segments
Segment Information
Revenue	15,732	15,322	30,085	29,406
Segment profit	$ 3,306	$ 3,028	$ 5,633	$ 5,241
Revenue year-to-year change (as a percent)	2.70%		2.30%
Segment profit year-to-year change (as a percent)	9.20%		7.50%
Segment profit margin (as a percent)	21.00%	19.80%	18.70%	17.80%
Operating Segments | Software
Segment Information
Revenue	$ 6,739	$ 6,294	$ 12,637	$ 11,885
Segment profit	$ 2,113	$ 1,749	$ 3,612	$ 3,128
Revenue year-to-year change (as a percent)	7.10%		6.30%
Segment profit year-to-year change (as a percent)	20.80%		15.50%
Segment profit margin (as a percent)	31.30%	27.80%	28.60%	26.30%
Operating Segments | Consulting
Segment Information
Revenue	$ 5,179	$ 5,226	$ 10,365	$ 10,423
Segment profit	$ 463	$ 483	$ 888	$ 910
Revenue year-to-year change (as a percent)	(0.90%)		(0.60%)
Segment profit year-to-year change (as a percent)	(4.00%)		(2.40%)
Segment profit margin (as a percent)	8.90%	9.20%	8.60%	8.70%
Operating Segments | Infrastructure
Segment Information
Revenue	$ 3,645	$ 3,618	$ 6,721	$ 6,716
Segment profit	$ 654	$ 732	$ 965	$ 1,039
Revenue year-to-year change (as a percent)	0.70%		0.10%
Segment profit year-to-year change (as a percent)	(10.70%)		(7.10%)
Segment profit margin (as a percent)	17.90%	20.20%	14.40%	15.50%
Operating Segments | Financing
Segment Information
Revenue	$ 169	$ 185	$ 362	$ 380
Segment profit	$ 77	$ 64	$ 168	$ 164
Revenue year-to-year change (as a percent)	(8.30%)		(4.90%)
Segment profit year-to-year change (as a percent)	19.30%		2.40%
Segment profit margin (as a percent)	45.30%	34.80%	46.50%	43.20%

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Segments - Revenue Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue
Revenue	$ 15,770	$ 15,475	$ 30,231	$ 29,727
Operating Segments
Revenue
Revenue	15,732	15,322	30,085	29,406
Other
Revenue
Other‒divested businesses	0	101	35	195
Other revenue	$ 38	$ 52	$ 111	$ 127

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Segments - Pre-Tax Income Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pre-tax income from continuing operations
Amortization of acquired intangible assets	$ (439)	$ (389)	$ (866)	$ (781)
Acquisition-related (charges)/income	(36)	(7)	(96)	(10)
Non-operating retirement-related (costs)/income	(98)	(1)	(194)	4
Stock-based compensation	(316)	(288)	(636)	(556)
Net interest excluding the Financing segment	(218)	(225)	(442)	(442)
Workforce rebalancing charges	(18)	(117)	(392)	(376)
Other-divested businesses	(4)	23	235	36
Total pre-tax income from continuing operations	2,219	2,000	3,293	3,058
Operating Segments
Pre-tax income from continuing operations
Total pre-tax income from continuing operations	3,306	3,028	5,633	5,241
Unallocated corporate amounts and other
Pre-tax income from continuing operations
Total pre-tax income from continuing operations	$ 41	$ (24)	$ 50	$ (57)

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Acquisitions & Divestitures - Acquisitions (Details) $ / shares in Units, € in Millions, $ in Millions			5 Months Ended	6 Months Ended
	Jul. 01, 2024 USD ($)	Jul. 01, 2024 EUR (€)	Dec. 31, 2024 USD ($) $ / shares	Jun. 30, 2024 USD ($) acquisition	Dec. 31, 2023 USD ($)
Acquisitions
Restricted cash				$ 2,268	$ 21
StreamSets and webMethods | Subsequent Event
Acquisitions
Aggregate acquisitions cost	$ 2,300	€ 2,130
2024 Acquisitions
Acquisitions
Percentage of business acquired (as a percent)				100.00%
Aggregate acquisitions cost				$ 278
Restricted cash				$ 2,300
2024 Acquisitions | Software
Acquisitions
Number of acquisitions | acquisition				2
2024 Acquisitions | Consulting
Acquisitions
Number of acquisitions | acquisition				2
HashiCorp | Forecast
Acquisitions
Aggregate acquisitions cost			$ 6,400
Business acquisition, cash per share (in dollars per share) | $ / shares			$ 35

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Acquisitions & Divestitures - Purchase Price Allocation (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2024	Dec. 31, 2023	Dec. 31, 2022
Acquisitions
Goodwill	$ 59,416	$ 60,178	$ 55,949
2024 Acquisitions
Acquisitions
Current assets	35
Property, plant and equipment/noncurrent assets	3
Goodwill	207
Total assets acquired	319
Current liabilities	24
Noncurrent liabilities	16
Total liabilities assumed	41
Total purchase price	278
2024 Acquisitions | Client relationships
Acquisitions
Intangible assets	$ 36
2024 Acquisitions | Client relationships | Minimum
Acquisitions
Weighted average useful life	1 year
2024 Acquisitions | Client relationships | Maximum
Acquisitions
Weighted average useful life	7 years
2024 Acquisitions | Completed technology
Acquisitions
Intangible assets	$ 37
Weighted average useful life	7 years
2024 Acquisitions | Trademarks
Acquisitions
Intangible assets	$ 1
Weighted average useful life	3 years

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Acquisitions & Divestitures - Divestitures (Details) - Discontinued Operations, Disposed of by Sale - The Weather Company - USD ($) $ in Millions		6 Months Ended
	Jan. 31, 2024	Jun. 30, 2024
Divestitures
Consideration	$ 1,100
Contingent consideration	250
Cash consideration received	750
Financing receivable	$ 100	$ 100
Seller financing loan term	7 years
Pre-tax gain on sale of business		$ 239
Contingent Consideration, Attainment Of Certain Investment Return Metrics
Divestitures
Contingent consideration	$ 200

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Acquisitions & Divestitures - Sale of Assets (Details) - Disposal Group, Held-for-Sale, Not Discontinued Operations - QRadar SaaS - USD ($) $ in Millions	Sep. 30, 2024	Jun. 30, 2024
Divestitures
Disposal group, assets		$ 113
Disposal group, liabilities		$ 37
Forecast
Divestitures
Consideration	$ 500

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Other (Income) and Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Other Income and Expenses [Abstract]
Foreign currency transaction losses/(gains)	$ (140)	$ (166)	$ (345)	$ (78)
(Gains)/losses on derivative instruments	140	141	427	(1)
Interest income	(217)	(201)	(427)	(371)
Net (gains)/losses from securities and investment assets	0	3	(10)	8
Retirement-related costs/(income)	98	1	194	(4)
Other	(114)	(39)	(389)	(61)
Total other (income) and expense	$ (233)	$ (261)	(550)	$ (506)
Discontinued Operations, Disposed of by Sale | The Weather Company
Divestitures
Pre-tax gain on sale of business			$ 239

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Earnings Per Share of Common Stock - Computation (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Number of shares on which basic earnings per share is calculated:
Weighted-average shares outstanding during period (in shares)	920,287,541	909,855,943	918,733,160	908,691,415
Add - Incremental shares under stock-based compensation plans (in shares)	11,883,820	7,584,035	13,070,105	8,096,637
Add - Incremental shares associated with contingently issuable shares (in shares)	2,226,234	2,012,519	2,111,189	1,860,836
Number of shares on which diluted earnings per share is calculated (in shares)	934,397,595	919,452,496	933,914,454	918,648,888
Net income on which basic earnings per share is calculated
Income from continuing operations	$ 1,830	$ 1,581	$ 3,405	$ 2,515
Income from discontinued operations, net of tax	4	2	34	(4)
Net income	1,834	1,583	3,439	2,511
Net income/(loss) on which diluted earnings per share is calculated
Income from continuing operations	1,830	1,581	3,405	2,515
Net income applicable to contingently issuable shares	0	0	0	0
Income from continuing operations on which diluted earnings per share is calculated	1,830	1,581	3,405	2,515
Income/(loss) from discontinued operations, net of tax, on which diluted earnings per share is calculated	4	2	34	(4)
Net income on which diluted earnings per share is calculated	$ 1,834	$ 1,583	$ 3,439	$ 2,511
Assuming dilution:
Continuing operations (in dollars per share)	$ 1.96	$ 1.72	$ 3.65	$ 2.74
Discontinued operations (in dollars per share)	0.00	0.00	0.04	0.00
Total (in dollars per share)	1.96	1.72	3.68	2.73
Basic:
Continuing operations (in dollars per share)	1.99	1.74	3.71	2.77
Discontinued operations (in dollars per share)	0.00	0.00	0.04	0.00
Total (in dollars per share)	$ 1.99	$ 1.74	$ 3.74	$ 2.76

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Earnings Per Share of Common Stock - Antidilutive Stock Options (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Stock Options
Antidilutive stock options
Outstanding stock options not included in the computation of diluted earnings per share (in shares)	2,985,594	5,541,485	1,523,477	3,251,207

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Financial Assets & Liabilities - Impairment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Investments, All Other Investments [Abstract]
Impairment for credit losses	$ 0	$ 0	$ 0	$ 0

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Financial Assets & Liabilities - Fair Value Measurements (Details) - USD ($) $ in Millions	Jun. 30, 2024	Jan. 31, 2024	Dec. 31, 2023
Financial assets and financial liabilities measured at fair value on a recurring basis:
Debt securities - current	$ 1,481		$ 373
Foreign Exchange Call Option
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivatives not designated as hedging - Assets			62
Discontinued Operations, Disposed of by Sale | The Weather Company
Financial assets and financial liabilities measured at fair value on a recurring basis:
Financing receivable	100	$ 100
Fair Value, Recurring
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	5,778		7,699
Total assets	7,799		8,446
Total liabilities	624		593
Fair Value, Recurring | Prepaid Expenses and Other Current Assets
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets	424		304
Fair Value, Recurring | Other Noncurrent Assets
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative assets	8		37
Fair Value, Recurring | Other Current Liabilities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative liabilities	173		294
Fair Value, Recurring | Other Noncurrent Liabilities
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivative liabilities	450		299
Fair Value, Recurring | Level 1
Financial assets and financial liabilities measured at fair value on a recurring basis:
Equity investments	0		25
Fair Value, Recurring | Level 1 | Money market funds
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	471		494
Fair Value, Recurring | Level 2
Financial assets and financial liabilities measured at fair value on a recurring basis:
Debt securities - current	1,481		373
Fair Value, Recurring | Level 2 | Interest rate contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivatives designated as hedging - Assets	0		2
Derivatives designated as hedging - Liabilities	419		299
Fair Value, Recurring | Level 2 | Foreign exchange contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivatives designated as hedging - Assets	402		131
Derivatives designated as hedging - Liabilities	161		275
Derivatives not designated as hedging - Assets	8		115
Derivatives not designated as hedging - Liabilities	33		19
Fair Value, Recurring | Level 2 | Equity contracts
Financial assets and financial liabilities measured at fair value on a recurring basis:
Derivatives not designated as hedging - Assets	22		93
Derivatives not designated as hedging - Liabilities	10		0
Fair Value, Recurring | Level 2 | Time deposits and certificates of deposit
Financial assets and financial liabilities measured at fair value on a recurring basis:
Cash equivalents	5,307		7,206
Fair Value, Recurring | Level 2 And 3
Financial assets and financial liabilities measured at fair value on a recurring basis:
Debt securities - noncurrent	$ 108		$ 8

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Financial Assets & Liabilities - Not Measured at Fair Value (Details) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Long-Term Debt
Long-term debt	$ 52,929	$ 50,121
Fair value of long-term debt	$ 49,844	$ 48,284

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Financing Receivables - Payment Terms (Details)	6 Months Ended
	Jun. 30, 2024
Loans Receivable | Maximum
Financing receivables
Financing receivable, payment terms	7 years
Finance Leases Portfolio Segment | Maximum
Financing receivables
Financing receivable, payment terms	5 years
Commercial Financing Receivables | Minimum
Financing receivables
Financing receivable, payment terms	30 days
Commercial Financing Receivables | Maximum
Financing receivables
Financing receivable, payment terms	60 days

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Financing Receivables - Components of Financing Receivables (Details) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Components of the company's financing receivables
Net investment in lease, gross	$ 3,938	$ 4,261
Net investment in lease, unearned income	(401)	(429)
Net investment in lease, unguaranteed residual value	464	458
Net investment in lease, amortized cost	4,000	4,290
Net investment in lease, allowance for credit loss	(57)	(63)
Total net investment in lease, net	3,944	4,227
Financing receivable and net investment in lease, gross	11,856	13,173
Financing receivable and net investment in lease, unearned income	(901)	(915)
Financing receivable and net investment in lease, unguaranteed residual value	464	458
Financing receivable and net investment in lease, amortized cost	11,419	12,716
Financing receivable and net investment in lease, allowance for credit loss	(137)	(156)
Financing receivable and net investment in lease, net	11,282	12,560
Asset Pledged as Collateral
Components of the company's financing receivables
Amortized cost	330	232
Current portion
Components of the company's financing receivables
Net investment in lease, current	1,507	1,520
Financing receivable and net investment in lease, net	5,799	6,793
Noncurrent portion
Components of the company's financing receivables
Net investment in lease, noncurrent	2,437	2,707
Financing receivable and net investment in lease, net	5,483	5,766
Loans Receivable
Components of the company's financing receivables
Financing receivables, gross	6,577	7,060
Unearned income	(500)	(486)
Amortized cost	6,077	6,574
Allowance for credit losses	(75)	(87)
Total financing receivables, net	6,002	6,486
Loans Receivable | Current portion
Components of the company's financing receivables
Total financing receivables, net	2,956	3,427
Loans Receivable | Noncurrent portion
Components of the company's financing receivables
Total financing receivables, net	3,046	3,059
Held for Investment
Components of the company's financing receivables
Financing receivables, gross	618	1,160
Amortized cost	618	1,160
Allowance for credit losses	(5)	(6)
Total financing receivables, net	613	1,155
Held for Investment | Current portion
Components of the company's financing receivables
Total financing receivables, net	613	1,155
Held for Sale
Components of the company's financing receivables
Financing receivables, gross	723	692
Amortized cost	723	692
Total financing receivables, net	723	692
Held for Sale | Current portion
Components of the company's financing receivables
Total financing receivables, net	$ 723	$ 692

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Financing Receivables - Transfer of Financing Assets (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jan. 31, 2024	Dec. 31, 2023	Nov. 30, 2023
Financing receivables
Financing receivable transferred, net gain (loss)	$ (33)	$ (45)
Commercial Financing Receivables
Financing receivables
Financing receivables transferred	3,686	4,345
Financing receivables transferred and uncollected	$ 786	$ 928
Commercial Financing Receivables | Third Party Investor
Financing receivables
Transfer of financial assets, sales period				1 year
Commercial Financing Receivables | Third Party Investor | Maximum
Financing receivables
Financing receivables to be sold			$ 1,300		$ 3,000

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Financing Receivables - By Portfolio Segment (Details) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2024 USD ($) class	Dec. 31, 2023 USD ($) class
Financing receivables
Amortized cost	$ 11,419	$ 12,716
Allowance for credit losses:
Allowance for credit losses, beginning balance	156
Allowance for credit losses, ending balance	$ 137	$ 156
Client Financing Receivables
Financing receivables
Number of classes of financing receivable | class	3	3
Amortized cost	$ 10,077	$ 10,863
Allowance for credit losses:
Allowance for credit losses, beginning balance	150	168
Write-offs	(1)	(18)
Recoveries	1	5
Additions/(releases)	(11)	(12)
Other	(7)	8
Allowance for credit losses, ending balance	131	150
Client Financing Receivables | Americas
Financing receivables
Amortized cost	6,075	6,488
Allowance for credit losses:
Allowance for credit losses, beginning balance	92	88
Write-offs	0	(9)
Recoveries	0	0
Additions/(releases)	(8)	5
Other	(5)	7
Allowance for credit losses, ending balance	78	92
Client Financing Receivables | Europe/Middle East/Africa
Financing receivables
Amortized cost	2,672	3,007
Allowance for credit losses:
Allowance for credit losses, beginning balance	48	60
Write-offs	(1)	(1)
Recoveries	0	2
Additions/(releases)	(3)	(14)
Other	(2)	1
Allowance for credit losses, ending balance	43	48
Client Financing Receivables | Asia Pacific
Financing receivables
Amortized cost	1,330	1,368
Allowance for credit losses:
Allowance for credit losses, beginning balance	11	20
Write-offs	0	(8)
Recoveries	0	3
Additions/(releases)	0	(4)
Other	0	(1)
Allowance for credit losses, ending balance	$ 10	$ 11

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Financing Receivables - Past Due (Details) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Past Due Financing Receivable
Amortized cost	$ 11,419	$ 12,716
Client Financing Receivables
Past Due Financing Receivable
Amortized cost	10,077	10,863
Amortized Cost Not Accruing	103	110
Impaired financing receivables, related allowance	99	106
Client Financing Receivables | Financial Asset, Equal to or Greater than 90 Days Past Due
Past Due Financing Receivable
Amortized cost	123	151
Amortized Cost > 90 Days and Accruing	21	43
Billed Invoices > 90 Days and Accruing	5	7
Client Financing Receivables | Americas
Past Due Financing Receivable
Amortized cost	6,075	6,488
Amortized Cost Not Accruing	67	71
Client Financing Receivables | Americas | Financial Asset, Equal to or Greater than 90 Days Past Due
Past Due Financing Receivable
Amortized cost	83	111
Amortized Cost > 90 Days and Accruing	17	40
Billed Invoices > 90 Days and Accruing	2	6
Client Financing Receivables | Europe/Middle East/Africa
Past Due Financing Receivable
Amortized cost	2,672	3,007
Amortized Cost Not Accruing	29	31
Client Financing Receivables | Europe/Middle East/Africa | Financial Asset, Equal to or Greater than 90 Days Past Due
Past Due Financing Receivable
Amortized cost	33	31
Amortized Cost > 90 Days and Accruing	4	1
Billed Invoices > 90 Days and Accruing	3	1
Client Financing Receivables | Asia Pacific
Past Due Financing Receivable
Amortized cost	1,330	1,368
Amortized Cost Not Accruing	7	8
Client Financing Receivables | Asia Pacific | Financial Asset, Equal to or Greater than 90 Days Past Due
Past Due Financing Receivable
Amortized cost	8	9
Amortized Cost > 90 Days and Accruing	0	1
Billed Invoices > 90 Days and Accruing	$ 0	$ 0

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Financing Receivables - Credit Quality Year of Origination (Details) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Amortized cost for each class of receivables, by credit quality indicator
Financing receivable and net investment in lease, amortized cost	$ 11,419	$ 12,716
Americas | Aaa – Baa3
Amortized cost for each class of receivables, by credit quality indicator
Originated in current fiscal year	1,176	2,292
Originated in fiscal year before latest fiscal year	1,766	1,645
Originated two years before latest fiscal year	1,258	655
Originated three years before latest fiscal year	410	205
Originated four years before latest fiscal year	88	104
Originated five or more years before latest fiscal year	106	55
Financing receivable and net investment in lease, amortized cost	4,804	4,955
Americas | Ba1 – C
Amortized cost for each class of receivables, by credit quality indicator
Originated in current fiscal year	381	1,028
Originated in fiscal year before latest fiscal year	588	268
Originated two years before latest fiscal year	168	85
Originated three years before latest fiscal year	45	79
Originated four years before latest fiscal year	35	23
Originated five or more years before latest fiscal year	54	50
Financing receivable and net investment in lease, amortized cost	1,271	1,533
Europe/Middle East/Africa | Aaa – Baa3
Amortized cost for each class of receivables, by credit quality indicator
Originated in current fiscal year	423	750
Originated in fiscal year before latest fiscal year	472	687
Originated two years before latest fiscal year	515	284
Originated three years before latest fiscal year	180	106
Originated four years before latest fiscal year	52	58
Originated five or more years before latest fiscal year	49	16
Financing receivable and net investment in lease, amortized cost	1,692	1,901
Europe/Middle East/Africa | Ba1 – C
Amortized cost for each class of receivables, by credit quality indicator
Originated in current fiscal year	223	520
Originated in fiscal year before latest fiscal year	358	374
Originated two years before latest fiscal year	262	83
Originated three years before latest fiscal year	54	60
Originated four years before latest fiscal year	35	38
Originated five or more years before latest fiscal year	48	30
Financing receivable and net investment in lease, amortized cost	980	1,106
Asia Pacific | Aaa – Baa3
Amortized cost for each class of receivables, by credit quality indicator
Originated in current fiscal year	296	501
Originated in fiscal year before latest fiscal year	356	386
Originated two years before latest fiscal year	322	110
Originated three years before latest fiscal year	70	97
Originated four years before latest fiscal year	58	40
Originated five or more years before latest fiscal year	38	39
Financing receivable and net investment in lease, amortized cost	1,139	1,174
Asia Pacific | Ba1 – C
Amortized cost for each class of receivables, by credit quality indicator
Originated in current fiscal year	61	70
Originated in fiscal year before latest fiscal year	39	42
Originated two years before latest fiscal year	34	40
Originated three years before latest fiscal year	28	22
Originated four years before latest fiscal year	15	8
Originated five or more years before latest fiscal year	14	12
Financing receivable and net investment in lease, amortized cost	$ 191	$ 195

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Leases - Lease Amounts Included in Consolidated Income Statement (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Lease income — sales-type and direct financing leases:
Sales-type lease selling price	$ 367	$ 248	$ 480	$ 338
Less: Carrying value of underlying assets	(66)	(61)	(94)	(91)
Gross profit	301	187	386	247
Interest income on lease receivables	69	59	138	118
Total sales-type and direct financing lease income	370	246	524	365
Lease income — operating leases	16	25	34	51
Variable lease income	18	14	38	35
Total lease income	$ 404	$ 284	$ 596	$ 451

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Intangible Assets Including Goodwill - Intangible Assets by Class (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Intangible asset balances by major asset class
Gross Carrying Amount	$ 18,175	$ 18,265
Accumulated Amortization	(7,924)	(7,229)
Net Carrying Amount	10,251	11,036
Amount of foreign currency translation increase (decrease)	(76)	50
Capitalized software
Intangible asset balances by major asset class
Gross Carrying Amount	1,528	1,636
Accumulated Amortization	(661)	(762)
Net Carrying Amount	867	874
Client relationships
Intangible asset balances by major asset class
Gross Carrying Amount	8,976	9,053
Accumulated Amortization	(3,911)	(3,500)
Net Carrying Amount	5,065	5,553
Completed technology
Intangible asset balances by major asset class
Gross Carrying Amount	5,719	5,713
Accumulated Amortization	(2,834)	(2,510)
Net Carrying Amount	2,885	3,203
Patents/trademarks
Intangible asset balances by major asset class
Gross Carrying Amount	1,803	1,821
Accumulated Amortization	(483)	(436)
Net Carrying Amount	1,320	1,385
Other
Intangible asset balances by major asset class
Gross Carrying Amount	149	41
Accumulated Amortization	(35)	(20)
Net Carrying Amount	$ 114	$ 22

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Intangible Assets Including Goodwill - Intangible Assets Activity (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible assets, increase (decrease)			$ (786)
Intangible asset amortization expense	$ 607	$ 556	1,205	$ 1,104
Retirement of fully amortized intangible assets			$ 405

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Intangible Assets Including Goodwill - Future Amortization (Details) $ in Millions	Jun. 30, 2024 USD ($)
Future amortization expense, by year
Remainder of 2024	$ 1,186
2025	2,075
2026	1,880
2027	1,710
2028	1,379
Thereafter	2,020
Capitalized software
Future amortization expense, by year
Remainder of 2024	305
2025	351
2026	180
2027	30
2028	0
Thereafter	0
Acquired intangibles
Future amortization expense, by year
Remainder of 2024	881
2025	1,724
2026	1,700
2027	1,681
2028	1,379
Thereafter	$ 2,020

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Intangible Assets Including Goodwill - Goodwill by Segment (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Changes in Goodwill Balances
Beginning Balance	$ 60,178	$ 55,949
Goodwill Additions	207	3,953
Purchase Price Adjustments	(11)	(15)
Divestitures	(464)	0
Foreign Currency Translation and Other Adjustments	(494)	291
Ending Balance	59,416	60,178
Goodwill impairment losses	0	0
Goodwill accumulated impairment losses	0	0
Software
Changes in Goodwill Balances
Beginning Balance	46,447	42,712
Goodwill Additions	91	3,538
Purchase Price Adjustments	(9)	(17)
Divestitures	0	0
Foreign Currency Translation and Other Adjustments	(408)	214
Ending Balance	46,120	46,447
Consulting
Changes in Goodwill Balances
Beginning Balance	8,883	8,409
Goodwill Additions	108	403
Purchase Price Adjustments	0	2
Divestitures	0	0
Foreign Currency Translation and Other Adjustments	(70)	69
Ending Balance	8,920	8,883
Infrastructure
Changes in Goodwill Balances
Beginning Balance	4,384	4,363
Goodwill Additions	8	12
Purchase Price Adjustments	(1)	0
Divestitures	0	0
Foreign Currency Translation and Other Adjustments	(16)	8
Ending Balance	4,376	4,384
Other
Changes in Goodwill Balances
Beginning Balance	464	464
Goodwill Additions	0	0
Purchase Price Adjustments	0	0
Divestitures	(464)	0
Foreign Currency Translation and Other Adjustments	0	0
Ending Balance	$ 0	$ 464

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Borrowings - Short-Term Debt (Details) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
Short-term debt	$ 3,602	$ 6,426

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Borrowings - Long-Term Debt, Components (Details) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Borrowings
Long-term debt, gross	$ 57,757	$ 57,598
Long-term debt excluding finance lease obligations	56,934	57,099
Less: net unamortized discount	844	838
Less: net unamortized debt issuance costs	179	154
Add: fair value adjustment	(204)	(60)
Total	56,531	56,546
Less: current maturities	3,601	6,425
Total long-term debt (excluding current portion)	52,929	50,121
United States of America, Dollars
Borrowings
Long-term debt, gross	35,817	35,317
Euro Member Countries, Euro
Borrowings
Long-term debt, gross	18,745	19,335
Maturing 2024 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 1	5,003
Debt instrument, weighted-average interest rate (as a percent)	3.40%
Maturing 2024 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 803	829
Debt instrument, weighted-average interest rate (as a percent)	1.10%
Maturing 2025 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 1,604	1,601
Debt instrument, weighted-average interest rate (as a percent)	5.10%
Maturing 2025 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 3,213	3,315
Debt instrument, weighted-average interest rate (as a percent)	1.60%
Maturing 2026 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 5,800	5,201
Debt instrument, weighted-average interest rate (as a percent)	3.70%
Maturing 2027 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 4,119	3,619
Debt instrument, weighted-average interest rate (as a percent)	3.30%
Maturing 2027 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 2,142	2,210
Debt instrument, weighted-average interest rate (as a percent)	2.30%
Maturing 2028 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 1,313	1,313
Debt instrument, weighted-average interest rate (as a percent)	5.00%
Maturing 2028 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 1,928	1,989
Debt instrument, weighted-average interest rate (as a percent)	0.70%
Maturing 2029 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 3,750	3,250
Debt instrument, weighted-average interest rate (as a percent)	3.60%
Maturing 2029 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 1,071	1,105
Debt instrument, weighted-average interest rate (as a percent)	1.50%
Maturing 2030 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 1,350	1,350
Debt instrument, weighted-average interest rate (as a percent)	2.00%
Maturing 2030 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 1,071	1,105
Debt instrument, weighted-average interest rate (as a percent)	0.90%
Maturing 2031 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 500	0
Debt instrument, weighted-average interest rate (as a percent)	4.80%
Maturing 2031 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 2,678	2,762
Debt instrument, weighted-average interest rate (as a percent)	2.70%
Maturing 2032 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 1,850	1,850
Debt instrument, weighted-average interest rate (as a percent)	4.40%
Maturing 2032 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 1,714	1,768
Debt instrument, weighted-average interest rate (as a percent)	0.70%
Maturing 2033 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 750	750
Debt instrument, weighted-average interest rate (as a percent)	4.80%
Maturing 2034 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 1,000	0
Debt instrument, weighted-average interest rate (as a percent)	4.90%
Maturing 2034 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 1,071	1,105
Debt instrument, weighted-average interest rate (as a percent)	1.30%
Maturing 2035 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 1,071	1,105
Debt instrument, weighted-average interest rate (as a percent)	3.80%
Maturing 2038 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 83	83
Debt instrument, weighted-average interest rate (as a percent)	8.00%
Maturing 2038 | United Kingdom, Pounds
Borrowings
Long-term debt, gross	$ 948	955
Debt instrument, weighted-average interest rate (as a percent)	4.90%
Maturing 2039 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 2,745	2,745
Debt instrument, weighted-average interest rate (as a percent)	4.50%
Maturing 2040 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 650	650
Debt instrument, weighted-average interest rate (as a percent)	2.90%
Maturing 2040 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 910	939
Debt instrument, weighted-average interest rate (as a percent)	1.20%
Maturing 2042 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 1,107	1,107
Debt instrument, weighted-average interest rate (as a percent)	4.00%
Maturing 2044 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 1,000	0
Debt instrument, weighted-average interest rate (as a percent)	5.30%
Maturing 2043 | Euro Member Countries, Euro
Borrowings
Long-term debt, gross	$ 1,071	1,105
Debt instrument, weighted-average interest rate (as a percent)	4.00%
Maturing 2045 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 27	27
Debt instrument, weighted-average interest rate (as a percent)	7.00%
Maturing 2046 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 650	650
Debt instrument, weighted-average interest rate (as a percent)	4.70%
Maturing 2049 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 3,000	3,000
Debt instrument, weighted-average interest rate (as a percent)	4.30%
Maturing 2050 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 750	750
Debt instrument, weighted-average interest rate (as a percent)	3.00%
Maturing 2052 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 1,400	1,400
Debt instrument, weighted-average interest rate (as a percent)	4.20%
Maturing 2053 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 650	650
Debt instrument, weighted-average interest rate (as a percent)	5.10%
Maturing 2054 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 1,400	0
Debt instrument, weighted-average interest rate (as a percent)	5.30%
Maturing 2096 | United States of America, Dollars
Borrowings
Long-term debt, gross	$ 316	316
Debt instrument, weighted-average interest rate (as a percent)	7.10%
Maturing 2024-2028 | Japan, Yen
Borrowings
Long-term debt, gross	$ 1,097	1,251
Debt instrument, weighted-average interest rate (as a percent)	0.50%
Maturing 2024-2027 | Other currencies
Borrowings
Long-term debt, gross	$ 327	241
Debt instrument, weighted-average interest rate (as a percent)	12.90%
Finance Lease Obligations Maturing 2024-2034
Borrowings
Finance lease obligations	$ 823	$ 499
Finance lease obligations, interest rate (as a percent)	5.00%

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Borrowings - Long-Term Debt, Covenants (Details) $ in Millions	6 Months Ended
	Jun. 30, 2024 USD ($)
Borrowings
Limit based on net tangible assets	10.00%
Revolving Credit Facility
Borrowings
Minimum net interest expense ratio	2.20
Default provision on credit facility	$ 500

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Borrowings - Long-Term Debt, Debt Issued (Details) - US dollar, fixed-rate notes issued 2024 $ in Billions	Feb. 05, 2024 USD ($)
Notes Issued
Aggregate amount of debt issued	$ 5.5
Minimum
Notes Issued
Credit facility term	2 years
Coupon rate (as a percent)	4.60%
Maximum
Notes Issued
Credit facility term	30 years
Coupon rate (as a percent)	5.30%

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Borrowings - Pre-Swap Obligations (Details) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Pre-swap annual contractual obligations of long-term debt outstanding
Remainder of 2024	$ 1,291
2025	5,142
2026	6,272
2027	6,397
2028	3,887
Thereafter	34,767
Total	$ 57,757	$ 57,598

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Borrowings - Interest on Debt (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Interest on Debt
Interest capitalized	$ 6	$ 6
Total interest paid and accrued	1,032	969
Cost of financing
Interest on Debt
Interest expense	167	173
Interest expense
Interest on Debt
Interest expense	$ 859	$ 790

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Borrowings - Lines of Credit (Details) - USD ($)	Jun. 17, 2024	Jun. 30, 2024
Revolving Credit Facility
Lines of Credit
Amount of credit facility	$ 10,000,000,000
Borrowings outstanding		$ 0
Three-Year Credit Agreement
Lines of Credit
Amount of credit facility	$ 2,500,000,000
Credit facility term	3 years
Five-Year Credit Agreement
Lines of Credit
Amount of credit facility	$ 7,500,000,000
Credit facility term	5 years

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Commitments - Extensions of Credit (Details) - USD ($) $ in Billions	Jun. 30, 2024	Dec. 31, 2023
Extended lines of credit
Other Commitments [Line Items]
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients	$ 1.4	$ 1.4
Financing for client purchase agreements
Other Commitments [Line Items]
Unused amounts in lines of credit to third-party entities and commitments for future financing to clients	$ 1.9	$ 1.9

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Commitments - Standard Warranty Liability (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Movement in standard warranty liability
Beginning Balance	$ 65	$ 79
Current-period accruals	38	35
Accrual adjustments to reflect actual experience	7	(14)
Charges incurred	(41)	(43)
Ending Balance	$ 70	$ 57

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Commitments - Extended Warranty Liability (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Movement in deferred income
Amortization of deferred revenue	$ (7,400)
Deferred income (current)	13,643		$ 13,451
Deferred income (noncurrent)	3,489		$ 3,533
Extended Warranty
Movement in deferred income
Beginning Balance	184	$ 272
Revenue deferred for new extended warranty contracts	18	20
Amortization of deferred revenue	(62)	(73)
Other	(4)	(1)
Ending Balance	135	218
Deferred income (current)	82	119
Deferred income (noncurrent)	$ 52	$ 99

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Contingencies (Details) $ in Millions			6 Months Ended
	May 30, 2022 USD ($)	Jun. 08, 2021 USD ($)	Jun. 30, 2024 USD ($) country
Brazil Tax Matters
Loss Contingencies
Damages sought, value			$ 400
BMC v. IBM
Loss Contingencies
Direct damages sought, value	$ 718
Punitive damages sought, value	$ 718
Minimum
Loss Contingencies
Clients' presence in number of countries | country			175
Minimum | IBM v. GF
Loss Contingencies
Damages sought, value		$ 1,500

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Equity Activity - Reclassifications and Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	$ 6,820	$ 6,974	$ 13,539	$ 13,717
SG&A expense	4,938	4,900	9,912	9,754
Other (income) and expense	(233)	(261)	(550)	(506)
Interest expense	427	423	859	790
Services
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	5,126	5,294	10,365	10,604
Sales
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	1,607	1,587	2,988	2,910
Financing
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	86	93	186	203
Accumulated Other Comprehensive Income/(Loss)
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Other Comprehensive Income (Loss), before Tax	322	381	885	289
Other comprehensive income/(loss), Tax (Expense)/Benefit	(153)	(101)	(442)	(48)
Other comprehensive income/(loss)	169	280	442	241
Unrealized gains/(losses) arising during the period, Net of Tax Amount			42	167
Reclassification/amortization, Net of Tax Amount			400	74
Accumulated Foreign Currency Adjustment Attributable to Parent
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Other Comprehensive Income (Loss), before Tax	2	116	57	29
Other comprehensive income/(loss), Tax (Expense)/Benefit	(68)	(34)	(222)	22
Other comprehensive income/(loss)	(66)	82	(165)	52
Unrealized gains/(losses) arising during the period, Net of Tax Amount			(165)	52
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-Sale, Parent
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Other Comprehensive Income (Loss), before Tax	1	(17)	1	(1)
Other comprehensive income/(loss), Tax (Expense)/Benefit	0	4	0	0
Other comprehensive income/(loss)	0	(12)	1	(1)
Unrealized gains/(losses) arising during the period, Before Tax Amount	1	(17)	1	(1)
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	0	4	0	0
Unrealized gains/(losses) arising during the period, Net of Tax Amount	0	(12)	1	(1)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Other Comprehensive Income (Loss), before Tax	61	148	307	(3)
Other comprehensive income/(loss), Tax (Expense)/Benefit	(16)	(40)	(79)	(1)
Other comprehensive income/(loss)	45	109	227	(4)
Unrealized gains/(losses) arising during the period, Before Tax Amount	103	178	279	149
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	(28)	(48)	(75)	(41)
Unrealized gains/(losses) arising during the period, Net of Tax Amount	75	130	204	107
Reclassification/amortization, Net of Tax Amount			24	(112)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Cost of services
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Reclassification/amortization, Tax (Expense)/Benefit	3	(1)	4	(1)
Reclassification/amortization, Net of Tax Amount	(7)	2	(10)	4
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Cost of sales
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Reclassification/amortization, Tax (Expense)/Benefit	5	1	9	5
Reclassification/amortization, Net of Tax Amount	(10)	(1)	(18)	(12)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Cost of financing
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Reclassification/amortization, Tax (Expense)/Benefit	0	(1)	(1)	(2)
Reclassification/amortization, Net of Tax Amount	1	3	2	7
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | SG&A expense
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Reclassification/amortization, Tax (Expense)/Benefit	2	0	3	3
Reclassification/amortization, Net of Tax Amount	(5)	0	(7)	(7)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Other (income) and expense
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Reclassification/amortization, Tax (Expense)/Benefit	5	14	(15)	45
Reclassification/amortization, Net of Tax Amount	(16)	(41)	44	(135)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Interest expense
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Reclassification/amortization, Tax (Expense)/Benefit	(2)	(5)	(4)	(11)
Reclassification/amortization, Net of Tax Amount	6	16	13	32
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income
Reclassifications and Taxes Related to Items of Other Comprehensive Income
SG&A expense	(7)	(1)	(10)	(10)
Other (income) and expense	(21)	(55)	58	(181)
Interest expense	8	22	17	42
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Services
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	(9)	3	(14)	5
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Sales
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	(15)	(2)	(27)	(17)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Reclassification out of Accumulated Other Comprehensive Income | Financing
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Cost	2	4	3	9
Accumulated Defined Benefit Plans Adjustment Attributable to Parent
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Other Comprehensive Income (Loss), before Tax	259	134	520	263
Other comprehensive income/(loss), Tax (Expense)/Benefit	(69)	(31)	(141)	(69)
Other comprehensive income/(loss)	190	102	379	194
Unrealized gains/(losses) arising during the period, Net of Tax Amount			2	9
Reclassification/amortization, Net of Tax Amount			377	185
Accumulated Defined Benefit Plans Adjustment, Net Prior Service Attributable to Parent
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Before Tax Amount	0	0	0	0
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	0	0	0	1
Unrealized gains/(losses) arising during the period, Net of Tax Amount	0	0	0	1
Reclassification/amortization, Before Tax Amount	(2)	(2)	(4)	(4)
Reclassification/amortization, Tax (Expense)/Benefit	0	1	1	1
Reclassification/amortization, Net of Tax Amount	(1)	(2)	(3)	(3)
Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) Attributable to Parent
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Unrealized gains/(losses) arising during the period, Before Tax Amount	0	0	1	2
Unrealized gains/(losses) arising during the period, Tax (Expense)/Benefit	2	7	2	7
Unrealized gains/(losses) arising during the period, Net of Tax Amount	2	7	2	8
Reclassification/amortization, Before Tax Amount	258	130	519	261
Reclassification/amortization, Tax (Expense)/Benefit	(71)	(38)	(143)	(76)
Reclassification/amortization, Net of Tax Amount	187	92	376	185
Retirement-Related Benefit Plans, Curtailments and Settlements
Reclassifications and Taxes Related to Items of Other Comprehensive Income
Reclassification/amortization, Before Tax Amount	2	6	4	5
Reclassification/amortization, Tax (Expense)/Benefit	(1)	(1)	(1)	(1)
Reclassification/amortization, Net of Tax Amount	$ 2	$ 5	$ 3	$ 4

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Equity Activity - AOCI Rollforward (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at the beginning of the period	$ 23,333	$ 21,672	$ 22,613	$ 22,021
Balance at the end of the period	24,103	22,271	24,103	22,271
Accumulated Other Comprehensive Income/(Loss)
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at the beginning of the period	(18,488)	(16,780)	(18,761)	(16,740)
Other comprehensive income before reclassifications			42	167
Amount reclassified from accumulated other comprehensive income			400	74
Other comprehensive income/(loss)	169	280	442	241
Balance at the end of the period	(18,319)	(16,499)	(18,319)	(16,499)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at the beginning of the period			(106)	(135)
Other comprehensive income before reclassifications	75	130	204	107
Amount reclassified from accumulated other comprehensive income			24	(112)
Other comprehensive income/(loss)	45	109	227	(4)
Balance at the end of the period	121	(139)	121	(139)
Accumulated Foreign Currency Adjustment Attributable to Parent
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at the beginning of the period			(3,488)	(3,591)
Other comprehensive income before reclassifications			(165)	52
Other comprehensive income/(loss)	(66)	82	(165)	52
Balance at the end of the period	(3,653)	(3,539)	(3,653)	(3,539)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at the beginning of the period			(15,165)	(13,013)
Other comprehensive income before reclassifications			2	9
Amount reclassified from accumulated other comprehensive income			377	185
Other comprehensive income/(loss)	190	102	379	194
Balance at the end of the period	(14,786)	(12,819)	(14,786)	(12,819)
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-Sale, Parent
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at the beginning of the period			(1)	(1)
Other comprehensive income before reclassifications	0	(12)	1	(1)
Other comprehensive income/(loss)	0	(12)	1	(1)
Balance at the end of the period	$ (1)	$ (2)	$ (1)	$ (2)

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Derivative Financial Instruments - Offsetting (Details) € in Millions, $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2024 USD ($)	Jun. 18, 2024 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2023 EUR (€)
Derivative Financial Instruments
Cash collateral rehypothecated				$ 7
Potential reduction in net position of total derivative liabilities	186	186		235
Potential reduction in net position of total derivative assets	186	186		235
Foreign Exchange Call Option
Derivative Financial Instruments
Derivative economic value on expiration
Realized loss on derivatives	18	68
Fair value of derivatives				62
Foreign Exchange Forward
Derivative Financial Instruments
Notional amount			$ 1,800
StreamSets and webMethods | Foreign Exchange Call Option
Derivative Financial Instruments
Notional amount				2,300	€ 2,130
Derivative premium				49
Other receivables
Derivative Financial Instruments
Right to reclaim cash collateral	56	56		11
Accounts Payable
Derivative Financial Instruments
Obligation to return cash collateral				$ 7

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Derivative Financial Instruments - Hedging Programs (Details)	6 Months Ended		12 Months Ended
	Jun. 30, 2024 USD ($) instrument	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($) instrument	Jun. 18, 2024 USD ($)
Net Investment Hedging
Derivative Financial Instruments
Notional amount	$ 6,000,000,000.0		$ 4,900,000,000
Average remaining maturity	2 months 12 days		1 month 6 days
Interest Rate Swap | Fair Value Hedging
Derivative Financial Instruments
Notional amount	$ 6,700,000,000		$ 6,700,000,000
Average remaining maturity	5 years		5 years 6 months
Interest Rate Swap | Cash Flow Hedging
Derivative Financial Instruments
Notional amount	$ 0		$ 0
Forward-starting interest rate swaps | Cash Flow Hedging
Derivative Financial Instruments
Number of derivative instruments outstanding | instrument	0		0
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges	$ (113,000,000)		$ (121,000,000)
Gains (losses) expected to be reclassified to net income within the next 12 months	(14,000,000)
Foreign exchange contracts
Derivative Financial Instruments
Gains (losses) expected to be reclassified to net income within the next 12 months		$ (52,000,000)
Foreign exchange contracts | Not Designated as Hedging Instrument, Economic Hedge
Derivative Financial Instruments
Notional amount	$ 7,100,000,000		6,700,000,000
Foreign exchange contracts | Not Designated as Hedging Instrument, Economic Hedge | Maximum
Derivative Financial Instruments
Term of contract	1 year
Foreign exchange contracts | Cash Flow Hedging
Derivative Financial Instruments
Notional amount	$ 5,200,000,000		5,200,000,000
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges	$ 38,000,000		23,000,000
Maximum length of time hedged	7 years
Foreign exchange contracts | Net Investment Hedging
Derivative Financial Instruments
Notional amount	$ 13,500,000,000		15,900,000,000
Foreign Exchange Forward
Derivative Financial Instruments
Notional amount				$ 1,800,000,000
Foreign Exchange Forward | Cash Flow Hedging
Derivative Financial Instruments
Notional amount	$ 9,600,000,000		$ 9,200,000,000
Average remaining maturity	7 months 6 days		7 months 6 days
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges	$ 312,000,000		$ 40,000,000
Gains (losses) expected to be reclassified to net income within the next 12 months	$ 251,000,000
Maximum length of time hedged	2 years
Currency Swap | Cash Flow Hedging
Derivative Financial Instruments
Net gains (losses) before taxes in accumulated other comprehensive income/(loss), cash flow hedges	$ (56,000,000)		(68,000,000)
Gains (losses) expected to be reclassified to net income within the next 12 months	(18,000,000)
Equity contracts hedging employee compensation obligations | Not Designated as Hedging Instrument, Economic Hedge
Derivative Financial Instruments
Notional amount	$ 1,400,000,000		$ 1,200,000,000

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Derivative Financial Instruments - Cumulative Basis Adjustments for Fair Value Hedges (Details) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Short-Term Debt
Amounts recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges
Carrying amount of the hedged item	$ 0	$ (1)
Cumulative hedging adjustments included in the carrying amount-assets/(liabilities)	0	(1)
Long-Term Debt
Amounts recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges
Carrying amount of the hedged item	(6,481)	(6,629)
Cumulative hedging adjustments included in the carrying amount-assets/(liabilities)	204	61
Hedging adjustments on discontinued hedging relationships	$ (177)	$ (200)

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Derivative Financial Instruments - Effect of Hedge Activity on Income and Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Derivative Instruments, Gain (Loss)
Cost	$ 6,820	$ 6,974	$ 13,539	$ 13,717
SG&A expense	4,938	4,900	9,912	9,754
Other (income) and expense	(233)	(261)	(550)	(506)
Interest expense	427	423	859	790
Cost of services
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	9	(3)	14	(5)
Cost of sales
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	15	2	27	17
Cost of financing
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	(4)	(3)	(7)	(7)
SG&A expense
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	11	43	85	102
Other (income) and expense
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	(140)	(141)	(427)	1
Interest expense
Derivative Instruments, Gain (Loss)
Gains/(losses) of total hedge activity	(19)	(18)	(34)	(31)
Services
Derivative Instruments, Gain (Loss)
Cost	5,126	5,294	10,365	10,604
Sales
Derivative Instruments, Gain (Loss)
Cost	1,607	1,587	2,988	2,910
Financing
Derivative Instruments, Gain (Loss)
Cost	$ 86	$ 93	$ 186	$ 203

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Derivative Financial Instruments - Gains and Losses (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Derivative Instruments, Gain (Loss)
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Cost, Interest expense, Selling, general and administrative, Other (income) and expense	Cost, Interest expense, Selling, general and administrative, Other (income) and expense	Cost, Interest expense, Selling, general and administrative, Other (income) and expense	Cost, Interest expense, Selling, general and administrative, Other (income) and expense
Gain (loss) recognized in earnings on derivatives	$ (207)	$ (337)	$ (509)	$ (206)
Gain (loss) recognized in earnings attributable to risk being hedged	12	155	143	71
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI	372	313	1,160	61
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	61	30	9	152
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing	6	32	14	60
Interest rate contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI - Cash flow hedges	0	0	0	0
Foreign exchange contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI - Cash flow hedges	134	178	300	149
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI - Amount excluded from the assessment of effectiveness	(31)	0	(21)	0
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing	(18)	0	(37)	0
Foreign exchange contracts | Net Investment Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Recognized in OCI - Net investment hedges	269	136	881	(88)
Foreign exchange contracts | Not Designated as Hedging Instrument, Economic Hedge
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	(161)	(196)	(368)	(180)
Equity contracts | Not Designated as Hedging Instrument, Economic Hedge
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	4	42	75	91
Cost of financing | Interest rate contracts | Fair Value Hedging
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	(8)	(30)	(35)	(21)
Gain (loss) recognized in earnings attributable to risk being hedged	2	25	23	13
Cost of financing | Interest rate contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	(1)	(1)	(1)	(2)
Cost of financing | Foreign exchange contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	(1)	(3)	(2)	(8)
Cost of financing | Foreign exchange contracts | Net Investment Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing	4	5	8	11
Interest expense | Interest rate contracts | Fair Value Hedging
Derivative Instruments, Gain (Loss)
Gain (loss) recognized in earnings on derivatives	(42)	(153)	(180)	(96)
Gain (loss) recognized in earnings attributable to risk being hedged	10	130	120	58
Interest expense | Interest rate contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	(3)	(4)	(7)	(7)
Interest expense | Foreign exchange contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	(5)	(18)	(10)	(35)
Interest expense | Foreign exchange contracts | Net Investment Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Amounts Excluded from Effectiveness Testing	21	27	43	49
Cost of services | Foreign exchange contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	9	(3)	14	(5)
Cost of sales | Foreign exchange contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	15	2	27	17
SG&A expense | Foreign exchange contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	7	1	10	10
Other (income) and expense | Foreign exchange contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss)
Gain (Loss) Recognized in Earnings and Other Comprehensive Income - Reclassified from AOCI	$ 39	$ 55	$ (22)	$ 181

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Stock-Based Compensation (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	$ 316	$ 288	$ 636	$ 556
Income tax benefits	(101)	(75)	(222)	(142)
Net stock-based compensation cost	214	213	414	414
Pre-tax stock-based compensation cost increase (decrease)	28		79
Unrecognized compensation cost related to non-vested awards	1,700		$ 1,700
Unrecognized compensation cost related to non-vested awards, weighted average period of recognition			2 years 4 months 24 days
Restricted Stock Units (RSUs)
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost increase (decrease)	14		$ 42
Performance Shares
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost increase (decrease)	6		21
Stock Options
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost increase (decrease)	5		13
Employee Stock
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost increase (decrease)	3		4
Cost
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	53	47	109	93
SG&A expense
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	172	168	343	317
Research, development and engineering
Stock-based compensation cost, allocation of recognized costs
Pre-tax stock-based compensation cost	$ 90	$ 73	$ 183	$ 146

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Retirement-Related Benefits - U.S. Retirement Plan Changes (Details) - Pension Plan - U.S. Plans - USD ($) $ in Millions		3 Months Ended	6 Months Ended
	Jan. 01, 2024	Jun. 30, 2024	Jun. 30, 2024
Retirement-Related Benefits
Service period	1 year
Benefit contribution monthly percent	5.00%
Benefit contribution interest percent, through 2026	6.00%
Increase (decrease) in actuarial losses due to changes in assumptions		$ 100	$ 200
Minimum
Retirement-Related Benefits
Benefit contribution interest percent, 2027 through 2033	3.00%

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Retirement-Related Benefits - All Retirement Plans Cost (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Retirement Benefits [Abstract]
Defined benefit pension and defined contribution pension plans — cost	$ 320	$ 259	$ 643	$ 541
Nonpension postretirement plans — cost	30	33	60	65
Total	$ 350	$ 292	$ 704	$ 606
Year-to-year percent change, Defined benefit pension and defined contribution plans — cost (as a percent)	23.60%		19.00%
Year-to-year percent change, Nonpension postretirement plans — cost (as a percent)	(8.10%)		(7.10%)
Year-to-year percent change, Total (as a percent)	20.00%		16.20%

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Retirement-Related Benefits - Cost of Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Cost/(Income) of Pension Plans
Total defined benefit pension and defined contribution plans cost recognized in the Consolidated Income Statement	$ 320	$ 259	$ 643	$ 541
U.S. Plans | Pension Plan
Cost/(Income) of Pension Plans
Service cost	98	0	197	0
Interest cost	254	272	508	545
Expected return on plan assets	(340)	(382)	(681)	(764)
Amortization of prior service costs/(credits)	0	0	0	0
Recognized actuarial losses	129	27	257	55
Curtailments and settlements	0	0	0	0
Multi-employer plans	0	0	0	0
Other costs/(credits)	0	0	0	0
Total net periodic pension (income)/cost of defined benefit plans	140	(82)	280	(165)
Cost of defined contribution plans	15	151	27	323
Total defined benefit pension and defined contribution plans cost recognized in the Consolidated Income Statement	155	69	307	158
U.S. Plans | Other Postretirement Benefits Plan
Cost/(Income) of Pension Plans
Service cost	1	1	1	2
Interest cost	27	29	53	58
Expected return on plan assets	0	0	0	0
Amortization of prior service costs/(credits)	(7)	(7)	(15)	(15)
Recognized actuarial losses	0	0	0	0
Curtailments and settlements	0	0	0	0
Total net periodic pension (income)/cost of defined benefit plans	20	23	40	46
Non-U.S. Plans | Pension Plan
Cost/(Income) of Pension Plans
Service cost	41	44	85	88
Interest cost	264	292	532	580
Expected return on plan assets	(384)	(362)	(773)	(718)
Amortization of prior service costs/(credits)	5	5	11	10
Recognized actuarial losses	128	101	258	203
Curtailments and settlements	2	6	4	5
Multi-employer plans	3	3	6	6
Other costs/(credits)	12	10	20	19
Total net periodic pension (income)/cost of defined benefit plans	71	99	143	194
Cost of defined contribution plans	94	91	193	188
Total defined benefit pension and defined contribution plans cost recognized in the Consolidated Income Statement	165	190	336	382
Non-U.S. Plans | Other Postretirement Benefits Plan
Cost/(Income) of Pension Plans
Service cost	1	1	1	1
Interest cost	10	10	21	19
Expected return on plan assets	0	(1)	(1)	(1)
Amortization of prior service costs/(credits)	0	0	0	0
Recognized actuarial losses	0	0	0	(1)
Curtailments and settlements	0	0	0	0
Total net periodic pension (income)/cost of defined benefit plans	$ 10	$ 10	$ 21	$ 19

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Retirement-Related Benefits - Contributions (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Retirement-Related Benefits
Total plan contributions	$ 150	$ 163
Trust for Benefit of Employees
Retirement-Related Benefits
Contributions by employer - Noncash	390	347
U.S. nonpension postretirement benefit plan
Retirement-Related Benefits
Total plan contributions	110	134
Non-U.S. DB plans and multi-employer plans
Retirement-Related Benefits
Total plan contributions	$ 40	$ 29

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Subsequent Events (Details)	Jul. 29, 2024 $ / shares
Subsequent Event
Subsequent Event [Line Items]
Dividend declared (in dollars per share)	$ 1.67