International Business Machines Corporation · NYSE:IBM
International Business Machines — Q3 2025 Earnings Presentation
33 slides from International Business Machines's earnings presentation, Oct 22, 2025
Slide 1: 3Q 2025 Earnings
3Q 2025 Earnings October 22, 2025 ibm.com/investor
Slide 2: Forward-looking statements and non-GAAP information
Forward-looking statements and non-GAAP information Certain comments made in this presentation may be characterized as forward adjusted EBITDA and adjustments for currency. The rationale for management’s looking under the Private Securities Litigation Reform Act of 1995. Forward- use of this non-GAA
Slide 3: Arvind Krishna and James Kavanaugh
Arvind Krishna James Kavanaugh Chairman, President and SVP, Finance & Operations Chief Executive Officer and Chief Financial Officer 3
Slide 4: CEO perspective
CEO perspective “This quarter we accelerated performance across all of our segments, and again exceeded expectations for revenue, profit and free cash flow. Clients globally continue to leverage our technology and domain expertise to drive productivity in their operations and deliver real business v
Slide 5: Financial highlights
Financial highlights 3Q25 >7% 22% $16.3B $2.4B Revenue growth yr/yr Adjusted EBITDA growth Revenue Free cash flow ~200bps 15% Pre-tax margin expansion Earnings per share growth (operating) (operating) “New innovation, the strength and diversity of our portfolio, and our disciplined execution led to
Slide 6: Software
Software $7.2B +9% Revenue Revenue growth Investments in innovation accelerating organic revenue growth Automation growth accelerated to 22%; strength Revenue categories-3Q25 in organic and HashiCorp Automation Hybrid Cloud Red Hat bookings growth of about 20% +22% yr/yr +12% yr/yr Strong segment pr
Slide 7: Infrastructure
Infrastructure $3.6B +15% Revenue Revenue growth Continued momentum in z17; highest third-quarter revenue in nearly two decades IBM Z is a significant driver of profitability and free Revenue categories-3Q25 cash flow Infrastructure Hybrid Innovation is delivering value across the portfolio Support
Slide 8: Consulting
Consulting $5.3B +2% Revenue Revenue growth Returned to growth with sequential improvement across both lines of business Revenue categories-3Q25 Strong generative AI demand with over $1.5B bookings in the quarter Strategy and Intelligent Continued improvement in signings quality Technology Operation
Slide 9: Summary
Summary 3Q25 Summary 2025 Expectations Highest revenue growth in several years, with Raising revenue growth @CC to more than 5% sequential acceleration across all segments Raising operating pre-tax margin to expand by Exceeded our expectations across revenue, over a point profitability, and free cas
Slide 10: ibm.com/investor
ibm.com/investor
Slide 11: Supplemental material
Supplemental material Revenue and P&L highlights Adjusted EBITDA performance Cash flow and balance sheet highlights Currency impact on revenue growth Software & Infrastructure segment details Consulting segment details Expense summary Balance sheet summary Free cash flow summary Cash flow (ASC 230)
Slide 12: Revenue and P&L highlights
Revenue and P&L highlights Revenue highlights 3Q25 B/(W) Operating P&L highlights $ 3Q25 B/(W) Yr/Yr Yr/Yr Revenue $16.3 7% Gross profit $9.6 11% Expense $6.6 (7%) Americas $8.1 9% Pre-tax income $3.0 22% Europe/ME/Africa $5.3 9% Net income $2.5 17% Asia Pacific $2.9 Flat Earnings per share $2.65 15
Slide 13: Adjusted EBITDA performance
Adjusted EBITDA performance QTD YTD 3Q25 Yr/Yr 3Q25 Yr/Yr Operating (non-GAAP) pre-tax income from continuing operations $3.0 $0.5 $8.0 $1.0 Net interest expense $0.3 $0.1 $0.9 $0.3 Depreciation/Amortization of non-acquired intangible assets $0.7 $0.0 $2.1 $0.0 Stock-based compensation $0.4 $0.1 $1.
Slide 14: Cash flow and balance sheet highlights
Cash flow and balance sheet highlights Cash flow 3Q25 YTD Yr/Yr Balance sheet Sep 25 Dec 24 Sep 24 Net cash from operations* $8.2 $1.0 Cash & marketable securities $14.9 $14.8 $13.7 Free cash flow** $7.2 $0.6 Total debt $63.1 $55.0 $56.6 Select uses of cash 3Q25 YTD Yr/Yr Select debt measures Sep 25
Slide 15: Currency impact on revenue growth
Currency impact on revenue growth Quarterly averages per US $ 3Q25 Yr/Yr Spot @4Q 4Q25 FY25 1Q26 2Q26 FY26 Earnings Euro 0.86 6% 0.86 8% 4% 9% 2% 3% Pound 0.74 4% 0.75 4% 3% 6% 0% 1% Yen 147 1% 152 1% 2% 0% (5%) (2%) Revenue impact, future @4Q Earnings Spot 1. 8 pts ~3 pts ~1.5 pts ~3 pts ~0 pts ~0.
Slide 16: Software & Infrastructure segment details
Software & Infrastructure segment details Software segment 3Q25 B/(W) Infrastructure segment 3Q25 B/(W) Yr/Yr Yr/Yr Revenue $7.2 9% Revenue $3.6 15% Hybrid Cloud $1.9 12% Hybrid Infrastructure $2.3 26% Automation $1.9 22% IBM Z 59% Data $1.5 7% Distributed Infrastructure 8% Transaction Processing $1
Slide 17: Consulting segment details
Consulting segment details Consulting segment 3Q25 B/(W) Yr/Yr Revenue $5.3 2% Strategy and Technology $2.9 Flat Intelligent Operations $2.4 4% Gross profit margin 29.3% 0.8 pts Segment profit $0.7 23% Segment profit margin 12.9% 2.0 pts Signings $5.2 (5%) Book-to-bill ratio (TTM) 1.12 Revenue & sig
Slide 18: Expense summary
Expense summary Expense 3Q25 B/(W) Acq/ Yr/Yr Currency Divest** Base*** Operating expense & other income $6.6 (7%) (1 pts) (5 pts) (1 pts) SG&A – operating $4.4 5% (1 pts) (4 pts) 9 pts R&D – operating $2.1 (11%) 0 pts (6 pts) (4 pts) IP and custom development income ($0.2) (8%) Other (income)/expen
Slide 19: Balance sheet summary
Balance sheet summary Sep 25 Dec 24 Sep 24 Cash & marketable securities $14.9 $14.8 $13.7 Core (non-IBM Financing) assets* $118.7 $108.9 $109.0 IBM Financing assets $12.8 $13.5 $11.7 Total assets $146.3 $137.2 $134.3 Other liabilities $55.2 $54.8 $53.2 Core (non-IBM Financing) debt* $51.8 $42.9 $46.
Slide 20: Free cash flow summary
Free cash flow summary QTD B/(W) YTD B/(W) 3Q25 Yr/Yr 3Q25 Yr/Yr Net cash from operations $3.1 $0.2 $9.2 $0.0 Less: IBM Financing receivables $0.3 ($0.6) $0.9 ($0.9) Net cash from operations (excluding IBM Financing receivables) $2.8 $0.8 $8.2 $1.0 Net capital expenditures ($0.4) ($0.5) ($1.1) ($0.4
Slide 21: Cash flow (ASC230)
Cash flow (ASC230) QTD QTD YTD YTD 3Q25 3Q24 3Q25 3Q24 Net income from operations $1.7 ($0.3) $5.0 $3.1 Pension settlement charge — $2.7 — $2.7 Depreciation / amortization of intangibles* $1.3 $1.3 $3.7 $3.6 Stock-based compensation $0.4 $0.3 $1.3 $1.0 Operating assets and liabilities / other, net**
Slide 22: Software segment categories
Software segment categories Revenue categories Revenue categories – FY 2024 The Software portfolio delivers end-to-end enterprise capabilities for Hybrid Cloud and AI: Hybrid Cloud incl. RHEL, OpenShift, Ansible, Red Hat AI Automation Automation Hybrid Cloud incl. application development & integrati
Slide 23: Consulting segment categories
Consulting segment categories Revenue categories Revenue categories – FY 2024 Strategy and Technology Provides strategy, process design, system implementation, cloud architecture and implementation services to help clients transform their businesses for growth and enable innovation. These services e
Slide 24: Infrastructure segment categories
Infrastructure segment categories Revenue categories Revenue categories – FY 2024 Hybrid Infrastructure Hybrid Innovative infrastructure platforms to help meet the new requirements Infrastructure of hybrid multi-cloud and enterprise AI workloads leveraging flexible and as-a-service consumption model
Slide 25: Non-GAAP supplemental materials
Non-GAAP supplemental materials Reconciliation of revenue performance – 3Q 2025 3Q25 Yr/Yr GAAP @CC Total revenue 9% 7% Americas 9% 9% Europe/ME/Africa 15% 9% Asia Pacific Flat Flat The above reconciles the non-GAAP financial information contained in the “Financial highlights”, “Revenue and P&L high
Slide 26: Non-GAAP supplemental materials
Non-GAAP supplemental materials Reconciliation of segment revenue performance – 3Q 2025 3Q25 Yr/Yr 3Q25 Yr/Yr GAAP @CC GAAP @CC Software 10% 9% Consulting 3% 2% Hybrid Cloud 14% 12% Strategy and Technology 2% Flat Automation 24% 22% Intelligent Operations 5% 4% Data 8% 7% Transaction Processing (1%)
Slide 27: Non-GAAP supplemental materials
Non-GAAP supplemental materials Reconciliation of revenue performance – 3QYTD 2025 3Q25 YTD Yr/Yr GAAP @CC Total revenue 6% 5% Automation 18% 17% Transaction Processing 0% (1%) The above reconciles the non-GAAP financial information contained in the “Prepared remarks” discussion in the company’s ear
Slide 28: Non-GAAP supplemental materials
Non-GAAP supplemental materials Reconciliation of expense summary – 3Q 2025 3Q25 Non-GAAP Operating GAAP adjustments (non-GAAP) SG&A Currency (1 pts) 0 pts (1 pts) Acquisitions/divestitures (4 pts) 0 pts (4 pts) Base* 8 pts 1 pts 9 pts R&D Currency 0 pts 0 pts 0 pts Acquisitions/divestitures (6 pts)
Slide 29: Non-GAAP supplemental materials
Non-GAAP supplemental materials Reconciliation of continuing operations – 3Q 2025 3Q25 Acquisition- Retirement- related related Tax reform Operating GAAP adjustments adjustments impacts* (non-GAAP) Gross profit $9,360 $231 — — $9,591 Gross profit margin 57.3% 1.4 pts — — 58.7% SG&A 4,748 (354) — — 4
Slide 30: Non-GAAP supplemental materials
Non-GAAP supplemental materials Reconciliation of GAAP net income to adjusted EBITDA QTD YTD 3Q25 Yr/Yr 3Q25 Yr/Yr Net income as reported (GAAP)* $1.7 $2.1 $5.0 $1.9 Less: income/(loss) from discontinued operations, net of tax $0.0 $0.0 $0.0 $0.0 Income from continuing operations $1.7 $2.1 $5.0 $1.9
Slide 31: Non-GAAP supplemental materials
Non-GAAP supplemental materials Reconciliation of net cash from operations to adjusted EBITDA QTD QTD YTD YTD 3Q25 3Q24 3Q25 3Q24 Net cash provided by operating activities $3.1 $2.9 $9.2 $9.1 Add: Net interest expense $0.3 $0.3 $0.9 $0.7 Provision for/(Benefit from) income taxes from continuing oper
Slide 32: Non-GAAP supplemental materials
Non-GAAP supplemental materials Reconciliation of pre-tax income margin – FY 2025 expectations Operating GAAP (non-GAAP) Pre-tax income margin B/(W)* B/(W) Pre-tax income margin Yr/Yr >6 pts >1 pt *Includes the impact of one-time, non-cash, U.S. and non-U.S. pension settlement charges in 2024 of $3.
Slide 33: ibm.com/investor
ibm.com/investor
International Business Machines — Q3 2025 Earnings Presentation on 6ix