IBM RELEASES THIRD-QUARTER RESULTS

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

ARMONK, N.Y., Oct. 22, 2025 /PRNewswire/ -- IBM (NYSE: IBM) today announced third-quarter 2025 earnings results.IBM Corporation logo. (PRNewsfoto/IBM Corporation)

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

Third-Quarter Highlights

Revenue
- Revenue of $16.3 billion, up 9 percent, up 7 percent at constant currency
- Software revenue up 10 percent, up 9 percent at constant currency
- Consulting revenue up 3 percent, up 2 percent at constant currency
- Infrastructure revenue up 17 percent, up 15 percent at constant currency Profit
- Gross Profit Margin: GAAP: 57.3 percent, up 1.1 points; Operating (Non-GAAP): 58.7 percent, up 1.2 points
- Pre-Tax Income Margin: GAAP: 14.9 percent, up 20.2 points; Operating (Non-GAAP): 18.6 percent, up 2.0 points Cash Flow
- Year to date, net cash from operating activities of $9.2 billion; free cash flow of $7.2 billion

THIRD-QUARTER 2025 INCOME STATEMENT SUMMARY Revenue Gross

Profit Gross

Profit

Margin Pre-tax

Income Pre-tax

Income

Margin Net

Income Diluted

Earnings

Per Share GAAP from

Continuing

Operations $ 16.3 B $ 9.4 B 57.3 % $ 2.4 B 14.9 % $ 1.7 B (2) $ 1.84 (2) Year/Year 9 % (1) 11 % 1.1 Pts NM (3) 20.2 Pts (3) NM (2,3) NM (2,3) Operating

(Non-GAAP) $ 9.6 B 58.7 % $ 3.0 B 18.6 % $ 2.5 B $ 2.65 Year/Year 11 % 1.2 Pts 22 % 2.0 Pts 17 % 15 % (1) 7% at constant currency. (2) 2025 GAAP results include a one-time, non-cash income tax charge associated with the enactment of H.R. 1 in July of 2025. (3) GAAP YTY results include the impact of a pension settlement charge in third-quarter 2024. NM - not meaningful

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

Story Continues

Segment Results for Third Quarter

Software — revenues of $7.2 billion, up 10 percent, up 9 percent at constant currency:
- Hybrid Cloud (Red Hat) up 14 percent, up 12 percent at constant currency
- Automation up 24 percent, up 22 percent at constant currency
- Data up 8 percent, up 7 percent at constant currency
- Transaction Processing down 1 percent, down 3 percent at constant currency Consulting — revenues of $5.3 billion, up 3 percent, up 2 percent at constant currency:
- Strategy and Technology up 2 percent, flat at constant currency
- Intelligent Operations up 5 percent, up 4 percent at constant currency Infrastructure — revenues of $3.6 billion, up 17 percent, up 15 percent at constant currency:
- Hybrid Infrastructure up 28 percent, up 26 percent at constant currency
-- IBM Z up 61 percent, up 59 percent at constant currency
-- Distributed Infrastructure up 10 percent, up 8 percent at constant currency
- Infrastructure Support up 1 percent, flat at constant currency Financing — revenues of $0.2 billion, up 10 percent, up 8 percent at constant currency

Cash Flow and Balance Sheet

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

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

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

Full-Year 2025 Expectations

Revenue: The company now expects constant currency revenue growth of more than 5 percent. At current foreign exchange rates, currency is expected to be about a one-and-a-half-point tailwind to growth for the year. Free cash flow: The company now expects about $14 billion in free cash flow for the full year.

Dividend Declaration

On October 22, 2025, the IBM board of directors approved a regular quarterly cash dividend of $1.68 per common share, to stockholders of record on November 10, 2025. With payment of the December 10, 2025 dividend, IBM will have paid consecutive quarterly dividends every year since 1916.

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company's innovation initiatives; damage to the company's reputation; risks from investing in growth opportunities; failure of the company's intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company's ability to successfully manage acquisitions, alliances and divestitures, including integration challenges, failure to achieve objectives, the assumption or retention of liabilities and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company's failure to meet growth and productivity objectives; ineffective internal controls; the company's use of accounting estimates; impairment of the company's goodwill or amortizable intangible assets; the company's ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product and service quality issues; the development and use of AI and generative AI, including the company's increased offerings and use of AI-based technologies; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity, privacy, and AI considerations; adverse effects related to climate change and other environmental matters; tax matters; legal proceedings and investigatory risks; the company's pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company's Form 10-Qs, Form 10-K and in the company's other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference.

Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.

Presentation of Information in this Press Release

For generative AI, book of business includes inception to date Software transactional revenue, plus new SaaS Annual Contract Value and Consulting signings related to specific offerings. The generative AI book of business is further defined within Exhibit 99.2 in the Form 8-K that includes this press release.

In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information, which management believes provides useful information to investors:

IBM results —

adjusting for currency (i.e., at constant currency); presenting operating (non-GAAP) earnings per share amounts and related income statement items; free cash flow; net cash from operating activities excluding IBM Financing receivables; adjusted EBITDA.

The rationale for management's use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.

Conference Call and Webcast

IBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. ET, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-3q25. Presentation charts will be available shortly before the Webcast.

Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).

Contact: IBM
Tim Davidson, 914-844-7847
[email protected]

Erin McElwee, 347-920-6825
[email protected]

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COMPARATIVE FINANCIAL RESULTS

(Unaudited; Dollars in millions except per share amounts) Three Months Ended
September 30, Nine Months Ended
September 30, 2025 2024 2025 2024 REVENUE BY SEGMENT Software $ 7,209 $ 6,524 $ 20,932 $ 19,162 Consulting 5,324 5,152 15,706 15,517 Infrastructure 3,559 3,042 10,586 9,764 Financing 200 181 557 543 Other 38 68 68 214 TOTAL REVENUE 16,331 14,968 47,849 45,199 GROSS PROFIT 9,360 8,420 27,369 25,112 GROSS PROFIT MARGIN Software 83.1 % 83.2 % 83.5 % 83.1 % Consulting 29.3 % 28.4 % 28.0 % 26.7 % Infrastructure 57.2 % 55.0 % 57.7 % 55.3 % Financing 45.6 % 47.2 % 45.7 % 48.2 % TOTAL GROSS PROFIT MARGIN 57.3 % 56.3 % 57.2 % 55.6 % EXPENSE AND OTHER INCOME SG&A 4,748 4,911 14,661 14,823 R&D 2,082 1,876 6,129 5,512 Intellectual property and custom development income (219) (238) (687) (696) Other (income) and expense (1) (173) 2,244 (376) 1,694 Interest expense 492 429 1,457 1,288 TOTAL EXPENSE AND OTHER INCOME 6,931 9,222 21,184 22,621 INCOME/(LOSS) FROM CONTINUING OPERATIONS

BEFORE INCOME TAXES 2,430 (802) 6,185 2,491 Pre-tax margin 14.9 % (5.4) % 12.9 % 5.5 % Provision for/(Benefit from) income taxes (1) 686 (485) 1,193 (597) Effective tax rate 28.2 % 60.4 % 19.3 % (24.0) % INCOME/(LOSS) FROM CONTINUING OPERATIONS $ 1,744 $ (317) $ 4,992 $ 3,088 DISCONTINUED OPERATIONS Income/(loss) from discontinued operations, net of

taxes (13) 1 21 NET INCOME/(LOSS) (1) $ 1,744 $ (330) $ 4,993 $ 3,109 EARNINGS/(LOSS) PER SHARE OF COMMON STOCK (1) Assuming Dilution Continuing Operations $ 1.84 $ (0.34) $ 5.27 $ 3.30 Discontinued Operations $ 0.00 $ (0.01) $ 0.00 $ 0.02 TOTAL $ 1.84 $ (0.36) $ 5.27 $ 3.32 Basic Continuing Operations $ 1.87 $ (0.34) $ 5.36 $ 3.36 Discontinued Operations $ 0.00 $ (0.01) $ 0.00 $ 0.02 TOTAL $ 1.87 $ (0.36) $ 5.36 $ 3.38 WEIGHTED-AVERAGE NUMBER OF COMMON SHARES

OUTSTANDING (M's) Assuming Dilution 948.9 923.6 947.4 935.4 Basic 933.9 923.6 930.9 920.3 ____________________ (1) 2024 includes the impact of a pension settlement charge of $2.7 billion ($2.0 billion net of tax).

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CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited) (Dollars in Millions) At September 30,
2025 At December 31,
2024 ASSETS: Current Assets: Cash and cash equivalents $ 11,569 $ 13,947 Restricted cash 30 214 Marketable securities 3,286 644 Notes and accounts receivable - trade, net 5,532 6,804 Short-term financing receivables Held for investment, net 5,156 6,259 Held for sale 745 900 Other accounts receivable, net 1,174 947 Inventories 1,397 1,289 Deferred costs 1,113 959 Prepaid expenses and other current assets 2,739 2,520 Total Current Assets 32,740 34,482 Property, plant and equipment, net 5,851 5,731 Operating right-of-use assets, net 3,223 3,197 Long-term financing receivables, net 6,258 5,353 Prepaid pension assets 8,044 7,492 Deferred costs 768 788 Deferred taxes 8,505 6,978 Goodwill 67,396 60,706 Intangibles, net 11,729 10,660 Investments and sundry assets 1,796 1,787 Total Assets $ 146,312 $ 137,175 LIABILITIES: Current Liabilities: Taxes $ 1,663 $ 2,033 Short-term debt 7,942 5,089 Accounts payable 3,867 4,032 Compensation and benefits 3,508 3,605 Deferred income 13,878 13,907 Operating lease liabilities 807 768 Other liabilities 3,477 3,709 Total Current Liabilities 35,142 33,142 Long-term debt 55,174 49,884 Retirement-related obligations 9,735 9,432 Deferred income 3,863 3,622 Operating lease liabilities 2,646 2,655 Other liabilities 11,762 11,048 Total Liabilities 118,322 109,783 EQUITY: IBM Stockholders' Equity: Common stock 62,819 61,380 Retained earnings 151,581 151,163 Treasury stock - at cost (170,512) (169,968) Accumulated other comprehensive income/(loss) (15,983) (15,269) Total IBM Stockholders' Equity 27,905 27,307 Noncontrolling interests 85 86 Total Equity 27,990 27,393 Total Liabilities and Equity $ 146,312 $ 137,175

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CASH FLOW

(Unaudited) Three Months Ended
September 30, Nine Months Ended
September 30, (Dollars in Millions) 2025 2024 2025 2024 Net Income/(Loss) from Operations $ 1,744 $ (330) $ 4,993 $ 3,109 Pension Settlement Charge - 2,725 - 2,725 Depreciation/Amortization of Intangibles (1) 1,283 1,268 3,725 3,555 Stock-based Compensation 444 330 1,285 966 Operating assets and liabilities/Other, net (2) (688) (1,984) (1,755) (3,063) IBM Financing A/R 298 873 905 1,824 Net Cash Provided by Operating Activities $ 3,081 $ 2,881 $ 9,153 $ 9,115 Capital Expenditures, net of payments & proceeds (3) (410) 55 (1,067) (705) Divestitures, net of cash transferred - 2 (1) 705 Acquisitions, net of cash acquired (58) (2,513) (7,903) (2,748) Marketable Securities / Other Investments, net 30 869 (2,748) (810) Net Cash Provided by/(Used in) Investing Activities $ (437) $ (1,587) $ (11,719) $ (3,558) Debt, net of payments & proceeds (1,108) (1,259) 4,683 (777) Dividends (1,569) (1,542) (4,681) (4,601) Financing - Other (334) 35 (425) (26) Net Cash Provided by/(Used in) Financing Activities $ (3,012) $ (2,766) $ (423) $ (5,403) Effect of Exchange Rate changes on Cash (59) 207 429 (29) Net Change in Cash, Cash Equivalents and Restricted Cash $ (426) $ (1,264) $ (2,561) $ 125 ____________________ (1) Includes operating lease right-of-use assets amortization. (2) 2025 includes a one-time, non-cash income tax charge of $0.3 billion associated with the enactment of H.R. 1 in July of 2025, and 2024

includes a $0.7 billion tax benefit associated with the pension settlement charge in the third quarter. (3) 2024 includes proceeds of $0.4 billion from the sale of certain QRadar SaaS assets in the third quarter.

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GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION

(Unaudited) Three Months Ended

September 30, Nine Months Ended

September 30, (Dollars in Billions) 2025 2024 Yr/Yr 2025 2024 Yr/Yr Net Income (Loss) as reported (GAAP) (1) $ 1.7 $ (0.3) $ 2.1 $ 5.0 $ 3.1 $ 1.9 Less: Income/(Loss) from discontinued operations, net of tax 0.0 0.0 0.0 0.0 0.0 0.0 Income/(Loss) from continuing operations 1.7 (0.3) 2.1 5.0 3.1 1.9 Provision for/(Benefit from) income taxes from continuing ops. 0.7 (0.5) 1.2 1.2 (0.6) 1.8 Pre-tax income/(loss) from continuing operations (GAAP) 2.4 (0.8) 3.2 6.2 2.5 3.7 Non-operating adjustments (before tax) Acquisition-related charges (2) 0.6 0.5 0.1 1.7 1.5 0.3 Non-operating retirement-related costs/(income) (1) 0.0 2.8 (2.8) 0.1 3.0 (2.9) Operating (non-GAAP) pre-tax income from continuing ops. 3.0 2.5 0.5 8.0 6.9 1.0 Net interest expense 0.3 0.3 0.1 0.9 0.7 0.3 Depreciation/Amortization of non-acquired intangible assets 0.7 0.7 0.0 2.1 2.1 0.0 Stock-based compensation 0.4 0.3 0.1 1.3 1.0 0.3 Workforce rebalancing charges 0.0 0.3 (0.3) 0.4 0.7 (0.3) Corporate (gains) and charges (3) 0.0 (0.4) 0.4 0.0 (0.6) 0.6 Adjusted EBITDA $ 4.6 $ 3.8 $ 0.8 $ 12.7 $ 10.8 $ 1.8 ____________________ (1) 2024 includes the impact of a pension settlement charge of $2.7 billion ($2.0 billion net of tax). (2) Primarily consists of amortization of acquired intangible assets. (3) Corporate (gains) and charges primarily consists of unique corporate actions such as gains on divestitures and asset sales (e.g., certain

QRadar SaaS assets in 2024).

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SEGMENT DATA

(Unaudited) Three Months Ended September 30, 2025 (Dollars in Millions) Software Consulting Infrastructure Financing Revenue $ 7,209 $ 5,324 $ 3,559 $ 200 Segment Profit $ 2,374 $ 686 $ 644 $ 123 Segment Profit Margin 32.9 % 12.9 % 18.1 % 61.6 % Change YTY Revenue 10.5 % 3.3 % 17.0 % 10.4 % Change YTY Revenue - Constant Currency 8.8 % 1.5 % 15.1 % 8.5 % Three Months Ended September 30, 2024 (Dollars in Millions) Software Consulting Infrastructure Financing Revenue $ 6,524 $ 5,152 $ 3,042 $ 181 Segment Profit $ 1,969 $ 559 $ 422 $ 86 Segment Profit Margin 30.2 % 10.9 % 13.9 % 47.5 % Nine Months Ended September 30, 2025 (Dollars in Millions) Software Consulting Infrastructure Financing Revenue $ 20,932 $ 15,706 $ 10,586 $ 557 Segment Profit $ 6,517 $ 1,807 $ 1,857 $ 371 Segment Profit Margin 31.1 % 11.5 % 17.5 % 66.5 % Change YTY Revenue 9.2 % 1.2 % 8.4 % 2.7 % Change YTY Revenue - Constant Currency 8.4 % 0.2 % 7.7 % 2.6 % Nine Months Ended September 30, 2024 (Dollars in Millions) Software Consulting Infrastructure Financing Revenue $ 19,162 $ 15,517 $ 9,764 $ 543 Segment Profit $ 5,582 $ 1,447 $ 1,387 $ 254 Segment Profit Margin 29.1 % 9.3 % 14.2 % 46.9 %

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

(Unaudited; Dollars in millions except per share amounts) Three Months Ended September 30, 2025 Continuing Operations GAAP Acquisition-

Related

Adjustments (1) Retirement-

Related

Adjustments (2) Tax

Reform

Impacts (3) Operating

(Non-

GAAP) Gross Profit $ 9,360 $ 231 $ — $ — $ 9,591 Gross Profit Margin 57.3 % 1.4 pts — pts — pts 58.7 % SG&A $ 4,748 $ (354) $ — $ — $ 4,394 Other (Income) & Expense (173) (6) (13) — (191) Total Expense & Other (Income) 6,931 (359) (13) — 6,559 Pre-tax Income from Continuing Operations 2,430 590 13 — 3,033 Pre-tax Income Margin from Continuing

Operations 14.9 % 3.6 pts 0.1 pts — pts 18.6 % Provision for/(Benefit from) Income Taxes (4) $ 686 $ 136 $ 3 $ (309) $ 516 Effective Tax Rate 28.2 % (1.0) pts 0.0 pts (10.2) pts 17.0 % Income from Continuing Operations $ 1,744 $ 454 $ 10 $ 309 $ 2,517 Income Margin from Continuing Operations 10.7 % 2.8 pts 0.1 pts 1.9 pts 15.4 % Diluted Earnings Per Share: Continuing

Operations $ 1.84 $ 0.48 $ 0.01 $ 0.33 $ 2.65 Three Months Ended September 30, 2024 Continuing Operations GAAP Acquisition-

Related

Adjustments (1) Retirement-

Related

Adjustments (2) Tax

Reform

Impacts Operating

(Non-

GAAP) Gross Profit $ 8,420 $ 192 $ — $ — $ 8,612 Gross Profit Margin 56.3 % 1.3 pts — pts — pts 57.5 % SG&A $ 4,911 $ (300) $ — $ — $ 4,611 Other (Income) & Expense 2,244 — (2,797) — (553) Total Expense & Other (Income) 9,222 (300) (2,797) — 6,125 Pre-tax Income/(Loss) from Continuing

Operations (802) 492 2,797 — 2,487 Pre-tax Income Margin from Continuing

Operations (5.4) % 3.3 pts 18.7 pts — pts 16.6 % Provision for/(Benefit from) Income Taxes (4) $ (485) $ 119 $ 700 $ (2) $ 332 Effective Tax Rate 60.4 % (7.2) pts (39.8) pts (0.1) pts 13.4 % Income/(Loss) from Continuing Operations $ (317) $ 373 $ 2,097 $ 2 $ 2,155 Income/(Loss) Margin from Continuing

Operations (2.1) % 2.5 pts 14.0 pts 0.0 pts 14.4 % Diluted Earnings/(Loss) Per Share: Continuing

Operations (5) $ (0.34) $ 0.40 $ 2.27 $ 0.00 $ 2.30 ____________________ (1) Includes amortization of acquired intangible assets, in-process R&D, transaction costs, applicable retention, restructuring and related expenses,

tax charges related to acquisition integration and pre-closing charges, such as financing costs. (2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan

curtailments/settlements and pension insolvency costs and other costs. 2024 also includes the impact of a pension settlement charge. (3) 2025 includes a one-time, non-cash income tax charge associated with the enactment of H.R. 1 in July of 2025. (4) The tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to

the GAAP pre-tax income. (5) Due to the GAAP net loss for the three months ended September 30, 2024, dilutive potential shares were excluded from the GAAP loss per share

as the effect would have been antidilutive. The difference in share count resulted in an additional $(0.04) reconciling item.

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

(Unaudited; Dollars in millions except per share amounts) Nine Months Ended September 30, 2025 Continuing Operations GAAP Acquisition-

Related

Adjustments (1) Retirement-

Related

Adjustments (2) Tax

Reform

Impacts (3) Operating

(Non-

GAAP) Gross Profit $ 27,369 $ 657 $ — $ — $ 28,025 Gross Profit Margin 57.2 % 1.4 pts — pts — pts 58.6 % SG&A $ 14,661 $ (1,055) $ — $ — $ 13,606 R&D 6,129 (4) — — 6,125 Other (Income) & Expense (376) (7) (61) — (444) Total Expense & Other (Income) 21,184 (1,066) (61) — 20,058 Pre-tax Income from Continuing Operations 6,185 1,723 61 — 7,968 Pre-tax Income Margin from Continuing

Operations 12.9 % 3.6 pts 0.1 pts — pts 16.7 % Provision for/(Benefit from) Income Taxes (4) $ 1,193 $ 396 $ 0 $ (307) $ 1,282 Effective Tax Rate 19.3 % 0.8 pts (0.2) pts (3.9) pts 16.1 % Income from Continuing Operations $ 4,992 $ 1,326 $ 61 $ 307 $ 6,686 Income Margin from Continuing Operations 10.4 % 2.8 pts 0.1 pts 0.6 pts 14.0 % Diluted Earnings Per Share: Continuing

Operations $ 5.27 $ 1.40 $ 0.06 $ 0.32 $ 7.06 Nine Months Ended September 30, 2024 Continuing Operations GAAP Acquisition-

Related

Adjustments (1) Retirement-

Related

Adjustments (2) Tax

Reform

Impacts (3) Operating

(Non-

GAAP) Gross Profit $ 25,112 $ 533 $ — $ — $ 25,645 Gross Profit Margin 55.6 % 1.2 pts — pts — pts 56.7 % SG&A $ 14,823 $ (854) $ — $ — $ 13,969 Other (Income) & Expense 1,694 (68) (2,991) — (1,364) Total Expense & Other (Income) 22,621 (922) (2,991) — 18,709 Pre-tax Income from Continuing Operations 2,491 1,454 2,991 — 6,936 Pre-tax Income Margin from Continuing

Operations 5.5 % 3.2 pts 6.6 pts — pts 15.3 % Provision for/(Benefit from) Income Taxes (4) $ (597) $ 374 $ 731 $ 434 $ 942 Effective Tax Rate (24.0) % 10.4 pts 20.9 pts 6.3 pts 13.6 % Income from Continuing Operations $ 3,088 $ 1,081 $ 2,259 $ (434) $ 5,994 Income Margin from Continuing Operations 6.8 % 2.4 pts 5.0 pts (1.0) pts 13.3 % Diluted Earnings Per Share: Continuing

Operations $ 3.30 $ 1.16 $ 2.42 $ (0.46) $ 6.41 ____________________ (1) Includes amortization of acquired intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges

related to acquisition integration and pre-closing charges, such as financing costs. 2024 also includes a loss of $68 million on foreign exchange

derivative contracts entered into by the company prior to the acquisition of StreamSets and webMethods from Software AG. (2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan

curtailments/settlements and pension insolvency costs and other costs. 2024 also includes the impact of a pension settlement charge. (3) 2025 includes a one-time, non-cash income tax charge associated with the enactment of H.R. 1 in July of 2025, and 2024 includes a benefit from

income taxes due to the resolution of certain tax audit matters in the first quarter. (4) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the

GAAP pre-tax income.

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GAAP OPERATING CASH FLOW TO FREE CASH FLOW RECONCILIATION

(Unaudited) Three Months Ended
September 30, Nine Months Ended
September 30, (Dollars in Millions) 2025 2024 2025 2024 Net Cash from Operations per GAAP $ 3,081 $ 2,881 $ 9,153 $ 9,115 Less: change in IBM Financing receivables 298 873 905 1,824 Net cash from operating activities excl. IBM Financing receivables 2,783 2,009 8,248 7,292 Capital Expenditures, net (410) 55 (1,067) (705) Free Cash Flow $ 2,373 $ 2,064 $ 7,181 $ 6,586

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GAAP OPERATING CASH FLOW TO ADJUSTED EBITDA RECONCILIATION

(Unaudited) Three Months Ended
September 30, Nine Months Ended
September 30, (Dollars in Billions) 2025 2024 2025 2024 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 operations 0.7 (0.5) 1.2 (0.6) Less change in: Financing receivables 0.3 0.9 0.9 1.8 Other assets and liabilities/other, net (1) (0.8) (2.0) (2.3) (3.5) Adjusted EBITDA $ 4.6 $ 3.8 $ 12.7 $ 10.8 ____________________ (1) Other assets and liabilities/other, net mainly consists of Operating assets and liabilities/Other, net in the Cash Flow chart, workforce

rebalancing charges, non-operating impacts and corporate (gains) and charges.Cision

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