INTERNATIONAL BUSINESS MACHINES CORP

Previous wording

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 and intangible asset amortization, expense resulting from basis differences on equity method investments, retirement-related costs and their related tax impacts. Due to the unique, non-recurring nature of the enactment of the U.S. Tax Cuts and Jobs Act (TCJA or U.S. tax reform), management characterizes the one-time provisional charge recorded in the fourth quarter of 2017, and adjustments to that charge as non-operating. Adjustments include the tax effect of true-ups, audit adjustments, accounting elections and new regulations or laws that impact the TCJA provisions which resulted in the one-time provisional charge. For acquisitions, operating (non-GAAP) earnings exclude the amortization of acquired intangible assets and acquisition-related charges such as in-process research and development, transaction costs, applicable retention, restructuring and related expenses, tax charges related to acquisition integration and pre-closing charges, such as financing costs. These charges are excluded as they may be inconsistent in amount and timing from period to period and are significantly impacted by the size, type and frequency of our acquisitions. Management also characterized as non-operating expense, given its unique and temporary nature, the impact on the foreign exchange derivative contracts entered into prior to the acquisition of StreamSets and webMethods from Software AG, beginning in December 2023, to economically hedge the foreign currency exposure related to the purchase price of this acquisition. These derivative contracts expired by June 28, 2024. All other spending for acquired companies is included in both earnings from continuing operations and in operating (non-GAAP) earnings. For retirement-related costs, 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 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.

Current wording

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 and intangible asset amortization, expense resulting from basis differences on equity method investments, retirement-related costs and their related tax impacts. Due to the unique, non-recurring nature of the enactment of the U.S. Tax Cuts and Jobs Act (TCJA or U.S. tax reform), management characterizes the one-time provisional charge recorded in the fourth quarter of 2017, and adjustments to that charge as non-operating. Adjustments include the tax effect of true-ups, audit adjustments, accounting elections and new regulations or laws (e.g., H.R. 1 in July of 2025) that impact the TCJA provisions which resulted in the one-time provisional charge. For acquisitions, operating (non-GAAP) earnings exclude the amortization of acquired intangible assets and acquisition-related charges such as in-process research and development, transaction costs, applicable retention, restructuring and related expenses, tax charges related to acquisition integration and pre-closing charges, such as financing costs. These charges are excluded as they may be inconsistent in amount and timing from period to period and are significantly impacted by the size, type and frequency of our acquisitions. Management also characterized as non-operating expense, given its unique and temporary nature, the impact on the foreign exchange derivative contracts entered into prior to the acquisition of StreamSets and webMethods from Software AG, beginning in December 2023, to economically hedge the foreign currency exposure related to the purchase price of this acquisition. These derivative contracts expired by June 28, 2024. All other spending for acquired companies is included in both earnings from continuing operations and in operating (non-GAAP) earnings. For retirement-related costs, 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 including the impact of a settlement charge of $2.7 billion ($2.0 billion net of tax) resulting from the transfer to an insurer of a portion of the IBM Qualified Personal Pension Plan's defined benefit pension obligations and related plan assets in the third quarter of 2024 and pension insolvency costs and other costs. Non-operating re…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The following table provides the company’s operating (non-GAAP) earnings for the second quarter of 2025 and 2024.

Current wording

The following table provides the company’s operating (non-GAAP) earnings for the third quarter of 2025 and 2024.

Previous wording

The strength of our portfolio and the resiliency of our business model underpinned by our hybrid cloud and AI strategy position us well to deliver sustainable and profitable growth. While the current economic and trade environment remains dynamic, we expect technology to continue contributing to overall economic growth and serve as a key source of competitive advantage allowing businesses to scale, drive efficiencies, and fuel growth. This was reflected in our performance in the second quarter. Our disciplined strategy and durable business model enable us to create long-term value for our partners and clients.

Current wording

The strength of our portfolio and the resiliency of our business model underpinned by our hybrid cloud and AI strategy position us well to deliver sustainable and profitable growth. While the current economic and trade environment continue to remain dynamic, we expect technology to keep supporting overall economic growth and serve as a key source of competitive advantage allowing businesses to scale, innovate and drive productivity. This was reflected in our performance in the third quarter. Our disciplined strategy and durable business model enable us to create long-term value for our partners and clients.

Previous wording

In the first six months of 2025, 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.

Current wording

In the first nine months of 2025, 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.

Previous wording

In the second quarter of 2025, we reported $17.0 billion in revenue, income from continuing operations of $2.2 billion, and operating (non-GAAP) earnings of $2.7 billion. Diluted earnings per share from continuing operations was $2.31 as reported and $2.80 on an operating (non-GAAP) basis. We generated $1.7 billion in cash from operations and $2.8 billion in free cash flow, and delivered shareholder returns of $1.6 billion in dividends. Our second-quarter performance reflects the continued success of our hybrid cloud and AI strategy. With our focus on the fundamentals of our business, we continue to maintain a strong liquidity position and solid cash flow generation which enables us to invest in our business and return value to shareholders through dividends.

Current wording

In the third quarter of 2025, we reported $16.3 billion in revenue, income from continuing operations of $1.7 billion, and operating (non-GAAP) earnings of $2.5 billion. Diluted earnings per share from continuing operations was $1.84 as reported and $2.65 on an operating (non-GAAP) basis. We generated $3.1 billion in cash from operations and $2.4 billion in free cash flow, and delivered shareholder returns of $1.6 billion in dividends. Our third-quarter performance reflects the continued success of our hybrid cloud and AI strategy. With our focus on the fundamentals of our business, we continue to maintain a strong liquidity position and solid cash flow generation which enables us to invest in our business and return value to shareholders through dividends.

Previous wording

Total revenue grew 7.7 percent as reported and 5.3 percent adjusted for currency compared to the prior-year period, led by Software and Infrastructure. Software delivered revenue growth of 9.6 percent as reported and 7.6 percent adjusted for currency, with solid growth in Hybrid Cloud, Automation and Data, reflecting continued growth in our high-value annual recurring revenue base. Consulting revenue increased 2.6 percent as reported and was flat adjusted for currency, as the business continued to stabilize through the second quarter of 2025. Infrastructure revenue increased 13.6 percent year to year as reported and 11.5 percent adjusted for currency, reflecting early strength in our new IBM Z platform.

Current wording

Total revenue grew 9.1 percent as reported and 7.3 percent adjusted for currency compared to the prior-year period. Software delivered revenue growth of 10.5 percent as reported (8.8 percent adjusted for currency). Consulting revenue increased 3.3 percent as reported (1.5 percent adjusted for currency). Infrastructure revenue increased 17.0 percent as reported (15.1 percent adjusted for currency), reflecting early strength in our new IBM z17.

Previous wording

From a geographic perspective, Americas revenue increased 6.1 percent as reported (6.5 percent adjusted for currency). Europe/Middle East/Africa (EMEA) increased 14.6 percent as reported (8.5 percent adjusted for currency). Asia Pacific increased 1.1 percent as reported but declined 2.7 percent adjusted for currency.

Current wording

From a geographic perspective, Americas revenue increased 9.3 percent as reported and adjusted for currency. Europe/Middle East/Africa (EMEA) increased 14.6 percent as reported (8.7 percent adjusted for currency). Asia Pacific increased 0.1 percent as reported (0.2 percent adjusted for currency).

Previous wording

Gross margin of 58.8 percent increased 2.0 points year to year with margin expansion driven primarily by portfolio mix and productivity actions. Operating (non-GAAP) gross margin of 60.1 percent increased 2.3 points compared to the prior-year period due to the same dynamics.

Current wording

Gross margin of 57.3 percent increased 1.1 points year to year with margin expansion driven primarily by portfolio mix and productivity actions. Operating (non-GAAP) gross margin of 58.7 percent increased 1.2 points compared to the prior-year period due to the same dynamics.

Previous wording

Total expense and other (income) increased 9.6 percent in the second quarter of 2025 compared to the second quarter of 2024 driven by higher operating acquisition-related spending and the effects of currency. Total operating (non-GAAP) expense and other (income) increased 10.7 percent year to year, driven primarily by the same factors.

Current wording

Total expense and other (income) decreased 24.8 percent in the third quarter of 2025 compared to the third quarter of 2024 driven by the prior-year pension settlement charge of $2.7 billion and lower workforce rebalancing charges in the current year. This was partially offset by higher operating acquisition-related spending and a prior-year gain from the sale of certain QRadar SaaS assets. Total operating (non-GAAP) expense and other (income) increased 7.1 percent year to year, driven by higher operating acquisition-related spending and the prior-year gain from the sale of certain QRadar SaaS assets, partially offset by lower workforce rebalancing charges.

Previous wording

Operating (non-GAAP) pre-tax income from continuing operations of $3.2 billion increased 14.5 percent compared to the second quarter of 2024 and the operating (non-GAAP) pre-tax margin from continuing operations increased 1.1 points to 18.8 percent driven by the same factors as described above. The operating (non-GAAP) provision for income taxes was $0.5 billion in both the second quarter of 2025 and the second quarter of 2024. Operating (non-GAAP) net income from continuing operations of $2.7 billion increased 16.6 percent and the operating (non-GAAP) net income margin from continuing operations of 15.6 percent increased 1.2 points year to year.

Current wording

Operating (non-GAAP) pre-tax income from continuing operations of $3.0 billion increased 22.0 percent compared to the third quarter of 2024 and the operating (non-GAAP) pre-tax margin from continuing operations increased 2.0 points to 18.6 percent driven by revenue growth, portfolio mix, and increased productivity while providing investment flexibility. The operating (non-GAAP) provision for income taxes was $0.5 billion in the third quarter of 2025, compared to $0.3 billion in the third quarter of 2024. Operating (non-GAAP) net income from continuing operations of $2.5 billion increased 16.8 percent and the operating (non-GAAP) net income margin from continuing operations of 15.4 percent increased 1.0 points year to year.

Previous wording

Cash provided by operating activities was $1.7 billion in the second quarter of 2025, a decrease of $0.4 billion compared to the second quarter of 2024 which includes an increase in cash used by financing receivables of $0.5 billion. Free cash flow was $2.8 billion, an increase of $0.2 billion versus the prior-year period. Net cash provided by investing activities of $1.7 billion decreased $0.5 billion and net cash used in financing activities of $2.9 billion decreased $1.7 billion compared to the second quarter of 2024.

Current wording

Cash provided by operating activities was $3.1 billion in the third quarter of 2025, an increase of $0.2 billion compared to the third quarter of 2024. Free cash flow was $2.4 billion, an increase of $0.3 billion versus the prior-year period. Net cash used in investing activities of $0.4 billion decreased $1.1 billion and net cash used in financing activities of $3.0 billion increased $0.2 billion compared to the third quarter of 2024.

Previous wording

The following table provides the company’s operating (non-GAAP) earnings for the first six months of 2025 and 2024.

Current wording

The following table provides the company’s operating (non-GAAP) earnings for the first nine months of 2025 and 2024.

Previous wording

In the first six months of 2025, we reported $31.5 billion in revenue, net income from continuing operations of $3.2 billion, and operating (non-GAAP) earnings of $4.2 billion. Diluted earnings per share from continuing operations was $3.43 as reported and $4.40 on an operating (non-GAAP) basis. We generated $6.1 billion in cash from operations and $4.8 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, gross profit margin expansion and strong cash generation, and a balance sheet with financial flexibility to support our business.

Current wording

In the first nine months of 2025, we reported $47.8 billion in revenue, net income from continuing operations of $5.0 billion, and operating (non-GAAP) earnings of $6.7 billion. Diluted earnings per share from continuing operations was $5.27 as reported and $7.06 on an operating (non-GAAP) basis. We generated $9.2 billion in cash from operations and $7.2 billion in free cash flow, and delivered shareholder returns of $4.7 billion in dividends. Our year-to-date performance reflects our deep focus on the business fundamentals with continued revenue growth, gross profit margin expansion and strong cash generation, and a balance sheet with financial flexibility to support our business.

Previous wording

From a geographic perspective, Americas revenue increased 2.6 percent year to year as reported (3.4 percent adjusted for currency). EMEA increased 10.3 percent (8.1 percent adjusted for currency). Asia Pacific decreased 0.6 percent (1.4 percent adjusted for currency).

Current wording

From a geographic perspective, Americas revenue increased 4.8 percent year to year as reported (5.3 percent adjusted for currency). EMEA increased 11.7 percent (8.3 percent adjusted for currency). Asia Pacific decreased 0.4 percent (0.9 percent adjusted for currency).

Previous wording

Gross margin of 57.1 percent increased 1.9 points year to year with gross profit margin expansion driven by our improving portfolio mix and productivity actions. Operating (non-GAAP) gross margin of 58.5 percent increased 2.1 points compared to the prior-year period due to the same dynamics.

Current wording

Gross margin of 57.2 percent increased 1.6 points year to year with gross profit margin expansion driven by our portfolio mix and productivity actions. Operating (non-GAAP) gross margin of 58.6 percent increased 1.8 points compared to the prior-year period due to the same dynamics.

Previous wording

Pre-tax income from continuing operations of $3.8 billion increased 14.0 percent and pre-tax margin was 11.9 percent, an increase of 1.0 points as compared to the first six months of 2024. Performance in the first six months of 2025 benefited from our gross margin expansion and productivity actions taken to transform our operations; partially offset by our continued investments to drive innovation. Our year-to-year pre-tax income results were also impacted by the gain from the divestiture of The Weather Company assets in the prior-year period. The continuing operations provision for income taxes for the first six months of 2025 was $0.5 billion, compared to a benefit from income taxes of $0.1 billion for the first six months of 2024. 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. Net income from continuing operations of $3.2 billion decreased 4.6 percent and the net income from continuing operations margin was 10.3 percent, down 1.0 points year to year.

Current wording

Pre-tax income from continuing operations of $6.2 billion increased 148.3 percent and pre-tax margin was 12.9 percent, an increase of 7.4 points as compared to the first nine months of 2024. Performance in the first nine months of 2025 is driven by revenue growth, portfolio mix, and increased productivity while providing investment flexibility. In addition, our year-to-year performance includes a benefit from the 2024 pension settlement charge offset by the prior-year gains from the sale of certain QRadar SaaS assets and from the divestiture of The Weather Company assets. The continuing operations provision for income taxes for the first nine months of 2025 was $1.2 billion, compared to a benefit from income taxes of $0.6 billion for the first nine months of 2024. Net income from continuing operations of $5.0 billion decreased 61.7 percent and the net income from continuing operations margin was 10.4 percent, down 3.6 points year to year.

Previous wording

Operating (non-GAAP) pre-tax income from continuing operations of$4.9 billion increased 10.9 percent compared to the prior-year period and the operating (non-GAAP) pre-tax margin from continuing operations increased 0.9 points to 15.7 percent primarily driven by the same dynamics as described above. The operating (non-GAAP) provision for income taxes in the first six months of 2025 was $0.8 billion, compared to $0.6 billion in the first six months of 2024. The operating (non-GAAP) income tax provision year-to-year change was primarily driven by the same factor described above. Operating (non-GAAP) income from continuing operations of$4.2 billion increased 8.6 percent and the operating (non-GAAP) income margin from continuing operations of 13.2 percent increased 0.5 points year to year.

Current wording

Operating (non-GAAP) pre-tax income from continuing operations of$8.0 billion increased 14.9 percent compared to the prior-year period and the operating (non-GAAP) pre-tax margin from continuing operations increased 1.3 points to 16.7 percent primarily driven by the same dynamics as described above, excluding the impact from the prior-year pension settlement charge. The operating (non-GAAP) provision for income taxes in the first nine months of 2025 was $1.3 billion, compared to $0.9 billion in the first nine months of 2024. Operating (non-GAAP) income from continuing operations of$6.7 billion increased 11.5 percent and the operating (non-GAAP) income margin from continuing operations of 14.0 percent increased 0.7 points year to year.

Previous wording

At June 30, 2025, 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, 2025 of $15.5 billion increased $0.7 billion from December 31, 2024 and debt of $64.2 billion at June 30, 2025 increased $9.2 billion, primarily driven by the first-quarter 2025 debt issuances.

Current wording

At September 30, 2025, 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 September 30, 2025 of $14.9 billion increased $0.1 billion from December 31, 2024 and debt of $63.1 billion at September 30, 2025 increased $8.1 billion. The company continues to make investments in innovation both organically and through acquisitions, including the HashiCorp acquisition in first-quarter 2025.

Previous wording

Total assets increased $11.4 billion ($7.4 billion adjusted for currency) from December 31, 2024 primarily driven by an increase in goodwill and intangible assets mainly related to the HashiCorp acquisition. Total liabilities increased $11.2 billion ($6.4 billion adjusted for currency) from December 31, 2024 primarily driven by an increase in debt and deferred income; partially offset by a decrease in taxes payable. Total equity of $27.6 billion increased $0.2 billion from December 31, 2024 primarily driven by first-half 2025 net income and common stock; partially offset by dividends paid and an increase in accumulated other comprehensive loss.

Current wording

Total assets increased $9.1 billion ($5.5 billion adjusted for currency) from December 31, 2024 primarily driven by an increase in goodwill and intangible assets mainly related to the HashiCorp acquisition. Total liabilities increased $8.5 billion ($3.9 billion adjusted for currency) from December 31, 2024 primarily driven by an increase in debt. Total equity of $28.0 billion increased $0.6 billion from December 31, 2024 primarily driven by year-to-date net income and an increase in common stock; partially offset by dividends paid and an increase in accumulated other comprehensive loss.

Previous wording

Cash provided by operating activities was $6.1 billion in the firstsix months of 2025, a decrease of $0.2 billion compared to the first six months of 2024 which includes a decrease in cash provided by financing receivables of $0.3 billion. Free cash flow was $4.8 billion, an increase of $0.3 billion versus the prior-year period. Refer to page 75 for additional information on free cash flow. Net cash used in investing activities of $11.3 billion increased $9.3 billion compared to the prior-year period primarily driven by cash used for the HashiCorp acquisition. Financing activities were a net source of cash of $2.6 billion in the first six months of 2025 as compared to a use of cash of $2.6 billion inthe prior-year period primarily driven by debt.

Current wording

Cash provided by operating activities was $9.2 billion in the first nine months of 2025, essentially flat compared to the first nine months of 2024. Free cash flow was $7.2 billion, an increase of $0.6 billion versus the prior-year period. Refer to page 78 for additional information on free cash flow. Net cash used in investing activities of $11.7 billion increased $8.2 billion compared to the prior-year period primarily driven by cash used for the HashiCorp acquisition. Financing activities were a net use of cash of $0.4 billion and decreased$5.0 billion compared to theprior-year period. The year-to-year performance is primarily driven by debt.

Previous wording

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 2025 versus the second quarter and first six months of 2024 reportable segments results. The reported revenue categories within our Software and Consulting reportable segments are reported on a comparable basis for all periods.

Current wording

The following tables present each reportable segment’s revenue and gross margin results, followed by an analysis of the third quarter and first nine months of 2025 versus the third quarter and first nine months of 2024 reportable segments results. The reported revenue categories within our Software and Consulting reportable segments are reported on a comparable basis for all periods.

Previous wording

Software revenue of $7,387 million increased 9.6 percent as reported (7.6 percent adjusted for currency) in the second quarter of 2025 compared to the prior-year period, with solid growth in Hybrid Cloud, Automation and Data. This revenue performance reflects our continued growth in our high-value, annual recurring revenue base.

Current wording

Software revenue of $7,209 million increased 10.5 percent as reported (8.8 percent adjusted for currency) in the third quarter of 2025 compared to the prior-year period, with solid growth in Automation, Hybrid Cloud and Data. This revenue performance reflects sequential acceleration of organic revenue growth and continued contribution from our high-value, annual recurring revenue.

Previous wording

Revenue performance by line of business in the second quarter compared to the prior-year period was as follows:

Current wording

Revenue performance by line of business in the third quarter compared to the prior-year period was as follows:

Previous wording

Across Software, our annual recurring revenue (ARR) was $22.7 billion, which increased 12.2 percent as reported (10.4 percent adjusted for currency). In the first quarter of 2025, the ARR calculation was updated to include all recurring revenue within the Software segment. ARR is a key performance metric management uses to assess the health and growth trajectory of our Software segment, and is calculated by using the current quarter’s recurring revenue and then multiplying that value by four. This value includes the following consumption models: (1) software subscription agreements, including committed term licenses, (2) as-a-service arrangements such as SaaS and PaaS, and (3) maintenance and support contracts. ARR should be viewed independently of software revenue as this performance metric and its inputs may not represent revenue that will be recognized in future periods.

Current wording

Across Software, our annual recurring revenue (ARR) was $23.2 billion, which increased 10.7 percent as reported (8.8 percent adjusted for currency). In the first quarter of 2025, the ARR calculation was updated to include all recurring revenue within the Software segment. ARR is a key performance metric management uses to assess the health and growth trajectory of our Software segment, and is calculated by using the current quarter’s recurring revenue and then multiplying that value by four. This value includes the following consumption models: (1) software subscription agreements, including committed term licenses, (2) as-a-service arrangements such as SaaS and PaaS, and (3) maintenance and support contracts. ARR should be viewed independently of software revenue as this performance metric and its inputs may not represent revenue that will be recognized in future periods.

Previous wording

Revenue performance in the first six months of 2025 compared to the prior-year period was as follows:

Current wording

Revenue performance in the first nine months of 2025 compared to the prior-year period was as follows:

Previous wording

Software revenue of $13,722 million increased 8.6 percent as reported (8.3 percent adjusted for currency) compared to the same period in 2024. Software represents approximately 45 percent of IBM's business and the performance in the first half of 2025 reflects the combination of the strength of our portfolio, innovation we have brought to our organic software, and contribution from acquisitions we have made during the past twelve months, including HashiCorp, StreamSets and webMethods. Our ability to deploy our AI assistants and agents as well as AI middleware in hybrid environments leveraging multi-model capabilities continues to resonate with clients.

Current wording

Software revenue of $20,932 million increased 9.2 percent as reported (8.4 percent adjusted for currency) compared to the same period in 2024, driven by double-digit growth in both Hybrid Cloud and Automation and growth at a high single-digit rate in Data. The revenue performance in Transaction Processing reflects our product cycle dynamics. Overall Software revenue performance through the first nine months of 2025 reflects the combination of the strength of our portfolio, the investment we have made in innovating our organic software, and the contribution from acquisitions we have made during the past twelve months, including HashiCorp, StreamSets and webMethods.

Previous wording

Software gross profit, segment profit and respective margin performance in the second quarter and the first six months of 2025 reflect the benefits from our continued productivity actions and investments in acquisitions.

Current wording

Software segment profit and profit margin performance in the third quarter and the first nine months of 2025 were driven by revenue growth and reflect the benefits from the productivity actions we have taken.

Previous wording

In the second quarter of 2025, Consulting gross profit margin of 27.5 percent increased 1.2 points on a year-to-year basis. Segment profit of $562 million increased 21.3 percent and segment profit margin of 10.6 percent increased 1.6 points year to year.

Current wording

In the third quarter of 2025, Consulting gross profit margin of 29.3 percent increased 0.8 points on a year-to-year basis. Segment profit of $686 million increased 22.6 percent and segment profit margin of 12.9 percent increased 2.0 points year to year.

Previous wording

For the first six months of 2025, Consulting gross profit margin of 27.4 percent increased 1.6 points compared to the prior-year period. Segment profit of $1,121 million increased 26.2 percent and segment profit margin of 10.8 percent increased 2.2 points in the first six months of 2025 compared to the prior-year period.

Current wording

For the first nine months of 2025, Consulting gross profit margin of 28.0 percent increased 1.3 points compared to the prior-year period. Segment profit of $1,807 million increased 24.8 percent and segment profit margin of 11.5 percent increased 2.2 points in the first nine months of 2025 compared to the prior-year period.

Previous wording

Consulting gross profit, segment profit and respective margin performance in the second quarter and the first six months of 2025 reflect the benefits of the productivity actions we have taken.

Current wording

Consulting gross profit, segment profit and the respective margin performance in the third quarter and the first nine months of 2025 reflect the benefits of the productivity actions we have taken, partially offset by strategic investments in acquisitions and innovation.

Previous wording

For the three and six months ended June 30, 2025, Consulting signings decreased 15.6 percent as reported (18.2 percent adjusted for currency) and 13.1 percent as reported (13.9 percent adjusted for currency), respectively, as clients continued to delay decision-making, especially in discretionary projects. However, we had continued growth in backlog in the second quarter despite the challenging pricing environment. Our book-to-bill ratio for the trailing twelve-months was over 1.14. 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.

Current wording

For the three and nine months ended September 30, 2025, Consulting signings decreased 4.1 percent as reported (5.1 percent adjusted for currency) and 10.1 percent as reported (11.0 percent adjusted for currency), respectively. However, the quality of our signings continued to strengthen, with more strategic signings with new clients and expanded engagements with existing clients. Our book-to-bill ratio for the trailing twelve-months was approximately 1.12. 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.

Previous wording

For the first six months of 2025, Infrastructure revenue of $7,027 million increased 4.6 percent as reported (4.3 percent adjusted for currency) compared to the prior-year period, reflecting strong growth in Hybrid Infrastructure driven by z17, partially offset by the decline in Distributed Infrastructure, and a decrease in Infrastructure Support reflecting product cycle dynamics.

Current wording

For the first nine months of 2025, Infrastructure revenue of $10,586 million increased 8.4 percent as reported (7.7 percent adjusted for currency) compared to the prior-year period, reflecting strong growth in Hybrid Infrastructure driven by z17, partially offset by declines in Distributed Infrastructure and Infrastructure Support, which reflected product cycle dynamics.

Previous wording

Infrastructure gross profit margin of 61.5 percent increased 5.0 points in the second quarter of 2025 compared to the prior-year period. Infrastructure segment profit of $965 million increased 47.6 percent and segment profit margin of 23.3 percent increased 5.4 points compared to the prior-year period.

Current wording

Infrastructure gross profit margin of 57.2 percent increased 2.2 points in the third quarter of 2025 compared to the prior-year period. Infrastructure segment profit of $644 million increased 52.6 percent and segment profit margin of 18.1 percent increased 4.2 points compared to the prior-year period.

Previous wording

For the first six months of 2025, gross profit margin of 57.9 percent increased 2.5 points compared to the prior-year period. Infrastructure segment profit of $1,213 million increased 25.7 percent and segment profit margin of 17.3 percent increased 2.9 points in the first six months of 2025 compared to the prior-year period.

Current wording

For the first nine months of 2025, gross profit margin of 57.7 percent increased 2.4 points compared to the prior-year period. Infrastructure segment profit of $1,857 million increased 33.9 percent and segment profit margin of 17.5 percent increased 3.3 points in the first nine months of 2025 compared to the prior-year period.

Previous wording

Refer to pages 76 through 77 for a discussion of Financing’s segment results.

Current wording

Refer to pages 79 through 80 for a discussion of Financing’s segment results.

Previous wording

Americas revenue of $8,462 million increased 6.1 percent as reported and 6.5 percent adjusted for currency in the second quarter of 2025 compared to the prior-year period. The U.S. increased 4.5 percent year to year. Canada increased 27.8 percent as reported and 28.6 percent adjusted for currency. Latin America increased 1.4 percent as reported and 5.3 percent adjusted for currency, reflecting growth across most countries with a partial offsetting decline in Brazil of 6.1 percent as reported and 0.8 percent adjusted for currency.

Current wording

Americas revenue of $8,143 million increased 9.3 percent as reported and adjusted for currency in the third quarter of 2025 compared to the prior-year period. The U.S. increased 12.0 percent year to year. Canada was flat as reported, but grew 0.7 percent adjusted for currency. Latin America decreased 1.2 percent as reported and 1.8 percent adjusted for currency, with a decline in Brazil of 9.3 percent as reported and 10.3 percent adjusted for currency.

Previous wording

In EMEA, total revenue of $5,413 million increased 14.6 percent as reported and 8.5 percent adjusted for currency. Germany, the UK, France, and Italy increased 30.9 percent, 23.7 percent, 15.4 percent and 9.1 percent, respectively, as reported, and 24.0 percent, 17.2 percent, 9.6 percent and 3.3 percent, respectively, adjusted for currency.

Current wording

In EMEA, total revenue of $5,251 million increased 14.6 percent as reported and 8.7 percent adjusted for currency. The UK, France and Italy increased 32.2 percent, 28.4 percent and 15.9 percent, respectively, as reported, and 28.0 percent, 21.5 percent and 9.6 percent, respectively, adjusted for currency. Germany decreased 5.9 percent as reported and 11.0 percent adjusted for currency.

Previous wording

Geographic revenue performance for the six months ended June 30, 2025:

Current wording

Geographic revenue performance for the nine months ended September 30, 2025:

Previous wording

Americas revenue of $15,668 million increased 2.6 percent as reported and 3.4 percent adjusted for currency. The U.S. increased 2.3 percent compared to the prior-year period. Canada increased 10.5 percent as reported and 13.6 percent adjusted for currency. Latin America was flat as reported, but grew 5.7 percent adjusted for currency. Within Latin America, Brazil decreased 5.9 percent as reported, but increased 2.3 percent adjusted for currency.

Current wording

Americas revenue of $23,811 million increased 4.8 percent as reported and 5.3 percent adjusted for currency. The U.S. increased 5.4 percent compared to the prior-year period. Canada increased 6.8 percent as reported and 9.2 percent adjusted for currency. Latin America decreased 0.4 percent as reported, but grew 3.0 percent adjusted for currency. Within Latin America, Brazil decreased 7.2 percent as reported and 2.5 percent adjusted for currency; however, there was growth in most other countries.

Previous wording

Asia Pacific revenue of $5,886 million decreased 0.6 percent as reported and 1.4 percent adjusted for currency. Japan increased 2.0 percent as reported, but declined 0.8 percent adjusted for currency. Australia and India increased 6.4 percent and 1.8 percent, respectively, as reported, and 10.0 percent and 5.3 percent, respectively, adjusted for currency. China decreased 24.1 percent as reported and 23.9 percent adjusted for currency.

Current wording

Asia Pacific revenue of $8,822 million decreased 0.4 percent as reported and 0.9 percent adjusted for currency. Japan increased 0.5 percent as reported, but declined 1.6 percent adjusted for currency. Australia and India increased 5.3 percent and 4.1 percent, respectively, as reported, and 8.6 percent and 8.0 percent, respectively, adjusted for currency. China decreased 20.1 percent as reported and 20.0 percent adjusted for currency. China represents approximately 1 percent of IBM total revenue.