866da9f5b334657b83315207440d50551d90398467e427a4a82eac417c45d8bc

Adjustments for Non-Cash Items

Stock-Based Compensation

Changes in Working Capital

Capital Expenditures (CapEx)

Proceeds from / Repayments of Debt

Share Repurchases

Dividend Payments

Net Change in Cash

4b9295b9507b98bf7abace62e765b926e1c8d26bc8e719243926e6fad1ffafdf

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bd31a1fef29ee8c8bc54826a3c33fcb9989e0df219a2c4cb0f9d0cd3f3e718c8

Total Consulting signings (USD millions)

Consulting trailing twelve-month book-to-bill ratio (ratio)

Percentage of Financing external portfolio that is investment grade (percent)

ed0334e40452305b5b0c64fb3a2c68209aaa44e4d65963f7b3010cf34633a71c

91cde12f9661753e21ad853b386125c45991d38dd52ce59fb165f1886ea5ae00

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The jump in operating cash flow in FY 2023 was driven by **performance-related improvements**—with net income rising significantly from **$1,639 million** in FY 2022 to **$7,502 million** in FY 2023—better efficiencies in managing **sales cycle working capital**, and a notable increase in **cash provided by financing receivables** (from a usage of **$(717) million** in FY 2022 to **$1,233 million** in FY 2023).  **[0000051143-24-000004_ibm-20240124xex991.htm:5]** **[0000051143-24-000012_ibm-20231231_d2.htm:54]** **[0000051143-24-000012_ibm-20231231_d2.htm:24]** 

What drove the jump in operating cash flow in FY 2023?

IBM’s acquisition activity in Q3 2024 was driven by a strategic shift rather than a traditional “spike.” Specifically, the change was due to the fact that **Q3 2023 included a high-cost acquisition (the Apptio acquisition)**, while in **Q3 2024 IBM completed a series of smaller, strategic acquisitions (such as StreamSets and webMethods)** aimed at enhancing its hybrid cloud and AI strategy. This shift led to a significantly different cash outflow profile, with the overall spending in Q3 2024 being lower in aggregate compared to the previous year’s high-cost deal.  **[0000051143-24-000049_ibm-20240930.htm:14]** **[0000051143-24-000049_ibm-20240930.htm:83]** 

Why did acquisitions spike in Q3 2024?

In Q3 2024, there was a significant increase in proceeds from the disposition of PPE primarily caused by the **sale of certain QRadar SaaS assets**, which contributed a pre-tax gain of **$351 million**. This divestiture was a key factor in the jump in cash provided by property, plant, and equipment disposition transactions.  **[0000051143-24-000049_ibm-20240930.htm:83]** **[0000051143-24-000049_ibm-20240930.htm:74]** 

What caused the jump in proceeds from disposition of PPE in Q3 2024?

IBM's Q4 2023 short-term borrowings line item experienced a drastic swing, where the net change was about **-7 million USD** compared to a **net inflow of 217 million USD** in Q4 2022. This volatility is generally reflective of routine short-term liquidity management activities—such as fluctuations in cash needs or repayments of short-term obligations—rather than a specific event. However, the documents do not provide any detailed explanation for this particular swing.   

What led to the drastic swing in short-term borrowings in Q4 2023?

20aaefdcb7295bec20877de16667242639e6df996ef8dad03de4e28541557072

IBM's cash and cash equivalents nearly doubled in Q1 2024 primarily due to **strong net operating cash flow** and **substantial debt issuance**. Specifically, IBM generated **$4,168 million** from operating activities and issued **$5,486 million** in debt, which together significantly boosted liquidity. In addition, the company increased its holdings of marketable securities—from **$373 million** at the end of 2023 to **$4,512 million** in Q1 2024—further contributing to the rise in cash and cash equivalents, despite outflows from investing activities and certain financing adjustments.  **[0000051143-24-000025_ibm-20240331.htm:56]** **[0000051143-24-000025_ibm-20240331.htm:44]** **[0000051143-24-000018_ibm-20240424xex991.htm:5]** **[0000051143-24-000025_ibm-20240331.htm:3]** 

Why did Cash and Cash Equivalents nearly double in Q1 2024?

The notable increase in Total Assets in Q1 2024 was primarily driven by a **substantial rise in cash and cash equivalents and marketable securities**. Specifically, cash and cash equivalents grew by **$1,535 million** and marketable securities by **$4,139 million**, which contributed significantly to the increase from **$135,241 million** to **$137,169 million**. Additionally, adjustments such as decreases in receivables and goodwill (following the sale of The Weather Company assets) also played a role in this change.  **[0000051143-24-000018_ibm-20240424xex991.htm:5]** **[0000051143-24-000025_ibm-20240331.htm:56]** **[0000051143-24-000025_ibm-20240331.htm:57]** 

What drove the notable increase in Total Assets in Q1 2024?

IBM's sharp drop in short-term debt in Q2 2024 was primarily driven by **maturities of debt** during the first half of 2024. Additionally, the company **reclassified a portion of its long-term debt to short-term debt** in anticipation of these impending maturities, and once these debts matured, they were settled, leading to the significant reduction in short-term debt.  **[0000051143-24-000039_ibm-20240630.htm:4]** **[0000051143-24-000033_ibm-20240724xex991.htm:4]** **[0000051143-24-000039_ibm-20240630.htm:73]** **[0000051143-24-000039_ibm-20240630.htm:72]** 

What factors led to the sharp drop in Short-term Debt in Q2 2024?

**IBM's long-term debt increased noticeably in Q1 2024 primarily due to new debt issuances. The company issued **$5,486 million** of new debt during the quarter to boost financial liquidity and prepare for future debt maturities, which, after adjusting for reclassifications to short-term debt, resulted in an overall increase of **$3,912 million** compared to December 31, 2023.  **[0000051143-24-000025_ibm-20240331.htm:57]** **[0000051143-24-000025_ibm-20240331.htm:56]** **

Why did Long-term Debt increase noticeably in Q1 2024?

3a566a01ec99e6c9abfc7668f34b46c3c6446a91b476fa80ee223ef2ef9dc647

IBM's Q4 2023 revenue spike was driven by strong performance across all key segments. The **Software segment** saw a **3.1% increase to $7,514 million** due to growing demand for hybrid cloud and AI solutions, including significant traction for its AI platform, watsonx. Similarly, the **Consulting segment** experienced a **5.8% growth to $5,048 million** thanks to durable revenue growth supported by strategic partnerships and expanding ecosystem initiatives. Additionally, the **Infrastructure segment** grew by **2.7% to $4,604 million**, with solid performance in zSystems fueled by innovations such as cloud-native development and embedded AI. Collectively, these factors helped IBM achieve a total revenue of **$17.4 billion** in Q4 2023, representing a **4% year-over-year increase**.  **[0000051143-24-000004_ibm-20240124xex991.htm:0]** **[IBM_3370752_1]** **[IBM_3370752_7]** **[0000051143-24-000004_ibm-20240124xex991.htm:6]** 

Why did Revenue - Sales spike in Q4 2023?

The negative net income in Q3 2024 was primarily driven by a **one-time, non-cash, pre-tax pension settlement charge of $2.7 billion** (or **$2.0 billion net of tax**), which significantly impacted earnings.  **[0000051143-24-000049_ibm-20240930.htm:55]** **[0000051143-24-000043_ibm-20241023xex991.htm:6]** **[0000051143-24-000049_ibm-20240930.htm:8]**  Additionally, **increased total expenses**—including higher workforce rebalancing charges, increased spending on portfolio innovation, and other costs that grew by **50% year-over-year**—further compounded the issue.  **[0000051143-24-000049_ibm-20240930.htm:56]** **[0000051143-24-000049_ibm-20240930.htm:74]**  A **tax benefit of $485 million** helped partially mitigate these charges, but it was not enough to offset the negative impact, especially since the modest revenue growth of **1.5%** to **$15.0 billion** could not cover the additional expenses.  **[0000051143-24-000049_ibm-20240930.htm:55]** **[20241023NY38488:6]** **[0000051143-24-000049_ibm-20240930.htm:8]** **[0000051143-24-000049_ibm-20240930.htm:78]** 

What drove the negative Net Income in Q3 2024?

IBM's **Total EPS turned negative in Q3 2024** primarily due to a one-time **pension settlement charge** that impacted per-share earnings by approximately **$2.18 per share** and contributed significantly to the downturn. Additionally, the company experienced a **net loss from continuing operations of $317 million** compared to a profit in Q3 2023, along with a substantial **50% year-over-year increase in total expenses**. These factors combined to push the EPS into negative territory in Q3 2024.  **[0000051143-24-000049_ibm-20240930.htm:57]** **[0000051143-24-000049_ibm-20240930.htm:54]** **[0000051143-24-000049_ibm-20240930.htm:55]** **[0000051143-24-000049_ibm-20240930.htm:58]** 

Why did Total EPS turn negative in Q3 2024?

The jump in Total Expenses in Q3 2024 was mainly driven by a **one-time, non-cash, pre-tax pension settlement charge of $2.7 billion** that significantly increased the expenses. This was supplemented by **higher workforce rebalancing charges** and **increased spending on portfolio innovation**. These expense increases were partly offset by a **$351 million pre-tax gain** from the sale of certain QRadar SaaS assets, resulting in an overall **50.0% year-over-year increase** in Total Expenses and Other (Income).  **[0000051143-24-000049_ibm-20240930.htm:56]** **[0000051143-24-000049_ibm-20240930.htm:71]** **[0000051143-24-000049_ibm-20240930.htm:74]** 

What caused the jump in Total Expenses in Q3 2024?

1764cfa45b30c399e9195705903f2587fe0ba21390bda3cd31291609e5092b71

International Business Machines Corp (IBM)

Financials