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

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Total Consulting signings (USD millions)

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

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

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Net Income (USD, millions)

Depreciation (USD, millions)

Amortization of capitalized software and acquired intangible assets (USD, millions)

Stock-based compensation (USD, millions)

Changes in operating assets and liabilities, net of acquisitions/divestitures (USD, millions)

Net cash provided by operating activities (USD, millions)

Acquisition of businesses, net of cash acquired (USD, millions)

Divestitures of businesses, net of cash transferred (USD, millions)

Net cash provided by/(used in) investing activities (USD, millions)

Financing — other (USD, millions)

Cash dividends paid (USD, millions)

Net cash provided by/(used in) financing activities (USD, millions)

Effect of exchange rate changes on cash, cash equivalents and restricted cash (USD, millions)

Net change in cash, cash equivalents and restricted cash (USD, millions)

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Total Revenue (USD, millions)

Gross Profit (USD, millions)

Selling, General and Administrative Expense (USD, millions)

Research, Development and Engineering Expense (USD, millions)

Intellectual Property and Custom Development Income (USD, millions)

Other (Income) and Expense (USD, millions)

Interest Expense (USD, millions)

Total Expense and Other (Income) (USD, millions)

Income/(Loss) from Continuing Operations Before Income Taxes (USD, millions)

Provision for/(Benefit from) Income Taxes (USD, millions)

Income/(Loss) from Continuing Operations (USD, millions)

Income/(Loss) from Discontinued Operations, Net of Tax (USD, millions)

Net Income/(Loss) (USD, millions)

Earnings/(Loss) Per Share of Common Stock - Assuming Dilution - Continuing Operations (USD)

Earnings/(Loss) Per Share of Common Stock - Assuming Dilution - Discontinued Operations (USD)

Earnings/(Loss) Per Share of Common Stock - Assuming Dilution - Total (USD)

Earnings/(Loss) Per Share of Common Stock - Basic - Continuing Operations (USD)

Earnings/(Loss) Per Share of Common Stock - Basic - Discontinued Operations (USD)

Earnings/(Loss) Per Share of Common Stock - Basic - Total (USD)

Weighted-average number of common shares outstanding - Assuming Dilution (millions)

Weighted-average number of common shares outstanding - Basic (millions)

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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?

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1f42b6b422350979e1c83269d8b936a4a3b01c734dd771258e08b1269515ac95

International Business Machines Corp (IBM)

Financials