Common-Size Income Statement
Quarterly Data
International Business Machines Corp., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2026-09-30), 10-Q (reporting date: 2026-06-30), 10-Q (reporting date: 2026-03-31), 10-K (reporting date: 2025-12-31), 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31).
The revenue composition exhibits a consistent seasonal pattern across the analyzed period. Revenue from Services typically peaks in the first and third quarters, while Sales reach their highest proportions in the fourth quarter of each year. This inverse relationship suggests a cyclical demand for hardware or software sales toward the end of the calendar year, contrasted by a steadier reliance on services during the interim periods. Financing remains a marginal and stable contributor, generally fluctuating between 0.9% and 1.6% of total revenue.
- Gross Profitability and Cost Management
- Gross profit margins demonstrate a gradual upward trajectory over time. While early periods fluctuated between 51% and 57%, the margins reached peaks exceeding 60% by the end of 2025. This improvement is driven by a reduction in the total cost of revenue, which decreased from a range of 43% to 48% in 2021 to lows of approximately 39% in late 2025. The most significant cost reductions are observable in the Services segment, where costs as a percentage of revenue dropped from approximately 35% in 2021 to below 28% in late 2025.
- Operating Expenditure Trends
- Selling, General and Administrative (SG&A) expenses show a general downward trend in their proportion of revenue, moving from highs of 35.55% in early 2021 to 27.01% by September 2026. This suggests an increase in operational efficiency or a scaling of revenue that outpaces administrative growth. Research and Development (R&D) spending remains relatively consistent, typically oscillating between 10% and 13% of revenue, indicating a sustained commitment to innovation regardless of quarterly fluctuations.
- Operating Income and Profitability Volatility
- Operating income is characterized by significant quarterly volatility, with a recurring peak in the fourth quarter. Operating margins frequently jump from single digits in the first quarter to over 20% in the fourth quarter. Net income reflects similar volatility, compounded by irregular items in "Other income and (expense)." Notably, severe contractions occurred in September 2022 and September 2024, where substantial non-operating expenses led to net losses of -22.66% and -2.20% of revenue, respectively. Despite these anomalies, the overall trend in net income is positive, culminating in a peak margin of 28.45% in December 2025.
- Tax and Non-Continuing Operations
- Income from discontinued operations has diminished over time, moving from a high contribution of 4.19% in early 2021 to negligible values near 0% by 2026. Tax provisions fluctuate significantly, occasionally providing benefits that offset operating losses or reducing net income during high-profit quarters, though they generally align with the volatility of the pre-tax income.
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