Analysis of Reportable Segments
International Business Machines Corp. operates in 4 segments: Software; Consulting; Infrastructure; and Financing.
Segment Profit Margin
International Business Machines Corp., profit margin by reportable segment
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|
| Software | 33.11% | 32.06% | 29.98% | 29.68% | 19.56% |
| Consulting | 11.70% | 9.93% | 10.20% | 9.33% | 8.12% |
| Infrastructure | 22.00% | 17.48% | 19.38% | 17.47% | 14.27% |
| Financing | 70.69% | 48.81% | 50.34% | 52.71% | 56.98% |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Segment profit margins exhibited varied performance across the reporting periods. Overall, a trend of increasing profitability is evident in Software, Consulting, and Infrastructure, while Financing demonstrates significant volatility.
- Software
- The Software segment experienced consistent growth in profit margin, increasing from 19.56% in 2021 to 33.11% in 2025. This represents a substantial improvement over the five-year period, indicating increasing efficiency or pricing power within this segment. The rate of increase appears to be accelerating in later years.
- Consulting
- Consulting profit margins showed a moderate upward trend, rising from 8.12% in 2021 to 11.70% in 2025. While positive, the growth was less pronounced than in the Software segment, with a slight dip observed in 2024 before recovering in the final year. This suggests potential challenges in maintaining consistent profitability within the Consulting business.
- Infrastructure
- The Infrastructure segment demonstrated a generally positive trajectory in profit margin, increasing from 14.27% in 2021 to 22.00% in 2025. There was a slight decrease in 2024, but the segment recovered strongly in the following year, reaching its highest margin within the observed period. This indicates successful cost management or improved revenue generation within Infrastructure.
- Financing
- The Financing segment exhibited the most significant fluctuations in profit margin. Starting at 56.98% in 2021, it declined steadily to 48.81% in 2024 before experiencing a dramatic increase to 70.69% in 2025. This volatility suggests the segment’s profitability is highly sensitive to external factors or internal strategic shifts. The substantial increase in 2025 warrants further investigation to understand the underlying drivers.
In summary, the observed trends suggest a strengthening of profitability in the core business segments (Software, Consulting, and Infrastructure), while the Financing segment presents a more complex picture requiring additional scrutiny. The overall performance indicates a positive shift in the company’s ability to generate profits from its various operations, though the Financing segment’s volatility introduces an element of uncertainty.
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Segment Profit Margin: Software
International Business Machines Corp.; Software; segment profit margin calculation
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment profit | 9,920) | 8,684) | 7,499) | 7,012) | 4,722) |
| Revenue | 29,962) | 27,085) | 25,011) | 23,629) | 24,141) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 33.11% | 32.06% | 29.98% | 29.68% | 19.56% |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Segment profit margin = 100 × Segment profit ÷ Revenue
= 100 × 9,920 ÷ 29,962 = 33.11%
The segment profit for Software demonstrated a consistent upward trajectory between 2021 and 2025. Initial values of US$4,722 million in 2021 increased to US$9,920 million by 2025, representing substantial growth over the five-year period.
Revenue for the Software segment exhibited a more variable pattern. While a slight decrease was noted between 2021 and 2022, revenue subsequently increased each year, reaching US$29,962 million in 2025. This indicates a recovery and subsequent expansion in sales.
- Segment Profit Margin
- The segment profit margin for Software showed a strong positive trend. Beginning at 19.56% in 2021, it rose significantly to 29.68% in 2022. This upward momentum continued, with margins reaching 29.98% in 2023, 32.06% in 2024, and culminating in 33.11% in 2025. This consistent improvement suggests increasing operational efficiency and/or pricing power within the Software segment.
The growth in segment profit margin outpaced the growth in revenue, particularly between 2021 and 2023. This suggests that the Software segment is becoming increasingly profitable, potentially due to economies of scale, improved cost management, or a shift towards higher-margin products or services. The continued increase in margin from 2023 to 2025, though at a diminishing rate, reinforces this observation.
Overall, the financial performance of the Software segment appears robust, characterized by both increasing profitability and revenue growth. The consistent improvement in the segment profit margin is a particularly noteworthy positive indicator.
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Segment Profit Margin: Consulting
International Business Machines Corp.; Consulting; segment profit margin calculation
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment profit | 2,464) | 2,054) | 2,130) | 1,871) | 1,449) |
| Revenue | 21,055) | 20,692) | 20,884) | 20,058) | 17,844) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 11.70% | 9.93% | 10.20% | 9.33% | 8.12% |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Segment profit margin = 100 × Segment profit ÷ Revenue
= 100 × 2,464 ÷ 21,055 = 11.70%
The Consulting segment demonstrated a positive trajectory in both profitability and revenue over the five-year period. Segment profit increased from US$1,449 million in 2021 to US$2,464 million in 2025, while revenue grew from US$17,844 million to US$21,055 million over the same timeframe. This growth is reflected in the segment profit margin, which exhibited an overall upward trend.
- Segment Profit
- Segment profit experienced consistent growth between 2021 and 2023, increasing from US$1,449 million to US$2,130 million. A slight decrease was observed in 2024, with profit reaching US$2,054 million, before resuming growth in 2025 to US$2,464 million. This indicates a generally strong performance with a minor fluctuation in the interim.
- Revenue
- Revenue showed steady growth throughout the period, increasing from US$17,844 million in 2021 to US$21,055 million in 2025. The rate of revenue growth slowed slightly between 2022 and 2023, and again between 2023 and 2024, but remained positive. This suggests continued demand for the segment’s services.
- Segment Profit Margin
- The segment profit margin increased from 8.12% in 2021 to 9.33% in 2022, and continued to rise to a peak of 10.20% in 2023. A modest decline to 9.93% occurred in 2024, followed by a significant increase to 11.70% in 2025. This indicates improving operational efficiency and pricing power within the Consulting segment, culminating in a substantial margin expansion in the final year of the period.
The consistent growth in segment profit, coupled with the expanding profit margin, suggests successful management of costs and effective revenue generation within the Consulting segment. The slight dip in both profit and margin in 2024 does not appear to have derailed the overall positive trend, as evidenced by the strong performance in 2025.
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Segment Profit Margin: Infrastructure
International Business Machines Corp.; Infrastructure; segment profit margin calculation
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment profit | 3,458) | 2,450) | 2,828) | 2,671) | 2,025) |
| Revenue | 15,718) | 14,020) | 14,593) | 15,288) | 14,188) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 22.00% | 17.48% | 19.38% | 17.47% | 14.27% |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Segment profit margin = 100 × Segment profit ÷ Revenue
= 100 × 3,458 ÷ 15,718 = 22.00%
The Infrastructure segment demonstrated a generally positive trajectory in financial performance between 2021 and 2025. Segment profit increased from US$2,025 million to US$3,458 million over the five-year period, although not consistently year-over-year. Revenue exhibited a similar pattern, rising from US$14,188 million to US$15,718 million. The most notable trend is the improvement in segment profit margin.
- Segment Profit
- Segment profit experienced growth in the initial three years, increasing from US$2,025 million in 2021 to US$2,828 million in 2023. A slight decrease was observed in 2024, with profit falling to US$2,450 million, before rebounding strongly to US$3,458 million in 2025. This suggests potential cyclicality or the impact of specific strategic initiatives.
- Revenue
- Revenue increased from 2021 to 2022, then decreased in 2023 and 2024. However, revenue recovered in 2025, reaching US$15,718 million, surpassing the 2022 level. This indicates a degree of volatility in sales, but ultimately a positive overall trend.
- Segment Profit Margin
- The segment profit margin showed a consistent upward trend, increasing from 14.27% in 2021 to 22.00% in 2025. This improvement suggests increasing operational efficiency, favorable pricing strategies, or a shift towards higher-margin products and services within the Infrastructure segment. The margin peaked at 19.38% in 2023, dipped slightly to 17.48% in 2024, and then rose significantly to 22.00% in 2025. This final increase is particularly noteworthy and warrants further investigation to understand the underlying drivers.
Overall, the Infrastructure segment’s performance indicates a strengthening financial position, particularly regarding profitability. While revenue experienced some fluctuations, the consistent improvement in segment profit margin suggests effective management of costs and pricing, leading to enhanced returns.
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Segment Profit Margin: Financing
International Business Machines Corp.; Financing; segment profit margin calculation
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment profit | 521) | 348) | 373) | 340) | 441) |
| Revenue | 737) | 713) | 741) | 645) | 774) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 70.69% | 48.81% | 50.34% | 52.71% | 56.98% |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Segment profit margin = 100 × Segment profit ÷ Revenue
= 100 × 521 ÷ 737 = 70.69%
The financing segment demonstrated fluctuating performance between 2021 and 2025. Segment profit exhibited volatility, while revenue showed a more moderate pattern. The segment profit margin experienced a notable decline followed by a substantial recovery.
- Segment Profit
- Segment profit decreased from US$441 million in 2021 to US$340 million in 2022, representing a decline of approximately 22.9%. A subsequent increase to US$373 million was observed in 2023, but this was followed by a further decrease to US$348 million in 2024. By 2025, segment profit rose significantly to US$521 million, indicating a strong recovery and exceeding the 2021 level.
- Revenue
- Revenue decreased from US$774 million in 2021 to US$645 million in 2022, a reduction of roughly 16.7%. Revenue then increased to US$741 million in 2023, before decreasing slightly to US$713 million in 2024. A modest increase to US$737 million was recorded in 2025, suggesting a stabilization in revenue generation.
- Segment Profit Margin
- The segment profit margin decreased consistently from 56.98% in 2021 to 48.81% in 2024. This represents a cumulative decline of approximately 14.3%. However, a substantial increase was observed in 2025, with the margin reaching 70.69%. This significant improvement suggests enhanced profitability within the financing segment, potentially driven by cost efficiencies or increased pricing power. The 2025 margin represents the highest value observed during the analyzed period.
The divergence between the revenue trend and the segment profit margin trend, particularly in 2025, warrants further investigation. While revenue experienced only a modest increase, the substantial rise in segment profit margin indicates a significant improvement in operational efficiency or a shift in the revenue mix towards higher-margin products or services within the financing segment.
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Revenue
International Business Machines Corp., revenue by reportable segment
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|
| Software | 29,962) | 27,085) | 25,011) | 23,629) | 24,141) |
| Consulting | 21,055) | 20,692) | 20,884) | 20,058) | 17,844) |
| Infrastructure | 15,718) | 14,020) | 14,593) | 15,288) | 14,188) |
| Financing | 737) | 713) | 741) | 645) | 774) |
| Total segments | 67,472) | 62,510) | 61,229) | 59,620) | 56,947) |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Overall segment revenue demonstrates a general upward trajectory between 2021 and 2025. However, the performance varies significantly across individual segments. The most substantial growth is observed in the Software segment, while Infrastructure exhibits more modest fluctuations. Consulting revenue shows initial growth followed by a period of relative stability, and Financing remains consistently the smallest contributor to overall revenue.
- Software
- Software revenue experienced a slight decrease from US$24,141 million in 2021 to US$23,629 million in 2022. This was followed by consistent growth, reaching US$29,962 million in 2025. This represents a cumulative increase of approximately 24% over the five-year period, making it the primary driver of overall revenue expansion.
- Consulting
- Consulting revenue increased notably from US$17,844 million in 2021 to US$20,058 million in 2022. Growth continued to US$20,884 million in 2023, but then plateaued, with revenue declining slightly to US$20,692 million in 2024 before a modest increase to US$21,055 million in 2025. While still a significant revenue contributor, the rate of growth in this segment has slowed considerably in recent years.
- Infrastructure
- Infrastructure revenue increased from US$14,188 million in 2021 to US$15,288 million in 2022, but then decreased to US$14,593 million in 2023 and further to US$14,020 million in 2024. A recovery is observed in 2025, with revenue reaching US$15,718 million. This segment demonstrates the most volatility among the reported segments.
- Financing
- Financing revenue remained relatively stable throughout the period, fluctuating between US$645 million and US$774 million. The segment concluded the period at US$737 million in 2025, showing minimal overall change.
- Total Segment Revenue
- Total segment revenue increased from US$56,947 million in 2021 to US$67,472 million in 2025, representing an overall increase of approximately 18.5%. The growth is not linear, with a slight deceleration in the rate of increase between 2023 and 2024. The Software segment’s performance is the dominant factor in this overall growth.
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Segment profit
International Business Machines Corp., segment profit by reportable segment
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|
| Software | 9,920) | 8,684) | 7,499) | 7,012) | 4,722) |
| Consulting | 2,464) | 2,054) | 2,130) | 1,871) | 1,449) |
| Infrastructure | 3,458) | 2,450) | 2,828) | 2,671) | 2,025) |
| Financing | 521) | 348) | 373) | 340) | 441) |
| Total segments | 16,363) | 13,536) | 12,830) | 11,894) | 8,637) |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Segment profit demonstrates varied performance across the reporting periods. Overall, total segment profit exhibits a consistent upward trajectory, though the rate of growth fluctuates. A detailed examination of individual segments reveals differing patterns contributing to this overall trend.
- Software
- The Software segment consistently shows growth in profit, increasing from US$4,722 million in 2021 to US$9,920 million in 2025. The growth rate appears to accelerate from 2021 to 2022, then moderates before resuming a higher growth rate towards the end of the period. This segment is the largest contributor to overall segment profit.
- Consulting
- Consulting profit increased from US$1,449 million in 2021 to US$2,464 million in 2025. Growth was observed between 2021 and 2023, but a slight decrease occurred in 2024 before resuming growth in 2025. While positive overall, the Consulting segment’s growth is less consistent than that of the Software segment.
- Infrastructure
- The Infrastructure segment experienced growth from US$2,025 million in 2021 to US$3,458 million in 2025. However, profit decreased in 2024 to US$2,450 million, representing a temporary setback before a substantial increase in 2025. This segment demonstrates volatility in its profit performance.
- Financing
- Financing profit shows the least consistent trend. It decreased from US$441 million in 2021 to US$340 million in 2022, then increased to US$373 million in 2023, decreased again to US$348 million in 2024, and finally increased to US$521 million in 2025. This segment’s profit remains significantly lower than the other three segments.
Total segment profit increased from US$8,637 million in 2021 to US$16,363 million in 2025. The largest year-over-year increase occurred between 2024 and 2025, suggesting a potential acceleration in overall profitability. The Software segment is the primary driver of this overall growth, while the Infrastructure and Financing segments exhibit more variable performance.
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