Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
International Business Machines Corp., EBITDA calculation
US$ in millions
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).
The financial information reveals a fluctuating pattern in profitability metrics over the five-year period. While net income and earnings before tax experienced volatility, earnings before interest and tax (EBIT) and earnings before interest, tax, depreciation, and amortization (EBITDA) generally demonstrate an upward trajectory, albeit with some interim variations.
- EBITDA Trend
- EBITDA decreased from US$12,428 million in 2021 to US$7,194 million in 2022, representing a substantial decline. However, a significant recovery occurred in 2023, with EBITDA reaching US$14,709 million. This upward trend continued, though at a slower pace, with EBITDA reported at US$12,193 million in 2024 and further increasing to US$17,310 million in 2025. This suggests improving operational performance and profitability, particularly in the latter years of the observed period.
- Relationship between EBITDA and EBIT
- EBIT consistently remained lower than EBITDA across all reported years, as expected, due to the inclusion of depreciation and amortization expenses in calculating EBIT. The difference between EBITDA and EBIT widened from US$6,417 million in 2021 to US$4,722 million in 2022, then increased to US$4,404 million in 2023. This difference narrowed to US$4,667 million in 2024 and then to US$5,021 million in 2025, indicating a relatively stable capital expenditure profile relative to revenue.
- EBT and Net Income Correlation
- Net income attributable to the company exhibited a strong correlation with earnings before tax. The significant decrease in EBT from 2021 to 2022 (US$4,856 million to US$1,176 million) directly corresponded with a substantial reduction in net income (US$5,743 million to US$1,639 million). Similarly, the increase in EBT in 2023 (US$8,706 million) was mirrored by a rise in net income (US$7,502 million). This pattern continued through 2025, with both metrics reaching their highest levels during the period.
Overall, the financial information suggests a period of initial challenge in 2022 followed by a strong recovery and continued growth in profitability through 2025. The increasing EBITDA figures, coupled with the consistent relationship between EBT and net income, indicate improving financial health and operational efficiency.
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Enterprise Value to EBITDA Ratio, Current
International Business Machines Corp., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 279,664) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 17,310) |
| Valuation Ratio | |
| EV/EBITDA | 16.16 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Accenture PLC | 9.70 |
| Adobe Inc. | 9.96 |
| AppLovin Corp. | 30.19 |
| Cadence Design Systems Inc. | 40.35 |
| CrowdStrike Holdings Inc. | 530.36 |
| Datadog Inc. | 200.92 |
| Intuit Inc. | 20.08 |
| Microsoft Corp. | 17.28 |
| Oracle Corp. | 20.99 |
| Palantir Technologies Inc. | 206.71 |
| Palo Alto Networks Inc. | 67.08 |
| Salesforce Inc. | 13.22 |
| ServiceNow Inc. | 33.72 |
| Synopsys Inc. | 34.54 |
| Workday Inc. | 21.45 |
| EV/EBITDA, Sector | |
| Software & Services | 19.78 |
| EV/EBITDA, Industry | |
| Information Technology | 27.33 |
Based on: 10-K (reporting date: 2025-12-31).
1 Click competitor name to see calculations.
If the company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.
Otherwise, if the company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.
Enterprise Value to EBITDA Ratio, Historical
International Business Machines Corp., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 261,991) | 279,256) | 211,965) | 159,474) | 155,684) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 17,310) | 12,193) | 14,709) | 7,194) | 12,428) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 15.14 | 22.90 | 14.41 | 22.17 | 12.53 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Accenture PLC | 11.82 | 19.87 | 17.26 | 14.25 | 23.31 | |
| Adobe Inc. | 12.68 | 22.06 | 34.07 | 22.32 | 35.44 | |
| AppLovin Corp. | 32.17 | 47.75 | 20.05 | 14.17 | 30.05 | |
| Cadence Design Systems Inc. | 42.96 | 42.25 | 55.61 | 42.11 | 39.61 | |
| CrowdStrike Holdings Inc. | 247.69 | 262.20 | — | — | — | |
| Datadog Inc. | 203.50 | 153.02 | 370.63 | 1,785.61 | 1,949.67 | |
| Intuit Inc. | 31.89 | 38.55 | 38.71 | 36.22 | 51.96 | |
| Microsoft Corp. | 23.79 | 23.66 | 22.92 | 20.17 | 24.59 | |
| Oracle Corp. | 28.10 | 21.81 | 21.80 | 17.12 | 13.78 | |
| Palantir Technologies Inc. | 184.77 | 551.39 | 175.93 | — | — | |
| Palo Alto Networks Inc. | 64.12 | 84.17 | 85.08 | 515.19 | — | |
| Salesforce Inc. | 24.64 | 31.64 | 38.31 | 38.88 | 33.83 | |
| ServiceNow Inc. | 38.82 | 87.89 | 96.48 | 104.31 | 147.45 | |
| Synopsys Inc. | 41.03 | 39.17 | 54.59 | 36.73 | 53.43 | |
| Workday Inc. | 55.27 | 86.37 | 216.44 | 147.90 | 670.04 | |
| EV/EBITDA, Sector | ||||||
| Software & Services | 25.34 | 27.48 | 25.41 | 22.68 | 26.04 | |
| EV/EBITDA, Industry | ||||||
| Information Technology | 27.46 | 27.74 | 23.62 | 18.33 | 20.59 | |
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).
3 2025 Calculation
EV/EBITDA = EV ÷ EBITDA
= 261,991 ÷ 17,310 = 15.14
4 Click competitor name to see calculations.
The Enterprise Value to EBITDA ratio exhibited considerable fluctuation over the five-year period. Initial values indicated a relatively high valuation multiple, followed by a period of increase, then a subsequent decline, and a final increase before a slight decrease.
- Enterprise Value
- Enterprise Value demonstrated an increasing trend from 2021 to 2023, rising from US$155,684 million to US$211,965 million. A significant increase occurred between 2022 and 2023. However, in 2024, Enterprise Value peaked at US$279,256 million before decreasing to US$261,991 million in 2025.
- EBITDA
- EBITDA experienced a substantial decrease from 2021 to 2022, falling from US$12,428 million to US$7,194 million. A strong recovery was observed in 2023, with EBITDA reaching US$14,709 million. EBITDA then decreased to US$12,193 million in 2024, followed by an increase to US$17,310 million in 2025.
- EV/EBITDA Ratio
- The EV/EBITDA ratio began at 12.53 in 2021. It more than doubled to 22.17 in 2022, primarily driven by the decline in EBITDA. The ratio decreased to 14.41 in 2023 as EBITDA recovered. In 2024, the ratio increased to 22.90, reflecting a combination of increased Enterprise Value and a slight decrease in EBITDA. Finally, the ratio decreased to 15.14 in 2025, influenced by the decrease in Enterprise Value and the increase in EBITDA.
The volatility in the EV/EBITDA ratio suggests changing market perceptions of the company’s value relative to its operating performance. The increases in the ratio generally coincide with periods of lower EBITDA, indicating a higher premium placed on the Enterprise Value. The decreases in the ratio correspond with periods of EBITDA growth, suggesting a more favorable valuation relative to earnings.
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