October 12, 2026·72 min read

International Business Machines Corporation (IBM), Financial Analysis

Insights derived from analysing SEC filings. Independent analysis, not a publication of the SEC.

Figures are read from the Forms 10-K for FY2021 to FY2025, whose financial statements sit in Exhibit 13, the Forms 10-Q for Q1 2025 to Q2 2026, the Forms 8-K of January 2022 to October 2026 with their quarterly earnings exhibits 99.1, the proxy statement of March 2026, Schedules 13G, Forms 13F and Forms 3, 4 and 144 on the record for central index key 51143, together with the comparable filings of seven peers. Accession numbers for every filing used appear in the Sources appendix. Market prices are closing prices of 9 October 2026.

IBM (IBM) closed at $290.23 on 13 July 2026 and $217.07 on 14 July 2026, a change of (25.2)%, on the day it published preliminary Q2 2026 results. Shares closed at $227.13 on 9 October 2026, 20.2x TTM (trailing twelve months, the last four reported quarters) diluted GAAP EPS of $11.27. FY2026 constant currency revenue growth guidance is 4% to 5%.

Key findings

Q2 2026 revenue was $17.16bn, up 1.1% year on year: Software grew 5.1%, Consulting 0.2% and Infrastructure fell 7.4% with IBM Z mainframe revenue down 42.0%; diluted GAAP EPS was $2.27 against $2.31 and operating (non GAAP) EPS $2.93 against $2.80.
IBM lowered FY2026 constant currency revenue growth guidance to 4% to 5% from more than 5% on 22 July 2026 and kept guidance for free cash flow on its own measure to rise about $1bn; the FY2026 Software growth expectation moved to 6% to 8% from 10% or more (earnings call, 22 July 2026).
Net debt was $53.81bn at 30 June 2026 against $46.79bn at 31 December 2025, on debt of $61.99bn and cash, restricted cash and marketable securities of $8.18bn, after the Confluent acquisition closed on 17 March 2026 for total consideration of $11.60bn.
TTM FCF (free cash flow: operating cash flow less capital expenditure including software investment) was $13.14bn, 19.0% of TTM revenue of $69.10bn, and dividends paid of $6.31bn took 48.0% of it.
At the 9 October 2026 close IBM traded at 3.9x EV (enterprise value) to TTM sales, 20.2x P / E and 16.3x P / FCF against medians of 4.9x, 22.2x and 18.0x for seven peers; TTM revenue growth was 7.9% against a peer median of 11.8%.
IBM has one share class with one vote per share; Vanguard Capital Management reported 7.48% at 31 March 2026, and at the 28 April 2026 annual meeting executive pay received 94.2% of votes, the 2026 long term performance plan 75.8% and the written consent proposal 37.3%.
Forms 4 filed from 10 October 2025 to 10 October 2026 report 1 open market sale of 25,000 shares for $5.76m on 26 August 2026 and 3 open market purchases of 1,484 shares for $0.42m in January and February 2026.
Three scenarios give implied prices at the end of FY2029 of $145 (worst case), $247 (base case) and $389 (best case) on diluted GAAP EPS at exit P / E of 18x, 22x and 27x; each is an arithmetic outcome of the assumptions in Table 9.5.

Table 0.1 IBM at a glance

Item	Value	Basis
Share price	$227.13	Close, 9 October 2026
Market cap	$213.99bn	Price times 942.1m shares outstanding at 30 June 2026, 10-Q cover
EV	$267.8bn	Market cap plus net debt
Net debt	$53.81bn	Debt of $61.99bn, of which IBM Financing debt $13.0bn, less cash, restricted cash and marketable securities of $8.18bn, 30 June 2026
TTM revenue	$69.10bn	Four quarters to 30 June 2026, up 7.9%
Q2 2026 revenue growth	1.1%	Year on year; 1.1% at constant currency
TTM GAAP operating margin	16.1%	Gross profit less SG&A and R&D; Q2 2026: 15.2%
Operating (non GAAP) pre tax margin	19.2%	Company measure, Q2 2026; FY2025: 18.8%
TTM FCF margin	19.0%	FCF of $13.14bn
Dividends as % of TTM FCF	48.0%	Dividends paid of $6.31bn; quarterly dividend $1.69 per share
RPO (remaining performance obligations)	about $68bn	30 June 2026; 69% due within two years
EV / sales	3.9x	TTM revenue
P / E	20.2x	Price over TTM diluted GAAP EPS of $11.27; 18.9x TTM operating (non GAAP) EPS of $12.01
P / FCF	16.3x	Market cap over TTM FCF
Diluted shares	953.3m	Q2 2026 weighted average
FY2029 scenario prices	$145, $247, $389	Worst, base and best case; arithmetic outcomes of the assumptions in Table 9.5

Source: 10-Q Q2 2026, 10-K FY2025 and 8-K Exhibit 99.1 of 22 July 2026, SEC filings via SEC-API.io; market data, 9 October 2026

1 Revenue & Business Model

IBM revenue was $17.16bn in Q2 2026, up 1.1% year on year: Software grew 5.1% to 45.2% of revenue and Infrastructure fell 7.4% on a 42.0% decline in IBM Z mainframe revenue (Q2 2026 10-Q). TTM revenue was $69.10bn against $67.54bn in FY2025.

IBM business model and revenue model

Table 1.1 IBM business model as filed

Element	Filed fact
Segments	4 reportable segments (Software, Consulting, Infrastructure, Financing); operations in more than 175 countries; over 75% of the business mix in Software and Consulting
Software, 44.4% of FY2025 revenue	Hybrid Cloud (Red Hat), Automation, Data and Transaction Processing; subscriptions, software as a service, term and perpetual licenses, and support; about 80% of Software revenue is recurring
Consulting, 31.2%	Strategy and Technology and Intelligent Operations; time and material, fixed price and managed services contracts
Infrastructure, 23.3%	IBM Z mainframes, Power servers, Storage and IBM Cloud infrastructure, sold or leased, plus Infrastructure Support maintenance
Financing, 1.1%	Leases, installment payment plans and loans to clients for terms generally up to 7 years; short term financing for business partners
Customer concentration	Clients representing 10% or more of total revenue in 2025, 2024 or 2023: 0
Manufacturing and supply	Distributed Infrastructure manufacturing moved to a strategic partner from Q2 2025; purchase obligations $4.82bn at 31 December 2025, $1.96bn due in 2026; Q2 2026 10-Q reports a constrained infrastructure supply environment and higher inventory
Acquisitions	HashiCorp, closed Q1 2025, total consideration $7.43bn; Confluent, closed 17 March 2026 at $31 per share, purchase price $11.60bn including $7.24bn of goodwill; both in Software
Generative AI book of business	More than $12.5bn at the Q4 2025 release against more than $9.5bn at the Q3 2025 release; inception to date Software transactional revenue, new software as a service annual contract value and Consulting signings; about one fifth Software and four fifths Consulting
Workforce	264,300 employees in IBM and wholly owned subsidiaries at 31 December 2025
Definition changes	January 2024: security services moved from Software to Consulting, The Weather Company assets moved to Other, stock based compensation and net interest removed from segment profit. Q1 2025: new revenue categories in Software and Consulting; ARR widened to all recurring Software revenue

Source: FY2025 10-K, Item 1, FY2025 10-K, Exhibit 13, FY2024 10-K, Exhibit 13, Note D, Q2 2026 10-Q, Note 5 and Item 2, 8-K of 22 October 2025, 8-K of 28 January 2026, 8-K of 22 July 2026, Exhibit 99.2, SEC filings via SEC-API.io

IBM revenue by segment

IBM's Q2 2026 10-Q attributes the revenue result to large IBM Z and Transaction Processing deals that slipped past the final weeks of June. It attributes the 18.9% rise in Data revenue to recent acquisitions, primarily Confluent, a data streaming software company.

Table 1.2 IBM revenue and segment profit (segment pre tax income) by segment, FY2021 to H1 2026

$bn	FY2021 (prior basis)	FY2022	FY2023	FY2024	FY2025	H1 2025	H1 2026
Software	23.43	23.63	25.01	27.09	29.96	13.72	14.81
Consulting	17.84	20.06	20.88	20.69	21.06	10.38	10.60
Infrastructure	14.19	15.29	14.59	14.02	15.72	7.03	7.16
Financing	0.77	0.65	0.74	0.71	0.74	0.36	0.41
Other	1.12	0.91	0.63	0.24	0.06	0.03	0.10
Total revenue	57.35	60.53	61.86	62.75	67.54	31.52	33.08
Total growth, year on year	3.9%	5.5%	2.2%	1.4%	7.6%	4.3%	5.0%
Software share of revenue	40.8%	39.0%	40.4%	43.2%	44.4%	43.5%	44.8%
Software segment profit	n/a	7.01	7.50	8.68	9.92	4.14	4.60
Consulting segment profit	n/a	1.87	2.13	2.05	2.46	1.12	1.21
Infrastructure segment profit	n/a	2.67	2.83	2.45	3.46	1.21	1.36
Financing segment profit	n/a	0.34	0.37	0.35	0.52	0.25	0.23
Software segment profit margin	n/a	29.7%	30.0%	32.1%	33.1%	30.2%	31.1%
Consulting segment profit margin	n/a	9.3%	10.2%	9.9%	11.7%	10.8%	11.4%
Infrastructure segment profit margin	n/a	17.5%	19.4%	17.5%	22.0%	17.3%	19.0%

Source: FY2023 10-K (FY2021, before the January 2024 segment changes), FY2024 10-K (FY2022 recast), FY2025 10-K, Q2 2026 10-Q; growth bases from FY2022 10-K (FY2020) and Q2 2025 10-Q (H1 2024), SEC filings via SEC-API.io

Table 1.3 IBM quarterly revenue and segment profit by segment, Q1 2025 to Q2 2026

$bn	Q1 2025	Q2 2025	Q3 2025	Q4 2025	Q1 2026	Q2 2026
Software	6.34	7.39	7.21	9.03	7.05	7.76
Consulting	5.07	5.31	5.32	5.35	5.27	5.33
Infrastructure	2.89	4.14	3.56	5.13	3.33	3.84
Financing	0.19	0.17	0.20	0.18	0.22	0.19
Total revenue	14.54	16.98	16.33	19.69	15.92	17.16
Total growth, year on year	0.5%	7.7%	9.1%	12.2%	9.5%	1.1%
Software growth, year on year	7.4%	9.6%	10.5%	14.0%	11.3%	5.1%
Consulting growth, year on year	(2.3)%	2.6%	3.3%	3.4%	4.0%	0.2%
Infrastructure growth, year on year	(6.2)%	13.6%	17.0%	20.6%	15.3%	(7.4)%
Software segment profit	1.85	2.30	2.37	3.40	2.10	2.50
Consulting segment profit	0.56	0.56	0.69	0.66	0.56	0.65
Infrastructure segment profit	0.25	0.97	0.64	1.60	0.52	0.84

Source: Q1 2025 10-Q, Q2 2025 10-Q, Q3 2025 10-Q, FY2025 10-K, Q1 2026 10-Q, Q2 2026 10-Q, SEC filings via SEC-API.io

Figure 1.2 IBM Software revenue by line, Q1 2025 to Q2 2026

Table 1.4 IBM revenue lines within segments

$bn	FY2024	FY2025	H1 2025	H1 2026	Q2 2025	Q2 2026	FY2025 change	Q2 2026 change
Software: Hybrid Cloud (Red Hat)	6.49	7.33	3.48	3.90	1.80	2.00	12.9%	11.2%
Software: Automation	6.56	7.73	3.47	3.69	1.88	1.95	17.9%	3.6%
Software: Data	5.63	6.30	2.74	3.26	1.50	1.78	11.9%	18.9%
Software: Transaction Processing	8.41	8.60	4.04	3.96	2.21	2.03	2.3%	(8.1)%
Consulting: Strategy and Technology	11.49	11.54	5.70	5.83	2.92	2.93	0.4%	0.5%
Consulting: Intelligent Operations	9.20	9.52	4.68	4.77	2.40	2.39	3.4%	0.0%
Infrastructure: Hybrid Infrastructure	8.91	10.62	4.51	4.68	2.87	2.57	19.1%	(10.3)%
Infrastructure: Infrastructure Support	5.11	5.10	2.52	2.48	1.28	1.27	(0.1)%	(0.8)%
Hybrid Infrastructure: IBM Z, growth as filed	n/a	n/a	n/a	n/a	n/a	n/a	51.7%	(42.0)%
Hybrid Infrastructure: Distributed Infrastructure, growth as filed	n/a	n/a	n/a	n/a	n/a	n/a	(1.8)%	37.3%

Source: FY2025 10-K, Exhibit 13, Q2 2026 10-Q, Item 2, SEC filings via SEC-API.io

Table 1.5 IBM revenue by type, FY2021 to H1 2026

$bn	FY2021	FY2022	FY2023	FY2024	FY2025	H1 2025	H1 2026
Sales (software and hardware)	27.35	29.67	30.75	32.23	36.09	16.20	17.06
Services	29.23	30.21	30.38	29.81	30.71	14.96	15.62
Financing	0.78	0.65	0.74	0.71	0.74	0.36	0.41
Sales share of revenue	47.7%	49.0%	49.7%	51.4%	53.4%	51.4%	51.6%

Source: FY2023 10-K, FY2025 10-K, Q2 2026 10-Q, SEC filings via SEC-API.io

IBM revenue by geography

Figure 1.3 IBM revenue by region, FY2021 to FY2025

Europe, Middle East and Africa (EMEA) supplied 32.9% of H1 2026 revenue against 31.0% in FY2024; its H1 2026 growth was 9.1% as reported and 3.6% at constant currency. United States revenue was $26.89bn in FY2025, 39.8% of the total.

Table 1.6 IBM revenue by geography, FY2021 to H1 2026

$bn	FY2021	FY2022	FY2023	FY2024	FY2025	H1 2025	H1 2026
Americas	28.30	31.06	31.67	31.27	33.34	15.67	16.28
of which United States	22.89	25.10	25.31	25.14	26.89	n/a	n/a
EMEA	17.45	17.95	18.49	19.43	22.19	9.97	10.88
Asia Pacific	11.60	11.52	11.70	12.06	12.00	5.89	5.93
Americas share	49.3%	51.3%	51.2%	49.8%	49.4%	49.7%	49.2%
EMEA share	30.4%	29.7%	29.9%	31.0%	32.9%	31.6%	32.9%
Asia Pacific share	20.2%	19.0%	18.9%	19.2%	17.8%	18.7%	17.9%
Americas growth at constant currency, as filed	n/a	n/a	n/a	n/a	6.9%	n/a	3.2%
EMEA growth at constant currency, as filed	n/a	n/a	n/a	n/a	9.0%	n/a	3.6%
Asia Pacific growth at constant currency, as filed	n/a	n/a	n/a	n/a	(0.7)%	n/a	3.6%

Source: FY2023 10-K, FY2025 10-K, FY2025 10-K, Exhibit 13, Q2 2026 10-Q, SEC filings via SEC-API.io

IBM RPO, ARR, backlog and deferred income

Figure 1.4 IBM RPO, Consulting backlog, Software ARR and deferred income

RPO was about $68bn at 30 June 2026 against about $71bn at 31 December 2025; RPO counts contracts that carry a substantive penalty on termination. Software ARR (annual recurring revenue: the current quarter's recurring revenue times four) was $24.6bn, level with 31 March 2026.

Table 1.7 IBM contract and order metrics

$bn	31 Dec 2023	31 Dec 2024	31 Mar 2025	30 Jun 2025	30 Sep 2025	31 Dec 2025	31 Mar 2026	30 Jun 2026
RPO, about	60	63	64	66	64	71	69	68
RPO due within two years	70%	67%	69%	69%	68%	67%	69%	69%
Deferred income	16.98	17.53	18.90	18.94	17.74	20.37	21.23	20.43
of which current	13.45	13.91	15.06	15.02	13.88	16.10	17.03	16.16
Software ARR	n/a	n/a	21.7	22.7	23.2	23.6	24.6	24.6
Consulting backlog	n/a	n/a	n/a	n/a	n/a	31.9	31.3	30.8
Consulting signings in the quarter	n/a	n/a	4.93	4.79	5.22	6.81	5.35	5.03
Consulting book to bill (signings over revenue), TTM	n/a	n/a	over 1.15	over 1.14	about 1.12	1.03	1.04	about 1.05

Source: FY2023 10-K, FY2024 10-K, Q1 2025 10-Q, Q2 2025 10-Q, Q3 2025 10-Q, FY2025 10-K, Q1 2026 10-Q, Q2 2026 10-Q, SEC filings via SEC-API.io

2 Financial Analysis & Ratios

Q2 2026 gross margin fell 1.0 point to 57.7% and diluted GAAP EPS was $2.27 against $2.31, while operating (non GAAP) EPS, which excludes acquisition related and retirement related items, rose to $2.93 from $2.80 (10-Q Q2 2026). That 10-Q attributes lower gross margin to a revenue shortfall and mix.

IBM Q2 2026 results year on year

Table 2.1 What changed, Q2 2026 and H1 2026 against prior year

Metric	Q2 2026	Q2 2025	Change	H1 2026	H1 2025	Change
Revenue, $bn	17.16	16.98	1.1%	33.08	31.52	5.0%
Gross profit, $bn	9.91	9.98	(0.7)%	18.86	18.01	4.7%
Operating income (gross profit less SG&A and R&D), $bn	2.62	2.85	(8.3)%	4.30	4.05	6.2%
Pre tax income, continuing operations, $bn	2.48	2.60	(4.5)%	3.87	3.75	3.0%
Operating (non GAAP) pre tax income, $bn	3.29	3.20	2.9%	5.42	4.93	9.8%
Net income, $bn	2.17	2.19	(1.3)%	3.38	3.25	4.1%
Diluted EPS, $	2.27	2.31	(1.7)%	3.55	3.43	3.5%
Operating (non GAAP) diluted EPS, $	2.93	2.80	4.6%	4.84	4.40	10.0%
Gross margin	57.7%	58.8%	(1.0) pts	57.0%	57.1%	(0.1) pts
Operating margin	15.2%	16.8%	(1.6) pts	13.0%	12.8%	0.2 pts
Pre tax margin	14.4%	15.3%	(0.9) pts	11.7%	11.9%	(0.2) pts
Net margin	12.6%	12.9%	(0.3) pts	10.2%	10.3%	(0.1) pts
Effective tax rate	12.6%	15.5%	(3.0) pts	12.5%	13.5%	(1.0) pts
Operating cash flow, $bn	2.60	1.70	52.7%	7.77	6.07	27.9%
FCF, $bn	2.21	1.33	66.7%	6.99	5.30	31.8%
FCF margin	12.9%	7.8%	5.1 pts	21.1%	16.8%	4.3 pts
Free cash flow as defined by IBM, $bn	2.54	2.85	(10.7)%	4.76	4.81	(1.0)%
Stock based compensation (SBC)	$498m	$441m	12.9%	$1.00bn	$842m	19.2%
SBC as % of revenue	2.9%	2.6%	0.3 pts	3.0%	2.7%	0.4 pts
Workforce rebalancing charges	$65m	$18m	252.3%	$424m	$334m	26.9%
Acquisitions, net of cash acquired	$15m	$747m	(98.0)%	$10.48bn	$7.85bn	33.6%
Dividends paid, $bn	1.59	1.56	1.7%	3.17	3.11	1.7%
Diluted shares, m	953.3	948.0	0.6%	952.7	946.7	0.6%

Source: 10-Q Q2 2026, 10-Q Q1 2026, 10-Q Q2 2025, 10-Q Q1 2025; 8-K Exhibit 99.1 of 22 July 2026, SEC filings via SEC-API.io

Figure 2.1 IBM quarterly revenue, gross margin and operating margin, Q1 2024 to Q2 2026

Table 2.2 Segment profit, segment profit margin and gross margin, Q2 2026 against Q2 2025

Segment	Segment profit Q2 2026	Segment profit Q2 2025	Change	Segment profit margin Q2 2026	Segment profit margin Q2 2025	Gross margin Q2 2026	Gross margin Q2 2025
Software	$2.50bn	$2.30bn	8.9%	32.2%	31.1%	82.6%	83.9%
Consulting	$647m	$562m	15.1%	12.1%	10.6%	28.9%	27.5%
Infrastructure	$835m	$965m	(13.4)%	21.8%	23.3%	58.4%	61.5%
Financing	$108m	$179m	(39.7)%	58.0%	107.9%	42.5%	45.7%

Source: 8-K Exhibit 99.1 of 22 July 2026, SEC filings via SEC-API.io

IBM GAAP EPS against operating EPS and one off items

FY2025 GAAP diluted EPS was $11.17 in total and $11.14 from continuing operations. It carries $1.22 per share of tax items that operating EPS of $11.59 removes; the earnings release attributes the FY2025 tax benefit primarily to resolution of tax audit matters. Both measures are filed: GAAP EPS includes acquisition related, retirement related and tax items, and operating EPS excludes them.

Table 2.3 Diluted EPS from continuing operations, GAAP to operating (non GAAP), $ per share as filed

Period	GAAP	Acquisition related	Retirement related	Tax reform impacts	Kyndryl related	Operating (non GAAP)
H1 2026	3.55	1.11	0.18	0.01	0.00	4.84
FY2025	11.14	1.62	0.05	(1.22)	0.00	11.59
FY2024	6.42	1.55	2.85	(0.49)	0.00	10.33
FY2023	8.15	1.40	(0.03)	0.10	0.00	9.62
FY2022	1.95	1.46	5.41	(0.08)	0.38	9.13
FY2021	5.21	1.57	1.14	0.10	(0.09)	7.93

Source: 8-K Exhibit 99.1 of 22 July 2026, 28 January 2026, 29 January 2025, 24 January 2024 and 25 January 2023, SEC filings via SEC-API.io

Figure 2.2 IBM GAAP and operating diluted EPS with adjustments per share, FY2021 to FY2025

Table 2.4 One off and non operating items

Item	FY2021	FY2022	FY2023	FY2024	FY2025	H1 2026
Pension settlement charges, pre tax	n/a	$5.89bn	n/a	$3.11bn	n/a	n/a
Workforce rebalancing charges, MD&A basis	n/a	n/a	$438m	$696m	$670m	$424m
Acquisitions, net of cash acquired	$3.29bn	$2.35bn	$5.08bn	$3.29bn	$8.29bn	$10.48bn
Income from discontinued operations, net of tax	$1.03bn	($143m)	($12m)	$8m	$22m	($1m)
Provision for (benefit from) income taxes	$124m	($626m)	$1.18bn	($218m)	($242m)	$484m
Effective tax rate	2.6%	(54.2)%	13.5%	(3.8)%	(2.3)%	12.5%

Source: 10-K FY2025, 10-K FY2024, 10-K FY2023, 10-K FY2022, 10-Q Q2 2026, SEC filings via SEC-API.io

IBM ratio analysis FY2021 to FY2025

Table 2.5 Growth, margin, return, leverage, liquidity and efficiency ratios

Ratio	FY2021	FY2022	FY2023	FY2024	FY2025	TTM to Q2 2026, balances at 30 Jun 2026
Revenue, $bn	57.35	60.53	61.86	62.75	67.54	69.10
Revenue growth	3.9%	5.5%	2.2%	1.4%	7.6%	7.9%
Gross margin	54.9%	54.0%	55.4%	56.7%	58.2%	58.1%
Operating margin	10.9%	12.4%	13.8%	13.4%	16.1%	16.1%
Pre tax margin	8.4%	1.9%	14.0%	9.2%	15.3%	15.1%
Net margin	10.0%	2.7%	12.1%	9.6%	15.7%	15.5%
FCF margin	17.5%	14.0%	19.6%	18.7%	17.0%	19.0%
SBC as % of revenue	1.7%	1.6%	1.8%	2.1%	2.5%	2.7%
Capital expenditure (property, plant, equipment and software) as % of revenue	4.8%	3.3%	2.9%	2.7%	2.6%	2.5%
Return on equity (ROE)	29.1%	8.0%	33.7%	24.2%	35.3%	34.6%
Return on invested capital (ROIC): operating income taxed at 21% over average debt plus equity	6.5%	8.3%	8.9%	8.2%	9.7%	9.3%
Return on assets (ROA)	4.0%	1.3%	5.7%	4.4%	7.3%	7.1%
Current ratio	0.88	0.92	0.96	1.04	0.96	0.79
Debt / equity	2.74	2.32	2.51	2.01	1.88	1.80
Net debt, $bn	44.15	42.11	43.09	40.17	46.79	53.81
Interest cover: operating income over interest expense	5.4	6.2	5.3	4.9	5.6	5.8
Days sales outstanding (DSO), trade receivables	43.0	39.4	42.6	39.6	43.8	31.9
Inventory days	23.3	20.3	15.4	17.3	15.8	22.0
Inventory turns	15.7	17.9	23.7	21.1	23.1	16.6
Asset turnover	0.40	0.47	0.47	0.46	0.47	0.46
Diluted EPS, total, $	6.35	1.80	8.14	6.43	11.17	11.27
Operating (non GAAP) diluted EPS, $	7.93	9.13	9.62	10.33	11.59	12.01
FCF per diluted share, $	11.09	9.28	13.15	12.55	12.07	13.79
Diluted shares, m	904.6	912.3	922.1	937.2	948.7	953.3
Dividends paid, $bn	5.87	5.95	6.04	6.15	6.25	6.31
Dividends per share paid, $	6.55	6.59	6.63	6.67	6.71	6.73
Dividends as % of FCF	58.5%	70.3%	49.8%	52.3%	54.6%	48.0%
Free cash flow as defined by IBM, $bn	6.51	9.29	11.21	12.75	14.73	14.69
Dividends as % of free cash flow as defined by IBM	90.2%	64.0%	53.9%	48.2%	42.5%	43.0%
Common stock repurchases for tax withholdings	$319m	$407m	$402m	$651m	$1.02bn	$1.05bn

Source: 10-K FY2025, 10-K FY2024, 10-K FY2023, 10-K FY2022, 10-K FY2021, 10-Q Q2 2026, 10-Q Q3 2025, 10-Q Q2 2025; 8-K Exhibit 99.1 of 22 July 2026, 28 January 2026, 29 January 2025, 24 January 2024, 25 January 2023, SEC filings via SEC-API.io

Figure 2.3 IBM free cash flow on two definitions against dividends paid, FY2021 to TTM Q2 2026

IBM debt, cash, goodwill and pension obligations

Cash, restricted cash and marketable securities fell $6.29bn in H1 2026 to $8.18bn after $10.48bn of acquisition spending, which the 10-Q links to Confluent; goodwill rose $6.88bn to $74.60bn. Free cash flow as defined by IBM (Table 2.5) also removes changes in IBM Financing receivables and nets asset sale proceeds against capital expenditure.

Table 2.6 Balance sheet items at 30 June 2026 against prior year ends

Item, $bn	30 Jun 2026	31 Dec 2025	31 Dec 2024	Change in H1 2026
Cash, restricted cash and marketable securities	8.18	14.47	14.80	(43.5)%
Total debt	61.99	61.26	54.97	1.2%
IBM Financing debt	13.0	15.1	12.1	(13.9)%
Net debt	53.81	46.79	40.17	15.0%
Goodwill	74.60	67.72	60.71	10.2%
Intangible assets, net	13.96	11.39	10.66	22.5%
Retirement related obligations, noncurrent	8.60	9.02	9.43	(4.6)%
Prepaid pension assets	7.64	7.54	7.49	1.3%
Trade receivables	6.04	8.11	6.80	(25.5)%
Inventory	1.75	1.22	1.29	43.1%
IBM stockholders equity	34.45	32.65	27.31	5.5%

Source: 10-Q Q2 2026, 10-K FY2025, 10-K FY2024; IBM Financing debt from 8-K Exhibit 99.1 of 22 July 2026, 28 January 2026 and 29 January 2025, SEC filings via SEC-API.io

Figure 2.4 IBM debt, cash and goodwill plus intangible assets, 2021 to 30 June 2026

3 MD&A & Management Commentary

IBM lowered its FY2026 constant currency revenue growth expectation to 4% to 5% on 22 July 2026, from more than 5%, after Q2 2026 growth of 1.1% against guidance for growth similar to the full year rate. Guidance for free cash flow growth of about $1bn on FY2025's $14.7bn, both on IBM's own non GAAP measure, was kept.

IBM guidance against actual results by quarter

Figure 3.1 Quarterly revenue growth at constant currency against guidance, Q1 2025 to Q2 2026

Table 3.1 Guidance given one quarter earlier against the reported result

Quarter	Guidance given	Revenue guidance	Revenue actual	Operating (non GAAP) pre tax margin guidance	Margin change actual
Q3 2026	Earnings call, 22 July 2026	Constant currency growth consistent with full year range of 4% to 5%; currency a 1.5 point headwind	n/a	n/a	n/a
Q2 2026	Earnings call, 22 April 2026	Constant currency growth similar to full year rate of more than 5%	1.1% at constant currency; $17.16bn	About 0.5 points of expansion	0.3 points
Q1 2026	Earnings call, 28 January 2026	Constant currency growth similar to full year rate of more than 5%	6.1% at constant currency; $15.92bn	About 1.0 point of expansion	1.4 points
Q4 2025	8-K, 23 October 2025	CFO comfortable with consensus estimates for constant currency growth	9% at constant currency; $19.69bn	CFO comfortable with consensus estimates for profitability	(0.2) points
Q3 2025	8-K, 24 July 2025	CFO comfortable with consensus estimates for revenue	7.3% at constant currency; $16.33bn	CFO comfortable with consensus estimates for profitability	2.0 points
Q2 2025	8-K, 23 and 24 April 2025	At least 4% at constant currency; $16.40bn to $16.75bn	5.3% at constant currency; $16.98bn, 2.4% above midpoint	Consistent with full year expansion of over 0.5 points	1.1 points
Q1 2025	8-K, 30 January 2025	Constant currency growth similar to Q4 2024 (2%)	2% at constant currency; $14.54bn	About 0.5 points of expansion excluding a prior year gain of $241m	0.5 points

Source: 8-K 0000051143-26-000077, 10-Q 0000051143-26-000078, 8-K 0000051143-26-000036, 10-Q 0000051143-26-000038, 8-K 0000051143-26-000004, 8-K 0000051143-25-000063, 8-K 0000051143-25-000061, 10-Q 0000051143-25-000064, 8-K 0000051143-25-000051, 8-K 0000051143-25-000048, 10-Q 0000051143-25-000052, 8-K 0000051143-25-000031, 8-K 0000051143-25-000026, 10-Q 0000051143-25-000032, 8-K 0000051143-25-000007, SEC filings via SEC-API.io. Earnings calls, 28 January 2026, 22 April 2026 and 22 July 2026

IBM full year guidance changes for revenue growth and free cash flow

H1 2026 growth of 3.4% at constant currency leaves 4.5% to 6.4% for H2 2026 as the arithmetic remainder of the 4% to 5% range.

Figure 3.2 Full year guidance as restated on each earnings release, January 2025 to July 2026

Table 3.2 Full year expectations stated with each earnings release, latest first

Date	Year	Revenue growth, constant currency	Currency effect on growth	Free cash flow, IBM measure	Operating (non GAAP) pre tax margin	Segment expectations
22 Jul 2026	FY2026	4% to 5%	Neutral	Up about $1bn year on year	Release: improved expansion. Call: about 1 point	Call: Software 6% to 8%; Consulting low to mid single digit growth; Infrastructure low single digit growth
22 Apr 2026	FY2026	More than 5%	0.5 to 1 point tailwind	Up about $1bn year on year	Call: about 1 point of expansion	Call: Software 10% or more; Consulting low to mid single digit growth; Infrastructure down low single digits
28 Jan 2026	FY2026	More than 5%	About 0.5 point tailwind	Up about $1bn year on year	Call: about 1 point of expansion	Call: Software 10%; Consulting low to mid single digit growth; Infrastructure down low single digits; Confluent dilution about $600m
FY2025 result	FY2025	6.1%	1.5 point tailwind	$14.7bn	1.0 point of expansion	Software 9.1%; Consulting 0.4%; Infrastructure 10.4%
22 Oct 2025	FY2025	More than 5%	About 1.5 point tailwind	About $14bn	Over 1 point of expansion	Software approaching double digits; Infrastructure over 1.5 points of IBM growth
23 Jul 2025	FY2025	At least 5%	About 1.5 point tailwind	More than $13.5bn	About 1 point of expansion	Software approaching double digits; Transaction Processing low single digit growth; Infrastructure about 1.5 points of IBM growth
23 Apr 2025	FY2025	At least 5%	1 to 1.5 point tailwind	About $13.5bn	Over 0.5 points of expansion	Red Hat mid teens growth; Infrastructure expected to grow
29 Jan 2025	FY2025	At least 5%	About 2 point headwind	About $13.5bn	Over 0.5 points of expansion	Software approaching double digits; Consulting low single digit growth; Infrastructure about 1 point of IBM growth

Source: 8-K 0000051143-26-000077, 8-K 0000051143-26-000036, 8-K 0000051143-26-000004, 10-K 0000051143-26-000010, 8-K 0000051143-25-000061, 8-K 0000051143-25-000063, 8-K 0000051143-25-000048, 8-K 0000051143-25-000051, 8-K 0000051143-25-000026, 8-K 0000051143-25-000031, 8-K 0000051143-25-000005, 8-K 0000051143-25-000007, SEC filings via SEC-API.io. Earnings calls, 28 January 2026, 22 April 2026 and 22 July 2026

IBM Software growth by line, mainframe cycle, Consulting signings and AI book of business

Figure 3.3 Revenue growth at constant currency by segment and line, Q1 2025 to Q2 2026

Figure 3.4 Software ARR, Consulting signings and generative AI book of business by quarter

Trends and risks IBM management flags

Management attributes the majority of the Q2 2026 shortfall to large deals that slipped in the final weeks of June. IBM's Q2 2026 10-Q states "the results in the quarter were worse than our expectations", and the CEO letter of 14 July 2026 states "this quarter we faltered". A second reading rests on constant currency growth rates in the release of 22 July 2026: Automation slowed from 22% in Q3 2025 to 3% in Q2 2026, Transaction Processing fell 9% and IBM Z fell 42%, and the 10-Q attributes Data growth of 18% to acquisitions.

Table 3.3 Trends named by management, with the filing or call and date

Trend	What management states	Where and when
Q2 2026 deal timing	Software and Infrastructure revenue were below expectations and Consulting was in line. In the final weeks of June client spending priorities shifted and numerous large deals slipped past the expected timelines, which drove the majority of the shortfall.	10-Q Q2 2026 MD&A; 8-K letter, 14 Jul 2026
Q2 2026 deal timing	CEO said about one third of the slipped large deals closed in the first three weeks of Q3 2026. CFO said the low end of the 4% to 5% range is the base case and assumes recent buying behavior persists. Software organic revenue was flat in Q2 2026.	Earnings call, 22 July 2026
Mainframe (z17) cycle	IBM Z revenue fell 42% in Q2 2026 against growth of 67% at constant currency in the z17 launch quarter a year earlier. Infrastructure segment profit margin fell 1.5 points to 21.8%.	8-K release, 22 Jul 2026; 10-Q Q2 2026 MD&A
Mainframe (z17) cycle	z17 revenue stands at nearly 130% of the prior program at the same point; clients representing 85% of installed capacity are maintaining or growing capacity. FY2026 Infrastructure outlook moved from a low single digit decline to low single digit growth.	8-K letter, 14 Jul 2026; Earnings calls, 22 April 2026 and 22 July 2026
Software recurring and transactional revenue	About 20% of Software revenue is transactional, tied mainly to IBM Z and enterprise license agreements, and it declined in Q2 2026. ARR rose about $2bn year on year including Confluent. OpenShift ARR is over $2bn.	10-Q Q2 2026 MD&A
Software growth outlook	Transaction Processing expected down low to mid single digits in H2 2026. CEO restated a long term goal of double digit Software growth.	Earnings call, 22 July 2026
AI demand	Generative AI was about 50% of Consulting signings in Q2 2026 and over 30% of Consulting backlog. CFO said Q4 2025 was the last quarter with the generative AI book of business reported separately. Lightwell reached general availability on 8 July 2026 with more than 7,500 open source patches in two weeks.	Earnings calls, 28 January 2026 and 22 July 2026; 8-K, 22 Jul 2026
Supply constraints and component prices	Clients redirected spending toward servers, storage and memory to secure supply constrained infrastructure ahead of expected price increases. IBM raised inventory in H1 2026 to support H2 demand. H1 2026 free cash flow on IBM's measure was $4.76bn against $4.81bn, with inventory, cash taxes and net interest named as offsets.	10-Q Q2 2026 MD&A
Supply constraints and component prices	CFO said inventory was up $600m year on year at the end of H1 2026. CEO said IBM had held its own prices in July 2026. Power and Storage order backlog was nearly $500m.	Earnings call, 22 July 2026; 8-K, 22 Jul 2026
Tariffs	CFO said goods imported to the US represent less than 5% of overall spend and that the effect of US tariff policy on IBM was minimal.	8-K prepared remarks, 24 Apr 2025
Currency	IBM hedges part of its exposure, which defers the effect of currency moves.	10-Q Q2 2026 MD&A
Acquisitions	Amortization of acquired intangibles rose 16.8% to $378m in Q2 2026. CFO expected about $600m of dilution from Confluent in 2026.	10-Q Q2 2026 MD&A; Earnings calls, 28 January 2026 and 22 April 2026
Productivity and workforce	Operating (non GAAP) expense fell 1.5% in Q2 2026, attributed to productivity actions and currency. Productivity savings reached $4.5bn in annual run rate since 2023, with a further $1bn expected in 2026.	10-Q Q2 2026 MD&A; 8-K prepared remarks, 23 Oct 2025; Earnings call, 22 April 2026
Capital return	Share repurchases have been suspended since the Red Hat acquisition in 2019, with $2.01bn of authorization remaining at 31 December 2025.	10-K FY2025 Exhibit 13

Source: 10-Q 0000051143-26-000078, 8-K 0000051143-26-000077, 8-K 0000051143-26-000070, 8-K 0000051143-26-000047, 10-K 0000051143-26-000010, 8-K 0000051143-26-000004, 8-K 0000051143-25-000063, 8-K 0000051143-25-000031, 8-K 0000051143-25-000005, 8-K 0000051143-26-000006, 8-K 0000051143-26-000086, SEC filings via SEC-API.io. Earnings calls, 28 January 2026, 22 April 2026 and 22 July 2026

4 Sector & Competitor Analysis

IBM's TTM revenue growth of 7.9% compares with an 11.8% median for seven enterprise IT peers, and shares trade at 20.2x TTM diluted GAAP EPS against a 22.2x peer median (market data, 9 October 2026).

Enterprise IT spending market size and growth

Gartner's forecast of 27 July 2026 puts 2026 worldwide IT spending at $6.37tn, up 14.2%: software $1.47tn (up 15.5%), IT services $1.57tn (up 5.3%).

Figure 4.1 Worldwide IT spending by segment, 2025 and 2026 forecast

Table 4.1 Worldwide IT spending forecast by segment

Segment	2025 spending	2025 growth	2026 spending	2026 growth
Data center systems	$506.0bn	51.6%	$822.0bn	62.5%
Devices	$790.0bn	9.7%	$868.0bn	9.8%
Software	$1.27tn	13.9%	$1.47tn	15.5%
IT services	$1.49tn	3.8%	$1.57tn	5.3%
Infrastructure as a service	$222.0bn	25.3%	$287.0bn	29.3%
Communications services	$1.30tn	3.3%	$1.35tn	4.4%
Overall IT	$5.58tn	10.7%	$6.37tn	14.2%

Source: Gartner press release, 27 July 2026

AI demand, remaining performance obligations and capital spending

RPO rose 3.0% at IBM against 45.8% at Oracle and 82.4% at Microsoft, whose capital expenditure reached $75.7bn and $115.9bn; IBM's purchases of property and equipment were $1.10bn.

Table 4.2 RPO and capital expenditure (purchases of property and equipment) filed by IBM and seven peers

Company	RPO date	RPO	Year earlier	Change	Capex period	Capex	Prior period	Change
IBM	30 Jun 2026	$68.0bn	$66.0bn	3.0%	TTM to 30 Jun 2026	$1.10bn	$1.04bn	5.3%
Accenture	31 May 2026	$38.0bn	$33.0bn	15.2%	FY to 31 Aug 2026	$743m	$600m	23.8%
Oracle	31 Aug 2026	$664.0bn	$455.3bn	45.8%	TTM to 31 Aug 2026	$75.7bn	$27.4bn	176.0%
Microsoft	30 Jun 2026	$684.0bn	$375.0bn	82.4%	FY to 30 Jun 2026	$115.9bn	$64.6bn	79.6%
Cisco Systems	25 Jul 2026	$46.7bn	$43.5bn	7.4%	FY to 25 Jul 2026	$1.41bn	$905m	55.8%
Hewlett Packard Enterprise	31 Jul 2026	$10.9bn	$10.1bn	7.9%	TTM to 31 Jul 2026	$2.54bn	$2.26bn	12.4%
Cognizant	30 Jun 2026	$6.94bn	$6.08bn	14.1%	TTM to 30 Jun 2026	$319m	$283m	12.7%
Salesforce	31 Jul 2026	$66.3bn	$59.9bn	10.7%	TTM to 31 Jul 2026	$596m	$672m	(11.3)%

Source: IBM 10-Q 0000051143-26-000078, Accenture 10-Q 0001467373-26-000032, Oracle 10-Q 0001193125-26-389274, Microsoft 10-K 0001193125-26-323660, Cisco 10-K 0000858877-26-000132, Hewlett Packard Enterprise 10-Q 0001645590-26-000080, Cognizant 10-Q 0001058290-26-000031, Salesforce 10-Q 0001108524-26-000190, Accenture 8-K 0001467373-26-000037, with the prior year reports in Table 4.7, SEC filings via SEC-API.io

IBM versus Accenture, Oracle, Microsoft, Cisco, HPE, Cognizant and Salesforce

Peer set: six competitors named in IBM's 10-K 0000051143-26-000010 (Microsoft, Oracle, Salesforce, Accenture, Hewlett Packard Enterprise, abbreviated HPE, and Cisco as owner of Splunk) plus Cognizant. IBM's FCF margin of 19.0% is above the 15.7% median; ROIC of 9.3% ranks seventh of eight.

Figure 4.2 Revenue growth and operating margin, latest twelve months

Table 4.3 Operating comparison, latest twelve months reported by each filer

Company	Period	Revenue	Growth	Gross margin	Operating margin	FCF margin	SBC % of revenue	R&D % of revenue	Inventory days	ROIC	Debt / equity
IBM	TTM to 30 Jun 2026	$69.1bn	7.9%	58.1%	16.1%	19.0%	2.7%	12.7%	22	9.3%	1.80x
Accenture	FY to 31 Aug 2026	$74.2bn	6.5%	32.0%	15.4%	15.7%	2.8%	n/a	n/a	23.1%	0.32x
Oracle	TTM to 31 Aug 2026	$71.8bn	21.6%	64.0%	32.1%	(40.0)%	6.7%	14.2%	n/a	11.8%	1.88x
Microsoft	FY to 30 Jun 2026	$331.8bn	17.8%	67.9%	46.8%	20.2%	3.7%	10.7%	5	28.2%	0.09x
Cisco Systems	FY to 25 Jul 2026	$63.3bn	11.8%	64.5%	24.3%	20.2%	6.0%	15.1%	93	15.7%	0.59x
Hewlett Packard Enterprise	TTM to 31 Jul 2026	$41.9bn	26.6%	36.7%	6.2%	9.9%	1.9%	8.8%	163	4.3%	0.76x
Cognizant	TTM to 30 Jun 2026	$21.6bn	5.6%	33.4%	15.9%	12.0%	0.9%	n/a	n/a	17.0%	0.11x
Salesforce	TTM to 31 Jul 2026	$43.9bn	11.2%	77.3%	19.9%	34.5%	8.3%	14.5%	n/a	9.4%	1.02x
Peer median			11.8%	64.0%	19.9%	15.7%	3.7%	14.2%	93	15.7%	0.59x

Source: IBM 10-Q 0000051143-26-000078, Accenture 8-K 0001467373-26-000037, Oracle 10-Q 0001193125-26-389274, Microsoft 10-K 0001193125-26-323660, Cisco 10-K 0000858877-26-000132, Hewlett Packard Enterprise 10-Q 0001645590-26-000080, Cognizant 10-Q 0001058290-26-000031, Salesforce 10-Q 0001108524-26-000190, with the annual and prior year reports in Table 4.7, SEC filings via SEC-API.io

Figure 4.3 IBM against the range of seven peers, latest twelve months

Table 4.4 Revenue lines of IBM segments and peers as filed, latest period

Company	Revenue line	Period	Revenue	Prior year	Growth
IBM	Software segment	Q2 2026	$7.76bn	$7.39bn	5.1%
Oracle	Cloud revenue	Q1 FY2027	$11.6bn	$7.19bn	61.5%
Microsoft	Intelligent Cloud segment	FY to 30 Jun 2026	$137.8bn	$106.3bn	29.7%
Salesforce	Subscription and support revenue	Q2 FY2027	$10.8bn	$9.69bn	11.7%
IBM	Consulting segment	Q2 2026	$5.33bn	$5.31bn	0.2%
Accenture	Total revenue	Q4 FY2026	$18.7bn	$17.6bn	6.2%
Cognizant	Total revenue	Q2 2026	$5.48bn	$5.25bn	4.5%
IBM	Infrastructure segment	Q2 2026	$3.84bn	$4.14bn	(7.4)%
Hewlett Packard Enterprise	Server segment	Q3 FY2026	$6.77bn	$5.00bn	35.3%
Cisco Systems	Networking product revenue	FY to 25 Jul 2026	$34.7bn	$28.3bn	22.5%

Source: IBM 10-Q 0000051143-26-000078, Oracle 10-Q 0001193125-26-389274, Microsoft 10-K 0001193125-26-323660, Salesforce 10-Q 0001108524-26-000190, Accenture 8-K 0001467373-26-000037, Cognizant 10-Q 0001058290-26-000031, Hewlett Packard Enterprise 10-Q 0001645590-26-000080, Cisco 10-K 0000858877-26-000132, SEC filings via SEC-API.io

Valuation multiples EV / sales, P / E and P / FCF

IBM trades at 3.9x EV to sales and 16.3x FCF against medians of 4.9x and 18.0x; net debt of $53.81bn is 25% of market capitalization.

Figure 4.4 Valuation multiples at 9 October 2026 closing prices

Table 4.5 Valuation and capital structure at 9 October 2026 closing prices

Company	Price	Shares	Market cap	Net cash (debt)	EV	EV / sales	P / E	P / FCF
IBM	$227.13	942m	$214.0bn	($53.8bn)	$267.8bn	3.9x	20.2x	16.3x
Accenture	$209.06	668m	$139.5bn	$2.72bn	$136.8bn	1.8x	15.4x	12.0x
Oracle	$141.40	3.02bn	$427.6bn	($88.3bn)	$515.8bn	7.2x	22.2x	n/a
Microsoft	$535.07	7.43bn	$3.97tn	$36.5bn	$3.94tn	11.9x	29.8x	59.3x
Cisco Systems	$118.39	3.94bn	$466.8bn	($13.6bn)	$480.4bn	7.6x	35.6x	36.6x
Hewlett Packard Enterprise	$73.46	1.33bn	$97.5bn	($14.0bn)	$111.5bn	2.7x	37.9x	23.5x
Cognizant	$59.20	450m	$26.7bn	($509m)	$27.2bn	1.3x	12.7x	10.3x
Salesforce	$229.13	823m	$188.6bn	($27.9bn)	$216.5bn	4.9x	21.0x	12.4x
Peer median						4.9x	22.2x	18.0x

Source: market data, 9 October 2026, for prices; share counts and balance sheets from IBM 10-Q 0000051143-26-000078, Accenture 8-K 0001467373-26-000037, Oracle 10-Q 0001193125-26-389274, Microsoft 10-K 0001193125-26-323660, Cisco 10-K 0000858877-26-000132, Hewlett Packard Enterprise 10-Q 0001645590-26-000080, Cognizant 10-Q 0001058290-26-000031, Salesforce 10-Q 0001108524-26-000190, Accenture 10-Q 0001467373-26-000032, SEC filings via SEC-API.io

Table 4.6 Metric definitions and basis

Item	Definition or basis
TTM	Last four reported quarters: latest fiscal year plus current year to date less prior year to date; Microsoft, Cisco and Accenture on their latest fiscal year
Growth	TTM revenue against the prior TTM; includes acquisitions (IBM: Confluent from March 2026; HPE: Juniper from 2025)
Accenture	Fiscal year to 31 August 2026 from the unaudited results release filed on Form 8-K
Gross margin	As filed; Accenture, Cognizant and HPE derived as revenue less cost of services or cost of revenue (Cognizant excludes depreciation and amortization); Oracle as revenue less cloud and software, hardware and services expenses
Operating margin	GAAP operating income over revenue; IBM shown as gross profit less SG&A and R&D
FCF	Operating cash flow less purchases of property and equipment; IBM also deducts investment in software ($646m TTM), as in Table 2.1
SBC	Stock based compensation expense from the cash flow statement
Inventory days	Inventory at the latest balance sheet over TTM cost of revenue, times 365; n/a where no inventory line is filed
ROIC	TTM operating income taxed at 21% over the average of debt plus equity at the latest balance sheet and one year earlier
Debt / equity	Debt at the latest balance sheet over shareholders equity; IBM debt includes IBM Financing debt
Shares and market cap	Shares outstanding from the latest 10-Q or 10-K cover, times the closing price; Accenture Class A shares at 4 June 2026, the latest cover count; the release reports FY2026 repurchases of 39.9m shares
EV	Market cap plus debt less cash and current marketable securities; IBM cash includes restricted cash
P / E	Closing price over TTM diluted GAAP EPS (IBM: $11.27, the four reported quarters to Q2 2026); Salesforce net income includes $3.17bn of gains on strategic investments in H1 FY2027
P / FCF	Market cap over TTM FCF; n/a for Oracle, whose TTM FCF is ($28.7bn)
Capex	Purchases of property and equipment over the period in Table 4.3

Source: definitions applied to the filings in Table 4.7

Table 4.7 Filings behind each peer figure

Company	Latest annual report	Latest interim report	Prior year report
IBM	10-K 0000051143-26-000010	10-Q 0000051143-26-000078	10-Q 0000051143-25-000052
Accenture	10-K 0001467373-25-000217	8-K 0001467373-26-000037, 10-Q 0001467373-26-000032	10-Q 0001467373-25-000169
Oracle	10-K 0001193125-26-277521	10-Q 0001193125-26-389274	10-Q 0001193125-25-200095
Microsoft	10-K 0001193125-26-323660		10-K 0000950170-25-100235
Cisco Systems	10-K 0000858877-26-000132		10-K 0000858877-26-000132
Hewlett Packard Enterprise	10-K 0001645590-25-000130	10-Q 0001645590-26-000080	10-Q 0001645590-25-000101
Cognizant	10-K 0001058290-26-000008	10-Q 0001058290-26-000031	10-Q 0001058290-25-000267
Salesforce	10-K 0001108524-26-000060	10-Q 0001108524-26-000190	10-Q 0001108524-25-000088

Source: SEC filings via SEC-API.io

5 Material Events & Contracts

IBM filed 14 Forms 8-K between 10 October 2025 and 10 October 2026: 5 on results, 3 on financing, 4 on board and governance and 2 under Regulation FD. A letter of 14 July 2026 gave preliminary Q2 2026 revenue of $17.2bn, up 1%, eight days ahead of the results release.

Figure 5.1 IBM Form 8-K filings and acquisition dates, October 2025 to October 2026

IBM 8-K filings last twelve months

Table 5.1 IBM 8-K filings, 10 October 2025 to 10 October 2026, newest first

Filed	Items	Event summary	Accession number
1 Oct 2026	5.02, 5.03, 9.01	Board elected Frank Baker, cofounder and Managing Partner of Siris Capital Group, as director effective 1 October 2026, with a seat on the Directors and Corporate Governance Committee; bylaws amended to raise the number of directors to 14.	0000051143-26-000086
14 Aug 2026	9.01	Exhibits for C$2.75bn of notes sold under an underwriting agreement dated 10 August 2026 and closed on 17 August 2026: C$1.75bn of 4.100% notes due 2030 and C$1.0bn of 4.750% notes due 2034.	0001104659-26-097089
22 Jul 2026	2.02, 9.01	Q2 2026 revenue $17.2bn, up 1%; GAAP diluted EPS $2.27, down 2%, and operating (non GAAP) EPS $2.93, up 5%; full year constant currency revenue growth now expected at 4% to 5%; free cash flow still expected to rise about $1bn year on year; $10.5bn invested in acquisitions in H1 2026; quarterly dividend $1.69 per share.	0000051143-26-000077
14 Jul 2026	2.02, 7.01, 9.01	Letter from the Chief Executive Officer with preliminary Q2 2026 results: revenue $17.2bn, up 1%, Software up 5%, Consulting flat and Infrastructure down 7%; the letter attributes the shortfall to IBM Z mainframes and the related Transaction Processing software and to large deals that slipped past the expected timelines; it also reports Lightwell, a $5bn commitment on open source software vulnerabilities, and a letter of intent with the US Department of Commerce for the Anderon quantum wafer foundry with $1bn of CHIPS incentives and $1bn of IBM cash.	0000051143-26-000070
23 Jun 2026	1.01, 2.03, 9.01	Maturity of the $2.5bn three year credit agreement extended by one year to 20 June 2029 and of the $7.5bn five year credit agreement to 22 June 2031; all other terms unchanged.	0000051143-26-000061
28 May 2026	7.01	Statements for investor meetings: plan to invest more than $10bn in quantum computing over five years across research, capital expenditure, partnerships, manufacturing and acquisitions; more than 90 quantum systems deployed to date; target of a large scale fault tolerant quantum computer by 2029.	0000051143-26-000047
1 May 2026	5.02, 5.03, 5.07	Annual meeting of 28 April 2026: 13 directors elected with 86.9% to 98.9% of votes cast for or against; advisory pay vote 94.2% for; 2026 Long Term Performance Plan approved with 75.8% for; auditor ratified with 94.0%; four stockholder proposals received 2.2% to 37.3% for; bylaws amended to reduce the number of directors to 13 after the term of Frederick H. Waddell ended.	0000051143-26-000043
22 Apr 2026	2.02, 9.01	Q1 2026 revenue $15.9bn, up 9% and up 6% at constant currency; GAAP diluted EPS $1.28 and operating (non GAAP) EPS $1.91; quarterly dividend raised to $1.69 from $1.68 per share, the 31st consecutive annual increase; debt $66.4bn after the Confluent acquisition.	0000051143-26-000036
3 Mar 2026	5.03, 9.01	Bylaws amended to raise the number of directors to 14 from 1 March 2026, the effective date of the election of Ramon Laguarta.	0000051143-26-000015
2 Feb 2026	9.01	Exhibits for notes sold under two underwriting agreements dated 29 January 2026 and closed on 3 February 2026: $3.25bn of US dollar notes in five series with coupons of 4.000% to 5.800%, due 2029 to 2056, and €3.5bn of euro notes in four series due 2028 to 2038.	0001104659-26-009343
30 Jan 2026	5.02, 9.01	Board elected Ramon L. Laguarta, Chairman and Chief Executive Officer of PepsiCo, as director effective 1 March 2026, with a seat on the Directors and Corporate Governance Committee.	0000051143-26-000006
28 Jan 2026	2.02, 9.01	Q4 2025 revenue $19.7bn, up 12% and up 9% at constant currency; 2025 revenue $67.54bn, up 8%, GAAP diluted EPS from continuing operations $11.14, operating (non GAAP) EPS $11.59 and free cash flow $14.7bn; 2026 expectations of more than 5% constant currency revenue growth and free cash flow about $1bn higher; quarterly dividend $1.68 per share.	0000051143-26-000004
23 Oct 2025	7.01, 9.01	Prepared remarks and slides of the Q3 2025 earnings presentation: productivity savings expected at an annual run rate of $4.5bn exiting 2025; Software ARR $23.2bn, up 9%; $7.9bn spent on acquisitions and $4.7bn paid in dividends in the first nine months; debt $63.1bn.	0000051143-25-000063
22 Oct 2025	2.02, 9.01	Q3 2025 revenue $16.3bn, up 9% and up 7% at constant currency; GAAP diluted EPS $1.84 after a noncash income tax charge tied to the enactment of H.R. 1; operating (non GAAP) EPS $2.65; 2025 expectations raised to more than 5% constant currency revenue growth and about $14bn of free cash flow; quarterly dividend $1.68 per share.	0000051143-25-000061

Source: IBM Forms 8-K with exhibits, SEC filings via SEC-API.io

Form 8-K reports under Items 2.01, 2.05, 2.06, 4.01 and 8.01 in the window: 0. Form 8-K/A filings in the window: 0.

IBM Confluent acquisition and other events in periodic reports

IBM completed the Confluent acquisition on 17 March 2026 for total consideration of $11.60bn, of which $7.24bn was recorded as goodwill.

Figure 5.2 Confluent purchase price allocation at 30 June 2026, $bn

Table 5.2 Events disclosed in periodic reports, newest first

Event date	Where disclosed	Event summary
22 Jul 2026	10-Q Q2 2026, note 5	Definitive agreement signed to acquire a business, expected to close in H2 2026 subject to regulatory approval; the business will join the Infrastructure segment.
22 Jul 2026	10-Q Q2 2026, note 19	Board approved a quarterly dividend of $1.69 per share, payable 10 September 2026 to holders of record on 10 August 2026.
30 Jun 2026	10-Q Q2 2026, Part II Items 2 and 5	Shares repurchased in Q2 2026: 0; $2.01bn remains under the $4.0bn authorization of 30 October 2018, and the program has been suspended since the Red Hat closing in 2019. Rule 10b5-1 trading arrangements adopted or terminated by directors and officers in Q1 and Q2 2026: 0.
15 Apr 2026	10-Q Q2 2026, note 5	Convertible notes assumed with Confluent, recorded as $1.1bn of short term debt at the acquisition date, were settled.
17 Mar 2026	10-Q Q2 2026, note 5	Confluent acquisition completed at $31 per share in cash: $11.27bn paid for common stock, $269m for equity awards and $65m of fair value for replaced awards; $1.17bn of cash and $917m of marketable securities acquired; 3.0m stock awards issued and assumed with a fair value of $665m; Confluent joined the Software segment.
12 Feb 2026	FY2025 10-K, Exhibit 13, note E	Confluent stockholders voted to approve the merger.
31 Dec 2025	FY2025 10-K, Exhibit 13, note E	Ten acquisitions completed in 2025, including HashiCorp on 27 February 2025 at $35 per share in cash, an equity value of about $7.2bn.
8 Dec 2025	FY2025 10-K, Exhibit 13, note E	IBM announced its intent to acquire Confluent at $31 per share in cash, an enterprise value of about $11bn.

Source: 10-Q Q2 2026 and FY2025 10-K with Exhibit 13, SEC filings via SEC-API.io

IBM debt offerings 2026

Notes issued in 2026 total $3.25bn, €3.5bn and C$2.75bn across 11 series; proceeds from new debt were $7.44bn and payments to settle debt $7.14bn in H1 2026.

Figure 5.3 Fixed rate notes issued in 2026: coupon by maturity year and currency

Table 5.3 Notes issued in 2026 by series

Series	Principal	Closing date	Price paid by underwriters, % of principal	Public offering price, % of principal	Interest paid
4.100% notes due 2030	C$1.75bn	17 Aug 2026	99.693%	99.993%	15 February and 15 August
4.750% notes due 2034	C$1.0bn	17 Aug 2026	99.261%	99.711%	15 February and 15 August
4.000% notes due 2029	$500m	3 Feb 2026	99.844%	99.944%	3 February and 3 August
4.300% notes due 2031	$500m	3 Feb 2026	99.658%	99.858%	3 February and 3 August
4.600% notes due 2033	$500m	3 Feb 2026	99.499%	99.799%	3 February and 3 August
4.950% notes due 2036	$1.0bn	3 Feb 2026	99.324%	99.774%	3 February and 3 August
5.800% notes due 2056	$750m	3 Feb 2026	99.322%	99.972%	3 February and 3 August
Floating rate notes due 3 February 2028, at three month EURIBOR plus 0.28%	€750m	3 Feb 2026	99.925%	100.000%	Quarterly from 3 May 2026
3.000% notes due 2031	€1.0bn	3 Feb 2026	99.549%	99.749%	3 February each year
3.450% notes due 2034	€1.0bn	3 Feb 2026	99.396%	99.746%	3 February each year
3.850% notes due 2038	€750m	3 Feb 2026	99.096%	99.566%	3 February each year

Source: 8-K of 14 Aug 2026, Exhibit 1.1; 8-K of 2 Feb 2026, Exhibit 1.1, Exhibit 1.2 and Exhibit 4.4, SEC filings via SEC-API.io

IBM material contracts, credit agreements and capital return

Committed credit agreements total $10.0bn and were undrawn at 30 June 2026, against total debt of $61.99bn, of which $5.78bn was short term.

Figure 5.4 Long term debt by contractual maturity at 30 June 2026, $bn

Table 5.4 Material contracts register

Contract and date	Counterparty	What it does	Terms	Filed in
Five year credit agreement, 22 June 2021, amended 30 June 2022 and 20 June 2025, extended 22 June 2026	JPMorgan Chase Bank, N.A. as administrative agent; BNP Paribas, Citibank and Royal Bank of Canada as syndication agents; a lender group	Unsecured revolving credit facility of $7.5bn for general corporate purposes of IBM and subsidiary borrowers, whose borrowings IBM guarantees.	Termination date 22 June 2031 after the one year extension; IBM may request a one year extension before each anniversary, which takes effect when lenders holding at least 51% of commitments agree; the 2021 agreement sets the margin on eurodollar loans at 0.625% to 1.125% and the commitment fee at 0.04% to 0.11% by credit rating level; covenant: consolidated net interest expense ratio of no less than 2.20 to 1.0 over four quarters; cross default on other debt of $500m or more. Drawn at 30 June 2026: $0.	8-K of 23 Jun 2026, Exhibit 10.2; 8-K of 20 Jun 2025; 8-K of 25 Jun 2021, Exhibit 10.2
Three year credit agreement, 22 June 2021, amended 30 June 2022 and 20 June 2025, extended 22 June 2026	JPMorgan Chase Bank, N.A. as administrative agent and 21 lenders	Unsecured revolving credit facility of $2.5bn; together the two agreements permit borrowings of up to $10.0bn.	Termination date 20 June 2029 after the one year extension requested on 2 June 2026; the four largest lenders (JPMorgan Chase Bank, BNP Paribas, Citibank and Royal Bank of Canada) each commit $175m; same interest expense covenant and cross default as the five year agreement. Drawn at 30 June 2026: $0.	8-K of 23 Jun 2026, Exhibit 10.1; 10-Q Q2 2026, note 12
Indenture, 1 October 1993, with first supplemental indenture of 15 December 1995	The Bank of New York Mellon as trustee	Governs IBM debt securities, including the notes issued in 2026.	Covenants oblige prompt payment of principal and interest, limit secured debt and sale and leaseback transactions to 10% of consolidated net tangible assets and restrict mergers unless conditions are met; an event of default can make principal and interest due at once. Senior long term debt ratings at 31 December 2025: A minus (S&P), A3 (Moody's), A minus (Fitch).	FY2025 10-K, Exhibit 4 list; 10-Q Q2 2026, note 12
Underwriting agreement, 10 August 2026	CIBC World Markets, RBC Dominion Securities, Scotia Capital and TD Securities as representatives of underwriters	Sale of C$1.75bn of 4.100% notes due 2030 and C$1.0bn of 4.750% notes due 2034.	Each representative takes 25% of each series; the 2030 notes mature on 15 August 2030 and are redeemable before the par call date of 15 July 2030 at the higher of par and a price based on the Government of Canada yield plus 20 basis points, and at par afterwards; no sinking fund.	8-K of 14 Aug 2026, Exhibit 1.1 and Exhibit 4.1
Two underwriting agreements, 29 January 2026	US dollar notes: Citigroup, BNP Paribas, BofA Securities, Deutsche Bank, Goldman Sachs, HSBC and Mizuho as representatives. Euro notes: 12 underwriters including Citigroup Global Markets Limited	Sale of $3.25bn of US dollar notes in five series and €3.5bn of euro notes in four series.	Closing 3 February 2026; no sinking fund; US dollar notes redeemable at the option of IBM in whole or in part; euro fixed rate notes redeemable at the option of IBM and on certain tax events; redemption of the floating rate notes is limited to certain tax events.	8-K of 2 Feb 2026, Exhibit 1.1 and Exhibit 1.2
Agreement and plan of merger, 7 December 2025	Confluent, Inc. and Corvo Merger Sub, Inc., a wholly owned subsidiary of IBM	Merger of the subsidiary into Confluent, which became a wholly owned subsidiary of IBM on 17 March 2026.	$31.00 in cash for each Class A and Class B share; vested and director held restricted stock units paid in cash, other units converted into IBM restricted stock units; closing conditions included the stockholder vote and antitrust clearance; termination fee of $453.6m payable by Confluent to IBM in specified cases, including a superior proposal; end date 7 December 2026, extendable to 7 June 2027; holders of about 62% of voting power signed a voting agreement.	Confluent 8-K of 8 Dec 2025, Exhibits 2.1 and 10.1; Confluent 8-K of 17 Mar 2026
Indenture, 2 February 2024	IBM International Capital Pte. Ltd. as issuer, IBM as guarantor, The Bank of New York Mellon as trustee	Governs $4.9bn of US dollar fixed rate notes issued in 2024 by a wholly owned finance subsidiary.	IBM guarantees the notes fully and unconditionally and is the sole guarantor.	10-Q Q2 2026, note 12 and Exhibit 22; FY2025 10-K, Exhibit 4 list
IBM 2026 Long Term Performance Plan, approved 28 April 2026	Employees, officers and independent contractors	Authorizes stock options, stock appreciation rights, restricted stock, restricted and performance share units and other stock or cash based awards.	Approved by the board on 24 February 2026 subject to the stockholder vote; 444.0m votes for and 141.4m against.	8-K of 1 May 2026, Items 5.02 and 5.07
Terms and conditions of equity awards, effective 15 February 2026	Award recipients	Sets the standard terms of restricted stock units, restricted stock, options and performance share units under the plan.	Unvested units are canceled when employment ends, except on death or disability; vested options stay exercisable for 90 days; senior leaders aged 60 with 15 years of service, or 65 with 5 years, keep vesting after one year from grant if they sign a release; IBM may cancel or rescind awards for detrimental activity, including competition where a noncompetition agreement applies; for awards that keep vesting after departure this right runs to 12 months after the last vesting date.	FY2025 10-K, Exhibit 10.1
Amendment No. 1 to the IBM Excess Savings Plan, effective 1 January 2026	Plan participants	Opens the unfunded deferred compensation plan to Red Hat employees who became IBM employees on 1 January 2026.	Eligible employees may defer 1% to 80% of base pay from 1 March 2026 and of performance pay from 1 April 2026, by an election made within 30 days of becoming eligible.	FY2025 10-K, Exhibit 10.2
Letter agreement, 26 February 2024	Anne Robinson, Senior Vice President and Chief Legal Officer	Sets employment terms from a projected start date of 24 June 2024; employment is at will.	Base salary $935,000 and target incentive $1.265m; new hire equity of $4.8m in planned value (60% performance share units, 20% restricted stock units, 20% options); sign on equity of $3.5m in retention restricted stock units vesting over three years; sign on bonus of $750,000 under a repayment agreement; share ownership of three times salary plus target incentive within five years.	10-Q Q1 2025, Exhibit 10.2; FY2025 10-K exhibit list
Purchase and lease obligations at 31 December 2025	Suppliers and lessors	Firm commitments to buy goods and services of a fixed or minimum quantity, and lease payments.	Purchase obligations $4.82bn, of which $1.96bn due in 2026; operating lease obligations $3.96bn; interest on long term debt $24.2bn; at 30 June 2026 unused lines of credit extended to third parties were $2.3bn and client financing commitments $1.5bn.	FY2025 10-K, Exhibit 13, MD&A; 10-Q Q2 2026, note 13

Source: filings and exhibits linked in each row; exhibit list from the FY2025 10-K, SEC filings via SEC-API.io

6 Ownership, Voting Power & Annual Meeting

Vanguard Capital Management reported 70.2m IBM shares, 7.48% of common stock, at 31 March 2026, and directors and executive officers as a group held 809,792 shares, 0.09% of 938.0m shares entitled to vote. IBM has one class of voting stock with one vote per share.

IBM major shareholders, Schedule 13D and 13G filings and voting power

Schedule 13G filings from 10 October 2024 to 10 October 2026: 3. Schedule 13D filings: 0.

Table 6.1 Holders above 5% of IBM common stock and Schedule 13G filings, October 2024 to October 2026

Holder	Schedule 13G	Filed	Holdings date	Shares beneficially owned	% of class, as filed	Sole voting power	Shared voting power	Sole dispositive power	Voting power as % of 938.0m shares
Vanguard Capital Management	Schedule 13G	30 Apr 2026	31 Mar 2026	70.2m	7.48%	9.4m	0	70.2m	1.00%
The Vanguard Group	Schedule 13G/A (No. 12)	27 Mar 2026	13 Mar 2026	0	0.00%	0	0	0	0.00%
The Vanguard Group	Schedule 13G/A (No. 11), cited in 2026 proxy	7 Feb 2025	31 Jan 2025	92.8m	10.03%	0	1.1m	88.6m	0.12%
BlackRock, Inc.	Cited in 2026 proxy	25 Jan 2024	n/a	75.5m	8.3%	68.5m	0	n/a	7.30%
State Street Corporation	Cited in 2026 proxy	30 Jan 2024	n/a	55.0m	6.03%	0	32.9m	n/a	3.51%

Source: DEF 14A filed 10 March 2026; Schedule 13G filings linked in the table, SEC filings via SEC-API.io

Table 6.2 IBM shares held by directors and executive officers at 31 December 2025

Name	Position as filed	Common stock	Of which shared voting power	Acquirable within 60 days	Deferred Compensation and Equity Award Plan (DCEAP) shares
Arvind Krishna	Chairman, President and CEO	418,689	311,101	146,158	n/a
James J. Kavanaugh	Senior VP, F&O & CFO	144,456	143,364	82,908	n/a
Gary Cohn	Vice Chairman	89,866	0	65,139	n/a
Robert D. Thomas	Senior VP, Software & Chief Commercial Officer	64,012	18,040	71,576	n/a
Anne Robinson	Senior VP & Chief Legal Officer	6,240	0	8,610	n/a
David N. Farr	Director	9,708	450	0	22,600
F. William McNabb III	Director	9,250	0	0	15,612
Alex Gorsky	Lead Director	4,444	0	0	33,343
Frederick H. Waddell	Director in 2025	3,763	0	0	23,013
Andrew N. Liveris	Director	2,655	0	0	43,186
Alfred W. Zollar	Director	936	0	0	9,118
Marianne C. Brown	Director	440	440	0	3,270
Michelle J. Howard	Director	144	0	0	15,940
Peter R. Voser	Director	0	0	0	31,421
Martha E. Pollack	Director	0	0	0	16,834
Thomas Buberl	Director	0	0	0	13,808
Michael Miebach	Director	0	0	0	3,529
Ramon Laguarta	Director from 1 March 2026	0	0	0	0
Directors and executive officers as a group (20 people)	Group total	809,792	473,395	422,723	231,674

Source: DEF 14A filed 10 March 2026, SEC filings via SEC-API.io

Table 6.3 Share structure, board and pay facts from the 2026 proxy

Item	As filed
Classes of voting stock	1 (common stock, $0.20 par value), one vote per share
Shares outstanding and entitled to vote, 10 February 2026	938.0m
Record date for the annual meeting	27 February 2026
Board of directors	13 nominees, 12 independent, all elected each year for a one year term
Director election standard	Majority of votes cast in an uncontested election; abstentions and broker non votes are excluded from votes cast
Chairman and Lead Director	Arvind Krishna is Chairman, President and CEO; Alex Gorsky is independent Lead Director
Stockholder right to call a special meeting	Holders of 25% or more of IBM stock
Hedging of IBM stock	Prohibited for directors and corporate leadership teams under insider trading policy
Group holdings including shares acquirable within 60 days and DCEAP shares	1.46m; proxy states the total is at most 1% of outstanding shares
CEO total compensation	2025 $37.99m; 2024 $25.14m; 2023 $20.40m
CEO stock awards, grant date fair value	2025 $23.99m; 2024 $14.83m; 2023 $11.48m
Median employee total compensation, 2025	$49,630
CEO pay ratio, 2025	765 to 1
2026 long term performance plan share pool	80.0m shares: 40.4m new plus 39.6m remaining under prior plans at 23 February 2026

Source: DEF 14A filed 10 March 2026, SEC filings via SEC-API.io

IBM 13F institutional holders

Original Form 13F-HR filings reporting IBM common stock numbered 3,662 for 30 June 2026 against 3,447 for 30 September 2025, up 6.2%. JPMorgan Chase reported 12.4m shares at 30 June 2026 against 18.5m a quarter earlier; Bank of New York Mellon reported 9.3m against 7.2m.

Figure 6.1 Form 13F-HR filings reporting IBM common stock, by quarter end

Table 6.4 IBM shares reported by 12 large Form 13F filers

Filer	Q3 2025	Q4 2025	Q1 2026	Q2 2026	Change Q3 2025 to Q2 2026	% of shares outstanding, Q2 2026	Sole voting authority, Q2 2026
BlackRock, Inc.	76.9m	77.9m	n/a	76.8m	(0.14m)	8.15%	70.0m
Vanguard Group Inc	95.8m	97.2m	0	0	(95.78m)	0.00%	0
Vanguard Capital Management LLC	n/a	n/a	60.8m	61.4m	n/a	6.52%	0
State Street Corp	54.5m	55.0m	54.6m	56.0m	1.57m	5.95%	5.0m
Vanguard Portfolio Management LLC	n/a	n/a	27.7m	28.3m	n/a	3.01%	0
Geode Capital Management	22.3m	22.6m	23.1m	23.4m	1.18m	2.49%	23.4m
Morgan Stanley	16.0m	14.9m	19.6m	17.5m	1.44m	1.85%	7.8m
Capital World Investors	17.0m	22.0m	17.1m	16.2m	(0.84m)	1.72%	16.1m
Bank of America Corp	15.4m	15.0m	16.1m	15.0m	(0.38m)	1.59%	3.8m
JPMorgan Chase & Co	16.8m	15.2m	18.5m	12.4m	(4.31m)	1.32%	10.0m
Northern Trust Corp	10.3m	10.1m	10.3m	10.2m	(0.04m)	1.09%	10.1m
Bank of New York Mellon Corp	7.1m	7.2m	7.2m	9.3m	2.20m	0.98%	8.6m

Source: Form 13F filings for the four quarter ends, CUSIP 459200101; filing for 30 June 2026 linked per filer (for Vanguard Group Inc, Schedule 13G/A of 27 March 2026 reporting 0 shares): BlackRock, Inc.; Vanguard Group Inc; Vanguard Capital Management LLC; State Street Corp; Vanguard Portfolio Management LLC; Geode Capital Management; Morgan Stanley; Capital World Investors; Bank of America Corp; JPMorgan Chase & Co; Northern Trust Corp; Bank of New York Mellon Corp. Shares outstanding 942.1m from 10-Q for Q2 2026, SEC filings via SEC-API.io

Figure 6.2 IBM shares reported by 12 large Form 13F filers, four quarter ends

IBM 2026 annual meeting voting results

Holders of 744.3m shares, 79.4% of shares entitled to vote, were represented on 28 April 2026; 3 management proposals received 75.8% to 94.2% of votes for and 4 stockholder proposals 2.2% to 37.3%. Andrew N. Liveris received 86.9%; the other 12 directors received 93.7% to 98.9%.

Table 6.5 Annual meeting results, 28 April 2026

Item	Proponent	Board position	For	Against	Abstained	Broker non votes	% for (for / for plus against)	% for at 2025 meeting
1. Elect Marianne C. Brown	Board	For	566.6m	20.6m	3.3m	153.8m	96.5%	97.2%
1. Elect Thomas Buberl	Board	For	572.0m	15.6m	3.0m	153.8m	97.3%	98.7%
1. Elect David N. Farr	Board	For	563.8m	23.6m	3.1m	153.8m	96.0%	95.4%
1. Elect Alex Gorsky	Board	For	576.4m	11.1m	3.0m	153.8m	98.1%	98.6%
1. Elect Michelle J. Howard	Board	For	581.4m	6.4m	2.8m	153.8m	98.9%	99.0%
1. Elect Arvind Krishna	Board	For	550.7m	37.0m	2.8m	153.8m	93.7%	94.1%
1. Elect Ramon Laguarta	Board	For	576.0m	11.5m	3.0m	153.8m	98.0%	n/a
1. Elect Andrew N. Liveris	Board	For	509.5m	77.1m	3.9m	153.8m	86.9%	87.0%
1. Elect F. William McNabb III	Board	For	579.9m	7.6m	3.0m	153.8m	98.7%	98.8%
1. Elect Michael Miebach	Board	For	580.4m	7.1m	3.0m	153.8m	98.8%	98.8%
1. Elect Martha E. Pollack	Board	For	581.1m	6.8m	2.7m	153.8m	98.8%	98.9%
1. Elect Peter R. Voser	Board	For	567.4m	20.1m	3.0m	153.8m	96.6%	97.8%
1. Elect Alfred W. Zollar	Board	For	565.4m	21.8m	3.4m	153.8m	96.3%	96.6%
2. Ratify PricewaterhouseCoopers LLP	Management	For	696.6m	44.1m	3.6m	0	94.0%	93.6%
3. Advisory vote on executive compensation	Management	For	549.9m	34.0m	6.7m	153.8m	94.2%	92.0%
4. Approve 2026 long term performance plan	Management	For	444.0m	141.4m	5.2m	153.8m	75.8%	n/a
5. Change outside director stock ownership guidelines	Theron Marshall Hoyt (at least 300 shares)	Against	25.2m	554.3m	11.0m	153.8m	4.4%	n/a
6. Right to act by written consent	John Chevedden (at least 25 shares)	Against	217.6m	366.1m	6.9m	153.8m	37.3%	n/a
7. Report on AI bias	National Center for Public Policy Research (at least 7 shares)	Against	14.2m	565.5m	10.9m	153.8m	2.4%	n/a
8. Report on discrimination in charitable support	The Heritage Foundation, represented by Bowyer Research (at least 114 shares)	Against	12.7m	567.0m	10.8m	153.8m	2.2%	n/a

Source: 8-K Item 5.07 filed 1 May 2026; 8-K Item 5.07 filed 2 May 2025; proponents and board positions from DEF 14A filed 10 March 2026, SEC filings via SEC-API.io

Figure 6.3 Votes on proposals 2 to 8 at the 28 April 2026 annual meeting

Figure 6.4 Share of votes cast for each IBM director, 2026 meeting against 2025 meeting

7 Insider Activity

IBM insiders reported 1 open market sale of 25,000 shares for $5.76m in Q3 2026 and 3 open market purchases of 1,484 shares for $0.42m in Q1 2026 on Forms 4 filed from 10 October 2025 to 10 October 2026. Buy to sell ratio on open market transactions (codes P and S) is 0.06 by shares and 0.07 by value. Filings: 87 Forms 4, 4 Forms 4/A, 2 Forms 3, 0 Forms 5, 1 Form 144.

Insider buying and selling

Table 7.1 Open market transactions (codes P and S) on Forms 4 filed 10 Oct 2025 to 10 Oct 2026

Date	Insider	Role	Code	Shares	Price	Value	Common shares held after	Rule 10b5-1 box	Form 4 filed
26 Aug 2026	Robert D. Thomas	Senior Vice President	S	25,000	$230.32	$5,758,088	47,800	Unchecked	28 Aug 2026
25 Feb 2026	Michael Miebach	Director	P	434	$233.33	$101,264	434	Unchecked	25 Feb 2026
25 Feb 2026	Michelle J. Howard	Director	P	50	$237.83	$11,891	194	Unchecked	25 Feb 2026
30 Jan 2026	David N. Farr	Director	P	1,000	$304.00	$304,000	9,258	Unchecked	30 Jan 2026

Source: Forms 4 linked in the table, SEC filings via SEC-API.io

Sale of 25,000 shares equals 0.003% of 942.13m shares outstanding at 30 June 2026 (10-Q). Rule 10b5-1 box is checked on 0 of the 4 Forms 4.

Figure 7.1 Net open market insider activity by month, Oct 2025 to Oct 2026

Table 7.2 Insider transactions by month of transaction, Forms 4

Month	Shares bought (P)	Shares sold (S)	Net shares	Award, vesting, withholding, gift and deferral lines	Forms 4
Oct 2025	0	0	0	0	0
Nov 2025	0	0	0	4	4
Dec 2025	0	0	0	12	12
Jan 2026	1,000	0	1,000	0	1
Feb 2026	484	0	484	103	29
Mar 2026	0	0	0	13	13
Apr 2026	0	0	0	0	0
May 2026	0	0	0	0	0
Jun 2026	0	0	0	13	13
Jul 2026	0	0	0	6	1
Aug 2026	0	25,000	(25,000)	1	2
Sep 2026	0	0	0	12	12
Oct 2026	0	0	0	0	0
Total	1,484	25,000	(23,516)	164	87

Source: 87 Forms 4, first 5 Nov 2025, latest 1 Oct 2026, SEC filings via SEC-API.io

Insider transactions by person

Table 7.3 Executive officers: common stock lines on Forms 4 and equity granted on 26 Feb 2026

Insider	Role	Performance share units paid in shares (A)	Restricted stock units (RSUs) released (M)	Withheld for tax (F)	Gifts (G)	Sold (S)	Common shares held after latest transaction	RSUs granted	Options granted at $243.22	Latest filing
Arvind Krishna	Chairman, President and CEO	83,028	22,567	52,442	20,000	0	371,894	22,518	90,071	28 Aug 2026
James J. Kavanaugh	Senior Vice President and CFO	48,474	12,551	30,107	6,700	0	175,392	10,364	41,455	27 Feb 2026
Gary Cohn	Vice Chairman	35,410	9,904	24,590	0	0	110,590	10,565	42,258	27 Feb 2026
Nickle Jaclyn Lamoreaux	Senior Vice President	23,566	5,977	14,617	0	0	56,755	6,285	25,138	27 Feb 2026
Robert D. Thomas	Senior Vice President	42,247	10,963	26,422	700	25,000	47,800	10,565	42,258	28 Aug 2026
Nicolas A. Fehring	Vice President, Controller	4,070	2,264	2,746	750	0	16,578	2,844	7,584	4 Jun 2026
Anne Robinson	Senior Vice President	6,318	9,017	8,014	0	0	13,648	6,341	25,363	2 Jul 2026
Total		243,113	73,243	158,938	28,150	25,000	792,657	69,482	274,127

Source: latest Form 4 of each officer, linked in the table, SEC filings via SEC-API.io

Shares withheld for tax (158,938, $46.63m) are 6.4 times shares sold in open market. Arvind Krishna's Form 4 filed 28 Aug 2026 reports 8,376 phantom stock units acquired at $238.79 under the IBM Excess Savings Plan (code I), $2.00m.

Figure 7.2 Common shares held by executive officers, before first and after latest Form 4 transaction

Figure 7.3 Shares acquired and disposed of by executive officers on Forms 4, by transaction type

Table 7.4 Directors: open market purchases and fees deferred into Promised Fee Shares (code A, paid in stock or cash after retirement)

Director	Shares bought (P)	Promised Fee Shares acquired	Value at reported prices	Promised Fee Shares held after latest Form 4	Form 4 count	Latest filing
Andrew N. Liveris	0	1,524	$0.39m	45,262	4	1 Oct 2026
Alex Gorsky	0	1,679	$0.43m	35,343	4	1 Oct 2026
Peter R. Voser	0	1,562	$0.40m	33,290	4	1 Oct 2026
David N. Farr	1,000	919	$0.24m	23,782	5	1 Oct 2026
Frederick H. Waddell	0	733	$0.20m	23,571	2	1 Apr 2026
Martha E. Pollack	0	919	$0.24m	17,899	4	1 Oct 2026
F. William McNabb III	0	1,426	$0.37m	17,053	4	1 Oct 2026
Michelle J. Howard	50	1,061	$0.27m	17,050	5	1 Oct 2026
Thomas Buberl	0	1,471	$0.38m	15,256	4	1 Oct 2026
Alfred W. Zollar	0	1,426	$0.37m	10,427	4	1 Oct 2026
Michael Miebach	434	1,426	$0.37m	4,724	5	1 Oct 2026
Marianne C. Brown	0	1,426	$0.37m	4,460	4	1 Oct 2026
Ramon Laguarta	0	866	$0.21m	869	3	1 Oct 2026
Frank Baker	0	0	0	0	0	Form 3, 8 Oct 2026
Total	1,484	16,438	$4.21m	248,986	52

Source: latest filing of each director, linked in the table, SEC filings via SEC-API.io. Form 4 filer name for F. William McNabb III: Frederick William McNabb III

New insiders and amended filings

Table 7.5 Forms 3, Forms 4/A and Form 144 filed 10 Oct 2025 to 10 Oct 2026

Form	Filed	Person	Event or transaction date	Content
3	8 Oct 2026	Frank Baker, director	1 Oct 2026	0 securities owned
144	26 Aug 2026	Robert D. Thomas	26 Aug 2026	25,000 shares, aggregate market value $5.76m; seller named as Robert D Thomas Revocable Trust
3	5 Mar 2026	Ramon Laguarta, director	1 Mar 2026	0 securities owned
4/A	29 Dec 2025	David N. Farr, director	31 Mar 2025	Restates Promised Fee Shares acquired to 237.077 units
4/A	29 Dec 2025	David N. Farr, director	30 Jun 2025	Restates Promised Fee Shares acquired to 200.283 units
4/A	29 Dec 2025	Martha E. Pollack, director	31 Mar 2025	Restates Promised Fee Shares acquired to 237.077 units
4/A	29 Dec 2025	Martha E. Pollack, director	30 Jun 2025	Restates Promised Fee Shares acquired to 200.283 units

Source: filings linked in the table, SEC filings via SEC-API.io

8 Risk Factors

IBM's Q2 2026 10-Q adds 0 risk factors to the 26 in the FY2025 10-K, of which 6 were reworded, 0 added and 0 dropped against FY2024; Item 1A ran to 5,220 words against 5,253.

IBM risk factors FY2025 against FY2024

Figure 8.1 IBM Item 1A word count by risk category, FY2025 and FY2024

Table 8.1 IBM risk factors in the FY2025 10-K and status against the FY2024 10-K

Risk factor	Status	Disclosure and change against FY2024
Risks related to the business
Economic downturn and client spending	Unchanged	Lower demand from economic conditions or a shift in client buying patterns could reduce revenue and profit.
Innovation initiatives	Reworded	Technology list now reads hybrid cloud, AI and quantum; the separate mention of generative AI is removed.
Reputation	Unchanged	Brand could be harmed by client disputes, product defects, control deficiencies, delivery failures, cybersecurity incidents or legal proceedings.
Investing in growth opportunities	Reworded	Strategic investment areas now name AI; the generative AI mention is removed.
Intellectual property and licenses	Unchanged	Competing offerings may arise despite patents, and open source code that IBM uses may cease to be maintained by its community.
Acquisitions, alliances and divestitures	Unchanged	Lists integration, missed revenue and cost targets, loss of key personnel, assumed liabilities, regulatory approval delays and financing needs.
Financial results difficult to predict	Unchanged	Q1 revenue has historically been lower than revenue in the preceding Q4, and orders concentrate at the end of each quarter.
Global presence	Reworded	Export controls on goods, technologies, inputs and raw materials are added beside tariffs and sanctions; IBM operates in over 175 countries.
Growth and productivity objectives	Unchanged	Automation, AI and changes to ways of working may yield less than the intended gains in speed, quality and productivity.
Internal controls	Unchanged	Inherent limitations may let misstatements pass controls over financial reporting.
Accounting estimates	Unchanged	Estimates involve judgment and actual results may differ; the reference now points to the 2025 annual report.
Goodwill and intangible impairment	Unchanged	Acquisitions may deliver less than the expected economic benefit, which could lead to an impairment charge in the income statement.
Skilled employees	Unchanged	Competition for skilled personnel is intense, and stock market volatility could reduce the value of equity awards.
Critical suppliers	Unchanged	Certain businesses rely on one or a limited number of suppliers, including for server processor technology.
Product and service quality	Unchanged	Errors, defects or service disruptions could affect customers' operations and IBM's operating results.
Development and use of AI	Reworded	Adds AI technologies that fail to work as intended or produce unexpected outcomes, adds governance offerings and removes the EU AI Act reference.
Government clients	Unchanged	Agreements may depend on periodic funding approval and allow termination without cause; suspension or debarment is possible.
Third party distribution channels	Unchanged	Ecosystem partners may be unable to keep up with technology changes or may fail to comply with applicable laws.
Risks related to cybersecurity and data protection
Cybersecurity and data protection	Reworded	Section renamed from data privacy to data protection; adds acquired companies as a source of risk and removes the MOVEit example.
Risks related to laws and regulations
Climate change and environmental matters	Reworded	Expectation of no disproportionate effect on IBM now extends to environmental protection laws.
Tax matters	Unchanged	Country adoption of OECD global minimum tax rules may increase tax uncertainty, and tax returns are under continuous examination.
Legal proceedings and investigations	Unchanged	Claims, suits and investigations arise in the ordinary course of business; the reference now points to note Q of the 2025 annual report.
Risks related to financing and capital markets activities
Pension plans	Unchanged	Market downturns could reduce plan assets and require incremental funding, and insolvency insurance premiums outside the US could rise.
Currency and financing	Unchanged	Results vary with currency values, and the financing business carries credit concentration, interest rate and residual value risk.
Market liquidity and customer credit	Unchanged	Most sales are on open credit, and a change in default rates could require an adjustment to the allowance for credit losses.
Risks related to ownership of IBM securities
IBM securities	Unchanged	Debt value varies with interest and exchange rates, and a rating change can reduce value and liquidity of debt and equity.

Source: FY2025 10-K, FY2024 10-K, Q2 2026 10-Q, Q1 2026 10-Q, SEC filings via SEC-API.io

IBM risk factor changes in AI, export controls and cybersecurity

AI risk factor wording now ties harm to market share, margins and reputation to AI technologies that fail to work as intended. Global presence risk wording adds export controls, and IBM derives about 60% of revenue outside the United States. Cybersecurity risk wording adds acquired companies as a source of exposure; Confluent closed on 17 March 2026 (Table 5.2).

Figure 8.2 IBM risk factors by length and change against the prior year

Table 8.2 Mentions of selected terms in Item 1A

Term	FY2024 10-K	FY2025 10-K
AI	25	18
Generative	5	0
EU AI Act	1	0
MOVEit	1	0
Export controls	0	2
Quantum	2	2
Tariffs	2	2
Pension	7	7

Source: FY2025 10-K, FY2024 10-K, SEC filings via SEC-API.io

IBM market risk, pension and tax sensitivity

Table 8.3 Sensitivities disclosed under Item 7A and critical accounting estimates

Exposure	Assumed change	Disclosed effect	As of
Interest rates, fair value of financial instruments	10% adverse	($1.1bn)	31 Dec 2025
Interest rates, fair value of financial instruments	10% adverse	($0.9bn)	31 Dec 2024, FY2025 10-K
Interest rates, fair value of financial instruments	10% adverse	($0.3bn)	31 Dec 2024, FY2024 10-K
Currency rates against the US dollar, fair value of financial instruments	10% adverse	($1.3bn)	31 Dec 2025
Currency rates against the US dollar, fair value of financial instruments	10% adverse	($1.3bn)	31 Dec 2024
US pension discount rate (5.2%), pre tax income in 2026	25 basis points lower	($70m)	31 Dec 2025
US pension discount rate, pre tax income in 2026	25 basis points higher	$30m	31 Dec 2025
US pension discount rate, projected benefit obligation	25 basis points either way	$300m	31 Dec 2025
Expected return on US plan assets, pension cost in following year	50 basis points either way	$90m	31 Dec 2025
Tax provision, consolidated net income	1% of pre tax income	$100m	FY2025
Net underfunded position, all retirement related plans	n/a	($2.28bn)	31 Dec 2025
Underfunded plans, funded status	n/a	($9.83bn)	31 Dec 2025
Overfunded plans, funded status	n/a	$7.54bn	31 Dec 2025
US Personal Pension Plan, funded ratio	n/a	137%	31 Dec 2025
Legally mandated non US pension contributions, 2026 to 2030	n/a	$0.8bn	31 Dec 2025

Source: FY2025 10-K, Exhibit 13, FY2024 10-K, Exhibit 13, SEC filings via SEC-API.io

IBM legal proceedings and cybersecurity disclosure

Named lawsuits in the contingencies note fell from 3 in FY2024 to 1 in FY2025 and 0 in the Q2 2026 10-Q. Item 1C grew to 1,059 words from 1,007 and adds board and Audit Committee participation in cyber incident tabletop exercises; cybersecurity incidents reported with a material adverse effect: 0.

Table 8.4 Legal matters named in the FY2024 contingencies note and their latest filed status

Matter	Amount stated	Latest filed status
IBM against GlobalFoundries, fraud and breach of contract, filed 8 June 2021	Claim of more than $1.5bn	Settled in December 2024 with no material financial impact; discontinued with prejudice in January 2025
Pension plan class action on joint and survivor annuity calculations, filed 2 June 2022	n/a	Settled; dismissed with prejudice on 11 December 2025 with no material financial impact
BMC Software against IBM, former managed infrastructure services business, filed 2017	$718m direct and $718m punitive damages awarded on 30 May 2022	Fifth Circuit reversed and rendered judgment for IBM on 30 April 2024
Brazilian non income tax assessments	About $300m total potential amount	IBM stated in the FY2024 note that it believes it will prevail

Source: FY2024 10-K, Exhibit 13, FY2025 10-K, Exhibit 13, Q2 2026 10-Q, SEC filings via SEC-API.io

9 Stock Price, Scenarios & Sensitivity

IBM closed at $227.13 on 9 October 2026, 31.0% below the closing high of $329.23 on 2 June 2026, and three sets of stated assumptions for FY2027 to FY2029 give arithmetic outcomes of $145, $247 and $389 per share at the end of FY2029.

Table 9.1 Share price range, price change, TTM EPS and yields at the 9 October 2026 close of $227.13

Measure	Value	Basis
52 week closing range	$205.77 to $329.23	Low on 22 July 2026, high on 2 June 2026
Change since 9 October 2025	(21.2)%	From $288.23
Change since 31 December 2025	(23.3)%	From $296.21
TTM diluted GAAP EPS	$11.27	Q4 2025 EPS of $5.88 includes a tax benefit of $1.54 per share, and FY2025 a net $1.22
EV / operating income	24.1x	EV $267.8bn (Table 0.1); TTM operating income $11.11bn: gross profit less SG&A and R&D
FCF yield	6.1%	TTM FCF $13.14bn over market cap of $213.99bn
Dividend yield	2.98%	Quarterly dividend of $1.69 per share, annualized

Source: 10-Q Q2 2026, 10-K FY2025, 8-K Exhibit 99.1 of 22 July 2026, 8-K Exhibit 99.1 of 28 January 2026, SEC filings via SEC-API.io; market data, 9 October 2026

Figure 9.1 IBM month end share price, November 2021 to 9 October 2026

Table 9.2 Share price after the last four results releases and the preliminary Q2 2026 letter

Release	Quarter	Timing	Diluted GAAP EPS	Operating EPS	Last close before	First close after	Change	Change after five sessions
22 October 2025	Q3 2025	After close	$1.84	$2.65	$287.51	$285.00	(0.9)%	7.2%
28 January 2026	Q4 2025	After close	$5.88	$4.52	$294.16	$309.24	5.1%	(1.7)%
22 April 2026	Q1 2026	After close	$1.28	$1.91	$251.86	$231.08	(8.3)%	(9.8)%
14 July 2026	Q2 2026 preliminary	Before open	$2.27	$2.93	$290.23	$217.07	(25.2)%	(26.6)%
22 July 2026	Q2 2026	After close	$2.27	$2.93	$205.77	$206.65	0.4%	10.0%

Source: 8-K Exhibit 99.1 of 22 October 2025, 8-K Exhibit 99.1 of 28 January 2026, 8-K Exhibit 99.1 of 22 April 2026, 8-K Exhibit 99.1 of 14 July 2026, 8-K Exhibit 99.1 of 22 July 2026, SEC filings via SEC-API.io; market data, 9 October 2026

FY2026 estimate from H1 2026 results and full year guidance

Table 9.3 FY2026 estimate (FY2026E) build

Item	H1 2026 filed	H2 2026 derived	FY2026E	Assumption for H2 2026
Revenue	$33.08bn	$37.50bn	$70.57bn	Company guidance of 4% to 5% growth at constant currency with currency neutral; midpoint on FY2025 revenue of $67.54bn; guidance before 22 July 2026 was more than 5%
Revenue growth, year on year	5.0%	4.1%	4.5%	Guidance range gives $70.24bn to $70.91bn
Gross margin	57.0%	58.1%	57.6%	H2 2025 margin of 59.1% less 1.0 point, the Q2 2026 year on year change
Operating income	$4.30bn	$6.97bn	$11.27bn	H2 2025 SG&A plus R&D of $14.48bn grown 2.4%, the Q2 2026 year on year rate
Operating margin	13.0%	18.6%	16.0%	FY2025: 16.1%
Intellectual property (IP) and other income	$524m	$524m	$1.05bn	H1 2026 repeated
Interest expense	$959m	$959m	$1.92bn	H1 2026 repeated
Pre tax income	$3.87bn	$6.53bn	$10.40bn	Operating income plus IP and other income less interest expense
Effective tax rate	12.5%	12.5%	12.5%	H1 2026 rate
Diluted shares	953m	953m	953m	Q2 2026 count
Diluted GAAP EPS	$3.55	$6.00	$9.55	FY2025: $11.17 total
Operating (non GAAP) pre tax margin	16.4%	21.8%	19.2%	Adds acquisition related adjustments of $1.43bn and retirement related adjustments of $192m, Q2 2026 times two; FY2025: 18.8%; the 8-K of 22 July 2026 states an expectation of full year expansion
Operating (non GAAP) EPS	$4.84	$7.28	$12.12	Adjusted pre tax income taxed at 14.9%, the H1 2026 operating rate; FY2025: $11.59
FCF	$6.99bn	$5.46bn	$12.46bn	FY2025 FCF of $11.46bn plus about $1bn, the increase guided on IBM's measure
Free cash flow as defined by IBM	$4.76bn	$10.97bn	$15.73bn	Company guidance: about $1bn above FY2025 of $14.73bn

Source: 10-Q Q2 2026, 10-K FY2025, 8-K Exhibit 99.1 of 22 July 2026, 8-K Exhibit 99.1 of 22 April 2026, 8-K Exhibit 99.1 of 28 January 2026, SEC filings via SEC-API.io

Core assumptions and demand drivers: Software, Consulting and Infrastructure

Table 9.4 Demand drivers by segment

Segment	TTM revenue	Share of revenue	Q2 2026 growth	H1 2026 growth	Demand data as filed, Q2 2026
Software	$31.05bn	45%	5.1%	7.9%	ARR $24.6bn, up about $2bn year on year; Hybrid Cloud (Red Hat) 11.2%, Data 18.9%, Automation 3.6%, Transaction Processing (8)%
Consulting	$21.27bn	31%	0.2%	2.1%	Signings 5.0% as reported; TTM book to bill about 1.05; backlog $30.8bn
Infrastructure	$15.85bn	23%	(7.4)%	1.9%	IBM Z (42.0)% one year after the z17 mainframe launch; Distributed Infrastructure 37% with order backlog of nearly $500m
Financing	$786m	1%	12.2%	13.6%	IBM Financing debt $13.0bn

Source: 8-K Exhibit 99.1 of 22 July 2026, 10-Q Q2 2026, 8-K Exhibit 99.1 of 28 January 2026, 8-K Exhibit 99.1 of 14 July 2026, SEC filings via SEC-API.io

Scenario analysis FY2027 to FY2029: worst, base and best case

Base case is an estimate built on the assumptions in Table 9.5. It returns less than the close of $227.13 if revenue growth falls below 1.8% per year, operating margin below 15.7% or exit P / E below 20.2x. Implied price excludes dividends of $6.76 per share per year.

Table 9.5 Scenario assumptions and FY2029 outcomes

Line	Worst	Base	Best	Basis
Assumption: revenue growth per year	1.0%	4.5%	7.5%	FY2022 to FY2025 range 1.4% to 7.6%; base equals FY2026 guidance midpoint
Assumption: gross margin	56.5%	58.0%	59.5%	FY2025 58.2%; FY2026E 57.6%
Assumption: operating margin	14.0%	17.0%	19.5%	FY2021 to FY2025 range 10.9% to 16.1%; FY2026E 16.0%
Assumption: IP and other income per year	$1.05bn	$1.05bn	$1.05bn	FY2026E level
Assumption: interest expense per year	$1.92bn	$1.92bn	$1.92bn	FY2026E level
Assumption: effective tax rate	14%	14%	14%	H1 2026 GAAP rate 12.5%; operating rate 14.9%
Assumption: FCF margin	14.5%	17.5%	20.0%	FY2021 to FY2025 range 14.0% to 19.6%; FY2026E 17.6%
Assumption: diluted share count change per year	1.5%	1.0%	0.5%	FY2022 to FY2025 range 0.8% to 1.6%; from 953m in FY2026E
Assumption: non GAAP adjustments after tax per year	$2.45bn	$2.45bn	$2.45bn	FY2026E gap between operating and GAAP net income
Assumption: exit P / E on FY2029 diluted GAAP EPS	18x	22x	27x	TTM 20.2x; FY2026E 23.8x; FY2023 and FY2025 year end 20.1x and 26.5x
FY2029 revenue	$72.71bn	$80.54bn	$87.67bn	FY2026E $70.57bn
FY2029 gross profit	$41.08bn	$46.71bn	$52.17bn	FY2026E $40.65bn
FY2029 operating income	$10.18bn	$13.69bn	$17.10bn	FY2026E $11.27bn
FY2029 pre tax income	$9.31bn	$12.82bn	$16.23bn	Operating income plus IP and other income less interest expense
FY2029 net income	$8.01bn	$11.03bn	$13.95bn	FY2026E $9.10bn
FY2029 FCF	$10.54bn	$14.09bn	$17.53bn	FY2026E $12.46bn
FCF, FY2027 to FY2029 cumulative	$31.32bn	$40.49bn	$49.02bn	FCF margin times revenue, three years
Dividends, FY2027 to FY2029 cumulative	$19.91bn	$19.72bn	$19.52bn	$20.28 per share
Diluted shares, FY2029	997m	982m	967m	From 953m in FY2026E
FY2029 diluted GAAP EPS	$8.03	$11.23	$14.43	FY2026E $9.55
FY2029 operating (non GAAP) EPS	$10.50	$13.73	$16.96	FY2026E $12.12
Implied price, end FY2029	$145	$247	$389	FY2029 diluted GAAP EPS times exit P / E, undiscounted
Against close of $227.13	(36)%	9%	71%	Market data, 9 October 2026
Implied price over FY2029 operating EPS	13.8x	18.0x	23.0x	TTM 18.9x; year end FY2021 to FY2025 range 15.4x to 25.6x

Source: 10-Q Q2 2026, 8-K Exhibit 99.1 of 22 July 2026, 10-K FY2025; scenario arithmetic on the inputs listed, SEC filings via SEC-API.io; market data, 9 October 2026

Figure 9.2 Revenue and diluted EPS, FY2021 to FY2025 filed, FY2026 estimate and scenarios to FY2029

Critical factors behind the best case

Table 9.6 Best case factors and the filed data point for each

Factor	Filed data point	Best case input it supports
Contracted revenue	RPO about $68bn at 30 June 2026; deferred income $20.43bn	Growth
Revenue growth in FY2025	Revenue $67.54bn, up 7.6%; Q4 2025 up 12.2%	Revenue growth of 7.5% per year
Software recurring revenue	ARR $24.6bn at Q2 2026, up about $2bn year on year; Hybrid Cloud (Red Hat) revenue up 11.2%; Software is 45% of TTM revenue at a segment profit margin of 33.4%	Growth and operating margin
Acquired software	Confluent acquired on 17 March 2026 for total consideration of $11.60bn; Data revenue up 18.9% in Q2 2026, which the 10-Q links mainly to Confluent	Growth
Mainframe cycle	IBM Z revenue down 42.0% in Q2 2026 (10-Q and release of 22 July 2026); the 14 July 2026 letter puts z17 at nearly 130% of the prior program at the same point	Growth after FY2026
Distributed Infrastructure	Revenue up 37% in Q2 2026; order backlog of nearly $500m; inventories $1.75bn against $1.22bn at 31 December 2025	Growth
Consulting demand	Signings up 5.0% as reported in Q2 2026 and 6.8% in H1 2026; backlog $30.8bn; revenue up 0.2%	Growth
Segment margins	Q2 2026 segment profit margin: Software 32.2% against 31.1%, Consulting 12.1% against 10.6%	Operating margin of 19.5%
Operating pre tax margin	19.2% in Q2 2026, up 0.3 points year on year; FY2025 18.8%; H1 2026 workforce rebalancing charges $424m	Operating margin of 19.5%
Cash generation	H1 2026 operating cash flow $7.77bn against $6.07bn; free cash flow as defined by IBM $4.76bn against $4.81bn	FCF margin of 20.0%
Balance sheet	Debt $61.99bn and cash, restricted cash and marketable securities $8.18bn at 30 June 2026; H1 2026 acquisitions $10.48bn, dividends $3.17bn, stock repurchased for tax withholding $465m	Share count change of 0.5% per year and flat interest expense
New investment	Quantum plan of more than $10bn over five years; $1bn cash contribution to the Anderon wafer foundry; Lightwell commitment of $5bn	Growth and operating margin

Source: 10-Q Q2 2026, 8-K Exhibit 99.1 of 22 July 2026, 8-K Exhibit 99.1 of 14 July 2026, 8-K Exhibit 99.1 of 28 January 2026, SEC filings via SEC-API.io

Sensitivity analysis: exit multiple, operating margin and growth

Exit P / E moves base case implied price between $202 and $303, operating margin between $201 and $286 and revenue growth between $221 and $270.

Figure 9.3 Sensitivity of implied price and FY2029 EPS to growth, exit multiple and operating margin

Figure 9.4 Implied price range by input, each moved from worst case to best case value

Five years of filed history against the scenario inputs

Table 9.7 Filed history of scenario inputs FY2021 to FY2025, FY2026 estimate and scenario values (growth, margins, tax rate and EPS history in Tables 2.4 and 2.5)

Measure	FY2021	FY2022	FY2023	FY2024	FY2025	FY2026E	Worst	Base	Best
IP and other income; FY2022 and FY2024 include pension settlement charges	($261m)	($5.14bn)	$1.77bn	($875m)	$1.41bn	$1.05bn	$1.05bn	$1.05bn	$1.05bn
Interest expense	$1.16bn	$1.22bn	$1.61bn	$1.71bn	$1.94bn	$1.92bn	$1.92bn	$1.92bn	$1.92bn
Dividends, share of FCF; scenarios: FY2029	59%	70%	50%	52%	55%	51%	64%	47%	37%
Diluted share count change	0.9%	0.8%	1.1%	1.6%	1.2%	0.5%	1.5%	1.0%	0.5%
P / E, year end close; FY2026E at 9 October 2026 close; scenarios: exit multiple	21.0x	78.3x	20.1x	34.2x	26.5x	23.8x	18x	22x	27x
Price / operating EPS, same basis	16.9x	15.4x	17.0x	21.3x	25.6x	18.7x	13.8x	18.0x	23.0x

Source: 10-K FY2022, 10-K FY2023, 10-K FY2025, 10-Q Q2 2026, 8-K Exhibit 99.1 of 25 January 2023, 8-K Exhibit 99.1 of 24 January 2024, 8-K Exhibit 99.1 of 28 January 2026, 8-K Exhibit 99.1 of 22 July 2026, SEC filings via SEC-API.io; market data, 9 October 2026

Sources and method

Filings used: 10-K FY2025 with Exhibit 13 and 10-K filings for FY2021 to FY2024; 10-Q Q2 2026 and 10-Q filings from Q1 2025; DEF 14A of 10 March 2026; 14 Forms 8-K from 22 October 2025 to 1 October 2026, including results of 22 July 2026, the letter of 14 July 2026, voting results of 1 May 2026 and note offerings of 2 February 2026 and 14 August 2026; Forms 3, 4 and 144, Schedule 13G and Form 13F filings; 10-K, 10-Q and 8-K filings of seven peers.
SEC filings via SEC-API.io.
Market data as of 9 October 2026.
Earnings calls of 28 January 2026, 22 April 2026 and 22 July 2026.
IT spending forecast from Gartner, 27 July 2026.
Scenario figures are arithmetic outcomes of stated assumptions.

Sources appendix

Every filing referenced in this analysis, sorted by form and then by date. Each accession number links to the filing on sec.gov. Count: 137 filings.

Table A.1 International Business Machines Corporation filings, with ownership filings by holders and insiders

Form	Period or filing date	Accession number
10-K	31 Dec 2025	0000051143-26-000010
10-K	31 Dec 2024	0000051143-25-000015
10-K	31 Dec 2023	0000051143-24-000012
10-K	31 Dec 2022	0001558370-23-002376
10-K	31 Dec 2021	0001558370-22-001584
10-Q	30 Jun 2026	0000051143-26-000078
10-Q	31 Mar 2026	0000051143-26-000038
10-Q	30 Sep 2025	0000051143-25-000064
10-Q	30 Jun 2025	0000051143-25-000052
10-Q	31 Mar 2025	0000051143-25-000032
8-K	1 Oct 2026	0000051143-26-000086
8-K	14 Aug 2026	0001104659-26-097089
8-K	22 Jul 2026	0000051143-26-000077
8-K	14 Jul 2026	0000051143-26-000070
8-K	23 Jun 2026	0000051143-26-000061
8-K	28 May 2026	0000051143-26-000047
8-K	1 May 2026	0000051143-26-000043
8-K	22 Apr 2026	0000051143-26-000036
8-K	1 Mar 2026	0000051143-26-000015
8-K	2 Feb 2026	0001104659-26-009343
8-K	28 Jan 2026	0000051143-26-000004
8-K	27 Jan 2026	0000051143-26-000006
8-K	22 Oct 2025	0000051143-25-000061
8-K	22 Oct 2025	0000051143-25-000063
8-K	23 Jul 2025	0000051143-25-000048
8-K	23 Jul 2025	0000051143-25-000051
8-K	20 Jun 2025	0000950157-25-000533
8-K	2 May 2025	0001104659-25-044116
8-K	23 Apr 2025	0000051143-25-000026
8-K	23 Apr 2025	0000051143-25-000031
8-K	29 Jan 2025	0000051143-25-000005
8-K	29 Jan 2025	0000051143-25-000007
8-K	24 Jan 2024	0000051143-24-000004
8-K	25 Jan 2023	0001558370-23-000529
8-K	24 Jan 2022	0001558370-22-000384
8-K	25 Jun 2021	0000950157-21-000696
DEF 14A	10 Mar 2026	0000051143-26-000025
Schedule 13G	31 Mar 2026	0002100119-26-000629
Schedule 13G/A	30 Jun 2026	0000102909-26-001549
Schedule 13G/A	31 Jan 2025	0000932471-25-000343
13F-HR	30 Jun 2026	0000019617-26-000325
13F-HR	30 Jun 2026	0000070858-26-000442
13F-HR	30 Jun 2026	0000073124-26-000053
13F-HR	30 Jun 2026	0000093751-26-000583
13F-HR	30 Jun 2026	0000895421-26-000243
13F-HR	30 Jun 2026	0001214717-26-000008
13F-HR	30 Jun 2026	0001390777-26-000087
13F-HR	30 Jun 2026	0001422849-26-000113
13F-HR	30 Jun 2026	0002012383-26-003238
13F-HR	30 Jun 2026	0002100119-26-001527
13F-HR	30 Jun 2026	0002100121-26-001018
13F-HR	31 Mar 2026	0000019617-26-000225
13F-HR	31 Mar 2026	0000070858-26-000315
13F-HR	31 Mar 2026	0000073124-26-000036
13F-HR	31 Mar 2026	0000093751-26-000315
13F-HR	31 Mar 2026	0000895421-26-000183
13F-HR	31 Mar 2026	0001214717-26-000006
13F-HR	31 Mar 2026	0001390777-26-000061
13F-HR	31 Mar 2026	0001422849-26-000046
13F-HR	31 Mar 2026	0002100119-26-001311
13F-HR	31 Mar 2026	0002100121-26-000861
13F-HR	31 Dec 2025	0000019617-26-000083
13F-HR	31 Dec 2025	0000070858-26-000116
13F-HR	31 Dec 2025	0000073124-26-000008
13F-HR	31 Dec 2025	0000093751-26-000100
13F-HR	31 Dec 2025	0000102909-26-000031
13F-HR	31 Dec 2025	0000895421-26-000187
13F-HR	31 Dec 2025	0001214717-26-000003
13F-HR	31 Dec 2025	0001390777-26-000018
13F-HR	31 Dec 2025	0001422849-26-000010
13F-HR	31 Dec 2025	0002012383-26-000920
13F-HR	30 Sep 2025	0000070858-26-000025
13F-HR	30 Sep 2025	0000073124-25-000252
13F-HR	30 Sep 2025	0000093751-25-000651
13F-HR	30 Sep 2025	0000102909-25-000353
13F-HR	30 Sep 2025	0000895421-26-000186
13F-HR	30 Sep 2025	0001214717-25-000016
13F-HR	30 Sep 2025	0001390777-25-000160
13F-HR	30 Sep 2025	0001422849-25-000069
13F-HR	30 Sep 2025	0002012383-25-002949
13F-HR/A	30 Sep 2025	0000019617-25-001093
Form 3	8 Oct 2026	0001441756-26-000003
Form 3	5 Mar 2026	0001630253-26-000002
Form 4	1 Oct 2026	0001183474-26-000005
Form 4	1 Oct 2026	0001196985-26-000004
Form 4	1 Oct 2026	0001269971-26-000004
Form 4	1 Oct 2026	0001453149-26-000008
Form 4	1 Oct 2026	0001628797-26-000004
Form 4	1 Oct 2026	0001630253-26-000005
Form 4	1 Oct 2026	0001731814-26-000006
Form 4	1 Oct 2026	0001738987-26-000004
Form 4	1 Oct 2026	0001765271-26-000004
Form 4	1 Oct 2026	0001769389-26-000005
Form 4	1 Oct 2026	0001771933-26-000007
Form 4	1 Oct 2026	0001804183-26-000014
Form 4	28 Aug 2026	0001629898-26-000005
Form 4	28 Aug 2026	0002005007-26-000005
Form 4	2 Jul 2026	0002026599-26-000004
Form 4	4 Jun 2026	0001875415-26-000005
Form 4	1 Apr 2026	0001223690-26-000002
Form 4	27 Feb 2026	0001366945-26-000004
Form 4	27 Feb 2026	0001433640-26-000004
Form 4	27 Feb 2026	0001837510-26-000004
Form 4	25 Feb 2026	0001769389-26-000002
Form 4	25 Feb 2026	0001771933-26-000002
Form 4	21 Feb 2026	0001366945-26-000003
Form 4	21 Feb 2026	0001433640-26-000003
Form 4	21 Feb 2026	0001629898-26-000003
Form 4	21 Feb 2026	0001837510-26-000003
Form 4	30 Jan 2026	0001183474-26-000002
Form 4	5 Nov 2025	0001433640-25-000004
Form 4/A	29 Dec 2025	0001183474-25-000006
Form 4/A	29 Dec 2025	0001183474-25-000007
Form 4/A	29 Dec 2025	0001765271-25-000005
Form 4/A	29 Dec 2025	0001765271-25-000006
Form 144	26 Aug 2026	0001969223-26-000960

Table A.2 Filings of peers and other companies

Company	Form	Period or filing date	Accession number
Accenture	10-K	31 Aug 2025	0001467373-25-000217
Accenture	10-Q	31 May 2026	0001467373-26-000032
Accenture	10-Q	31 May 2025	0001467373-25-000169
Accenture	8-K	1 Oct 2026	0001467373-26-000037
Cisco Systems	10-K	25 Jul 2026	0000858877-26-000132
Cognizant	10-K	31 Dec 2025	0001058290-26-000008
Cognizant	10-Q	30 Jun 2026	0001058290-26-000031
Cognizant	10-Q	30 Jun 2025	0001058290-25-000267
Confluent	8-K	17 Mar 2026	0001104659-26-029071
Confluent	8-K	8 Dec 2025	0001104659-25-119081
Hewlett Packard Enterprise	10-K	31 Oct 2025	0001645590-25-000130
Hewlett Packard Enterprise	10-Q	31 Jul 2026	0001645590-26-000080
Hewlett Packard Enterprise	10-Q	31 Jul 2025	0001645590-25-000101
Microsoft	10-K	30 Jun 2026	0001193125-26-323660
Microsoft	10-K	30 Jun 2025	0000950170-25-100235
Oracle	10-K	31 May 2026	0001193125-26-277521
Oracle	10-Q	31 Aug 2026	0001193125-26-389274
Oracle	10-Q	31 Aug 2025	0001193125-25-200095
Salesforce	10-K	31 Jan 2026	0001108524-26-000060
Salesforce	10-Q	31 Jul 2026	0001108524-26-000190
Salesforce	10-Q	31 Jul 2025	0001108524-25-000088

This report is for information only and is not financial advice.

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