IBM : 2024 1Q Charts

1Q 2024 Earnings

April 24, 2024 ibm.com/investor

Forward-looking statements and non-GAAP information

Certain comments made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Forward-

looking statements are based on the company's current assumptions regarding

future business and financial performance. Those statements by their nature address matters that are uncertain to different degrees. Those statements involve a number of factors that could cause actual results to differ materially. Additional information concerning these factors is contained in the Company's filings with the SEC. Copies are available from the SEC, from the IBM website, or from IBM Investor Relations. Statements in this communication regarding IBM and HashiCorp that are forward-looking may include projections as to closing date for the transaction, the extent of, and the time necessary to obtain, the regulatory approvals required for the transaction, the anticipated benefits of the transaction, the impact of the transaction on IBM's business, the synergies from

the transaction or the combined company's future operating results. Any

forward-looking statement made during this presentation speaks only as of the date on which it is made. The company assumes no obligation to update or revise any forward-looking statements except as required by law; these charts and the associated remarks and comments are integrally related and are intended to be presented and understood together.

In an effort to provide additional and useful information regarding the company's financial results and other financial information as determined by generally accepted accounting principles (GAAP), the company also discusses, in its

earnings press release and presentation materials, certain non-GAAP information including operating earnings and other "operating" financial measures, free cash flow, net cash from operating activities excluding IBM Financing receivables, adjusted EBITDA and adjustments for currency. The rationale for management's use of this non-GAAP information is included as Exhibit 99.2 to the company's Form 8-K submitted to the SEC on April 24, 2024. The reconciliation of non- GAAP information to GAAP is included in the press release within Exhibit 99.1 to the company's Form 8-K submitted to the SEC on April 24, 2024, as well as on

the slides entitled "Non-GAAP supplemental materials" in this presentation.

To provide better transparency, the company also discusses management performance metrics including annual recurring revenue, annual bookings, signings, and book-to-bill. The metrics are used to monitor the performance of the business and are viewed as useful decision-making information for management and stakeholders. The rationale for management's use of these performance metrics and their calculation are included in Exhibit 99.2 to the company's Form 8-K submitted to the SEC on April 24, 2024, and in the Management Discussion section of the company's 2023 Annual Report, which is Exhibit 13 to the Form 10-K submitted with the SEC on February 26, 2024. For

other related information please visit the Company's investor relations website

at:

https://www.ibm.com/investor/events/earnings-1Q24

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Arvind Krishna

Chairman and Chief

Executive Officer

James Kavanaugh

SVP, Finance & Operations

and Chief Financial Officer

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CEO perspective

"We began the year with solid revenue and free cash flow growth, reflecting the strength of our hybrid cloud and AI strategy. We continue to capitalize on the excitement and demand for enterprise AI from our clients. Our book of business for watsonx and generative AI again showed strong momentum, growing quarter over quarter, and has now eclipsed one billion dollars since we launched watsonx in mid-2023. As a result, for the full year, we continue to expect revenue performance in line with our mid-single digit model and about $12 billion in free cash flow.

To strengthen our position in today's hybrid cloud and AI- driven technology landscape, we also announced our intent to acquire HashiCorp. IBM's and HashiCorp's combined

portfolios will help clients manage growing application and infrastructure complexity and create a comprehensive hybrid cloud platform designed for the AI era."

Arvind Krishna

IBM Chairman and CEO

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Creates Leading End-to-End Hybrid and Multi-Cloud Platform

Infrastructure complexity is increasing

…driven by an explosion of applications across hybrid cloud environments, magnified by AI

This combination creates a comprehensive platform

• to include application, infrastructure and security lifecycle management - a total client solution

And builds on IBM's commitment

…to industry collaboration, developer communities and

open-source hybrid cloud and AI innovation

Leading Provider of Hybrid

Cloud & AI Solutions

+

Leading Provider of

Infrastructure & Security

Automation

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Together We Unlock Value and Drive Growth

Accelerates Growth in	Enhances Ability to
Focus Areas	Capture TAM

Attractive Financial Opportunity

• Synergies across Red Hat, watsonx, data security, IT automation and Consulting
• Extends HashiCorp's reach and monetization potential with IBM's go-to-market scale and global footprint

• Delivers comprehensive hybrid and multi-cloud capabilities to enterprise clients
• Enhances opportunity to address total cloud TAM of ~$1.1T, growing at high-teens rate per year*

• Accelerates IBM's growth profile over time
• Substantial operating efficiencies
• Expected to be accretive to Adjusted EBITDA within the first full year, post close, and free cash flow in year two

*IDC Worldwide Black Book Live Edition, March 2024 (V1 2024) - global whole cloud TAM of	6
$1.1 trillion in 2023, with a compound annual growth rate in the high teens through 2027.

CEO perspective

"We began the year with solid revenue and free cash flow growth, reflecting the strength of our hybrid cloud and AI strategy. We continue to capitalize on the excitement and demand for enterprise AI from our clients. Our book of business for watsonx and generative AI again showed strong momentum, growing quarter over quarter, and has now eclipsed one billion dollars since we launched watsonx in mid-2023. As a result, for the full year, we continue to expect revenue performance in line with our mid-single digit model and about $12 billion in free cash flow.

To strengthen our position in today's hybrid cloud and AI- driven technology landscape, we also announced our intent to acquire HashiCorp. IBM's and HashiCorp's combined

portfolios will help clients manage growing application and infrastructure complexity and create a comprehensive hybrid cloud platform designed for the AI era."

Arvind Krishna

IBM Chairman and CEO

1Q24 Performance

Generative AI

Investments, innovation and clients

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Financial highlights

1Q24

$14.5B	$1.9B
Revenue	Free cash flow

"In the quarter we continued to focus on the fundamentals of our business, growing revenue, expanding operating margins, improving profit performance and increasing productivity and operating leverage.

These fundamentals, combined with our strong cash generation, position us to invest both organically and through strategic acquisitions like today's announcement with HashiCorp. At the same time, we continue to return value to

shareholders through our dividend."

James Kavanaugh

IBM SVP & CFO

3%	$0.6B
Revenue growth	Free cash flow yr/yr
>75%	100bps
Revenue mix in	Gross margin expansion
software and consulting	(operating)
$19.3B	130bps
Cash and marketable	Pre-tax margin expansion
securities	(operating)

Revenue growth rates @CC

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Software

Strong growth across Hybrid Platform & Solutions and Transaction Processing

Strength in OpenShift, Apptio and watsonx

Solid and growing recurring revenue base; ARR* of $13.9 billion, +8% yr/yr

Continued investment in innovation

1Q24 results; revenue growth rates @CC

*Annual recurring revenue for Hybrid Platform & Solutions, growth rate @CC

$5.9B +6%

Revenue

Revenue growth

Revenue categories
Transaction	Hybrid Platform
Processing	& Solutions
+4% yr/yr	+7% yr/yr
	Red Hat	+9%
	Automation	+13%
	Data & AI	+1%
	Security	(3%)

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Consulting

Continued strength in technology-driven transformations

Growth in strategic partnerships and Red Hat practice

Book-to-bill ratio of >1.15 for the last year

Reduced yield as clients tightened discretionary spend

$5.2B +2%

Revenue

Revenue growth

Revenue categories
Application	Business
Operations	Transformation
(1%) yr/yr	+3% yr/yr

Technology Consulting +3% yr/yr

1Q24 results; revenue growth rates @CC

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