v3.25.2
Revenue Recognition
 6 Months Ended
Jun. 30, 2025
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition:
Disaggregation of Revenue
In the first quarter of 2025, the company made changes to the reported revenue categories within its Software and Consulting reportable segments to better reflect the market opportunities and how IBM addresses them. Beginning January 1, 2025, the company reports revenue for Hybrid Cloud (Red Hat), Automation, Data and Transaction Processing within Software; and it no longer reports revenue for Hybrid Platform & Solutions. Within Consulting, the company reports revenue for Strategy and Technology and Intelligent Operations. These changes did not impact the company's Consolidated Financial Statements or its reportable segments.
The following tables provide details of revenue by major products/service offerings and revenue by geography.
Revenue by Major Products/Service Offerings
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)2025
2024 (1)
2025
2024 (1)
Hybrid Cloud$1,796 $1,547 $3,483 $3,057 
Automation
1,883 1,620 3,467 3,012 
Data
1,499 1,378 2,736 2,550 
Transaction Processing
2,208 2,194 4,037 4,019 
Total Software$7,387 $6,739 $13,722 $12,637 
Strategy and Technology
2,920 2,895 5,702 5,757 
Intelligent Operations
2,395 2,284 4,680 4,608 
Total Consulting$5,314 $5,179 $10,382 $10,365 
Hybrid Infrastructure2,866 2,360 4,512 4,163 
Infrastructure Support1,275 1,285 2,515 2,558 
Total Infrastructure$4,142 $3,645 $7,027 $6,721 
Financing (2)
166 169 357 362 
Other (3)
(31)38 30 146 
Total revenue$16,977 $15,770 $31,519 $30,231 
(1)Prior-year amounts recast to reflect January 2025 changes to the reported revenue categories within Software and Consulting segments.
(2)Contains lease and loan financing arrangements which are not subject to the guidance on revenue from contracts with customers.
(3)Includes reductions in revenue for estimated residual value less related unearned income on sales-type leases, which reflects the new z17 launch in June 2025. Refer to note A, "Significant Accounting Policies," in the company's 2024 Annual Report for additional information.
Revenue by Geography
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)20252024 20252024
Americas$8,462 $7,979 $15,668 $15,275 
Europe/Middle East/Africa5,413 4,722 9,965 9,035 
Asia Pacific3,103 3,069 5,886 5,922 
Total$16,977 $15,770 $31,519 $30,231 
Remaining Performance Obligations
The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for
convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency.
At June 30, 2025, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was approximately $66 billion. Approximately 69 percent of the amount is expected to be recognized as revenue in the subsequent two years, approximately 27 percent in the subsequent three to five years and the balance thereafter.
Revenue Recognized for Performance Obligations Satisfied (or Partially Satisfied) in Prior Periods
For the three and six months ended June 30, 2025, revenue recognized for performance obligations satisfied or partially satisfied in prior periods was immaterial.
Reconciliation of Contract Balances
The following table provides information about notes and accounts receivable — trade, contract assets and deferred income balances.
(Dollars in millions)At June 30, 2025At December 31, 2024
Notes and accounts receivable — trade (net of allowances of $109 in 2025 and $114 in 2024)
$5,974 $6,804 
Contract assets (1)
$495 $433 
Deferred income (current)$15,022 $13,907 
Deferred income (noncurrent)$3,913 $3,622 
(1)Included within prepaid expenses and other current assets in the Consolidated Balance Sheet.
The amount of revenue recognized during the six months ended June 30, 2025 that was included within the deferred income balance at December 31, 2024 was $7.8 billion and was primarily related to software and services.
The following table provides roll forwards of the notes and accounts receivable–trade allowance for expected credit losses for the six months ended June 30, 2025 and the year ended December 31, 2024.
(Dollars in millions)    
January 1, 2025Additions / (Releases)
Write-offs (1)
Foreign currency and otherJune 30, 2025
$114$(2)$(14)$11$109
January 1, 2024Additions / (Releases)
Write-offs (1)
Foreign currency and otherDecember 31, 2024
$192$(2)$(78)$2$114
(1)The majority of the write-offs during the period related to receivables which had been previously reserved.
The contract assets allowance for expected credit losses was not material in any of the periods presented.