INTERNATIONAL BUSINESS MACHINES CORP (Form: 8-K, Received: 10/19/2020 16:21:29)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: October 19, 2020

(Date of earliest event reported)

INTERNATIONAL BUSINESS MACHINES CORPORATION

(Exact name of registrant as specified in its charter)


New York	1-2360	13-0871985
(State of Incorporation)	(Commission File Number)	(IRS employer Identification No.)

One New Orchard Road

Armonk, New York

10504

(Address of principal executive offices)

(Zip Code)

914-499-1900

(Registrant’s telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Capital stock, par value $.20 per share	IBM	New York Stock Exchange
		NYSE Chicago
2.750% Notes due 2020	IBM 20B	New York Stock Exchange
1.875% Notes due 2020	IBM 20A	New York Stock Exchange
0.500% Notes due 2021	IBM 21B	New York Stock Exchange
2.625% Notes due 2022	IBM 22A	New York Stock Exchange
1.250% Notes due 2023	IBM 23A	New York Stock Exchange
0.375% Notes due 2023	IBM 23B	New York Stock Exchange
1.125% Notes due 2024	IBM 24A	New York Stock Exchange
2.875% Notes due 2025	IBM 25A	New York Stock Exchange
0.950% Notes due 2025	IBM 25B	New York Stock Exchange
0.875% Notes due 2025	IBM 25C	New York Stock Exchange
0.300% Notes due 2026	IBM 26B	New York Stock Exchange
1.250% Notes due 2027	IBM 27B	New York Stock Exchange
0.300% Notes due 2028	IBM 28B	New York Stock Exchange
1.750% Notes due 2028	IBM 28A	New York Stock Exchange
1.500% Notes due 2029	IBM 29	New York Stock Exchange
1.750% Notes due 2031	IBM 31	New York Stock Exchange
0.650% Notes due 2032	IBM 32A	New York Stock Exchange
1.200% Notes due 2040	IBM 40	New York Stock Exchange
7.00% Debentures due 2025	IBM 25	New York Stock Exchange
6.22% Debentures due 2027	IBM 27	New York Stock Exchange
6.50% Debentures due 2028	IBM 28	New York Stock Exchange
7.00% Debentures due 2045	IBM 45	New York Stock Exchange
7.125% Debentures due 2096	IBM 96	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

The registrant’s press release dated October 19, 2020, regarding its financial results for the periods ended September 30, 2020, including consolidated financial statements for the periods ended September 30, 2020, is Exhibit 99.1 of this Form 8-K.

In an effort to provide investors with additional information regarding the company’s results as determined by generally accepted accounting principles (GAAP), the company has disclosed in the attached press release certain non-GAAP information which management believes provides useful information to investors. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included in the press release, which is Exhibit 99.1 to this Form 8-K. The rationale for management’s use of non-GAAP measures is included in Exhibit 99.2 to this Form 8-K.

The information in this Item 2.02, including the corresponding Exhibits 99.1 and 99.2, is hereby filed.

Item 7.01. Regulation FD Disclosure.

The slides for IBM’s Chief Executive Officer Arvind Krishna and Chief Financial Officer Jim Kavanaugh’s third-quarter 2020 earnings presentation on October 19, 2020, are Exhibit 99.3 to this Form 8-K.

The information in this Item 7.01, including the corresponding Exhibit 99.3, is being furnished with the Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are being filed as part of this report:


Exhibit No.		Description of Exhibit
99.1		Earnings Release of the Registrant, dated October 19, 2020
99.2		Non-GAAP Financial Information
104		Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

The following exhibit is being furnished as part of this report:


Exhibit No.		Description of Exhibit
99.3		Earnings Presentation of the Registrant, dated October 19, 2020

IBM’s web site (www.ibm.com) contains a significant amount of information about IBM, including financial and other information for investors (www.ibm.com/investor/). IBM encourages investors to visit its various web sites from time to time, as information is updated and new information is posted.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


Date: October 19, 2020


	By:	/s/ Robert F. Del Bene
		Robert F. Del Bene
		Vice President and Controller

Exhibit 99.1

IBM REPORTS 2020 THIRD-QUARTER RESULTS

Strong Cloud Revenue Growth; Gross Margin Expansion; Solid Balance Sheet and Liquidity Position

ARMONK, N.Y., October 19, 2020 . . . IBM (NYSE: IBM) today announced third-quarter 2020 earnings results.

“The strong performance of our cloud business, led by Red Hat, underscores the growing client adoption of our open hybrid cloud platform," said Arvind Krishna, IBM chief executive officer. "Separating the managed infrastructure services business creates a market-leading standalone company and further sharpens our focus on IBM's open hybrid cloud platform and AI capabilities. This will accelerate our growth strategy and better position IBM to seize the $1 trillion hybrid cloud opportunity.”

Highlights for the third quarter include:

●	GAAP EPS from continuing operations of $1.89

●	Operating (non-GAAP) EPS of $2.58

●	Revenue of $17.6 billion, down 2.6 percent (down 3.1 percent adjusting for divested businesses and currency)

-- Cloud & Cognitive Software revenue up 7 percent (up 6 percent adjusting for currency)

●	Total cloud revenue of $6.0 billion, up 19 percent

-- Total cloud revenue of $24.4 billion over the last 12 months, up 22 percent (up 25 percent adjusting for divested businesses and currency)

●	Red Hat revenue up 17 percent (up 16 percent adjusting for currency), normalized for historical comparability

●	GAAP gross profit margin of 48 percent, up 180 basis points; Operating (non-GAAP) gross profit margin of 49 percent, up 160 basis points

●	Net cash from operating activities of $15.8 billion and free cash flow of $10.8 billion, over the last 12 months


	THIRD QUARTER 2020
										Pre-tax		Gross
	Diluted			Net			Pre-tax			Income		Profit
	EPS			Income			Income			Margin		Margin
GAAP from Continuing Operations	$	1.89		$	1.7B		$	1.8B		10.4	%	48.0	%
Year/Year		1	%		2	%		20	%	2.0	Pts	1.8	Pts

Operating (Non-GAAP)	$	2.58		$	2.3B		$	2.6B		14.7	%	49.0	%
Year/Year		(4)	%		(3)	%		8	%	1.4	Pts	1.6	Pts

“In the third quarter we continued to deliver strong gross profit margin expansion, generated solid free cash flow and maintained a sound capital structure with ample liquidity," said James Kavanaugh, IBM senior vice president and chief financial officer. "We have the necessary financial flexibility to increase our investments in hybrid cloud and AI technology innovation and skills, while remaining committed to our long-standing dividend policy.”

Cash Flow and Balance Sheet

In the third quarter, the company generated net cash from operating activities of $4.3 billion, or $1.9 billion excluding Global Financing receivables. IBM’s free cash flow was $1.1 billion. The company returned $1.5 billion to shareholders in dividends.

IBM ended the third quarter with $15.8 billion of cash on hand which includes marketable securities, up $6.7 billion from year-end 2019. Debt, including Global Financing debt of $20.9 billion, totaled $65.4 billion.

Segment Results for Third Quarter

Segment results reflect growing adoption of IBM's open hybrid cloud platform while clients continue to shift priorities to preserve cash and maintain operational stability.

●

Cloud & Cognitive Software (includes Cloud & Data Platforms which includes Red Hat, Cognitive Applications and Transaction Processing Platforms) — revenues of $5.6 billion, up 7 percent (up 6 percent adjusting for currency). Cloud & Data Platforms, grew 20 percent (up 19 percent adjusting for currency) led by Red Hat. Cognitive Applications grew 1 percent (flat adjusting for currency), led by Security and Supply Chain. Transaction Processing Platforms declined. Cloud revenue grew more than 60 percent.

●

Global Business Services (includes Consulting, Application Management and Global Process Services) — revenues of $4.0 billion, down 5 percent (down 6 percent adjusting for currency), driven by declines in Application Management and Consulting. Cloud revenue up 10 percent (up 9 percent adjusting for currency). Gross profit margin up 190 basis points.

●	Global Technology Services (includes Infrastructure & Cloud Services and Technology Support Services) — revenues of $6.5 billion, down 4 percent. Cloud revenue up 9 percent (up 8 percent adjusting for currency).

●	Systems (includes Systems Hardware and Operating Systems Software) — revenues of $1.3 billion, down 15 percent (down 16 percent adjusting for currency), driven by declines in IBM Z and Storage Systems, reflecting the impact of product cycle dynamics.

●	Global Financing (includes financing and used equipment sales) — revenues of $273 million, down 20 percent, reflecting the wind-down of OEM commercial financing. Gross profit margin up 60 basis points.

Year-To-Date 2020 Results

Year-to-date results reflect transaction-related impacts associated with the Red Hat acquisition, which closed in July 2019.

Consolidated diluted earnings per share was $4.72 compared with $6.45 per diluted share for the 2019 period, a decrease of 27 percent. Consolidated net income was $4.2 billion, down 27 percent year to year. Revenues for the nine-month period ended September 30, 2020 totaled $53.3 billion, a decrease of 4 percent year to year (down 2 percent adjusting for divested businesses and currency) compared with $55.4 billion for the first nine months of 2019.

Operating (non-GAAP) diluted earnings per share from continuing operations was $6.60 compared with $8.10 per diluted share for the 2019 period, a decrease of 19 percent. Operating (non-GAAP) net income for the nine months ended September 30, 2020 was $5.9 billion compared with $7.2 billion in the prior-year period, a decrease of 18 percent.

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of 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. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; the company’s failure to meet growth and productivity objectives; a failure of the company’s innovation initiatives; damage to the company’s reputation; risks from investing in growth opportunities; failure of the company’s intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; cybersecurity and data privacy considerations; fluctuations in financial results; the possibility that the proposed separation of the managed infrastructure services unit of the company’s Global Technology Services segment will not be completed within the anticipated time period or at all, the possibility of disruption or unanticipated costs in connection with the proposed separation or the possibility that the separation will not achieve its intended benefits; impact of local legal, economic, political, health and other conditions; adverse effects from environmental matters, tax matters and the company’s pension plans; ineffective internal controls; the company’s use of accounting estimates; impairment of the company’s goodwill or amortizable intangible assets; the company’s ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; reliance on third party distribution channels and ecosystems; the company’s ability to successfully manage acquisitions, alliances and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities, and higher debt levels; legal proceedings and investigatory risks; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company’s Form 10-Qs, Form 10-K and in the company’s other filings with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.

Presentation of Information in this Press Release

IBM results —

●	adjusting for currency (i.e., at constant currency);

●	total revenue and cloud revenue adjusting for divested businesses and currency;

●	Red Hat revenue normalized for historical comparability;

●	presenting operating (non-GAAP) earnings per share amounts and related income statement items;

●	adjusting for free cash flow;

●	net cash from operating activities, excluding Global Financing receivables.

The rationale for management’s use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.

Conference Call and Webcast

IBM’s regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. EDT, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-3q20. Presentation charts will be available shortly before the Webcast.

Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).


Contact:	IBM
	Edward Barbini, 914-499-6565
	barbini@us.ibm.com

	John Bukovinsky, 732-618-3531
	jbuko@us.ibm.com

INTERNATIONAL BUSINESS MACHINES CORPORATION

COMPARATIVE FINANCIAL RESULTS

(Unaudited; Dollars in millions except per share amounts)


	Three Months Ended							Nine Months Ended
	September 30,							September 30,
	2020			2019				2020			2019
REVENUE
Cloud & Cognitive Software	$	5,553		$	5,201	*		$	16,540		$	15,731	*
Global Business Services		3,965			4,160	*			11,992			12,513	*
Global Technology Services		6,462			6,700				19,245			20,412
Systems		1,257			1,481				4,477			4,562
Global Financing		273			343				837			1,100
Other		50			142	*			163			1,053	*
TOTAL REVENUE		17,560			18,028				53,253			55,370

GROSS PROFIT		8,430			8,336				25,052			25,388

GROSS PROFIT MARGIN
Cloud & Cognitive Software		77.1	%		74.5	%	*		76.6	%		76.0	%	*
Global Business Services		32.9	%		31.1	%	*		29.5	%		27.8	%	*
Global Technology Services		35.0	%		35.8	%			34.4	%		34.6	%
Systems		51.2	%		52.6	%			53.7	%		51.1	%
Global Financing		37.5	%		36.9	%			39.0	%		35.6	%

TOTAL GROSS PROFIT MARGIN		48.0	%		46.2	%			47.0	%		45.9	%

EXPENSE AND OTHER INCOME
S,G&A		4,647			5,024				15,849			15,171
R,D&E		1,515			1,553				4,722			4,393
Intellectual property and custom development income		(134)			(166)				(453)			(489)
Other (income) and expense		253			(31)				614			(850)
Interest expense		323			432				971			990
TOTAL EXPENSE AND OTHER INCOME		6,603			6,813				21,704			19,215

INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		1,827			1,522				3,348			6,173
Pre-tax margin		10.4	%		8.4	%			6.3	%		11.1	%
Provision for / (Benefit from) income taxes		128			(151)				(888)			407
Effective tax rate		7.0	%		(9.9)	%			(26.5)	%		6.6	%

INCOME FROM CONTINUING OPERATIONS	$	1,698		$	1,673			$	4,237		$	5,766
DISCONTINUED OPERATIONS
Income / (Loss) from discontinued operations, net of taxes		(1)			(1)				(2)			(5)

NET INCOME	$	1,698		$	1,672			$	4,234		$	5,761

EARNINGS / (LOSS) PER SHARE OF COMMON STOCK
Assuming Dilution
Continuing Operations	$	1.89		$	1.87			$	4.72		$	6.46
Discontinued Operations	$	0.00		$	0.00			$	0.00		$	(0.01)
TOTAL	$	1.89		$	1.87			$	4.72		$	6.45

Basic
Continuing Operations	$	1.90		$	1.89			$	4.76		$	6.50
Discontinued Operations	$	0.00		$	0.00			$	0.00		$	(0.01)
TOTAL	$	1.90		$	1.89			$	4.76		$	6.49

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M’s)
Assuming Dilution		897.3			892.8				895.8			892.5
Basic		891.4			886.0				889.6			887.3

*Recast to conform with 2020 presentation.

INTERNATIONAL BUSINESS MACHINES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)


	At		At
	September 30,		December 31,
(Dollars in Millions)	2020		2019
ASSETS:

Current Assets:
Cash and cash equivalents	$	14,393	$	8,172
Restricted cash		160		141
Marketable securities		1,200		696
Notes and accounts receivable - trade, net		6,099		7,870
Short-term financing receivables, net		10,848		14,192
Other accounts receivable, net		923		1,733
Inventories		1,949		1,619
Deferred costs		2,084		1,896
Prepaid expenses and other current assets		2,188		2,101
Total Current Assets		39,845		38,420

Property, plant and equipment, net		9,958		10,010
Operating right-of-use assets, net		4,715		4,996
Long-term financing receivables, net		6,423		8,712
Prepaid pension assets		7,636		6,865
Deferred costs		2,438		2,472
Deferred taxes		8,852		5,182
Goodwill		58,355		58,222
Intangibles, net		13,962		15,235
Investments and sundry assets		1,944		2,074
Total Assets	$	154,128	$	152,186

LIABILITIES:

Current Liabilities:
Taxes	$	2,375	$	2,839
Short-term debt		10,285		8,797
Accounts payable		3,985		4,896
Deferred income		11,681		12,026
Operating lease liabilities		1,336		1,380
Other liabilities		8,332		7,763
Total Current Liabilities		37,993		37,701

Long-term debt		55,129		54,102
Retirement related obligations		16,732		17,142
Deferred income		3,820		3,851
Operating lease liabilities		3,635		3,879
Other liabilities		15,484		14,526
Total Liabilities		132,794		131,202

EQUITY:

IBM Stockholders’ Equity:
Common stock		56,366		55,895
Retained earnings		162,806		162,954
Treasury stock — at cost		(169,380)		(169,413)
Accumulated other comprehensive income/(loss)		(28,584)		(28,597)
Total IBM Stockholders’ Equity		21,208		20,841

Noncontrolling interests		126		144
Total Equity		21,334		20,985

Total Liabilities and Equity	$	154,128	$	152,186

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW ANALYSIS

(Unaudited)


									Trailing Twelve
	Three Months Ended				Nine Months Ended				Months Ended
	September 30,				September 30,				September 30,
(Dollars in Millions)	2020		2019		2020		2019		2020
Net Cash Provided by Operating Activities per GAAP:	$	4,286	$	3,619	$	12,337	$	11,319	$	15,789

Less: change in Global Financing (GF) Receivables		2,353		1,135		5,324		3,712		2,104
Capital Expenditures, Net		(829)		(681)		(2,262)		(1,725)		(2,907)

Free Cash Flow		1,104		1,803		4,751		5,882		10,778

Acquisitions		(17)		(32,587)		(37)		(32,630)		(37)
Divestitures		(248)		39		510		927		658
Dividends		(1,453)		(1,436)		(4,343)		(4,269)		(5,780)
Share Repurchase		—		(126)		—		(1,361)		—
Non-GF Debt		1,019		(4,967)		4,977		28,432		(663)
Other (includes GF Net Receivables and GF Debt)		1,098		1,823		886		1,755		(160)

Change in Cash, Cash Equivalents, Restricted Cash and Short-term Marketable Securities	$	1,503	$	(35,451)	$	6,744	$	(1,265)	$	4,796

INTERNATIONAL BUSINESS MACHINES CORPORATION

CASH FLOW

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in Millions)	2020		2019		2020		2019
Net Income from Operations	$	1,698	$	1,672	$	4,234	$	5,761
Depreciation/Amortization of Intangibles		1,683		1,669		4,996		4,409
Stock-based Compensation		222		220		658		468
Working Capital / Other		(1,670)		(1,077)		(2,874)		(3,031)
Global Financing A/R		2,353		1,135		5,324		3,712
Net Cash Provided by Operating Activities	$	4,286	$	3,619	$	12,337	$	11,319
Capital Expenditures, net of payments & proceeds		(829)		(681)		(2,262)		(1,725)
Divestitures, net of cash transferred		(248)		39		510		927
Acquisitions, net of cash acquired		(17)		(32,587)		(37)		(32,630)
Marketable Securities / Other Investments, net		762		2,856		(680)		6,365
Net Cash Provided by / (Used in) Investing Activities	$	(332)	$	(30,373)	$	(2,470)	$	(27,064)
Debt, net of payments & proceeds		(252)		(6,608)		1,067		20,465
Dividends		(1,453)		(1,436)		(4,343)		(4,269)
Common Stock Repurchases		—		(126)		—		(1,361)
Common Stock Transactions - Other		16		(7)		(152)		(118)
Net Cash Provided by / (Used in) Financing Activities	$	(1,689)	$	(8,177)	$	(3,428)	$	14,717
Effect of Exchange Rate changes on Cash		101		(378)		(200)		(352)
Net Change in Cash, Cash Equivalents and Restricted Cash	$	2,366	$	(35,310)	$	6,239	$	(1,379)

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

(Unaudited)


	Three Months Ended September 30, 2020
	Cloud &			Global			Global
	Cognitive			Business			Technology						Global
(Dollars in Millions)	Software			Services			Services			Systems			Financing
Revenue
External	$	5,553		$	3,965		$	6,462		$	1,257		$	273
Internal		875			49			312			240			208
Total Segment Revenue	$	6,428		$	4,014		$	6,774		$	1,497		$	480

Pre-tax Income / (Loss) from Continuing Operations		1,834			570			399			(37)			196

Pre-tax Margin		28.5	%		14.2	%		5.9	%		(2.5)	%		40.7	%

Change YTY Revenue - External		6.8	%		(4.7)	%		(3.6)	%		(15.1)	%		(20.5)	%
Change YTY Revenue - External @constant currency		5.8	%		(5.8)	%		(4.3)	%		(16.0)	%		(20.3)	%


	Three Months Ended September 30, 2019
	Cloud &			Global			Global
	Cognitive			Business			Technology						Global
(Dollars in Millions)	Software*			Services*			Services			Systems			Financing
Revenue
External	$	5,201		$	4,160		$	6,700		$	1,481		$	343
Internal		686			70			287			195			302
Total Segment Revenue	$	5,888		$	4,230		$	6,988		$	1,676		$	645

Pre-tax Income / (Loss) from Continuing Operations		1,290			567			490			39			275

Pre-tax Margin		21.9	%		13.4	%		7.0	%		2.3	%		42.6	%

* Recast to conform with 2020 presentation.

INTERNATIONAL BUSINESS MACHINES CORPORATION

SEGMENT DATA

(Unaudited)


	Nine Months Ended September 30, 2020
	Cloud &			Global			Global
	Cognitive			Business			Technology						Global
(Dollars in Millions)	Software			Services			Services			Systems			Financing
Revenue
External	$	16,540		$	11,992		$	19,245		$	4,477		$	837
Internal		2,431			150			911			628			660
Total Segment Revenue	$	18,971		$	12,142		$	20,155		$	5,106		$	1,497

Pre-tax Income / (Loss) from Continuing Operations		4,475			1,203			471			(7)			566

Pre-tax Margin		23.6	%		9.9	%		2.3	%		(0.1)	%		37.8	%

Change YTY Revenue - External		5.1	%		(4.2)	%		(5.7)	%		(1.9)	%		(23.9)	%
Change YTY Revenue - External @constant currency		5.7	%		(3.7)	%		(4.6)	%		(1.6)	%		(22.8)	%


	Nine Months Ended September 30, 2019
	Cloud &			Global			Global
	Cognitive			Business			Technology						Global
(Dollars in Millions)	Software*			Services*			Services			Systems			Financing
Revenue
External	$	15,731		$	12,513		$	20,412		$	4,562		$	1,100
Internal		2,135			213			879			528			884
Total Segment Revenue	$	17,865		$	12,726		$	21,291		$	5,091		$	1,983

Pre-tax Income / (Loss) from Continuing Operations		5,082			1,154			1,000			(101)			803

Pre-tax Margin		28.4	%		9.1	%		4.7	%		(2.0)	%		40.5	%

* Recast to conform with 2020 presentation.

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION

(Unaudited; Dollars in millions except per share amounts)


	Three Months Ended September 30, 2020
	Continuing Operations
				Acquisition-			Retirement-			Tax
				Related			Related			Reform			Operating
	GAAP			Adjustments*			Adjustments**			Impacts			(Non-GAAP)
Gross Profit	$	8,430		$	180		$	—		$	—		$	8,610

Gross Profit Margin		48.0	%		1.0	Pts		—			—			49.0	%

S,G&A		4,647			(279)			—			—			4,367

R,D&E		1,515			—			—			—			1,515

Other (Income) & Expense		253			(1)			(291)			—			(39)

Interest Expense		323			—			—			—			323

Total Expense & Other (Income)		6,603			(280)			(291)			—			6,032

Pre-tax Income from Continuing Operations		1,827			460			291			—			2,578

Pre-tax Income Margin from Continuing Operations		10.4	%		2.6	Pts		1.7	Pts		—			14.7	%

Provision for / (Benefit from) Income Taxes***		128			102			54			(21)			263

Effective Tax Rate		7.0	%		2.7	Pts		1.3	Pts		(0.8)	Pts		10.2	%

Income from Continuing Operations		1,698			358			237			21			2,315

Income Margin from Continuing Operations		9.7	%		2.0	Pts		1.4	Pts		0.1	Pts		13.2	%

Diluted Earnings / (Loss) Per Share: Continuing Operations	$	1.89		$	0.40		$	0.26		$	0.03		$	2.58


	Three Months Ended September 30, 2019
	Continuing Operations
				Acquisition-			Retirement-			Tax
				Related			Related			Reform			Operating
	GAAP			Adjustments*			Adjustments**			Impacts			(Non-GAAP)
Gross Profit	$	8,336		$	209		$	—		$	—		$	8,545

Gross Profit Margin		46.2	%		1.2	Pts		—			—			47.4	%

S,G&A		5,024			(451)			—			—			4,573

R,D&E		1,553			(53)			—			—			1,500

Other (Income) & Expense		(31)			10			(145)			—			(166)

Interest Expense		432			(24)			—			—			408

Total Expense & Other (Income)		6,813			(518)			(145)			—			6,150

Pre-tax Income from Continuing Operations		1,522			727			145			—			2,395

Pre-tax Income Margin from Continuing Operations		8.4	%		4.0	Pts		0.8	Pts		—			13.3	%

Provision for / (Benefit from) Income Taxes***		(151)			142			16			(5)			1

Effective Tax Rate		(9.9)	%		8.9	Pts		1.3	Pts		(0.2)	Pts		0.1	%

Income from Continuing Operations		1,673			586			130			5			2,394

Income Margin from Continuing Operations		9.3	%		3.3	Pts		0.7	Pts		0.0	Pts		13.3	%

Diluted Earnings / (Loss) Per Share: Continuing Operations	$	1.87		$	0.66		$	0.14		$	0.01		$	2.68

* Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related to acquisition integration and pre-closing charges, such as financing costs.

** Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements and pension insolvency costs and other costs.

*** Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION

(Unaudited; Dollars in millions except per share amounts)


	Nine Months Ended September 30, 2020
	Continuing Operations
				Acquisition-			Retirement-			Tax
				Related			Related			Reform			Operating
	GAAP			Adjustments*			Adjustments**			Impacts			(Non-GAAP)
Gross Profit	$	25,052		$	556		$	—		$	—		$	25,608

Gross Profit Margin		47.0	%		1.0	Pts		—			—			48.1	%

S,G&A		15,849			(849)			—			—			15,000

R,D&E		4,722			—			—			—			4,722

Other (Income) & Expense		614			(2)			(829)			—			(217)

Interest Expense		971			—			—			—			971

Total Expense & Other (Income)		21,704			(851)			(829)			—			20,024

Pre-tax Income from Continuing Operations		3,348			1,407			829			—			5,584

Pre-tax Income Margin from Continuing Operations		6.3	%		2.6	Pts		1.6	Pts		—			10.5	%

Provision for / (Benefit from) Income Taxes***		(888)			312			119			128			(329)

Effective Tax Rate		(26.5)	%		12.3	Pts		6.1	Pts		2.3	Pts		(5.9)	%

Income from Continuing Operations		4,237			1,095			710			(128)			5,913

Income Margin from Continuing Operations		8.0	%		2.1	Pts		1.3	Pts		(0.2)	Pts		11.1	%

Diluted Earnings / (Loss) Per Share: Continuing Operations	$	4.72		$	1.23		$	0.79		$	(0.14)		$	6.60


	Nine Months Ended September 30, 2019
	Continuing Operations
				Acquisition-			Retirement-			Tax
				Related			Related			Reform			Operating
	GAAP			Adjustments*			Adjustments**			Impacts			(Non-GAAP)
Gross Profit	$	25,388		$	359		$	—		$	—		$	25,747

Gross Profit Margin		45.9	%		0.6	Pts		—			—			46.5	%

S,G&A		15,171			(724)			—			—			14,447

R,D&E		4,393			(53)			—			—			4,340

Other (Income) & Expense		(850)			152			(419)			—			(1,118)

Interest Expense		990			(228)			—			—			762

Total Expense & Other (Income)		19,215			(853)			(419)			—			17,942

Pre-tax Income from Continuing Operations		6,173			1,212			419			—			7,805

Pre-tax Income Margin from Continuing Operations		11.1	%		2.2	Pts		0.8	Pts		—			14.1	%

Provision for / (Benefit from) Income Taxes***		407			245			82			(160)			575

Effective Tax Rate		6.6	%		2.1	Pts		0.7	Pts		(2.0)	Pts		7.4	%

Income from Continuing Operations		5,766			967			338			160			7,230

Income Margin from Continuing Operations		10.4	%		1.7	Pts		0.6	Pts		0.3	Pts		13.1	%

Diluted Earnings / (Loss) Per Share: Continuing Operations	$	6.46		$	1.08		$	0.38		$	0.18		$	8.10

INTERNATIONAL BUSINESS MACHINES CORPORATION

U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION

(Unaudited; Dollars in millions except per share amounts)


										Trailing
	Three Months Ended						Nine Months Ended			Twelve Months Ended
	September 30, 2020						September 30, 2020			September 30, 2020
	Change YTY						Change YTY			Change YTY
Revenue Adjusting for Divested Businesses and Currency	Cloud			Total IBM			Total IBM			Cloud

Revenue as reported		19.2	%		(2.6)	%		(3.8)	%		22.2	%
Impact from divested businesses		1.0	Pts		0.4	Pts		1.5	Pts		1.8	Pts
Currency impact		(1.3)	Pts		(0.9)	Pts		0.7	Pts		0.6	Pts
Revenue adjusting for divested businesses and currency (non-GAAP)		18.9	%		(3.1)	%		(1.6)	%		24.6	%


	Three Months Ended
	September 30, 2020
Red Hat Revenue, Normalized for Historical Comparability	Change YTY

Red Hat Revenue GAAP growth rate⁽¹⁾		163	%
Impact from Red Hat revenue prior to acquisition⁽²⁾		(26)	Pts
Impact from purchase accounting deferred revenue and intercompany adjustments⁽³⁾		(120)	Pts
Red Hat revenue growth rate, normalized for historical comparability (non-GAAP)		17	%
Impact from currency		(1)	Pts
Red Hat revenue growth rate, normalized for historical comparability and adjusting for currency (non-GAAP)		16	%

(1) Represents change in GAAP revenue as reported by IBM, which is included in the Cloud & Cognitive Software segment.

(2) Red Hat revenue was included in IBM’s consolidated results beginning July 9, 2019. Revenue for July 1 – July 8, 2019 represents pre-acquisition Red Hat standalone revenue and is included for computing year over year change purposes.

(3) Represents change in the third-quarter 2020 impact of the deferred revenue purchase accounting adjustment and adjustments to add back revenue which was eliminated for sales between Red Hat and IBM. This line represents revenue that would have been recognized by Red Hat under GAAP if the acquisition had not occurred, but was not recognized by IBM due to purchase accounting and intercompany adjustments.

Exhibit 99.2

Non-GAAP Financial Information

Operating (non-GAAP) Earnings Per Share and Related Income Statement Items

In an effort to provide better transparency into the operational results of the business, supplementally, the company separates business results into operating and non-operating categories. Operating earnings from continuing operations is a non-GAAP measure that excludes the effects of certain acquisition-related charges, intangible asset amortization, expense resulting from basis differences on equity method investments, retirement-related costs and discontinued operations and their related tax impacts. Due to the unique, non-recurring nature of the enactment of the U.S. Tax Cuts and Jobs Act (U.S. tax reform), the company characterizes the one-time provisional charge recorded in the fourth quarter of 2017 and adjustments to that charge as non-operating. Adjustments include true-ups, accounting elections and any changes to regulations, laws, audit adjustments, etc. that affect the recorded one-time charge. For acquisitions, operating (non-GAAP) earnings exclude the amortization of purchased intangible assets and acquisition-related charges such as in-process research and development, transaction costs, applicable retention, restructuring and related expenses, tax charges related to acquisition integration and pre-closing charges, such as financing costs. These charges are excluded as they may be inconsistent in amount and timing from period to period and are significantly impacted by the size, type and frequency of the company’s acquisitions. All other spending for acquired companies is included in both earnings from continuing operations and in operating (non-GAAP) earnings. For retirement-related costs, the company characterizes certain items as operating and others as non-operating, consistent with GAAP. The company includes defined benefit plan and nonpension postretirement benefit plan service costs, multi-employer plan costs and the cost of defined contribution plans in operating earnings. Non-operating retirement-related costs include defined benefit plan and nonpension postretirement benefit plan amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/settlements and pension insolvency costs and other costs. Non-operating retirement-related costs are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance, and the company considers these costs to be outside of the operational performance of the business.

Overall, the company believes that supplementally providing investors with a view of operating earnings as described above provides increased transparency and clarity into both the operational results of the business and the performance of the company’s pension plans; improves visibility to management decisions and their impacts on operational performance; enables better comparison to peer companies; and allows the company to provide a long-term strategic view of the business going forward. The company’s reportable segment financial results reflect pre-tax operating earnings from continuing operations, consistent with the company’s management and measurement system. In addition, these non-GAAP measures provide a perspective consistent with areas of interest the company routinely receives from investors and analysts.

Free Cash Flow

The company uses free cash flow as a measure to evaluate its operating results, plan share repurchase levels, strategic investments and assess its ability and need to incur and service debt. The entire free cash flow amount is not necessarily available for discretionary expenditures. The company defines free cash flow as net cash from operating activities less the change in Global Financing receivables and net capital expenditures, including the investment in software. A key objective of the Global Financing business is to generate strong returns on equity, and increasing receivables is the basis for growth. Accordingly, management considers Global Financing receivables as a profit-generating investment, not as working capital that should be minimized for efficiency. Therefore, management includes presentations of both free cash flow and net cash from operating activities that exclude the effect of Global Financing receivables. Free cash flow guidance is derived using an estimate of profit, working capital and operational cash flows. Since the company views Global Financing receivables as a profit-generating investment which it seeks to maximize, it is not considered when formulating guidance for free cash flow. As a result, the company does not estimate a GAAP Net Cash from Operations expectation metric.

Constant Currency

When the company refers to growth rates at constant currency or adjusts such growth rates for currency, it is done so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of its business performance. Financial results adjusted for currency are calculated by translating current period activity in local currency using the comparable prior year period’s currency conversion rate. This approach is used for countries where the functional currency is the local currency. Generally, when the dollar either strengthens or weakens against other currencies, the growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates.

Revenue adjusted for divested businesses and constant currency

To provide better transparency on the recurring performance of the ongoing business, the company provides total revenue, cloud and geographic revenue growth rates excluding divested businesses and at constant currency. These divested businesses are included in the company’s Other segment.

Revenue for Red Hat, normalized for historical comparability

On July 9, 2019, the company completed the acquisition of Red Hat, Inc. (Red Hat) and began including Red Hat’s financial results in the company’s consolidated results. As part of the accounting for this acquisition, the company recorded certain adjustments, including a purchase accounting deferred revenue fair value adjustment and intercompany eliminations, each of which impact IBM’s post-acquisition revenue. To help investors better understand the underlying performance of Red Hat, management presents a non-GAAP growth rate of Red Hat’s revenue performance year to year, normalized for historical comparability. The normalized (non-GAAP) growth rate of Red Hat’s revenue for the three months ended September 30, 2020 includes adjustments to reverse the Red Hat standalone pre-acquisition revenue for July 1 - 8, 2019, adjustments to reverse the purchase accounting deferred revenue fair value adjustment and adjustments to add back revenue which was eliminated for post-acquisition sales between Red Hat and IBM. The deferred revenue adjustment represents revenue that would have been recognized by Red Hat under GAAP if the acquisition had not occurred, but was not recognized by IBM due to purchase accounting. The sales between Red Hat and IBM, which were eliminated post-acquisition, are added back in this presentation to provide a comparative view of Red Hat on a pre-acquisition basis. This information is included to provide additional transparency and for comparative purposes only.

Exhibit 99.3

EX99.3_IBM_EX99_3_PAGE_01.GIF

IBM 3Q 2020 Earnings October 19, 2020 ibm.com/investor

EX99.3_IBM_EX99_3_PAGE_02.GIF

Forward Looking Statements and Non-GAAP Information Certain comments made in this presentation may be In an effort to provide additional and useful information regarding characterized as forward looking under the Private Securities the company’s financial results and other financial information as Litigation Reform Act of 1995. Forward-looking statements aredetermined by generally accepted accounting principles (GAAP), the based on the company’s current assumptions regarding future company also discusses, in its earnings press release and earnings business and financial performance. Those statements by their presentation materials, certain non-GAAP information including year nature address matters that are uncertain to different degrees.to year change in revenue for Red Hat normalized for historical Those statements involve a number of factors that could causecomparability, revenue adjusting for divested businesses and actual results to differ materially. Additional information currency, operating earnings, other “operating” financial measures, concerning these factors is contained in the Company’s filings including free cash flow, net cash from operating activities excluding with the SEC. Copies are available from the SEC, from the IBM Global Financing receivables, and adjustments for currency. The website, or from IBM Investor Relations. Any forward-looking rationale for management’s use of this non-GAAP information is statement made during this presentation speaks only as of the included as Exhibit 99.2 to the company’s Form 8-K filed with the date on which it is made. The company assumes no obligation to SEC on October 19, 2020. The reconciliation of non-GAAP update or revise any forward-looking statements except as information to GAAP is included on the slides entitled “Non-GAAP required by law; these charts and the associated remarks and Supplemental Materials” in this presentation, as well as in Exhibit comments are integrally related, and are intended to be 99.1 to the company’s Form 8-K filed with the SEC on October 19, presented and understood together. 2020. For other related information please visit the Company’s investor relations website at: https://www.ibm.com/investor/events/earnings-3q20 2

EX99.3_IBM_EX99_3_PAGE_03.GIF

Arvind Krishna Chief Executive Officer James Kavanaugh SVP, Finance & Operations, Chief Financial Officer 3

EX99.3_IBM_EX99_3_PAGE_04.GIF

led by Red Hat, underscores the growing client services business creates a market-leading strategy and better position IBM to seize the CEO Perspective “The strong performance of our cloud business,Strategic Update adoption of our open hybrid cloud platform.” “Separating the managed infrastructure Hybrid Cloud Platform standalone company and further sharpens our focus on IBM’s open hybrid cloud platform and AI capabilities. This will accelerate our growth Current Environment $1 trillion hybrid cloud opportunity.” - Arvind Krishna, IBM CEO 4

EX99.3_IBM_EX99_3_PAGE_05.GIF

Accelerating IBM’s Hybrid Cloud Platform Growth Strategy Creating value through focus Establishing the #1 Managed Infrastructure Services Company Improving growth trajectory of both businesses 5

EX99.3_IBM_EX99_3_PAGE_06.GIF

platform innovation modernization transformations excellence Company Services Company efficiency and cash opportunities Creating Two Market-Leading Companies Technology & IBM NewCoIT infrastructure #1 Hybrid Cloud#1 Managed Digital Platform and AI InfrastructureService delivery Significant growth Operational $59B $19B flow generation Revenue*Revenue* IBM and NewCo will have a strong strategic relationship *TTM revenue through June 30, 2020, adjusted to reflect estimated historical sales between IBM and NewCo 6

EX99.3_IBM_EX99_3_PAGE_07.GIF

Middleware X PLATFORM IBM’s Hybrid Cloud Platform Leadership Hybrid Cloud ValuePlatform Approach3Q20 Progress CLOUD TRANSFORMATION SERVICES SOFTWARE IBM INFRASTRUCTURE IBM IBM Public CloudsEnterprise SystemsPublic CloudAWS | Azure | OthersInfrastructure 7 Open Hybrid Cloud Platform Dev Sec Ops 3rd Party Ecosystem IBM Applications Global System Integrators IBM Services Clients Ecosystem Innovation 2.5 Hybrid cloud value vs. public only $1T Hybrid cloud market opportunity

EX99.3_IBM_EX99_3_PAGE_08.GIF

Gross and PTI margin expansion-operating, cash includes marketable securities, FCF excludes financing receivables 3Q20 Highlights $17.6B $2.58 $10.8B RevenueOperating (non-GAAP) EPSFree Cash Flow LTM CloudSolid Cash StrengthGeneration +19% @CC$16B Revenue GrowthCash Balance $24B 136% Revenue (LTM)FCF Realization (LTM) Cloud growth @CC excludes impact of divested businesses; Red Hat normalized for historical comparability 8 R d Hat M mentum +16% @CC Revenue Growth ~2,600 Container platform clients High Value Model 1.6 pts Gross Margin Expansion 1.4 pts PTI Margin Expansion

EX99.3_IBM_EX99_3_PAGE_09.GIF

Revenue growth led by Red Hat, Segment Elements in current economic environment Flat yr/yr Cloud & Cognitive Software RevenueRevenue Growth $5.6B 6% Cloud Paks and Security Transaction Processing Platforms impacted by client buying behaviors Cognitive Profit reflects strong Red Hat Applications contribution Cloud & Data Platforms +19% yr/yr Transaction includes Red Hat Processing Platforms (9%) yr/yr 3Q20 Results; Revenue growth rates @CC9

EX99.3_IBM_EX99_3_PAGE_10.GIF

Double-digit signings growth, backlog returned to growth Consulting application modernization offset by project delays Gross margin expansion with (8%) yr/yr Process Global Business ServicesRevenueGross Margin $4.0B 32.9% (6%) yr/yr +1.9 pts yr/yr Continued scaling of Red Hat client engagements Segment Elements Revenue reflects strength in (4%) yr/yr Application Management continued investment Global Services (3%) yr/yr 3Q20 Results; Revenue growth rates @CC10

EX99.3_IBM_EX99_3_PAGE_11.GIF

Revenue impacted by lower volumes (4%) yr/yr (0.8) pts yr/yr Closed 8 deals over $100M Global Technology ServicesRevenueGross Margin $6.5B 35.0% Margins reflect revenue mix and higher investment in IBM Cloud Segment Elements as clients continue to make long-term commitments Infrastructure & Cloud Services (4%) yr/yr Technology Support Services (6%) yr/yr 3Q20 Results; Revenue growth @CC11

EX99.3_IBM_EX99_3_PAGE_12.GIF

IBM Z reflects product cycle in the Segment Elements Systems RevenueRevenue Growth $1.3B (16%) current economic environment Storage performance driven by high-end declines Gross margin performance in line with product cycle dynamics Systems Hardware (19%) yr/yr Operating Systems Software (8%) yr/yr 3Q20 Results; Revenue growth rates @CC12

EX99.3_IBM_EX99_3_PAGE_13.GIF

Summary Current environment provides near-term challenges and longer-term opportunities Accelerating hybrid cloud platform strategy Creating value through focus 13

EX99.3_IBM_EX99_3_PAGE_14.GIF

ibm.com/investor

EX99.3_IBM_EX99_3_PAGE_15.GIF

Supplemental Materials ● Currency – Impact on Revenue Growth ● Revenue and P&L Highlights ● Services Segments Details ● Software & Systems Segment Details ● Expense Summary ● Balance Sheet Summary ● Cash Flow Summary ● Cash Flow (ASC 230) ● Non-GAAP Supplemental Materials Some columns and rows in these materials, including the supplemental exhibits, may not add due to rounding Supplemental Materials 15

EX99.3_IBM_EX99_3_PAGE_16.GIF

Currency – Impact on Revenue Growth US$B Yr/Yr Revenue As Reported $17.6 (3%) Currency Impact $0.2 1 pts Revenue @CC(3%) Supplemental Materials 16 Quarterly Averages per US $ 3Q20 Yr/Yr 10/16/2020 Spot 4Q20 FY20 1Q21 FY21 Euro 0.86 5% Pound 0.77 5% Yen 106 1% Revenue Impact, Future @ 10/16/20 Spot 0.9 pts 0.85 0.77 105 6% 1% 6% 3% 0% (0%) 1% 1% 3% 2% 3% 1% 0-1 pts (0.5-1 pts) 1-2 pts 0-1 pts

EX99.3_IBM_EX99_3_PAGE_17.GIF

Revenue and P&L Highlights B/(W) B/(W) Revenue Highlights3Q20 Yr/Yr*Operating P&L Highlights $ 3Q20 Yr/Yr Revenue$17.6 (3%) Gross Profit $8.6 1% Cloud $6.0 19% Expense$6.0 2% Pre-Tax Income $2.6 8% B/(W)Net Income$2.3(3%) Geography Revenue 3Q20 Yr/Yr* Earnings Per Share $2.58 (4%) Americas $8.1 (3%) B/(W) Europe/ME/Africa $5.6 (2%) Operating P&L Highlights % 3Q20 Yr/Yr Asia Pacific $3.9 (5%) Gross Profit Margin 49.0% 1.6 pts Expense E/R 34.4% (0.2 pts) Pre-Tax Income Margin 14.7% 1.4 pts Net Income 13.2% (0.1 pts) Tax Rate 10.2% (10.1 pts) Revenue growth rates @CC, $ in billions *Yr/Yr excludes impact of divested businesses Supplemental Materials 17

EX99.3_IBM_EX99_3_PAGE_18.GIF

Services Segments Details B/(W) B/(W) GBS Segment 3Q20 Yr/YrGTS Segment3Q20 Yr/Yr Revenue (External) $4.0 (6%) Revenue (External) $6.5 (4%) Consulting $2.0 (4%) Infrastructure & Cloud Services$4.9 (4%) Application Management$1.8 (8%) Technology Support Services$1.5 (6%) Global Process Services$0.2 (3%) Gross Profit Margin (External) 35.0% (0.8 pts) Gross Profit Margin (External) 32.9% 1.9 ptsPre-Tax Income $0.4 (19%) Pre-Tax Income$0.6 1% Pre-Tax Income Margin 5.9% (1.1 pts) Pre-Tax Income Margin14.2% 0.8 pts Cloud Revenue (External) $2.3 8% Cloud Revenue (External) $1.4 9% B/(W) Services Signings & Backlog 3Q20 Yr/Yr Signings $9.5 5% Backlog$108.0 (1%) Backlog Yr/Yr @ActualFlat Revenue & Signings growth rates @CC, $ in billions, Services Backlog calculated using Sep 30 currency spot rates, Signings & Backlog includes Security Services Supplemental Materials 18

EX99.3_IBM_EX99_3_PAGE_19.GIF

Software and Systems Segment Details B/(W) B/(W) Cloud & Cognitive Software Segment 3Q20 Yr/Yr Systems Segment3Q20 Yr/Yr Revenue (External) $5.6 6% Revenue (External) $1.3 (16%) Cloud & Data Platforms $2.8 19% Systems Hardware $0.9 (19%) Cognitive Applications $1.3 Flat IBM Z(20%) Transaction Processing Platforms $1.5 (9%) Power (16%) Pre-Tax Income$1.8 42% Storage(20%) Pre-Tax Income Margin28.5% 6.6 pts Operating Systems Software $0.3 (8%) Cloud Revenue (External) $1.8 63% Gross Profit Margin (External) 51.2%(1.4 pts) Systems Hardware 40.4% (2.5 pts) Operating Systems Software 80.9% (1.7 pts) Pre-Tax Income$0.0 (195%) Pre-Tax Income Margin(2.5%) (4.8 pts) Cloud Revenue (External)$0.5(4%) Revenue growth rates @CC, $ in billions Supplemental Materials 19

EX99.3_IBM_EX99_3_PAGE_20.GIF

Expense Summary $ in billions *includes acquisitions in the last twelve months net of non-operating acquisition-related charges and includes impact of divested businesses **represents the percentage change after excluding the impact of currency, acquisitions and divestitures Supplemental Materials 20 B/(W) Expense3Q20 Yr/Yr Acq/ CurrencyDivest*Base** SG&A – Operating $4.4 5% RD&E – Operating $1.5 (1%) IP and Custom Development Income ($0.1) (19%) Other (Income)/Expense - Operating ($0.0) (77%) Interest Expense – Operating $0.3 21% Operating Expense & Other Income $6.0 2% 0 pts 2 pts 3 pts 0 pts 1 pts (2 pts) (1 pts)1 pts2 pts

EX99.3_IBM_EX99_3_PAGE_21.GIF

Balance Sheet Summary Sep 20 Dec 19 Sep 19 Cash & Marketable Securities $15.8 $9.0 $11.0 Core (non-GF) Assets* $115.7 $115.3 $113.3 Global Financing Assets$22.7 $27.9 $25.4 Total Assets$154.1 $152.2 $149.6 Other Liabilities $67.4 $68.3 $65.2 Core (non-GF) Debt* $44.5 $38.2 $43.2 Global Financing Debt $20.9 $24.7 $23.1 Total Debt $65.4 $62.9 $66.3 Total Liabilities $132.8 $131.2 $131.5 Equity $21.3 $21.0 $18.1 $ in billions *includes eliminations of inter-company activity Supplemental Materials 21

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Cash Flow Summary $ in billions Supplemental Materials 22 QTDB/(W) 3Q20Yr/Yr YTDB/(W) 3Q20 Yr/Yr Net Cash from Operations $4.3 $0.7 Less: Global Financing Receivables $2.4 $1.2 Net Cash from Operations (excluding GF Receivables)$1.9 ($0.6) Net Capital Expenditures ($0.8) ($0.1) Free Cash Flow (excluding GF Receivables) $1.1 ($0.7) Acquisitions ($0.0) $32.6 Divestitures ($0.2) ($0.3) Dividends ($1.5) ($0.0) Share Repurchases (Gross) - $0.1 Non-GF Debt $1.0 $6.0 Other (includes GF Net A/R & GF Debt) $1.1 ($0.7) Change in Cash & Marketable Securities $1.5 $37.0 $12.3 $1.0 $5.3 $1.6 $7.0 ($0.6) ($2.3) ($0.5) $4.8 ($1.1) ($0.0) $32.6 $0.5 ($0.4) ($4.3) ($0.1) - $1.4 $5.0 ($23.5) $0.9 ($0.9) $6.7 $8.0

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Cash Flow (ASC 230) $ in billions Supplemental Materials 23 QTDQTD 3Q203Q19 YTDYTD 3Q20 3Q19 Net Income from Operations$1.7 $1.7 Depreciation / Amortization of Intangibles$1.7 $1.7 Stock-based Compensation$0.2 $0.2 Working Capital / Other ($1.7) ($1.1) Global Financing A/R$2.4 $1.1 Net Cash provided by Operating Activities$4.3 $3.6 Capital Expenditures, net of payments & proceeds ($0.8) ($0.7) Divestitures, net of cash transferred ($0.2) $0.0 Acquisitions, net of cash acquired ($0.0) ($32.6) Marketable Securities / Other Investments, net $0.8 $2.9 Net Cash provided by/(used in) Investing Activities ($0.3) ($30.4) Debt, net of payments & proceeds ($0.3) ($6.6) Dividends ($1.5) ($1.4) Common Stock Repurchases - ($0.1) Common Stock Transactions - Other $0.0 ($0.0) Net Cash provided by/(used in) Financing Activities($1.7) ($8.2) Effect of Exchange Rate changes on Cash$0.1 ($0.4) Net Change in Cash, Cash Equivalents & Restricted Cash$2.4 ($35.3) $4.2 $5.8 $5.0 $4.4 $0.7 $0.5 ($2.9) ($3.0) $5.3 $3.7 $12.3 $11.3 ($2.3) ($1.7) $0.5 $0.9 ($0.0) ($32.6) ($0.7) $6.4 ($2.5) ($27.1) $1.1 $20.5 ($4.3) ($4.3) - ($1.4) ($0.2) ($0.1) ($3.4) $14.7 ($0.2) ($0.4) $6.2 ($1.4)

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Non-GAAP Supplemental Materials Reconciliation of Revenue Performance - 3Q 2020 3Q20 Yr/Yr3Q20 Yr/Yr GAAP @CC GAAP @CC Cloud & Cognitive Software 7% 6% Global Technology Services (4%) (4%) Cloud & Data Platforms 20% 19% Infrastructure & Cloud Services (3%) (4%) Cognitive Applications 1% Flat Technology Support Services (6%) (6%) Transaction Processing Platforms (8%) (9%) Cloud 9% 8% Cloud 64% 63% Systems(15%) (16%) Global Business Services (5%) (6%) Systems Hardware (18%) (19%) Consulting (2%) (4%) IBM Z(19%) (20%) Application Management (7%) (8%) Power(15%) (16%) Global Process Services (3%) (3%) Storage(19%) (20%) Cloud 10% 9% Operating Systems Software (7%) (8%) Cloud(4%) (4%) The above reconciles the Non-GAAP financial information contained in the “Cloud & Cognitive Software”, “Global Business Services”, “Global Technology Services”, “Systems”, “Services Segments Details”, “Software & Systems Segment Details”, and “Prepared Remarks” discussions in the company’s earnings presentation. See Exhibit 99.2 included in the company’s Form 8-K dated October 19, 2020 for additional information on the use of these Non-GAAP financial measures. Supplemental Materials 24

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Non-GAAP Supplemental Materials Reconciliation of Revenue Performance - 3Q 2020 3Q20 Yr/Yr GAAPDivest impact Currency impact Adjusted Total Revenue(3%) 0 pts (1 pts) (3%) Americas (4%) 0 pts 1 pts (3%) Europe/ME/Africa 2% 0 pts (4 pts) (2%) Asia Pacific (4%) 0 pts (1 pts) (5%) Total Cloud19% 1 pts (1 pts) 19% The above reconciles the Non-GAAP financial information contained in the “3Q20 Highlights”, “Revenue and P&L Highlights”, and “Prepared Remarks” discussions in the company’s earnings presentation. See Exhibit 99.2 included in the company’s Form 8-K dated October 19, 2020 for additional information on the use of these Non-GAAP financial measures. Supplemental Materials 25

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Non-GAAP Supplemental Materials Reconciliation of Revenue for Red Hat, Normalized - 3Q 2020 Three Months Ended September 30, 2020 Red Hat Revenue, Normalized for Historical ComparabilityYr/Yr Red Hat Revenue GAAP Growth Rate 163% Impact from Red Hat revenue prior to acquisition (26 pts) Impact from purchase accounting deferred revenue and intercompany adjustments (120 pts) Red Hat revenue growth rate, normalized for historical comparability (non-GAAP)17% Impact from currency (1 pt) Red Hat revenue growth rate, normalized for historical comparability and adjusting for currency (non-GAAP)16% The above reconciles the Non-GAAP financial information contained in the “3Q20 Highlights” and “Prepared Remarks” discussions in the company’s earnings presentation. See Exhibit 99.2 included in the company’s Form 8-K dated October 19, 2020 for additional information on the use of these Non-GAAP financial measures. Supplemental Materials 26

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Non-GAAP Supplemental Materials Reconciliation of Expense Summary - 3Q 2020 3Q20 Non-GAAPOperating GAAPAdjustments(Non-GAAP) SG&A Currency 0 pts 0 pts 0 pts Acquisitions/Divestitures 2 pts 0 pts 2 pts Base* 6 pts (3 pts) 3 pts RD&E Currency 0 pts 0 pts 0 pts Acquisitions/Divestitures 1 pts 0 pts 1 pts Base* 2 pts (4 pts) (2 pts) Operating Expense & Other Income Currency(1 pts) 0 pts (1 pts) Acquisitions/Divestitures1 pts 0 pts 1 pts Base*3 pts (1 pts) 2 pts The above reconciles the Non-GAAP financial information contained in the “Expense Summary” discussion in the company’s earnings presentation. See Exhibit 99.2 included in the company’s Form 8-K dated October 19, 2020 for additional information on the use of these Non-GAAP financial measures. *Represents the percentage change after excluding the impact of currency, acquisitions and divestitures. Supplemental Materials 27

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Non-GAAP Supplemental Materials Reconciliation of Free Cash Flow - Last 12 Months 12 Months Ended Sep 2020 Net Cash from Operating Activities per GAAP:$15.8 Less: change in Global Financing (GF) Receivables$2.1 Net Cash from Operating Activities (Excluding GF Receivables)$13.7 Capital Expenditures, Net ($2.9) Free Cash Flow (Excluding GF Receivables)$10.8 $ in billions The above reconciles the Non-GAAP financial information contained in the “3Q20 Highlights” and “Prepared Remarks” discussions in the company’s earnings presentation. See Exhibit 99.2 included in the company’s Form 8-K dated October 19, 2020 for additional information on the use of these Non-GAAP financial measures. Supplemental Materials 28

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