#1IBM 3Q 2022 Earnings IBM October 19, 2022 ibm.com/investor#2Forward-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. 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. Unless otherwise specified, results are presented on a continuing operations basis. All references to revenue impacts from sales to Kyndryl are incremental sales post-separation. 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, consolidated free cash flow, net cash from operating activities excluding IBM Financing receivables, 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 October 19, 2022. 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 October 19, 2022, 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 hybrid cloud revenue, annual recurring revenue, 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 the Management Discussion section of the company's 2021 Annual Report, which is Exhibit 13 to the Form 10-K submitted with the SEC on February 22, 2022. For other related information please visit the Company's investor relations website at: https://www.ibm.com/investor/events/earnings-3q22 2#3Arvind Krishna Chairman and Chief Executive Officer James Kavanaugh SVP, Finance & Operations, Chief Financial Officer 3#4CEO perspective "IBM delivered strong revenue growth in the quarter, reflecting our continued focus on the execution of our strategy. Globally, clients view technology as an opportunity to enhance their business, which is evident in the results across our portfolio. With our year-to-date performance, we now expect full-year revenue growth above our mid-single digit model." Arvind Krishna IBM Chairman and CEO Lol 3Q22 Performance Hybrid cloud and AI progress Clients, ecosystem and innovation 4#5Hybrid cloud and AI progress Our platform approach IBM Consulting Mi IBM Software IBM Cloud Paks Ø Business Transformation Technology Consulting Application Operations Automation Data & AI Security Transaction Processing Red Hat Hybrid Cloud Platform IBM Infrastructure zSystems Distributed Infrastructure (IBM Cloud, Power, Storage) Infrastructure Support System Integrator Partners Software and SaaS Partners Development, Security and Operational Services OpenShift Red Hat Enterprise Linux Ansible Automation Platform Public Clouds AWS Azure Others 8 Enterprise Infrastructure Edge (p) Accelerating client adoption Expanding partner ecosystem Delivering innovation LO 5#6Financial highlights 3Q22 $14.1B Revenue $4.1B Free Cash Flow (YTD) "Both our revenue growth and operating profit profile for the first three quarters of the year align to the investment thesis we outlined last fall. Our portfolio mix, business fundamentals, strong recurring revenue stream and solid cash generation allow us to invest for continued growth and return value to shareholders through dividends." James Kavanaugh IBM SVP & CFO Revenue growth rates @CC 15% Revenue growth incl. -5 pts from sales to Kyndryl >70% Revenue mix in software and consulting $22.2B Hybrid cloud revenue (TTM), +20% yr/yr 180bps Pre-tax margin expansion (Operating) $9.7B Cash on hand, incl. marketable securities 6#7Software Strong and growing software recurring revenue base Annual recurring revenue* of $13B, +9% yr/yr Pre-tax margin reflects solid revenue performance 3022 results; revenue growth rates @CC *Annual recurring revenue for Hybrid Platform & Solutions, growth rate @CC $5.8B Revenue Revenue categories Transaction Processing +33% yr/yr -26 pts sales to Kyndryl +14% Revenue growth (includes -8 pts from sales to Kyndryl) O Hybrid Platform & Solutions +8% yr/yr -1.5 pts sales to Kyndry! Red Hat Automation Data & AI Security 18% 3% 4% 6% 7#8Consulting Pervasive growth driven by demand for digital transformations Strength in Red Hat and strategic partner practices Book-to-bill ratio of 1.05 for the last year Profit reflects continued labor cost inflation; sequential margin improvement 3022 results; revenue growth rates @CC $4.7B Revenue Revenue categories Application Operations +17% yr/yr Technology Consulting +17% yr/yr +16% Revenue growth O Business Transformation +14% yr/yr 8#9Infrastructure zSystems performance fueled by new workloads and demand for zSystems in a hybrid cloud environment Distributed Infrastructure growth driven by Power and storage innovation Pre-tax margin reflects zSystems mix benefit 3022 results; revenue growth rates @CC $3.4B Revenue Revenue categories Infrastructure Support +5% yr/yr -7 pts sales to Kyndryl +23% Revenue growth (includes -9 pts from sales to Kyndryl) O Hybrid Infrastructure +41% yr/yr -11 pts sales to Kyndryl zSystems +98% Distributed Infrastructure +21% 9#10Summary 3Q 2022 Progress Executing a focused hybrid cloud and AI strategy Broad-based revenue growth Portfolio mix contributes to profit and margin Generated >$4B of free cash flow year to date FY 2022 Expectations Revenue growth @CC above mid-single digit model, plus -3.5 pts from sales to Kyndryl Free cash flow of -$10 billion 10#11ibm.com/investor IBM#12Supplemental material Revenue and P&L highlights Cash flow and balance sheet highlights Currency impact on revenue growth Software & Infrastructure segment details • Consulting segment details Expense summary Balance sheet summary . • . Cash flow summary Cash flow (ASC 230) Software segment revenue categories Consulting segment revenue categories • Infrastructure segment revenue categories Non-GAAP supplemental materials Unless otherwise specified, results are presented on a continuing operations basis. Some columns and rows in these materials, including the supplemental exhibits, may not add due to rounding 12#13Revenue and P&L highlights Revenue highlights Revenue Hybrid cloud Hybrid cloud (TTM) Geography revenue Americas Europe/ME/Africa Asia Pacific 3Q22 $14.1 $5.2 $22.2 3022 Revenue growth rates @CC, $ in billions $7.4 $4.0 $2.7 B/(W) Yr/Yr 15% 19% 20% B/(W) Yr/Yr 13% 16% 16% sales to KD benefit ~5 pts ~2 pts sales to KD benefit ~ 4 pts ~ 6 pts - 5 pts Operating P&L highlights $ Gross profit Expense Pre-tax income Net income Earnings per share Operating P&L highlights % Gross profit margin Expense E/R Pre-tax income margin Net income margin Tax rate 3Q22 $7.6 $5.6 $2.0 $1.7 $1.81 3Q22 53.8% 39.9% 13.9% 11.7% 15.9% B/(W) Yr/Yr 4% 1% 23% (1%) (2%) B/(W) Yr/Yr (1.2 pts) 3.0 pts 1.8 pts (0.9 pts) (20.1 pts) 13#14Cash flow and balance sheet highlights Cash flow 3Q22 Yr/Yr Consolidated net cash from operations* $1.2 ($0.0) Consolidated free cash flow** $0.8 $0.1 Selected uses of cash Net capital expenditures Acquisitions Dividends 3022 $0.4 $0.1 $1.5 YTD $5.4 $4.1 YTD $1.3 $1.0 $4.5 Balance sheet Cash & marketable securities Total debt Selected debt measures IBM Financing debt Core (non-IBM Financing) debt $ in billions *Non-GAAP financial measure; excludes Financing receivables **Non-GAAP financial measure; adjusts for Financing receivables and net capital expenditures Dec 21 $9.7 $7.6 $50.9 $51.7 Sep 22 Sep 22 Dec 21 $11.2 $13.9 $39.7 $37.8 Sep 21 $8.4 $54.5 Sep 21 $15.9 $38.6 14#15Currency impact on growth Quarterly averages per US $ Euro Pound Yen Revenue impact, future @ 10/18/22 Spot Prior view @ 7/15/22 Spot Revenue as reported Currency impact Revenue @CC 3Q22 Yr/Yr 0.99 0.85 138 US $B $14.1 ($1.1) (17%) (17%) (26%) (8.2 pts) -(8 pts) Yr/Yr 6.5% (8.2 pts) 14.6% Spot 10/18/22 4022 FY22 (8-9 pts) -(6 pts) 1023 1.02 (16%) (14%) (14%) 0.88 (19%) (13%) 149 (31%) (21%) 2023 3023 (8%) (19%) (11%) (28%) (15%) FY23 (2%) (6%) (4%) (8%) (8%) (12%) -(7 pts) -(8 pts) -(5 pts) (2-3 pts) (4 pts) -(6 pts) 15#16Software & Infrastructure segment details Software segment Revenue Hybrid Platform & Solutions Red Hat Automation Data & AI Security Transaction Processing Pre-tax income Pre-tax income margin Hybrid cloud revenue (TTM) Annual recurring revenue* 3022 $5.8 $4.2 $1.6 $1.3 22.5% $9.2 $13.0 Includes sales to Kyndryl B/(W) Yr/Yr 14% 8% 18% 3% 4% 6% 33% 32% 4.2 pts 3022 results; revenue growth rates @CC *Annual recurring revenue for Hybrid Platform & Solutions, growth rate @CC 20% 9% Infrastructure segment Revenue Hybrid Infrastructure zSystems Distributed Infrastructure Infrastructure Support Pre-tax income Pre-tax income margin Hybrid cloud revenue (TTM) 3022 $3.4 $1.9 $1.4 $0.3 8.3% $3.9 B/(W) Yr/Yr 23% 41% 98% 21% 5% 34% 1.2 pts 6% 16#17Consulting segment details Consulting segment Revenue Business Transformation Technology Consulting Application Operations Gross profit margin Pre-tax income Pre-tax income margin Hybrid cloud revenue (TTM) Signings Book-to-bill ratio (TTM) Revenue and signings growth rates @CC, $ in billions 3022 $4.7 $2.2 $0.9 $1.6 26.0% $0.5 9.8% $8.9 $4.5 1.05 B/(W) Yr/Yr 16% 14% 17% 17% (3.5 pts) (1%) (0.6 pts) 28% (2%) 17#18Expense summary Expense SG&A - operating RD&E IP and custom development income Other (income)/expense - operating Interest expense Operating expense & other income 3022 $4.1 $1.6 ($0.1) ($0.3) $0.3 $5.6 B/(W) Yr/Yr (3%) Flat (21%) NM (2%) 1% Currency 5 pts 3 pts 7 pts Acq/ Divest* 0 pts 5 pts 1 pts Base** (8 pts) (8 pts) (7 pts) $ in billions *includes acquisitions in the last twelve months net of non-operating acquisition-related charges and includes impact of closed divested businesses **represents the percentage change after excluding the impact of currency, acquisitions and divestitures 18#19Balance sheet summary Consolidated Cash & marketable securities Core (non-IBM Financing) assets* IBM Financing assets Total assets Other liabilities Core (non-IBM Financing) debt* IBM Financing debt Total debt Total liabilities Equity $ in billions *includes eliminations of inter-company activity Sep 22 $9.7 $7.6 $102.9 $108.9 $117.8 $13.2 $15.5 $18.0 $125.8 $132.0 $144.2 Dec 21 Sep 21 $8.4 $54.8 $61.3 $67.4 $39.7 $37.8 $38.6 $11.2 $13.9 $15.9 $50.9 $51.7 $54.5 $105.7 $113.0 $121.9 $20.1 $19.0 $22.4 19#20Cash flow summary Consolidated Net cash from operations Less: IBM Financing receivables Net cash from operations (excluding IBM Financing receivables) Net capital expenditures Free cash flow (excluding IBM Financing receivables) Acquisitions Divestitures Dividends Non-IBM Financing debt Other (includes IBM Financing net A/R & IBM Financing debt) Change in cash & marketable securities $ in billions QTD 3022 $1.9 $0.7 $1.2 ($0.4) $0.8 ($0.1) $0.0 ($1.5) $2.9 ($0.2) $1.9 B/(W) Yr/Yr YTD 3022 $6.5 $1.1 $5.4 ($1.3) $4.1 ($0.8) ($0.8) ($0.0) $0.2 $0.1 $0.1 ($1.0) ($0.0) $1.3 ($0.0) ($4.5) $1.8 $4.7 ($0.2) ($2.4) $1.7 $2.2 B/(W) Yr/Yr ($3.8) ($4.2) $0.4 $0.5 $0.9 $2.0 $1.2 ($0.1) $5.8 ($1.9) $8.0 20#21Cash flow (ASC230) Consolidated Net income/(loss) from operations Pension settlement charges Depreciation / amortization of intangibles Stock-based compensation Working capital / other IBM Financing A/R Net cash provided by operating activities Capital expenditures, net of payments & proceeds Divestitures, net of cash transferred Acquisitions, net of cash acquired Marketable securities / other investments, net Net cash provided by/(used in) investing activities Debt, net of payments & proceeds Dividends Common stock repurchases Financing - other Net cash provided by/(used in) financing activities Effect of exchange rate changes on cash Net change in cash, cash equivalents & restricted cash $ in billions QTD 3Q22 ($3.2) $5.9 $1.2 $0.3 ($2.9) $0.7 $1.9 ($0.4) $0.0 ($0.1) ($1.2) ($1.7) $2.1 ($1.5) $0.1 $0.7 ($0.2) $0.7 QTD 3021 $1.1 $1.7 $0.3 ($1.8) $1.5 $2.7 ($0.6) $0.1 ($0.2) $0.1 ($0.6) ($0.3) ($1.5) $0.0 ($1.7) ($0.1) $0.2 YTD 3022 ($1.1) $5.9 $3.7 $0.7 ($3.8) $1.1 $6.5 ($1.3) $1.3 ($1.0) ($1.8) ($2.9) $2.6 ($4.5) YTD 3021 $3.4 $5.0 $0.7 ($4.1) $5.2 $10.3 ($1.9) $0.0 ($3.0) ($0.5) ($5.3) ($6.1) ($4.4) ($0.2) ($0.2) ($2.1) ($10.7) ($0.5) ($0.2) $1.0 ($5.9) 21#22Software segment categories Revenue categories Hybrid Platform & Solutions Software, infused with AI, to help clients operate, manage, and optimize their IT resources and business processes within hybrid, multi-cloud environments Red Hat: incl. RHEL, OpenShift, Ansible Automation: incl. business automation, AIOps and management, integration, and application servers Data & AI: incl. data fabric, customer care, data management, business analytics, dataops & governance, asset & supply chain management, information exchange and weather Security: incl. software and services for threat, data and identity Transaction Processing Software that supports clients' mission-critical on-premise workloads in industries such as banking, airlines and retail incl. transaction processing software such as Customer Information Control System and storage software, and analytics and integration software running on IBM operating systems (e.g., DB2 and WebSphere running on z/OS) Revenue categories - FY 2021 Security Data & AI Red Hat Automation Hybrid Platform & Solutions Transaction Processing 22#23Consulting segment categories Revenue categories Business Transformation Services that enable clients to apply technologies at scale to transform key workflows, processes and domains end-to-end incl. finance & supply chain, talent, strategy, business process design and operations, data and analytics, and system integration These services deploy AI in business processes to exploit the value of data incl. a full ecosystem of partners: SAP, Adobe, Salesforce and Oracle, among others Technology Consulting The skills to architect and implement cloud platforms and strategies to transform enterprise experience and enable innovation, including application modernization on the hybrid cloud with Red Hat OpenShift Application Operations Application and cloud platform services required to operationalize and run cloud platforms Manage, optimize, and orchestrate application and data workloads across environments through both custom applications and ISV/ERP packages Revenue categories - FY 2021 Business Transformation Technology Consulting Application Operations 23#24Infrastructure segment categories Revenue categories Hybrid Infrastructure Innovative infrastructure platforms to help meet the new requirements of hybrid multi-cloud and enterprise AI workloads leveraging flexible and as-a-service consumption models zSystems: incl. hardware and operating system Distributed Infrastructure: incl. Power hardware and operating system, storage hardware, IBM Cloud IaaS, OEM asset recovery service Infrastructure Support Comprehensive, proactive and AI enabled services to maintain and improve the availability and value of clients IT infrastructure (hardware and software) both on-premises and in the cloud incl. maintenance for IBM products and other technology platforms Revenue categories - FY 2021 zSystems Distributed Infrastructure Hybrid Infrastructure Infrastructure Support#25Non-GAAP supplemental materials Reconciliation of revenue performance - 3Q 2022 Total revenue Total hybrid cloud Total hybrid cloud (TTM) Americas Europe/ME/Africa Asia Pacific 3Q22 Yr/Yr GAAP 6% 11% 15% 13% 1% Flat @CC 15% 19% 20% 13% 16% 16% The above reconciles the non-GAAP financial information contained in the "Financial 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, 2022, for additional information on the use of these Non-GAAP financial measures. 25#26Non-GAAP supplemental materials Reconciliation of segment revenue performance - 3Q 2022 Software Hybrid Platform & Solutions Red Hat Automation Data & AI Security Transaction Processing Hybrid cloud revenue (TTM) 3Q22 Yr/Yr GAAP 7% 2% 12% (2%) (1%) (1%) 23% 16% @CC 14% 8% 18% 3% 4% 6% 33% 20% Consulting Business Transformation Technology Consulting Application Operations Hybrid cloud revenue (TTM) Infrastructure Hybrid Infrastructure zSystems Distributed Infrastructure Infrastructure Support Hybrid cloud revenue (TTM) 3022 Yr/Yr GAAP 5% 5% 6% 6% 21% 15% 33% 88% 13% (3%) 3% @CC 16% 14% 17% 17% 28% 23% 41% 98% 21% 5% 6% The above reconciles the non-GAAP financial information contained in the "Software", "Consulting", "Infrastructure", "Software & Infrastructure segment details", "Consulting 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, 2022, for additional information on the use of these Non-GAAP financial measures. 26#27Non-GAAP supplemental materials Reconciliation of expense summary - 3Q 2022 SG&A Currency Acquisitions/divestitures Base* RD&E Currency Acquisitions/divestitures Base* Operating expense & other income Currency GAAP Acquisitions/divestitures 5 pts 0 pts (7 pts) 3 pts 5 pts (8 pts) 3022 Non-GAAP Adjustments 6 pts 3 pts (99 pts) 0 pts 0 pts (1 pts) 0 pts 0 pts 0 pts Operating (Non-GAAP) 5 pts 0 pts (8 pts) 0 pts 7pts (2 pts) 1 pts Base* 92 pts (7 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, 2022, for additional information on the use of these Non-GAAP financial 3 pts 5 pts (8 pts) measures. *Represents the percentage change after excluding the impact of currency, acquisitions and divestitures. 27#28Non-GAAP supplemental materials Reconciliation of continuing operations - 3Q 2022 Gross profit Gross profit margin SG&A Other (income) & expense Total expense Pre-tax income Pre-tax income margin Tax rate Net income Net income margin Earnings per share** GAAP adjustments $7,430 52.7% 4,391 Acquisition- related 5,755 11,931 (4,501) (31.9%) 28.6% (3,214) (22.8%) ($3.55) $165 1.2 pts (253) (1) (253) 418 3.0 pts (0.8 pts) 315 2.2 pts $0.35 3022 Retirement- related adjustments* (6,062) (6,062) 6,062 43.0 pts (12.1 pts) 4,566 32.4 pts $5.05 Kyndryl- impacts related impact Tax reform 0.0 pts 0.0 pts $0.00 (0) 14 14 (14) (0.1 pts) 0.2 pts (14) (0.1 pts) -$0.02 Operating (non-GAAP) $7,595 53.8% 4,138 (293) 5,630 1,965 13.9% 15.9% 1,653 11.7% $1.81 $ in millions (except EPS which is in whole dollars) *Includes a one-time non-cash pre-tax pension settlement charge of $5.9 billion ($4.4 billion net of tax) **Operating (non-GAAP) EPS was calculated using 912.8 million shares, which includes 8.8 million dilutive potential shares under our stock-based compensation plans and contingently issuable shares. Due to the GAAP net loss for the three months ended September 30, 2022, these dilutive potential shares were excluded from the GAAP loss per share calculation as the effect would have been antidilutive. The difference in share count resulted in an additional ($0.02) reconciling item. The above reconciles the non-GAAP financial information contained in the "Financial highlights", "Revenue and P&L highlights", "Expense summary" 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, 2022, for additional information on the use of these Non-GAAP financial measures. 28#29ibm.com/investor IBM