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International Business Machines Corporation (IBM, NYSE: IBM) reported total revenues of $62.753 billion in fiscal year 2024 (the calendar year ending December 31, 2024). GAAP net income was $6.023 billion, producing diluted EPS of $6.42. Non-GAAP diluted EPS was approximately $10.22 after adjusting for acquisition-related charges and other items. Free cash flow reached approximately $12.7 billion. IBM's strategy centers on hybrid cloud and AI, with Software as its largest and fastest-growing segment at approximately $27.0 billion, followed by Consulting at approximately $20.1 billion and Infrastructure at approximately $14.5 billion.
Revenue by segment (FY2024)
| Segment | FY2024 Revenue | Description |
|---|---|---|
| Software | ~$27.0B | Red Hat, hybrid cloud software, transaction processing platforms |
| Consulting | ~$20.1B | Business transformation, technology consulting, managed services |
| Infrastructure | ~$14.5B | IBM Z mainframes, distributed infrastructure, IBM Cloud |
| Financing | ~$0.6B | Client and commercial financing |
| Total revenues | $62.753B |
Software is IBM's highest-margin segment and the primary engine of the company's hybrid cloud strategy. It includes Red Hat (acquired in 2019 for approximately $34 billion), which contributes Red Hat Enterprise Linux and OpenShift; IBM's transaction processing software serving banks and other regulated industries; and the watsonx AI platform. The Software segment has been the fastest-growing part of IBM's business under the current strategy.
Consulting delivers the services that help enterprises adopt IBM's software platforms. It covers business transformation (process redesign and change management), technology consulting (application modernization, cloud migration), and managed services. Consulting revenues depend significantly on enterprise technology spending cycles and competition from other large services firms.
Infrastructure includes the IBM Z mainframe product line, which follows a multi-year product refresh cycle typically lasting three to four years. A new IBM Z generation drives a surge in Infrastructure revenue during its release year, followed by a gradual decline as the installed base depreciates and customers defer purchases ahead of the next generation. Distributed infrastructure and IBM Cloud services round out this segment.
Financing is a small segment that provides financing arrangements to IBM clients for purchasing IBM products and services. IBM has been reducing the size of this segment over time as it focuses on higher-margin software and consulting activities.
Key financial metrics (FY2023 vs. FY2024)
| Metric | FY2023 | FY2024 |
|---|---|---|
| Total revenues | ~$61.9B | $62.753B |
| GAAP net income | ~$7.5B | $6.023B |
| GAAP diluted EPS | ~$8.14 | $6.42 |
| Non-GAAP diluted EPS | ~$9.62 | ~$10.22 |
| Free cash flow | ~$11.3B | ~$12.7B |
| Quarterly dividend per share | $1.66 | $1.67 |
GAAP net income declined from approximately $7.5 billion in FY2023 to $6.023 billion in FY2024, partly due to acquisition-related charges, amortization of intangible assets from prior acquisitions including Red Hat, and other non-recurring items. Non-GAAP EPS, which IBM management uses to communicate underlying operational performance by excluding these charges, increased from approximately $9.62 to approximately $10.22, reflecting underlying earnings growth in the Software and Consulting businesses.
Free cash flow of approximately $12.7 billion in FY2024 exceeded GAAP net income substantially. This pattern reflects IBM's significant non-cash charges, primarily depreciation and amortization from prior acquisitions, that reduce GAAP income but do not reduce cash generation. Free cash flow is the metric IBM management emphasizes for assessing dividend sustainability and capacity for future acquisitions.
IBM increased its quarterly dividend from $1.66 to $1.67 per share during 2024, continuing a streak of annual dividend increases that has now reached 29 consecutive years.
Hybrid cloud and AI strategy
IBM's current strategy is built on two pillars: hybrid cloud infrastructure and AI for enterprise. The company articulated this direction most clearly with its 2019 acquisition of Red Hat, which IBM describes as the foundation of its hybrid cloud platform.
The hybrid cloud thesis holds that large enterprises, particularly in regulated industries such as banking, healthcare, and government, will not move all their workloads to a single public cloud provider. Instead, they will operate a mix of on-premises infrastructure, private clouds, and multiple public clouds. IBM positions itself as the software and services layer that makes this mixed environment manageable and secure, with Red Hat's OpenShift as the common application platform across all these environments.
IBM's watsonx platform extends this strategy into AI. watsonx includes tools for building and deploying large language models on enterprise data, a data and analytics layer, and an AI governance product aimed at helping enterprises meet emerging AI regulation requirements. IBM's approach targets the specific concerns of regulated industries: data residency, model explainability, and avoiding vendor lock-in to a single AI provider.
The 2021 spin-off of Kyndryl, which separated IBM's managed infrastructure services business into an independent public company, was an important precondition for this strategy. Before the spin-off, IBM's revenue mix was weighted toward low-margin managed services contracts. After the spin-off, IBM's remaining business was more concentrated in software and higher-value consulting, which improved the overall margin profile and made the Software segment's growth more visible in the financial results.
IBM closed its acquisition of HashiCorp in April 2025 for approximately $6.4 billion. HashiCorp makes infrastructure automation software, including Terraform, which is widely used to provision and manage cloud infrastructure. This acquisition expands IBM's Software segment's position in the infrastructure-as-code layer that sits across the hybrid cloud environments IBM's strategy targets.
Dividend track record
IBM has increased its annual dividend for 29 consecutive years as of 2024, meeting and exceeding the Dividend Aristocrat threshold of 25 or more consecutive years of dividend growth in the S&P 500. As of 2024, IBM pays approximately $1.67 per share per quarter, or $6.68 annualized.
Maintaining this streak through IBM's significant structural transformation is notable. IBM spun off Kyndryl in November 2021, completed the largest acquisition in its history (Red Hat, approximately $34 billion) in 2019, and has continued to pursue acquisitions since then. Each of these moves altered the company's revenue mix, cost structure, and debt levels, yet IBM continued to increase its dividend each year.
The primary support for IBM's dividend is free cash flow rather than GAAP earnings. IBM's GAAP earnings are depressed by large amortization charges from acquisitions, which are non-cash items that reduce reported income without reducing the cash available to pay dividends. Free cash flow of approximately $12.7 billion in FY2024 provides substantial coverage for total annual dividend payments of approximately $6 billion to $7 billion at current per-share levels and share count.
Investors who focus on dividend sustainability assess IBM's free cash flow coverage ratio, the direction of the underlying software and consulting businesses, and the pace of debt reduction following large acquisitions. IBM's dividend growth rate has been modest in recent years, reflecting the balance between maintaining the streak and preserving financial flexibility for continued investment in the hybrid cloud and AI strategy.
Frequently Asked Questions
What was IBM's total revenue in fiscal year 2024?
International Business Machines Corporation reported total revenues of $62.753 billion in fiscal year 2024 (the calendar year ending December 31, 2024), a modest increase from approximately $61.9 billion in fiscal year 2023. IBM's fiscal year aligns with the calendar year. Software was the largest segment at approximately $27.0 billion, followed by Consulting at approximately $20.1 billion and Infrastructure at approximately $14.5 billion.
What are IBM's four business segments?
IBM reports four business segments. Software (approximately $27.0 billion in FY2024) includes Red Hat, hybrid cloud software platforms, and transaction processing. Consulting (approximately $20.1 billion) covers business transformation and technology consulting. Infrastructure (approximately $14.5 billion) includes IBM Z mainframes and distributed infrastructure. Financing (approximately $0.6 billion) provides client and commercial financing. Software carries the highest margins and has been the fastest-growing segment under IBM's current strategy.
Does IBM pay a dividend and for how many consecutive years has it raised it?
Yes. IBM has increased its quarterly dividend for 29 consecutive years as of 2024, meeting and exceeding the Dividend Aristocrat threshold of 25 consecutive annual increases in the S&P 500. IBM pays approximately $1.67 per share per quarter ($6.68 annualized) as of 2024. The dividend growth streak reflects IBM's commitment to returning capital to shareholders even through periods of significant strategic transformation, including the 2021 spin-off of Kyndryl and the 2024 HashiCorp acquisition.
What is IBM's hybrid cloud and AI strategy?
IBM's hybrid cloud and AI strategy centers on helping enterprises run workloads across on-premises infrastructure, private clouds, and public clouds through a consistent software layer. Red Hat, acquired in 2019 for approximately $34 billion, provides the open-source foundation through Red Hat Enterprise Linux and OpenShift. IBM's watsonx platform delivers AI and data tools aimed at enterprise use cases including automated code generation, business process automation, and AI governance. The Infrastructure segment's IBM Z mainframe line serves regulated industries that require high transaction throughput and security on premises. Consulting delivers the services to implement these platforms at client organizations.