How Does IBM Make Money?

There are more than 175 countries where the firm has customers, and it competes with hundreds of enterprises ranging from tiny businesses to huge multinational corporations in each of them. IBM released financial figures for its fiscal year (FY) 2021, which concluded in late January on December 31, 2021. The corporation recorded a net income of $5.7 billion, a 2.7 percent increase over the previous year's figure. Overall, the company's gross profit increased by 2.0 percent to $31.5 billion for the year.

The company's gross profit margin decreased to 54.9 percent in the fiscal year 2020 from 55.9 percent the previous year. In its annual report, IBM said that its financial performance represented an improvement in numerous important growth areas, such as technology and consulting, and the overall business. The corporation said that the COVID-19 epidemic had created a climate of uncertainty in the commercial environment. The firm's hybrid cloud and artificial intelligence (AI) solutions assist organizations in their efforts to change their operations digitally.

The Business Segments of IBM

Currently, IBM works via four business segments: software and consulting, infrastructure and financing, and financial services. It also includes a number for gross profit for the first three parts of the business. It should be noted that IBM money also earned money via a category referred to as "Other," which we have excluded from the revenue and gross profit share percentages shown below and in the pie chart above.

Software

Clients rely on IBM's Software division to connect their software solutions to its hybrid cloud platform, which helps them with their data demands and automate and protect their systems. Except for the software contained in the Infrastructure section, this category contains all of IBM's software products.

Consulting

IBM's Consulting division guides customers to assist them in transforming their companies and implementing new technologies. The Consulting division earned $17.8 billion in sales during the fiscal year, representing a 9.8 percent increase over the previous year. It accounted for more than 31% of total sales across all business segments in 2015. In 2021, the Infrastructure segment's revenue decreased 2.4 percent to $14.2 billion, accounting for approximately 25 percent of the total revenue across all four segments. The business had a gross profit of $7.8 billion, a 6.1 percent decrease from the previous year's figure. It contributed to about 24% of overall gross profit across all business sectors in 2013.

Infrastructure

The Infrastructure section of IBM is responsible for hybrid cloud solutions. This company offers customers infrastructure solutions that assist them in meeting the increased needs associated with hybrid multi-cloud and corporate artificial intelligence workloads. Besides software, it also provides hardware, such as high-capacity servers, storage solutions, and Cloud Infrastructure as a Service (CIAS). The remanufacturing and remarketing of old equipment are also included in this section.

In 2021, the Infrastructure segment's revenue decreased 2.4 percent to $14.2 billion, accounting for approximately 25 percent of the total revenue across all four segments. The business had a gross profit of $7.8 billion, a 6.1 percent decrease from the previous year's figure.

Financing

The IBM Financing sector assists the company's customers in acquiring its information technology systems, software, and services. Best IBM hybrid cloud platform and AI strategy are supported by this sector, which often offers to finance for goods or services that are vital to the client's business operations. The Financing division earned revenue of $774 million in the fiscal year 2020, a 20.6 percent decrease from the previous year. The firm said that the purchase would assist in expanding its hybrid multi-cloud services offerings and implementing its continuing hybrid cloud and artificial intelligence strategy. No information was provided about the transaction's financial details.

IBM's Most Recent Innovations

When Russia launched its invasion of Ukraine on March 3, 2022, IBM made a statement in response. Due to the issue, according to the statement, the firm has decided to discontinue sales of technology in Russia. In a press release on February 15, 2022, IBM revealed that it had bought Neudesic, a cloud services consultant focusing on the Microsoft Azure cloud computing platform.

Diversity and Inclusion at IBM

As part of our ongoing effort to raise awareness of the significance of diversity in business, we provide investors with an insight into IBM's transparency and its commitment to diversity, inclusion, and social responsibility in the workplace. We looked at the information IBM makes available to show you how it discloses its board of directors and workforce's diversity to assist readers in making informed buying and investment choices.