IBM Corporation Financial Profile Full Year 2015 Highlights*: Jan 19, 2016 Continued strength in strategic imperatives; 2015 revenue of $29B up 26% Yr/Yr, represents 35% of IBM Revenue - Cloud revenue of $10B, exited 4Q with an annual as-a-Service run rate of $5.3B - Analytics revenue of $18B, up 16% for full year 2015 Expanded gross margins Investing and adding capabilities Expect 2016 Operating EPS of at least $13.50 and FCF conversion in the nineties * All revenue growth @cc and adjusted for divested businesses ($ in Billions, except per share amounts) ($ in Billions) P&L Highlights FY 2014 (From Continuing Operations) Revenue $92.8 B/(W) Yr/Yr (1%)* FY 2015 B/(W) Yr/Yr $81.7 (1%)* Pre-Tax Income - Operating $21.1 (4%) $17.7 (16%) Net Income - Operating $16.7 (9%) $14.7 (12%) $16.53 (1%) $14.92 (10%) $12.4 (18%) $13.1 6% EPS (Diluted) - Operating Free Cash Flow** Balance Sheet Assets Cash & Marketable Securities Global Financing Assets Non-Global Financing Assets** Liabilities Global Financing Debt Non-Global Financing Debt** Other Liabilities Equity * @ constant currency & excluding divestited businesses ** Net Cash from Ops excl GF Receivables, less Capital Expenditures Dec 2014* Dec 2015 $8.5 $37.3 $71.5 $117.3 $8.2 $34.6 $67.7 $110.5 $29.1 $11.6 $64.5 $105.3 $27.2 $12.7 $56.2 $96.1 $12.0 $14.4 * Prior year reclassified for the adoption of the FASB guidance (Debt issuance cost and Deferred Tas classification) ** Includes eliminations of inter-company activity Key P&L Metrics - Operating (From Continuing Operations) Gross Profit Margin Expense / Revenue % * Pre-Tax Income Margin Tax Rate Net Income Margin FY 2014 B/(W) Yr/Yr FY 2015 B/(W) Yr/Yr 50.6% 27.9% 22.8% 21.0% 18.0% 0.1 pts 0.2 pts 0.3 pts 4.0 pts (0.7 pts) 50.8% 29.2% 21.6% 17.2% 17.9% 0.2 pts (1.3 pts) (1.1 pts) 3.8 pts (0.1 pts) Key Metrics Non GF Debt/Cap Global Financing Leverage Dividend Yield Credit Rating (Moody's, S&P)* * Total Operating Expense & Other Income / Revenue Dec 2014* Dec 2015 59.2% 7.2 2.9% Aa3, AA- 54.3% 7.3 4.3% Aa3, AA- * Credit ratings are not recommendations to purchase, hold, or sell any IBM securities or to make any investment decisions 2015 Revenue by Geography (excludes OEM) 2015* Revenue by Business Segment 2015* Pre-Tax (Operating) Profit by Business Segment Systems & Financing Systems & Financing U.S. 37% 12% Asia Pacific Services Can/ LA 21% 60% 15% Services 39% Software Software 28% 10% 46% EMEA 32% * From Continuing Operations Strategic Imperative IBM/ Market Revenue Growth* * Served market growth source: IBM Market Insights; Historical Strategic Imperative Revenue measured on consistent basis; Growth rates reflect constant/modeled currency excluding System x Strategic Imperative Revenue Progression* Strategic Imperative 2015 Portfolio Revenue Summary Analytics Cloud Mobile Security Social 2015 $18B 10 3 2 1 Yr/Yr 16% 57% 250% 12% 21% aaS-exit run rate $5.3B +$1.8B * Revenue growth rates @ constant currency and excludes divested businesses * Revenue growth rates @ constant currency and excludes divested businesses Overlap in Strategic Imperatives primarily reflects solutions delivered via cloud excluding System x In an effort to provide additional and useful information regarding the company’s results as determined by generally accepted accounting principles (GAAP), these materials contain certain non-GAAP financial measures on a continuing operations basis. For reconciliation to GAAP and other information about FY 2014 and FY 2015 revenue at constant currency excluding divestitures, operating gross profit margin, operating pre-tax income and margin, operating expense and other income, operating tax rate, operating net income and margin, operating earnings per share, free cash flow and the December 2014 and December 2015 non GF debt-to-capital ratio, see Non-GAAP Supplemental Materials and related information in the Forms 8-K submitted to the SEC on January 19, 2016. For reconciliation to GAAP and other information about 2011-2015 strategic imperatives revenue growth at constant currency excluding divestitures, see Non-GAAP Supplemental Materials and related information in the Form 8-K submitted to the SEC on February 26, 2015 and January 19, 2016. For reconciliation to GAAP and other information about Analytics, Cloud, Mobil, Security and Social revenue growth at constant currency excluding divestitures, see Non-GAAP Supplemental Materials and related information in the Form 8-K submitted to the SEC on January 19, 2016. For reconciliation to GAAP and other information about Expected 2016 Operating EPS, see Additional Information - 2016 Earnings Per Share in the Form 8-K submitted to the SEC on January 20, 2016.