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Financing Receivables (Tables) | 3 Months Ended
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Mar. 31, 2025
Receivables [Abstract] |
Summary of the components of financing receivables | A summary of the components of the company’s financing receivables is presented as follows:
|  | Client Financing Receivables |  |  |  |  |  |
|  | Client Loan and Installment Payment Receivables |  | Investment in Sales-Type and Direct Financing |  |  |  |
|  |  |  | Commercial Financing Receivables |  |
(Dollars in millions) |  |  |  | Held for |  | Held for |  |
At March 31, 2025 |  | (Loans) |  | Leases |  | Investment |  | Sale (1) |  | Total
Financing receivables, gross |  | $ | 6,914 |  |  | $ | 3,225 |  |  | $ | 459 |  |  | $ | 588 |  |  | $ | 11,187 |
Unearned income |  | (540) |  |  | (327) |  |  | — |  |  | — |  |  | (868) |
Unguaranteed residual value |  | — |  |  | 466 |  |  | — |  |  | — |  |  | 466 |
Amortized cost |  | $ | 6,374 |  |  | $ | 3,364 |  |  | $ | 459 |  |  | $ | 588 |  |  | $ | 10,785 |
Allowance for credit losses |  | (88) |  |  | (57) |  |  | (5) |  |  | — |  |  | (149) |
Total financing receivables, net |  | $ | 6,286 |  |  | $ | 3,307 |  |  | $ | 454 |  |  | $ | 588 |  |  | $ | 10,635 |
Current portion |  | $ | 3,302 |  |  | $ | 1,372 |  |  | $ | 454 |  |  | $ | 588 |  |  | $ | 5,715 |
Noncurrent portion |  | $ | 2,985 |  |  | $ | 1,935 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,920 |
|  | Client Financing Receivables |  |  |  |  |  |
|  | Client Loan and Installment Payment Receivables |  | Investment in Sales-Type and Direct Financing |  |  |  |  |  |
|  |  |  | Commercial Financing Receivables |  |
(Dollars in millions) |  |  |  | Held for |  | Held for |  |
At December 31, 2024 |  | (Loans) |  | Leases |  | Investment |  | Sale (1) |  | Total
Financing receivables, gross |  | $ | 7,425 |  |  | $ | 3,406 |  |  | $ | 1,322 |  |  | $ | 900 |  |  | $ | 13,052 |
Unearned income |  | (547) |  |  | (344) |  |  | — |  |  | — |  |  | (891) |
Unguaranteed residual value |  | — |  |  | 479 |  |  | — |  |  | — |  |  | 479 |
Amortized cost |  | $ | 6,878 |  |  | $ | 3,540 |  |  | $ | 1,322 |  |  | $ | 900 |  |  | $ | 12,639 |
Allowance for credit losses |  | (73) |  |  | (50) |  |  | (5) |  |  | — |  |  | (128) |
Total financing receivables, net |  | $ | 6,804 |  |  | $ | 3,491 |  |  | $ | 1,317 |  |  | $ | 900 |  |  | $ | 12,512 |
Current portion |  | $ | 3,535 |  |  | $ | 1,408 |  |  | $ | 1,317 |  |  | $ | 900 |  |  | $ | 7,159 |
Noncurrent portion |  | $ | 3,269 |  |  | $ | 2,083 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,353 |
(1)The carrying value of the receivables classified as held for sale approximates fair value.
Schedule of transfer of commercial financing assets | The following table presents the total amount of commercial financing receivables transferred.
(Dollars in millions) |  |
For the three months ended March 31: |  | 2025 |  | 2024
Commercial financing receivables: |  |  |  |
Receivables transferred during the period |  | $ | 1,942 |  |  | $ | 1,802 |
Receivables uncollected at end of period (1) |  | $ | 680 |  |  | $ | 655 |
(1)Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from business partners as of March 31, 2025 and 2024.
Schedule of client financing receivables and allowance for credit losses by class | The following tables present the amortized cost basis for client financing receivables at March 31, 2025 and December 31, 2024, further segmented by three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. The commercial financing receivables portfolio segment is excluded from the tables in the sections below as the receivables are short term in nature and the current estimated risk of loss and resulting impact to the company’s financial results are not material.
(Dollars in millions) |  |  |  |  |  |  |  |
At March 31, 2025: |  | Americas |  | EMEA |  | Asia Pacific |  | Total
Amortized cost |  | $ | 5,376 |  |  | $ | 2,975 |  |  | $ | 1,387 |  |  | $ | 9,738 |
Allowance for credit losses: |  |  |  |  |  |  |  |
Beginning balance at January 1, 2025 |  | $ | 69 |  |  | $ | 45 |  |  | $ | 9 |  |  | $ | 123 |
Write-offs |  | $ | 0 |  |  | $ | 0 |  |  | $ | — |  |  | $ | 0 |
Recoveries |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Additions/(releases) |  | 7 |  |  | 10 |  |  | 2 |  |  | 19 |
Other (1) |  | 2 |  |  | 1 |  |  | 0 |  |  | 3 |
Ending balance at March 31, 2025 |  | $ | 78 |  |  | $ | 56 |  |  | $ | 11 |  |  | $ | 144 |
(1)Primarily represents translation adjustments.
(Dollars in millions) |  |  |  |  |  |  |  |
At December 31, 2024: |  | Americas |  | EMEA |  | Asia Pacific |  | Total
Amortized cost |  | $ | 5,861 |  |  | $ | 3,128 |  |  | $ | 1,429 |  |  | $ | 10,418 |
Allowance for credit losses: |  |  |  |  |  |  |  |
Beginning balance at January 1, 2024 |  | $ | 92 |  |  | $ | 48 |  |  | $ | 11 |  |  | $ | 150 |
Write-offs |  | $ | (2) |  |  | $ | (1) |  |  | $ | 0 |  |  | $ | (3) |
Recoveries |  | 1 |  |  | 0 |  |  | 0 |  |  | 1 |
Additions/(releases) |  | (10) |  |  | 0 |  |  | (2) |  |  | (12) |
Other (1) |  | (11) |  |  | (2) |  |  | 0 |  |  | (14) |
Ending balance at December 31, 2024 |  | $ | 69 |  |  | $ | 45 |  |  | $ | 9 |  |  | $ | 123 |
(1)Primarily represents translation adjustments.
Schedule of past due client financing receivables |
(Dollars in millions) |  | Total Amortized Cost |  | Amortized Cost > 90 Days (1) |  | Amortized Cost > 90 Days and Accruing (1) |  | Billed Invoices > 90 Days and Accruing |  | Amortized Cost Not Accruing (2)
At March 31, 2025: |  |  |  |  |
Americas |  | $ | 5,376 |  |  | $ | 70 |  |  | $ | 10 |  |  | $ | 1 |  |  | $ | 63 |
EMEA |  | 2,975 |  |  | 29 |  |  | 1 |  |  | 0 |  |  | 30 |
Asia Pacific |  | 1,387 |  |  | 7 |  |  | 0 |  |  | 0 |  |  | 7 |
Total client financing receivables |  | $ | 9,738 |  |  | $ | 107 |  |  | $ | 11 |  |  | $ | 1 |  |  | $ | 100 |
(Dollars in millions) |  | Total Amortized Cost |  | Amortized Cost > 90 Days (1) |  | Amortized Cost > 90 Days and Accruing (1) |  | Billed Invoices > 90 Days and Accruing |  | Amortized Cost Not Accruing (2)
At December 31, 2024: |  |  |  |  |
Americas |  | $ | 5,861 |  |  | $ | 66 |  |  | $ | 7 |  |  | $ | 1 |  |  | $ | 62 |
EMEA |  | 3,128 |  |  | 29 |  |  | 1 |  |  | 0 |  |  | 28 |
Asia Pacific |  | 1,429 |  |  | 8 |  |  | 0 |  |  | 0 |  |  | 7 |
Total client financing receivables |  | $ | 10,418 |  |  | $ | 103 |  |  | $ | 8 |  |  | $ | 1 |  |  | $ | 97 |
(1)At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days. (2)Of the amortized cost not accruing, there was a related allowance of $96 million and $94 million at March 31, 2025 and December 31, 2024, respectively. Financing income recognized on these receivables was immaterial for the three months ended March 31, 2025 and 2024, respectively.
Schedule of amortized cost by credit quality indicator | The following tables present the amortized cost basis for client financing receivables by credit quality indicator at March 31, 2025 and December 31, 2024, respectively. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators reflect mitigating credit enhancement actions taken by customers which reduce the risk to IBM. Gross write-offs by vintage year at March 31, 2025 and December 31, 2024 were not material.
(Dollars in millions) |  | Americas |  | EMEA |  | Asia Pacific
At March 31, 2025: |  | Aaa – Baa3 |  | Ba1 – C |  | Aaa – Baa3 |  | Ba1 – C |  | Aaa – Baa3 |  | Ba1 – C
Vintage year: |  |  |  |  |  |  |  |  |  |  |  |
2025 |  | $ | 504 |  |  | $ | 99 |  |  | $ | 183 |  |  | $ | 67 |  |  | $ | 135 |  |  | $ | 36 |
2024 |  | 1,700 |  |  | 431 |  |  | 961 |  |  | 541 |  |  | 499 |  |  | 70 |
2023 |  | 1,111 |  |  | 332 |  |  | 300 |  |  | 225 |  |  | 257 |  |  | 15 |
2022 |  | 815 |  |  | 94 |  |  | 319 |  |  | 164 |  |  | 233 |  |  | 23 |
2021 |  | 165 |  |  | 16 |  |  | 100 |  |  | 19 |  |  | 56 |  |  | 4 |
2020 and prior |  | 50 |  |  | 60 |  |  | 48 |  |  | 48 |  |  | 44 |  |  | 15 |
Total |  | $ | 4,344 |  |  | $ | 1,032 |  |  | $ | 1,912 |  |  | $ | 1,063 |  |  | $ | 1,225 |  |  | $ | 162 |
(Dollars in millions) |  | Americas |  | EMEA |  | Asia Pacific
At December 31, 2024: |  | Aaa – Baa3 |  | Ba1 – C |  | Aaa – Baa3 |  | Ba1 – C |  | Aaa – Baa3 |  | Ba1 – C
Vintage year: |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | $ | 2,080 |  |  | $ | 621 |  |  | $ | 1,145 |  |  | $ | 514 |  |  | $ | 616 |  |  | $ | 77 |
2023 |  | 1,372 |  |  | 310 |  |  | 341 |  |  | 258 |  |  | 285 |  |  | 19 |
2022 |  | 950 |  |  | 113 |  |  | 408 |  |  | 194 |  |  | 254 |  |  | 26 |
2021 |  | 233 |  |  | 24 |  |  | 125 |  |  | 27 |  |  | 69 |  |  | 5 |
2020 |  | 43 |  |  | 17 |  |  | 29 |  |  | 15 |  |  | 36 |  |  | 8 |
2019 and prior |  | 53 |  |  | 44 |  |  | 37 |  |  | 35 |  |  | 26 |  |  | 7 |
Total |  | $ | 4,732 |  |  | $ | 1,129 |  |  | $ | 2,085 |  |  | $ | 1,043 |  |  | $ | 1,287 |  |  | $ | 142 |

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- Definition Tabular disclosure of financing receivables by credit quality indicator. The credit quality indicator is a statistic about the credit quality of financing receivables. Examples include, but not limited to, consumer credit risk scores, credit-rating-agency ratings, an entity's internal credit risk grades, loan-to-value ratios, collateral, collection experience and other internal metrics. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 29 -Publisher FASB -URI https://asc.fasb.org/1943274/2147481962/310-10-50-29 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 326 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479319/326-20-50-5 + Details
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- Definition Tabular disclosure of the various types of trade accounts and notes receivable and for each the gross carrying value, allowance, and net carrying value as of the balance sheet date. Presentation is categorized by current, noncurrent and unclassified receivables. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 210 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02(4)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480566/210-10-S99-1 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 210 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02(3)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480566/210-10-S99-1 + Details
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