The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are computers, internet services, IT services, semiconductors, and software companies.

Fortune Sector Leaders: Technology

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

WMA 2024-IBM

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

WMAC 2023-IBM

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

The essential guide to a sector that’s now attracting one out of every four startup investment dollars.

AI-Innovators-2023-IBM

Big Blue, based in Armonk, N.Y., was early to the AI game with Watson, which was first introduced over two decades ago, mesmerizing the world with what the tech could do. In 2023, the company launched its generative AI offerings, called Watsonx, with the conviction that the technology will bring about a productivity boom. CEO Arvind Krishna expects close to a third of current roles at the company can be taken over by AI and automation in the next five years, freeing up human staff for high-value work. The benefits from boosting productivity could mean reinvestment and larger margins, Krishna suggested. For its part, IBM’s Watsonx already has clients like NASA and Wix on board. The company also brings AI to clients to assist them with automation, modernization, and providing customer care services. For instance, Brazilian bank Bradesco automated its customer service answers using Watson Assistant, responding to 283,000 questions monthly. IBM is focusing on expanding the use of its AI where it is scalable and relevant, while strengthening its position beyond a legacy IT business; it has committed to <a class="waffle-rich-text-link" href="https://newsroom.ibm.com/2023-09-18-IBM-Commits-to-Train-2-Million-in-Artificial-Intelligence-in-Three-Years,-with-a-Focus-on-Underrepresented-Communities">training 2 million</a> people in AI over the next three years. It acquired software company Apptio in a $4.6 billion deal to complement its AI portfolio and Red Hat cloud business.

Fortune 50 AI Innovators

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500 2023 065 IBM_quantum-computers-and-accelerated-discovery_40645906341_o

Information technology company IBM delivered $60.5 billion in total revenue in 2022, with its hybrid cloud unit accounting for $22.4 billion of that sum. 
<ul> 
 	<li>Still, sales growth stagnated at the end of 2022, and IBM said it would cut about 3,900 jobs.</li> 
 	<li>In May 2023, IBM said it would give $100 million to the University of Chicago and the University of Tokyo to aid in the building of a quantum-centric supercomputer within a decade.</li> 
 	<li>A longtime A.I. leader, IBM stepped into the current ChatGPT-inspired frenzy in May 2023 by unveiling Watsonx, a platform that offers tools for building A.I. models and access to pretrained models that can generate code and text.</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

WMAC-2022-46-IBM

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

Fortune's annual list dedicated to the idea that business is uniquely suited to address society’s biggest challenges.

CTW.1122. IBM

To help businesses adapt to climate-change-related disruptions, IBM recently launched its Environmental Intelligence Suite, software-as-a-service incorporating an extensive weather data set with powerful A.I. EIS is already being used by freight giant Norfolk Southern to fight freezes on rail lines, and by Brazilian biofuel maker BP Bunge Bioenergía to forecast high-risk areas for wildfires.

Change the World

This year’s Fortune 500 marks the 68th running of the list.

F500 2022-IBM

IBM generated $57.4 billion in revenue from continuing operations in 2021, up from $55.17 billion in 2020. That’s not enormous growth, but it’s a step in the right direction for a company that has been coping for a decade with declining revenue from the IT-management and hardware businesses that used to be at its core. CEO Arvind Krishna has been working to bolster IBM’s presence in cloud software, business automation, and artificial intelligence. The company has recently won plaudits for its Environmental Intelligence Suite, an A.I.-powered system designed to help other companies manage their CO2 emissions and predict and prepare for climate-related threats.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

WMAC 2021-41-IBM

Our 2021 list of the 100 best companies to work for, as ranked by their employees. See which companies made the list.

100 Best Companies 2021-73-IBM

Big Blue was under new leadership in 2020 after Arvind Krishna took over for Ginni Rometty as CEO just after the pandemic shut down IBM offices around the world. Adding some of the most rigorous safety measures, IBM has not had a single known case of workplace transmission of COVID-19. The company also offered additional weeks of paid emergency leave for employees dealing with the pandemic and backup child and elder care options. IBM also joined with the U.S. government and other researchers attacking COVID-19 and provided free access to its supercomputers. IBM also reached out to offer resources to historically Black colleges and universities, and CEO Krishna backed specific legislative recommendations for Congress to address racial justice. The company’s “dedication to diversity seems to be consistently reflected in programs and initiatives, rather than just in statements of support,” an employee said. “Actions follow words in meaningful ways.”

Fortune 100 Best Companies to Work For

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500 121 IBM

International Business Machines’ big news in 2020 was the promotion of 30-year company executive Arvind Krishna to the CEO job, succeeding Ginni Rometty. IBM stock has been in a long swoon since 2013, even as the overall market has rocketed; the company needs a revised strategy, and Krishna has wasted little time pursuing one. In October 2020, he announced plans to spin off the business that manages IT infrastructure for other companies—IBM stock rose on the news—and he has been acquiring smaller businesses to build up IBM’s strength in cloud software for business automation. His strategic direction is no surprise; he had been following it even before he was CEO, championing IBM’s acquisition of the Red Hat enterprise software firm in 2019. Judging his success so far is difficult because the pandemic muddied comparisons with past performance.

These companies foster supportive cultures, where employees find opportunities for growth with help from their colleagues.

Best Large Workplaces New York 2021-IBM

Employees say: 
 
“IBM strongly believes in providing training opportunities to their employees. For example, it's mandatory for employees to take at least 40 hours of training in a given year. There is a very large selection of training courses to enroll in.”

Best Large Workplaces in New York

Caring leaders at the Best Workplaces in Technology have been preparing their companies to thrive as the business world emerges from the COVID downturn.

Best-Workplaces-in-Technology-Large-IBM

Employees say: 
“I do believe there is a very great level of work-life balance, especially since the pandemic has hit. Management teams are very compassionate and sympathetic to our needs.” 
Read the Great Place to Work review .

Best Large Workplaces in Technology

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-42-IBM

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-118-IBM

In 2019 IBM took the most dramatic step yet in its years-long project of adapting to a fast-changing tech environment, one in which Big Blue's historic dominance has been steadily eroded. In its largest acquisition ever, IBM spent $34 billion to buy Red Hat, the main distributor of the open-source operating system Linux. But progress on the company's top priorities—cloud computing, social engagement, mobile devices, and data analytics—has remained frustratingly slow, with revenue shrinking by 3% in 2019. This spring, however, the venerable computer giant got a new leader to take it forward. In April 2020, Arvind Krishna took the reins as CEO from Ginny Rometty, who had been serving in the role since 2012 and who remains executive chairman.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-038-IBM

In 2019 IBM took the most dramatic step yet in its years-long project of adapting to the fast-changing tech environment. It bought Red Hat, the main distributor of the open-source operating system Linux, paying $34 billion in its largest acquisition ever. But progress on CEO Ginni Rometty’s top priorities—cloud computing, social engagement, mobile devices, and data analytics—remained frustratingly slow. Revenue shrank; IBM’s Fortune 500 rank has declined every year for over a decade. In January 2020 the company announced that Rometty would step down after eight years as CEO, to be succeeded by longtime executive Arvind Krishna, who took over in April.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

These 52 companies from across the globe are doing well by doing good.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here’s our look at 50 companies that do well by doing good.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Nike, Cisco, MasterCard, SABMiller, Vodafone, Google—and 45 other companies that are doing well by doing good.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Best Companies

Years on list

U.S. job openings

Year founded

Perks

100% health coverage

Unlimited sick days

Telecommuting

Job sharing

Subsidized childcare

Compressed work weeks

Fully-paid sabbaticals

On-site fitness/subsidized gym

On-site medical care facility

Non-discrimination policy includes sexual orientation

Sick days for part-timers

College tuition reimbursement

Student loan debt repayment

Paid Time Off: Full-time Employees

PTO limit (days)

# Sick days

Hiring/staffing (past 12 Months)

# of job applicants

Avg. # of applicants per opening

Change The World

Impact Segment

Sector

Company Info

Industry

Industry Vertical

Founded

City

Sites

Worldwide Employees

Total Worldwide [including U.S.] Revenue in the Latest Fiscal Year

Web Address

Date info provided (companies may opt to keep some data confidential)

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Strongest Dimension

Previous rank

State

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

IBM is a cornerstone of U.S. business that is best known for its software, cloud computing services, and consulting. Incorporated in 1911, and later rebranded as International Business Machines, the company has ridden the many waves of innovation over the decades, from early technology such as tabulating machines, and time clocks for employee punch-ins, to today’s advancements in artificial intelligence. As of 2024, it was among just a few dozen companies to have appeared on the Fortune 500 every year since the list’s inception in 1955.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

International Business Machines (IBM): Company Profile, Stock Price, News, Rankings

legacy

International Business Machines

international business machines

Welcome and thank you for standing by. At this time, all participants are in a listen only mode. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now, I will turn the meeting over to Olympia McNearney, IBM's Global Head of Investor Relations.

Thank you. I'd like to welcome you to IBM's Q4 2024 earnings presentation. I'm Olympia McNearney, and I'm here today with Arvind Krishna, IBM's Chairman, President and Chief Executive Officer and Jim Kavanaugh, IBM's Senior Vice President and Chief Financial Officer. We'll post today's prepared remarks on the IBM website within a couple of hours and a replay will be available by this time tomorrow. To provide additional information to our investors, our presentation includes certain non GAAP measures.

For example, all of our references to revenue and signings growth are at constant currency. We provided reconciliation charts for these and other non GAAP financial measures at the end of the presentation, which is posted to our investor website. Finally, some comments made in this presentation may be considered forward looking under the Private Securities Litigation Reform Act of 1995. These statements involve factors that could cause our actual results to differ materially. Additional information about these factors is included in the company's SEC filings.

So with that, I'll turn the call over to Arvind.

Thank you for joining us today. Let me start by reflecting on our strong close to 2024 and performance over the midterm model, then get into more detail on the execution of our strategy. We are pleased with the progress we made in 2024, delivering revenue growth of 3% and $12,700,000,000 of free cash flow. We saw continued acceleration in software and our highest level of cash flow generation in many years. As we close out the midterm model we laid out at the end of 2021, I am proud of our achievements.

We met or exceeded our target metrics for revenue growth, profitability and free cash flow growth. We set out a plan for mid single digit growth and we delivered on it, growing our revenue by a 6% CAGR over this period. All of our segments delivered revenue growth in line with our model over the last 3 years. Software grew ahead of our goal of mid single digits and this momentum continued with 9% growth in 2024. We committed to accelerate the growth of Red Hat and we delivered double digits for the year.

Infrastructure performed in line with our model as we invested in innovation and transformed the business model. Consulting met the model for high single digit growth, although we acknowledge 2024 was below model. We are confident that our investment in partnerships and skills, as well as our early leadership in GenAI position us to accelerate consulting growth as we move forward. Overall, our technology momentum and consulting signings bolster our confidence in our future performance. Before getting deeper into our execution, I'll make a few comments on the macroeconomic environment.

As we look at the broader environment, IBM's mission to help businesses leverage technology to both scale revenue and grow profitably is more critical than ever. Geopolitical tensions, interest rate volatility, supply chain vulnerabilities, demographic shifts, evolving cyber threats, or creating headwinds of businesses worldwide. In this context, technology is key to drive sustainable growth. IBM's combination of advanced technology and deep consulting expertise positions us to uniquely deliver end to end business transformations. We entered the year intent on enhancing our portfolio.

Software is now about 45% of our business with more than $15,000,000,000 of ARR growing at double digits. We delivered strong and accelerating revenue growth of 11% in the 4th quarter, which includes 8 points of organic growth and strength across the portfolio. This growth was led by Red Hat, up 17% in the quarter. Our early leadership in generative AI and the consulting advantage platform have positioned us well in today's evolving market. In infrastructure, Z16 is our most successful program in history, highlighting customer adoption and continued reliance on the mainframe.

We see more opportunities ahead as our infrastructure solutions play a crucial role in helping clients bring AI workloads closer to their data, and we will launch Z17 in the middle of 2025. Let me now address our progress in generative AI. We continue to gain momentum with our Gen AI book of business growing to over $5,000,000,000 inception to date, up by about $2,000,000,000 quarter over quarter. Approximately 1 5th of this book of business comes from software and the remaining 4 5th is consulting. Our AI portfolio is tailored to meet the diverse needs of enterprise clients, enabling them to leverage a mix of models, IBMs, their own, open models from Hugging Face, Meta and Mistral.

IBM's Granite models designed for specific purposes are 90% more cost efficient than larger alternatives. Additionally, Rel AI and OpenShift AI provide clients with a consistent and scalable AI foundation built on open source technology. This quarter, we saw strong traction in our WatsonX middleware solutions and AI assistance, including whatsonex.gov, whatsonex.ai, Watsonx Code Assistant for Z, Watsonx Orchestrate, as well as products embedding AI such as Concert. And consulting remains key to designing and implementing AI use cases, driving Watson X deployment. Through the year, we introduced key innovations that are resonating with clients.

This quarter, we launched OpenShift virtualization engine to meet growing virtualization demand. In infrastructure, the Telen 2 Processor enhances IBM Z's AI capabilities and performance. We just announced RISE with SAP on IBM Power Virtual Server, offering the fastest and easiest migration from on premises to cloud for the 10,000 plus clients who use SAP on IBM Power. The consulting advantage platform is integrating our technology and industry expertise to drive business transformation. With more than 75 Quantum systems deployed worldwide, our focus on emerging innovation is clear.

This quarter, we announced a collaboration with the State of Illinois to establish the National Quantum Algorithm Center in Chicago. M and A remains a key enabler of our strategy. The acquisition of Neural Magic strengthens our AI solutions with advanced model optimization. Clients worldwide cross IBM to lead transformations. Notable examples this quarter include NatWest and Lockheed Martin, leveraging our Granite models for advanced AI applications.

L'Oreal is partnering with IBM to use our AI consulting and research capabilities to develop foundation models for cosmetic formulation. We also collaborated with UFC and Ferrari, helping them tap into IBM's AI and consulting expertise to drive operational efficiency. Announced earlier this month, IBM and the UK Home Office will partner on the emergency services network, supporting more than 300,000 emergency responders in Great Britain. Our ecosystem continues to expand as we strengthen our partnerships with leading technology providers, including AMD, Palo Alto Networks, SFP, Amazon, Microsoft and Core Reef. These partnerships allow us to co innovate and deliver greater value to clients.

Before I conclude, let me touch on our outlook. We see continued momentum in our business, driven by our focused strategy, enhanced portfolio and culture of innovation. For 2025, we expect revenue growth inflecting higher to 5% plus and about $13,500,000,000 of free cash flow. I look forward to sharing more details at our upcoming Investor Day on February 4. I will now hand over to Jim to walk you through the details of the quarter.

Thanks, Arvind. For the full year, we delivered about $63,000,000,000 in revenue,

$11,200,000,000 of operating pre tax income and operating earnings per share of $10.33 And we generated $12,700,000,000 of free cash flow, our strongest level of free cash flow generation in many years and our highest reported free cash flow margin in history. Revenue growth, combined with 120 basis points of operating pre tax margin expansion, drove 9% operating pre tax profit growth, 14% free cash flow growth and 7% operating diluted earnings per share growth. We are pleased with these results, delivering durable revenue growth in our repositioned business and exceeding our expectations on profitability, free cash flow and earnings per share. Revenue performance for the year was led by software, up 9%, with strength across our portfolio. We achieved Rule of 40, driven by the combination of accelerating growth and margin expansion throughout the year.

Consulting revenue was up 1% and continue to be impacted by a dynamic market environment as clients reprioritized spending. While infrastructure was down 3%, reflecting product cycle dynamics, we delivered more than 120% program to program growth for Z16, our most successful program in history. Our portfolio mix, operating leverage and yield from productivity initiatives generated strong operating gross margin and operating profit performance. For the full year, we expanded operating gross profit margin by 130 basis points. Our operating pre tax margin expanded by 120 basis points, ahead of our expectations and well above our model.

These results represent our highest level of operating gross margin and operating pre tax margin in many years. Now turning to a deeper dive on the quarter. We generated $17,600,000,000 of revenue, up over 2% at constant currency and ahead of our expectation. Software growth accelerated to 11%, with strength across our key categories of Red Hat, automation, data and AI and transaction processing. Consulting was down 1%.

This quarter, we achieved record levels of signings and strong sequential growth in our generative AI book of business, reflecting our early leadership in the areas our clients are prioritizing. Infrastructure was down 6%, reflecting product cycle dynamics in our 11th quarter of Z16. Looking at our profit metrics, in the Q4, we expanded operating gross margin by 50 basis points and operating pretax margin by 40 basis points. We are pleased with this strong performance, driven by our portfolio mix, operating leverage and ongoing productivity initiatives, similar to the full year. This allowed for continued investments to drive innovation in our portfolio, which you can see in our higher R and D expense, up 13%.

Our operating tax rate was 14%, which is flat versus last year. And our operating earnings per share of $3.92 was up 1%. For the full year, we generated $12,700,000,000 of free cash flow, up $1,500,000,000 and growing 14%. The largest driver of this growth comes from adjusted EBITDA, up about $900,000,000 year over year. We realized $500,000,000 in proceeds from the Palo Alto QRadar transaction, which was a small contribution of free cash flow given the payout of structural actions and foregone profit.

We also delivered sustainable lower cash requirements through changes in our retirement plans. As we close out the midterm model we introduced in 2021, we've grown free cash flow faster than revenue in each of the last 3 years, have exited 2024 with our highest free cash flow margin in reported history, and our free cash flow run rate is above our midterm model. In terms of cash uses for the year, we invested over $3,000,000,000 on acquisitions, and we returned just over $6,000,000,000 to shareholders in the form of dividends. Looking at the balance sheet, we ended the year with a strong liquidity position with cash of $14,800,000,000 which is up $1,300,000,000 year over year. Our debt balance ended the year down $1,600,000,000 at $55,000,000,000 including approximately $12,000,000,000 of debt associated with our financing business.

Turning to the segments. Software revenue growth accelerated to 11% in the 4th quarter, driven by strength across the portfolio, with growth of 17% for Red Hat, 16% for automation, 11% for transaction processing and 5% for both data and AI and security. We are pleased with how we finished the year, exceeding the rule of 40 and the growth driver expectations we set back in January. Let me dive in a little deeper on each of these growth drivers. We continue to see momentum in Red Hat, with 4th quarter revenue growth of 17%, fueled by 6 consecutive quarters of double digit bookings growth.

This performance reflects the continued demand for our hybrid cloud solutions as clients are prioritizing application modernization on OpenShift containers and Ansible automation to optimize their IT spend and reduce operational complexity. OpenShift is now $1,400,000,000 ARR business, growing about 25%, and we continue to see increased volume in OpenShift virtualization engagements. In addition to the strength in subscriptions, we saw a recovery in the consumption based services business. Looking forward, Red Hat's 6 month revenue under contract, a reflection of the strong bookings performance mentioned, continues to grow in the mid teens. We delivered strong results in our recurring revenue base and are seeing momentum from innovation across our portfolio.

Our hardware platform and solutions ARR was $15,300,000,000 up 11%. Transaction processing delivered another strong quarter, driven by growing capacity demands, solid renewal rates and increasing contribution from our generative AI product, Watson X Code Assistant for Z. We continue to introduce new products, which are making a meaningful impact on software's results. We have confidence in our portfolio with our market leading businesses centered around hybrid cloud, automation, data and transaction processing. In the quarter, about 8 points of our growth was organic, led by demand for our generative AI products like Concert and our AI assistance.

We launched new products such as next generation of Watson X Code Assistant that provides coding support for multiple languages and Guardian Quantum Safe that helps organization monitor and manage their cryptographic security to fix vulnerabilities. And these investments in generative AI are paying off, with the software AI book of business reaching about $1,000,000,000 inception to date in the Q4. Our performance continues to benefit from our recent acquisitions. We are seeing growing contribution from the StreamSets and WebMethods assets acquired in the Q2. And at the end of 2024, we closed the acquisition of Neuromagic, which strengthens our AI capabilities and performance engineering and model optimization.

And we are looking forward to the opportunities that the Penning HashiCorp acquisition will bring. Looking at software profit for the quarter, gross margin expanded and segment profit was up over 2 20 basis points year to year, reflecting operating leverage driven by our revenue performance. In consulting, revenue was down 1%. Throughout the year, we have operated in a dynamic macroeconomic environment. We continue to see clients reprioritizing their IT spending towards digital transformation and AI initiatives for cost optimization and operational efficiency as we wrap on a strong above market performance in 2023.

Our focus remains on rapidly evolving our offerings and enhancing investments in the quarter, our highest 4th quarter signings in recent history. Generative AI contributed about $1,500,000,000 of new bookings in the quarter as clients see the value our extensive industry and enterprise AI expertise can bring to accelerating their digital transformations. This strong signings performance takes our book to bill ratio up to 1.21 over the last 12 months. Our overall backlog remains healthy, up 8% year over year and our backlog erosion levels remain stable. Our Red Hat practice delivered another record breaking quarter of signings and double digit revenue growth.

We now have annual revenue of nearly $3,000,000,000 In the quarter, strategic partnerships were a growth contributor, both in signings and revenue with solid performance from partnerships with AWS and Azure. We are actively investing to enhance our skills and capabilities to address our clients' top priorities with acquisitions like Accel Alpha, a global Oracle services provider, which closed in the Q4. And earlier this month, we announced our intent to acquire Applications Technology Software, a consultancy known for driving business transformation with Oracle Cloud Applications. Turning to our lines of business, business transformation revenue grew 2%, driven by continued strength in transformational projects for data, finance and supply chain. While technology consulting and application operations declined in the quarter.

Similar last quarter, there was strength in cloud based application services across modernization, development and management. But we continue to see clients reprioritize spending away from on prem customized services. Looking at consulting profit, we delivered segment profit margin of nearly 12%, a sequential expansion of almost one point as we continue to realize the benefits of our productivity actions. Moving to the Infrastructure segment, revenue was down 6%, reflecting product cycle dynamics. Hybrid infrastructure was down 8% and infrastructure support was flat.

Within hybrid infrastructure, IBM Z revenue is down 20% in the quarter. This is the 11th quarter of Z16 availability and the combination of resiliency, reliability and security continues to resonate with clients. Nearly 3 years in, this product cycle has outpaced prior cycles and program to date installed MIPS have increased over 30% as clients' capacity needs continue to grow. IBM Z remains an enduring platform for mission critical workloads, driving not just hardware adoption, but also the related software, storage and services. Distributed infrastructure revenue grew 2%.

This performance was fueled by double digit growth in storage as we introduced new innovation in quarter designed to give clients the ability to scale storage capacity to meet growing data demands to support the next generation of AI workloads and projects. For infrastructure profit, we expanded gross profit margin nearly 2 points sequentially. Our segment profit margin was down 3 20 basis points in the quarter, reflecting where we are in the product cycle and continued investments in innovation. For the full year, our segment profit margin was 17.5%. Now let me bring it back up to the IBM level to wrap up.

As Arvind mentioned, we met or exceeded our midterm model target metrics for revenue growth, profitability and free cash flow growth. And we have fundamentally repositioned our business to a software led integrated platform. Let me now turn to 2025 guidance on our 2 key measures of success, revenue growth and free cash flow. We expect constant currency revenue growth inflecting higher to 5% plus, and we expect to grow free cash flow faster than revenue growth with about $13,500,000,000 of free cash flow. Given the continued strengthening of the dollar, we expect currency to be about a 2 point headwind to revenue growth for the year.

International Business Machines (IBM) Q4 2024 Earnings Call Transcript

Company Participants